Are fund managers losing the modern client relationship game!?
By Ole Rollag.
It is always fun to compare the asset management industry to the “real world”. One of the biggest standouts is the fact that most asset managers don’t have a CRM (Customer Relationship Management) system. People outside the industry are often quite baffled to hear that most funds haven’t adapted to something that is so crucial to other businesses. With CRM market growth being 15% last year and valuing at a $20.4 billion business we have to wonder why the asset management industry is so allergic to this revolutionary software?
What is CRM?
CRM is different from a contact database, Outlook or Excel. CRM is a program that not only manages the sales process but also the lifecycle of the client in order to better understand a whole range of metrics. It manages every lead you have, every presentation given, every email sent, etc. It helps a company track the effectiveness of its sales efforts and what happens during the life of the relationship.
A CRM system provides an easy way to answer important questions:
- Do we want to do this event again? How many clients did we get for the effort we made?
- Are people reading our fact sheets on a regular basis?
- Who is likely to invest? How much? When?
- Who do you need to get back in touch with, and when?
When we did our research, we found that roughly 80% of the fund management industry does not use a CRM system. Surprisingly, this statistic doesn’t just apply to smaller managers, but even to some multi-billion dollar shops. Our results showed that the preferred method to manage clients is Excel. The problem is, if a business developer is speaking to more than twenty people at any given time, then keeping track of where everyone is in the sales process becomes really difficult. Of course he or she knows where the important ones are, but once you get beyond 50 meetings, Excel starts reaching its limits.
Why use a CRM system?
It seems as though the industry has not undergone the “professionalization” that many others have adopted. Another surprising fact is that this resistance to change ends up becoming not only a sales issue, but also a regulatory one. Tracking client interaction, what has been discussed and when, how the client was acquired, KYC, and a whole roster of other matters need to be documented in one central system. Compliance officers need these records, and having a CRM system is a cheap way to comply with all the various regulations that must be met.
Not only that, but a CRM protects the salesperson and makes them more effective. Since the sales process is so long, keeping accounts of everything that has happened and is happening is crucial to knowing what will happen next and how to maximize each opportunity. It can help gauge the amount of effort that is going into a long sales cycle. An owner of a business will need to know what is going on in the sales process and what factors require improvement:
- Is the salesperson getting enough meetings?
- Are the meetings being followed up?
- If there are follow ups but no conversions, what’s going wrong?
Sales is a tough game, and there are many elements to it. Understanding where improvements need to be done, and then making them, is key.
What are the risks?
It has been our experience that even the most amazing CRM system, if it isn’t used properly, is useless. CRM is a lot like learning Excel or how your new phone works: there is a break-in period during which you must get past the difficulty of learning something new. It will take a few months for you to get used to each other; if you don’t have the patience, then the CRM system is useless.
One thing is for sure: investing in a CRM is probably the most cost-effective move you can make to enhance your sales, if used as directed.
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