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4 things to avoid when setting up a new CRM

Investors gathering around a conference room table to discuss their new software

As your business expands so does your network, and having a reliable CRM becomes more and more valuable. Even though they are essential tools, about one-third of all CRM projects fail. As a venture capitalist, how can you bridge the execution gap and get the most out of your CRM?  

Frederick Reichheld, Phil Schefter, and Darrell Rigby—Three Bain and Co. executives—shared their views on how to avoid four perils of customer relationship management platforms. Avoiding some potential pitfalls can make sure you find the right solution for your firm on the first try instead of setting up and tearing multiple systems. Let’s make sure you find the right CRM for your team by learning from these common mistakes.

Don’t implement a CRM before you have sourcing strategies

For most businesses, it’s important to design and test a customer acquisition strategy before implementing a wall-to-wall CRM. As a venture capitalist, your “customers” that you’ll manage reach far beyond the typical definition, and you have to have a clear sense of how to start sourcing new deals. Your CRM will include relationship data spanning your entire network, including:

  • Prospective and current portfolio companies
  • Limited partners
  • Potential hires
  • Other GPs

Creating an effective sourcing strategy to scale your business is challenging. Every firm wants to know what every other firm is doing. Your strategy doesn't have to be perfect—a great CRM can actually help you refine it—but trying to implement a CRM before setting the stage for how you’ll utilize it can be hugely detrimental. Jumping the gun could cost your team a lot of time and money. Remember, not having a CRM at all is better than having an empty one.

Once you’ve developed a plan for scaling your network—and feel confident in your ability to source quality deals—you can use Affinity’s smart lists to prioritize people, organizations, or opportunities that matter most to your business. Just make sure your team is prepared to act on your new data.

Avoid rolling out a CRM before changing your firm to match

If you implement a CRM before building a proper foundation for it, your efforts will be, at best, counterproductive and, at worst, disruptive to your firm. Launching a standard CRM doesn’t guarantee cross-firm adoption, so make sure your team is prepared to use their new tools effectively. Establish best practices in your current methodologies (even if you’re tracking contacts in spreadsheets), so that once you’re ready to start with your CRM, the entire firm is ready for the change.

Affinity makes adoption easy by logging valuable communication data automatically, but even if you have automatic support, setting your new CRM requires team-wide awareness and buy-in. A great place to start this alignment is to evaluate your key business processes relating to your contact management.

  • When a deal is moving along your pipeline, how are points of contact being recorded?
  • What data do you have about each account?
  • Most importantly, what data are you missing that you wish you had?

Understanding your team's biggest pain points can help you choose a CRM that addresses them. If you can solve your team's problems and solve them easily, it's a lot more likely that everyone will be excited to make the change.   

Don’t assume that more is better when it comes to your CRM

Introducing new technologies into your firm without clear intent is risky. You can avoid this unnecessary risk by determining where your CRM needs fit along a technology spectrum. This should involve a strategic evaluation of business needs that starts by identifying the current activity in your firm. Again, what pain points are you hitting? What's currently working well? From there, think about how those pain points can be addressed and what positives can be replicated (and improved) across your firm through technology.

Start small

Evaluate your needs against low-technology solutions first. “Should we keep logging our data in Excel or Google Sheets?” If the answer is no, and it often is, then move toward mid or high technology solutions. A team of 10 or fewer probably doesn't need massive enterprise software. In fact, it's more likely to slow them down as they spend time ramping up an unruly tool that does more than they need it to. While it’s important to weigh a solution that allows you to scale, starting big doesn’t always mean starting better. 

Consider a technology ramp strategy that allows managers to sequence individual software solutions so that each step reinforces the next. Or, better yet, find a solution that's more modular. A CRM that offers powerful integrations means you can get started fast and add the bells and whistles on as you grow. 

Don’t just document contacts in your CRM, nurture relationships

No matter what tool you’re using to manage your relationships, it’s invaluable that you nurture long-term relationships. Launching a new CRM might get your team organized and offer more visibility across the firm, but that should only be the start. It’s important that your newly captured data is then leveraged properly.

Reichheld, Schefter, and Rigby remind us that every contact is different and your approach to nurturing loyalty will vary across industries, across companies within an industry, and, especially, across company size. No two relationships are the same, and your CRM should help you maintain standout relationships no matter how different they may be from other folks in your network. 

Consistent smart reminders can help you track when critical relationships are at risk. Key data enrichment fields and relationship intelligence help you pinpoint new connections in your network so you can find new warm introductions and better support your portcos. These tools can’t replace best practices for relationship management, but understanding the value of the tools before choosing a CRM means you can find the right one.

An effective CRM will move waters at increasing revenue if it enables you to build strong, long-lasting relationships. To achieve success, you have to ensure that your firm’s strategy defines your CRM use and that organizational changes are made when necessary to align with business processes. By following these principles and avoiding the perils above, you’ll lay the foundations to reap the most value from your new CRM.