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The Cost of CRM, Part 1

CRM refers to Customer Relationship Management. It is the acronym for the software that companies use to keep track of their interactions with customers. The Software also tracks customers’ buying patterns and surveys possible future needs for more product.

CRM Software

The Cost of CRM, Part 1

Companies buy CRM as a way not only to keep customers loyal, but to bring in new customers, too. If a company cannot continue to attract new customers, it cannot grow. Thus, by supporting companies in their attempt to deal expertly with current customers as well as with potential customers, CRM Software helps sales and marketing teams make the most of their time and expertise in order to generate more profit and revenue.

CRM Software evolved from marketing strategies that first began setting up customer-service groups once companies realized that even this basic surveying practice rewarded them with increased business. As a result of observing how the customer relationship market was one worth pursuing, CRM designers began to target the development of software systems capable of tracking what customers bought, what they spent, when they did their spending, and what they might purchase down the line.

Twenty years ago saw a change with the initiation of special sales, incentives, bonuses, and perks as businesses attempted to reward loyalty. CRM Software made this possible by setting up categories based on sex, age, income, education level, family status, and location as a way to sort customers and their purchasing habits. Organizing buyers in such a way facilitated more select marketing, and thus a more efficient use of company resources. Needless to say, as CRM software evolved into more functional and informative software, CRM implementation grew at an impressive rate and CRM Cost went up. This left businesses to figure out whether the benefits of CRM equaled the expense of the technology.

When comparing CRM costs, prices, and features, the first thing a company should do is consider the exact results it expects from its customer relationship management software. Then it will be time to begin the process of researching how much a Customer Relationship Manager system will cost.

CRM projects can be broken down into three main areas of costs: 1) the price of software licenses and software maintenance. A license can cost in the range of two-hundred dollars to a six zeroes investment. The range depends on the number of users involved, the size of the company, and –of course- on which application is being bought.

You can thank Mark Zuckerberg, Evan Williams and others for turning America’s legendary productivity into wasteful social media “screensucking.” While social media may be engaging, it does not always help us accomplish what really needs to get done. It’s time to refocus America’s software ingenuity on making productivity software as delightful to use as social networking.

Computers were once productivity boosters. Now they’ve morphed into social media touchpoints. This global trend - plus a dearth in computer innovation - is reining in productivity.

Americans spend about 1 billion hours each month on Facebook. And 140 million U.S. Twitter users devote 36 minutes a month to the service - totaling 84 million hours! The pervasive habit of being glued to LCD screens was aptly dubbed “screensucking” by Dr. Edward Hallowell in 2006.

Innovation Drives Productivity

Technology innovation became a substantial productivity driver during key periods in our country’s economic growth. Between 1973 and 1995, U.S. productivity grew about 1.5% per year. But between 1995 and 2000 productivity growth nearly doubled to 2.9% annually (PDF).


U.S. Productivity Trend (output per hour worked)

The New York Fed concluded in a December 2004 analysis that the sudden surge in worker productivity was fueled by “sectors of the economy that produce information technology (IT) or use IT equipment and software most intensively.”

So the boom markedly boosted productivity. Yet in the past four years productivity growth has fallen to a 2% annual rate. And while the recession and subsequent market doldrums are partially to blame for this decline, I believe that paying more attention to the development of entertaining “apps” has shunted innovation in software that could significantly boost our country’s productivity.

You’re A Drag On My Drop

Every day, office workers - you may be one of them - toil using technology meant to improve their efficiency. That is, until an email gets misdirected or a last-minute graph needs to be created and dropped into PowerPoint. Or until or a marketing list gets compiled in a spreadsheet and then exported as a .csv file so it can be laboriously imported into yet another tool in order to do whatever needs to be done.

.CSV files? In 2012? What hostile planet are we on?

Even Apple, a stalwart in mobile innovation, has spent a lot of time refining the faux “printed book” look of its address book program, yet its latest iteration, Contacts, is still not Facebook or Twitter-aware.

In 2004, I wrote an article for Fast Company titled “The Need for More Drag and Drop,” in which I expressed my wish that even the folks in IT should experience the joys of drag and drop. A casual search of Google shows that my dream remains unfulfilled.

Yet survey after survey shows that ease-of-use remains the paramount concern of computer users. In a study of 255 business intelligence tool users, ease-of-use was rated as more important than features or analytics, with 47% saying ease-of-use was “very important,” while 32% called it “essential.”

The Invoice Machine represents a new genre of easy-to-use Web services software that reinvent a difficult task, like the process of invoicing.

Fact is productivity software innovation, including Mac and PC software, is in a moribund state. And our economy is taking a direct hit as a result. We should be trailblazing exciting new software directions. Instead, we’re still chewing on leftovers from the ‘70s. Metaphors developed in another era, before the Internet and social media.

And this is why I believe software needs to be reinvented. As developed right now, it’s inefficient, cumbersome and not intuitive. Email, and in particular Customer Relations Management (CRM), need to enter the 21st century.

Here’s how it should work. Anyone, including Joe Sixpack CEO, should be able to push one button to send an email to the top 20% of customers without having to invoke the voodoo magic of the IT department. Creating a promotion should be as simple as graphically connecting a line between a database and word processor icons, and filling out a properties form. Yes, that simple.

Apple’s address book should intelligently sort contacts by social network, and allow you to seamlessly share subgroups with other programs without requiring a .csv degree in engineering. Next-generation software should anticipate user needs, so when you drag a name from a contacts list to your email program it should create an email. Drag it to your promo tool and it exports name and email address.

Thousand Points of UI Lights

To get there we need to pivot our development priorities toward software applications that will boost productivity. We need to create a thousand user interface (UI) design studios specializing in a new craft - total user experience (TUX).

There’s promise lurking over the horizon. HTML5 will make it easy to add drag and drop to Web-based services. And I’m encouraged by companies that broke through in data visualization (Mint), simplicity (Simple), or have made heretofore difficult tasks, like customer invoicing, much easier (The Invoice Machine).

But we need a bigger push toward new ways of doing things. You can help. Here’s a link to my Social Revolution ideation engine, where your ideas will be collected and ranked. I would like to hear your thoughts and opinions on what makes for better software and have other visitors like, or unlike, them.

It’s time to become productive again, and have fun doing it.


Guest author and public speaker Michael Tchong is the founder of Social Revolution, a San Francisco-based change agency, which seeks to transform the future through innovation and reinvention. Michael also founded four other startups, including MacWEEK and ICONOCAST, and authored Social Engagement Marketing, an easy-to-navigate guide to the world of social media. You can read his earlier ReadWriteWeb posts here.

Lead image courtesy of Shutterstock.

PayPal is confirming reports that it is test-running a new app-based checkout system in McDonald’s restaurants, a pilot program that could push the online payment broker - and the notion of phone-based payments  - much further into the consumer shopping experience. It could also add confusing choices and tools to manage in an increasinly fragmented payment landscape.

The trial is actually taking place as far away from the general US population as possible: it’s being conducted in 30 McDonald’s outlets in France. This is a different system than PayPal’s two existing in-store payment systems. The French trial features a smartphone app or a website from which customers can order and pay for the food with their PayPal account. The customer can then pick up the food in a separate line, bypassing the normal ordering process.

You might think there’s some delicious irony in testing this new payment method in McDonald’s located in a nation where good food is nearly the state religion - but it turns out that McDonald’s is very popular in France. And there is nothing funny about the payoff for PayPal if the McDonald’s trial works out: a cut of the transactions at some 30,000 McDonald’s restaurants around the world.

That’s a lot of special sauce.

PayPal’s Third Try

PayPal’s already has two existing in-store systems, including a point-of-sale system at the cash register and a credit-card swipe system for smartphones. The still-unnamed payment system on trial in France will be a third in-store system, when it’s eventually launched.

The existing point-of-sale system enables PayPal users who have activated the in-store payment system on their PayPal accounts to enter their mobile phone number and a special PIN at the register. All of the information about the transaction is sent as a receipt to the PayPal account and the phone itself. Consumers can also use a PayPal card that will directly debit funds from their PayPal account at participating merchants.

Home Depot is one of the larger participants in this system, connecting its nearly 2,000 US stores on the system this Spring. Other merchants include Hollister and Abercrombie & Fitch.

The card-swiping PayPal Here system is more or less a clone of the rapidly growing Square payment system. Square and PayPal Here use a small card reader that plugs into the headphone jack of a compatible smart phone. Credit and debit cards can be entered through a swipe on the reader, or keyed in directly for an extra fee to the merchant.

PayPal is feeling the pressure from Square in the small business space, which is also where PayPal Here is aimed. And last week Square and Starbucks partnered on Square’s Pay with Square app that enables Starbucks users to pay for their java with any debit or credit card in 7,000 Starbucks stores.

Competing With Square and Others

PayPal’s pay-with-an-app payment system trial in France will directly complete with the Pay with Square system. Little wonder, then, why PayPal - a company that tends to hold its plans very close to the vest - let news about the small trial in France leak to the press; PayPal wants the marketplace to be aware that it is working in this area, too.

Square, PayPal, Google Wallet, and Isis - a joint mobile payment venture from AT&T Mobility, T-Mobile USA and Verizon Wireless - are all fighting to insert themselves between the customer and the merchant. The big selling point? Lower transaction fees for the merchant, who are naturally keen to avoid paying the big-bank credit-card transaction fees that can take anywhere from 1% to 12% of a customer sale, depending on the bank.

PayPal Here and Square’s card-swipe service, in comparison, take a flat 2.7% and 2.75% percent off a transaction, respectively. Transactions made with PayPal credit cards only cost merchants 1.7%, which gives merchants a nice incentive to push the PayPal connection.

Will Merchants Play Along?

But merchants are now looking at all of this positioning and wondering why should they be giving up any of this potential revenue to these new payment middlemen. The Merchant Customer Exchange (MCX) was launched last week, which will enable participating businesses like 7-Eleven, Best Buy, Target and Wal-mart to use a mobile payment system that goes straight to participating retailers.

MCX doesn’t have anything in place yet, but it’s presence may force PayPal and Square to adjust their strategies. The big-whale businesses like Starbucks and McDonald’s may be harder to get if consortiums like MCX start forming around the giant retailers. Instead, they may have to concentrate on gathering lots of smaller fish.

For consumers, it will be a lot easier to make payments with mobile devices, but the landscape is becoming increasingly fragmented. If every other store uses a different payment system, customers will switch between payment apps - multiplying the security risks of linked accounts.

Merchants may get a lot of choices for online payment systems, but customers could get the raw end of the deal.


McDonald's image courtesy of Shutterstock.

What Ever Happened to Intranets?

Back in the mid-1990s when the Web was young, corporate Intranets were popping up at companies all over the place. They were usually quick and dirty efforts that often involved off-the-shelf parts and little (if any) programming. The idea was to produce a corporate Web portal that was just for internal use, enabling staff to share documents, best practices, customer information and the like.

But corporate instranets are mostly historical artifacts now. What happened?

No one saw it coming at the time, but in retrospect the failure of the corporate Intranet offers a classic lesson in how even popular categories of products can be quickly made obsolete by seemingly unrelated technological advances and social changes.

TCP/IP Happened

So, what killed the Intranet? TCP/IP was the first culprit. Back in the mid-90s, corporate networks used a hodge-podge of protocols, including SNA and Netware. No one talks about those anymore.

Having an all-IP network made it easier to adopt more Internet-native technologies. Remember when sending emails from one company to another was a chore and not always successful? Now we take it for granted that we can communicate with anyone.

Second, the tool sets got better. Many companies migrated their Intranets to Wikis or Wordpress blogs when it became clear that these products were easier to maintain and use.

And then a whole class of products now called enterprise social networks arrived. These solutions include ready-made discussion groups, microblogs, news streams and social media. For example, you can share files with comments attached to them, which is useful if a team is collaborating on a presentation slide deck. Or use them for customer support actions. Or tracking competitors. All the things that worker bees once used Intranets for.

Then Twitter took off, and many of these products modeled their user interface on the simple 140-character “what are you doing now” dialog box. That made it dirt simple to add content and for a work team to collaborate together.

Free Social Networking

The final nail in the Intranet coffin may be an announcement this week from Socialcast. The company is offering a fully featured version of its software for free and forever for up to 50 seats. Expect that competitors will jump on board this model.

These enterprise social networking tools mean more than a “Like” button on a particular page of content: they are a way to curate and disseminate that content quickly and easily. This class of products is distinguished by several features:

  • Team workspace. You can segregate your work teams by project and have all the materials for that project in a single place for easy access. These spaces can be persistent to serve as an archival record for completed projects, too.
  • Activity stream. The Twitter-like stream is useful to keep track of what your colleagues are doing in any given day.
  • Presence detection. Like corporate Instant Message tools, you can keep track of when your co-workers are in the office or ask them quick questions via text or video chats.
  • Document collaboration. You can edit documents in real-time to shape a particular deliverable for a client without having to do serial emails.
  • External services connections. Many of these products can search and interact with CRM systems, SharePoint servers, Salesforce, emails and other external services.
  • Mobile clients. Most products have specialized clients that have been optimized for iOS and Android phones.
  • Public or private deployments. You can start with a public cloud deployment of the product to try out, and then move your system to your own server behind a firewall for the ultimate security.

So say goodbye to Intranets. It was nice to know them. Certainly, the new breed of social network products makes it easier for workers to communicate and collaborate. But that still doesn’t mean that most employees actually use them.

 Image courtesy of Solodov Alexey /

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