Chapter 4
CRM Made Just for Projects
In This Chapter
▶ Defining project-based CRM
▶ Deciding if an opportunity is profitable
▶ Forecasting your resources
▶ Creating a winning proposal
Customer relationship management, or CRM, is nothing new, but not everyone is familiar with project-based CRM. What makes project-based CRM different from generic CRM? Project-based CRM tracks different information and gives visibility to the type of work coming down the line and the potential resources that may be needed. This chapter examines the attributes of project-based CRM and illustrates how it helps your project-based organization thrive.
Knowing the Problems with Regular CRM
Most CRM tools are designed for businesses that sell products to help these companies forecast demand and serve their customers well. It’s simple enough to determine the value of a potential sale — you just figure out how much of the product the customer wants to buy and then multiply price by quantity. Total up all the potential sales and you have your revenue fore- cast. Total up the inventory you potentially might sell and you have a forecast of the products that will be in demand.
This concept just doesn’t work for project-based businesses because the key item often needed for a potential project is labor. As you’re planning for a project, you need to know what resources you’ll need and what those resources cost so you can prepare a cost estimate that’s both competitive in the market and profitable for your business. If you’re bidding on a job for $10,000 and it’ll take four people two weeks to com- plete, is it profitable for your business to pursue this?
Hearing Opportunity Knock Although general CRM is designed to build estimates and quotes by identifying the value of an opportunity based on product items, a project-based CRM system is designed to value the opportunity based on resources, products, expenses, and, if you need them, subcontractors. If you take the four-person example mentioned in the previous section, you can plug in the information shown in Table 4-1.
Seems simple, but what you really need to know is what the labor is going to cost your business, so you can add in a profit margin. A project-based CRM system has the ability to plug in the costs of your labor resources and determine what you will charge per hour. It looks like Table 4-2
Now you can make a solid decision about whether pursuing this $10,000 opportunity will be good for the business. Also, by tracking these opportunities, you can see how much work you’re pursuing and evaluate whether you have enough work to grow the business, when this work is expected to come in, and how long it will last.
Forecasting Your Resources Tracking resource information allows you to forecast your resource needs. Returning to the previous example and look ing at just one of those resources for the $10,000 job, you estimated you would need a designer for 40 hours. How many other potential jobs also need a designer at the present time? Imagine that during the next six months there will be 15 jobs that need design work. Each job needs roughly 40 hours of work, for a total of 600 hours of design work. Now imagine you have two full-time designers who can each work 40 hours a week, which means that over the next six months you have 1,920 hours of design time available (960 per designer). So, do you have enough work over the next six months to keep these two people busy? Do you need to find more design work? On the other hand, if they’re already backlogged for the next five months, does that mean you need to find an additional designer?
By tracking resources needed based on opportunities, you can answer two key questions:
✓ Do you have enough work to keep all your people employed and busy?
✓ Do you have all of the right resources for all the work to which you could potentially commit?
Some companies accomplish this tracking with spreadsheets that are attached to opportunities. Ask this question: If you had to find out how many designer hours were in the forecast for all opportunities expected to close over the next six months, how many spreadsheets would you have to look through? A project-based CRM system solves this for you.
Creating Solid Proposals
Back to the example again — you have decided that the $10,000 job would be profitable for your business and you have the resources needed to get the job done. Now you must create a proposal. Many businesses have proposal templates handy, allowing them to put together their written presentations to potential clients. These templates include such things as descrip- tions of the company, the team that will be involved and their resumes (that’s important because your customers are often buying your expertise and your employees’ skills), similar proj- ects your organization has successfully completed, and count- less other pieces of information that go into a winning proposal.
Although every proposal to every client is different, many pieces of that proposal are similar to, if not the same as, what you’ve used in other proposals. So when creating a new pro- posal, you’ll spend lots of time searching through previous pro- posals and cutting and pasting items from one document into another. You’ll spend just as much time hunting down people who have answers or who need to update certain pieces of information, such as resumes and project descriptions.
Proposal-generation tools can speed this process, especially if they’re tied to your project-based ERP system. Think of your proposal as a puzzle. You just need to grab the right pieces and glue them all together for the finished product. For example, you may use several company boilerplates. Every member of the organization has a resume used on proposals, there is a list of previous clients to be used as references, and maybe there are descriptions or pictures of previous projects. A proposal tool allows you to select all the pieces you’ll need from these choices and then pulls them all together into one document, saving you the time of searching, cutting, and pasting.
Your previous clients and projects will be part of your project- based ERP system, so the ability to pull from that system into your proposal will save lots of time.