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Does CRM Matter for Construction?

By Steven James Mulka

"In cases we have reviewed, sales increases arising from advanced marketing and sales information technology have ranged from 10% to more than 30%, and investment returns have often exceeded 100%. These returns may sound like the proverbial free lunch, but they are real."
Rowland T. Moriarty & Gordon S. Swartz in Harvard Business Review

With the tough economic conditions facing the construction industry there is a sharp focus on better ways to track and manage the sales process.  Companies are finding that the old way of obtaining business is not as effective in today’s market.   Construction companies have traditionally invested in software systems for estimating, job costing and project management.   The industry has not historically been a large adopter of Customer Relationship Management, CRM software, but that is changing.

In response to the challenges of obtaining new business, companies are now reviewing and investing in better software tools to manage their sales process.  There still is a lot of confusion on CRM and why is it important in the construction Industry.  This article looks to define CRM, and how it can make an immediate impact on a contractor’s ability to win more business. 

CRM or Customer Relationship Management is a broad term that is widely used by software companies to describe software that is designed to manage your customers and business development.   The credit card industry for years has utilized CRM to capture and profile all relevant information on a customer.   Many construction companies attempt to do this manually, using handwritten records, Microsoft Outlook, or Excel. With the maturity of today’s CRM software, there are more advanced ways to track your customers and sales pipeline that make it affordable for virtually all companies to take advantage of this technology. 

Pipeline Tracking
A strong pipeline of projects being bid is vital to the health and long term viability of any contractor.   Successful contractors need to utilize their limited resources to focus on the projects that they have a high percentage of winning.    Too many contractors are chasing projects that they have a minimal chance of winning, taking the focus away from opportunities that have a good potential.  When used properly, CRM provides visibility to management in the following areas so that resources and effort can be focused on winning projects that can be won.

  • What projects are we bidding?
  • Where in the sales process is each project?
  • What is the bid due date?
  • Who has the ball in court?
  • What was the last activity completed?

By standardizing the sales process, and tracking key information and all the history, CRM software can significantly impact the chances of winning a project.    This is accomplished by using the following components found in most CRM software. 

CRM allows a company to input all the key information on a "Customer" or prospective customer in a single location.  More importantly, each of these customers can be classified according to their "Relationship" to the company.  For example, customers may be classified according to long term customers or prospective customers.  CRM is not only for tracking customers but can be extended to all business partners for a company.  Subcontractors, Architects, Banks, General Contractors, competitors all can be entered into CRM so that employees can quickly find the details on a particular company, contract or bid. 

By having all business partners in a single software system, this information can be used during the sales process to provide the company with a complete picture of partner subcontractors and the architect, owner, GC or other relevant relationships to the bid and ultimately the project.  The end result is that now companies are "Managing" their business using Customer Relationship Management software instead of reacting to emails or phone calls. 

Associated with Accounts are Contacts.  For each Account, an unlimited number of contacts can be added so that all the players at a company are identified.  This reduces the islands of information within a company when estimating has some contacts, project managers have other contacts, and business development has their own set of contacts.   CRM bridges the islands, so that all the information is joined and accessible.  Not only do you need to understand a potential client’s company, but also the needs of the individual decision makers.

Once a project has been identified as a viable project for bid, CRM creates an Opportunity to track all the bidding information.  The opportunity has key information such as:

  • Opportunity Name
  • Contract Value
  • Bid Dates
  • Construction Type
  • Market Segment
  • Sales Stage
  • Tasks to be completed
  • Who are the Players:  Architect, Owner, GC, Subcontractors, etc.

An opportunity makes it easy to get an immediate view of the pipeline that a company is bidding and details available on each project.  This provides the management teams responsible for new business withinvaluable information to make decisions on the projects being bid, what needs attention and where there is success. 

Sales Stage
CRM also helps standardize on the sales process and methodology.  Setting up Sales Stages for the opportunity allows for a consistent approach to bidding and winning work.  A typical sales stage for construction has the following steps:

1. Qualification:  Identifying the scope, timeframes and decision makers
2. Bidding: Getting pricing and takeoffs
3. Proposal Development: Creating an estimate and supporting proposal
4. Negotiations: Finalizing contracts
5. Close: Win the Business

The sales cycle also facilitates setting up standard tasks that need to be competed at each phase of the sales process.   Think of the tasks as "to do items" that help manage employees’ time and capture phone calls, emails, notes and observations at each step of the sales cycle. Some CRM software use workflow to automatically create each of these tasks when an opportunity is created, reducing the burden on the sales team. 

CRM software represents a new way for the construction industry to manage getting work and tracking customers.  The benefits of standardizing an organization’s sales process and gaining insight into all aspects of the bidding process can provide a real and immediate return on investment.  Companies looking to increase their success in bidding and winning more work should seriously review CRM software as a strategic element of a company’s overall Information Technology Strategy. 

About the author
Steven J. Mulka is a founding partner of Microsoft Dynamics Gold Certified Partner SIS Software, LLC. He has over 15 years of experience in providing financial and operational software solutions to support the A/E/C industries. He is also the Product Manager of the SIS Navigator CRM solution for Contractors built on Microsoft Dynamics CRM, and a member of the AGC IT Forum Steering Committee. Steven can be reached at smulka@sisn.com.

About SIS Software, LLC
SIS is a Microsoft Gold Certified Partner providing financial and operational software for the construction industry. Specializing in construction applications since 1992, SIS is the founder of the Microsoft Dynamics SL Users Group, a member of Microsoft’s Partner and Product Advisory Boards, and the recipient of Microsoft Partner of the Year for 2009. Accounting Today magazine ranks SIS as one of the Top 100 accounting software resellers in the United States. SIS has offices in Atlanta, Dallas, Houston, New York, Philadelphia, and Pittsburgh.


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