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Helping or Hurting? Tips to Ensure Your CRM Is in Top Shape

Get tips on ensuring your firm's CRMs are filled with top quality data

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May 9, 2023

Once upon a time, dealmaking was all about who you knew. The partner withthe biggest network and busiest calendar usually won the best deals. But ascompanies grew capable of getting started with little to no capital and beganseeking investors with sector specialization and deep domain expertise, dealmakingbecame less about who you knew and more about what you knew.

Today there's over $1 trillion in unallocatedcapital, but market uncertainty has made both firms and companies alikehesitant to transact. As deal volume and value have shrunk, the importance ofcultivating relationships has grown. Dealmakers must not only pinpoint theright opportunities for their firms' investment criteria and expertise, butthey must also find ways to establish rapport with these companies and growtheir connections over time.

Vice President of leadingtechnology investment firm Francisco Partners Christie Klauberg agrees, “In anenvironment with less overall deal volume relative to 2021 levels, theimportance of establishing relationships with potential targets early andbuilding pipeline is certainly heightened. It is incumbent on dealmakers to becreative and proactive with outreach, maintain active dialogue, and adopt aprudent approach towards capital deployment.”

As the heart of the moderndealmakers' technology stack responsible for housing all prospect and portfoliodata, customer relationship management (CRM) platforms can either majorly helpor seriously hurt firms' abilities to cultivate relationships and buildlong-term pipeline in this uncertain time. So we spoke with our friends at Dynamo Software to betterunderstand how this technology functions and what dealmakers can do to ensuretheir CRMs are filled with top quality data.

One Truth to Rule Them All

The specific tools in dealmakers' technology stacks are unique, but most firms have three core components that work together to help them identify, understand, and connect with opportunities:

The CRM sits at the center of this ecosystem. It collects and organizesinformation about target companies and how your firm interacts with them. Thisincludes executive email addresses and phone numbers, industry details, companysize, meeting notes, content downloads, deal flow stage, specific needs orconcerns, and so much more.

While much of this informationcomes from data service providers, some is entered or uploaded manually by afirm's business development (BD) team. In addition to providing firms with asingle reference point for all deals, CRMs can also pass this data directly tosales and marketing automation tools so BD teams can use it to personalizeoutreach to opportunities at scale.

Today, 70% of firms say they have aCRM in place, yet many fail to use it as the centralized source of truth it'sdesigned to be. Instead, some firms use individual spreadsheets to track theircompany research and conversations with prospects. Even worse, many don'tinsist that teams track this information at all.

“Data quality within a CRM is keyfor having effective, actionable data that both deal and marketing teams cantransform into meaningful prospect engagements, which ultimately generates morerevenue,”says Arie Oustinoff, Head of Global Sales at Dynamo Software. “By aligningthe teams around consistent, organized, and accurate information updates, youwill create a single source of truth where the right technology becomes abusiness enabler.”

He continues, “However, the technologymust be equipped to reliably and securely handle the workflows, whether simpleor complex. In the end, the CRM becomes the lifeblood of your prospectcommunications, and it can make or break those relationships.”

Multiple reps reaching out to thesame opportunity at once, failure to follow-up with potential investments ontime, an obvious lack of understanding of top targets - these are allconsequences of poor CRM processes and hygiene. In contrast, when usedcorrectly, CRMs not only enhance relationships with key opportunities, but theyalso improve team productivity, accelerate deal flow, and deliver actionableinsights.

4 Tips for Top-Quality CRM Data

Following these four actionable tips will maximize the value of your CRM by ensuring that it houses only the most complete, accurate, and fresh data about current and potential investments. In turn, this positions your firm to quickly and easily identify, vet, engage, close, and grow the right deals. Competition, beware!

#1: Get Standardized

Data is messy by nature. Firms must put effort into capturing information in a standardized way so that it can be easily understood and effectively analyzed. Doing this requires mapping out your firm's end-to-end deal flow process and the stages businesses go through on their journeys to becoming portfolio companies and beyond.

While not every firm's deal flow process is exactly the same, the diagram below offers an overview of the most common process stages and can be tailored to fit most private equity pipelines:

The best CRMs allow firms to not only build custom deal flow processes, but also clearly define the data points that must be captured before a deal can progress from one stage to the next. These data points will vary based on a firm's specific goals and investment criteria, but a few common pieces of necessary information include company name, sector/sub-sector, date founded, existing investors and funding amount, and current revenue.

It's important to remember that it's not just about standardizing what information you're collecting during the deal flow process, but also how you're collecting it. A good CRM can help you with this, too. The team at Dynamo suggests limiting free-form data entry and using drop-down menus that allow teams to select from a number of pre-defined options whenever possible instead. It's also a good idea to mark any mission-critical fields as mandatory. This is especially important for capturing meeting notes and won/lost reasons so dealmakers can spot trends and identify patterns that help them improve performance over time.

#2: Leverage Integrations

The data service providers your firm works with will depend on its unique focus and specialization - e.g. do you invest in early-stage bootstrapped businesses or provide growth capital for Series B companies? But regardless of which providers you choose, it's helpful to ensure that they integrate directly with your CRM of choice. This means that information from these tools can be automatically passed directly to the appropriate fields in your CRM, and vice versa.

This limits the amount of information teams must manually enter into the CRM, saving them time and minimizing data inaccuracies caused by human error. Choosing a CRM with the power to integrate information from across multiple data service providers also makes it much easier to
maintain a single source of truth that everyone at the firm can reference and rely on to manage past, present, and future relationships.

For example, the Francisco Partners' deal teams maintain a master calendar of relevant conferences that are on their radar for the next twelve months. The firm used to have to manually visit these conference websites and comb through attendee lists to find potential opportunities and determine which tradeshows to attend. Since adopting Sourcescrub as a data service provider and deal sourcing platform, the team is now able to quickly check whether any of the existing target accounts in their CRM are planning to attend these tradeshows.

From there, they filter the conference lists by other data signals like ownership structure and capital raised to see if there are any other attendees that match their investment criteria. Any companies that match are immediately added to their CRM, where their profiles can be further enriched by other data service providers and the team can reach out to schedule a meeting.

This data-driven approach has enabled the team to easily decide which conferences will be the best use of their time and resources, as well as start connecting with the right companies well in advance of the events. According to one of firm's operating advisors focused on M&A, "this has not only cut hours out of our conference planning process, but it also enables us to schedule as many as ten meetings per day at trade shows and monitor new conferences that we should consider attending."

#3: Define Processes

No matter how effectively you integrate your CRM and data service providers, some information must still be entered by hand at specific points in the deal flow process. The only way to ensure the right information is captured at the right moments is to establish clear processes and hold team members accountable for adhering to them.

For example, some firms require analysts and associates to log notes from any calls they make or meetings they have within 30 minutes. They may also have rules around double checking all manually-entered information for typos, avoiding shorthand and abbreviations so that notes are easily understood by all, or adding a follow-up date each time a deal is marked Closed/Lost.

There are two key roles that top firms hire to help them oversee these activities and protocols: a BD Manager and Sales Operations Manager. A BD Manager is responsible for working directly with associates and analysts to ensure they're productive, prioritize top opportunities, and consistently collect the necessary company and contact information. They also help the team by setting activity goals, crafting outreach strategies and templates, and more.

A dedicated sales operations professional works closely with your BD manager and team. The person in this role is not only the overseer of your CRM, email marketing platform, and other go-to-market tools, but they're also the conductor of your deal flow processes. Their responsibilities include using data and best practices to accelerate deal flows, implement lead scoring models, optimize outbound efficiencies, and more.

Good BD and Sales Ops Managers leverage industry-leading technology to help further streamline these processes. Some CRMs allow teams to flag deals for follow-up or next steps and receive real-time reminders when it's time to take action. Automated workflows trigger actions when certain conditions are met, while integrations with email providers and phone dialers automatically log and capture all team communication. This type of functionality keeps processes on track while maximizing BD focus and productivity.

#4: Update Regularly

What's the only thing worse than having no data about a top target? Having outdated information. Approaching an opportunity with stale growth numbers or inaccurate industry insights not only hurts your chances of getting the deal, but can also damage your overall reputation.

Today's markets change rapidly, especially those involving young, founder-owned companies. In fact, the data decay rate is now estimated to be over 70% each year! That's why it's critical to work with data service providers that consistently update and re-verify the information they provide, as well as automatically refresh the records they've passed to your CRM. Ideally, these refreshes can be scheduled on a daily, weekly, or monthly basis depending on your firm's needs.

Some deal sourcing platforms even allow dealmakers to track target companies and receive updates about them in real time. New executive hires, key job openings, won industry awards, fresh press coverage, and upcoming conference attendance are all examples of the types of notifications these solutions provide. As Boathouse Capital's M&A Director Steve Dressel says, 'These kinds of compelling events give me an excuse to reach out to companies in much more timely and personalized ways."

This is especially useful in today's slower market where dealmakers must build rapport and maintain relationships with top targets over time. So is using a CRM that separates Deals and Deal Opportunities. Organizing deals this way allows firms to track multiple, distinct opportunities with the same company over time while preserving all history and context.

"Having up-to-date databases to help track things is key," says dealmaking veteran and Vice President of Vaquero Capital Dominic Chan. "Like a CRM platform, for instance. We log all of our activity and calls, and having that historical record is pretty important. So when you go back in time you can look at who you talked to and where they were at that time."

To the Top!

CRM has long been the lifeblood of the modern dealmaker's technology stack. And it will grow increasingly important as the market continues to stall and firms must play the long game with potential targets.

Ensuring your CRM is fully loaded with the most accurate, complete, and up-to-date company information is one of the most surefire ways for dealmakers to come out on top post-slowdown. Following the four tips detailed in this post will help your firm grow meaningful relationships with key companies even after deals have been won:

  1. Standardize your deal flow process and the data that's captured at each stage so that it's easier to understand and analyze.
  2. Leverage integrations with your CRM and chosen data service providers to minimize human error and maintain a single source of truth.
  3. Define processes for BD teams to follow to ensure the right information is captured and actions are taken at the right times.
  4. Regularly update the data that teams use and access via your CRM to take advantage of compelling events that move relationships forward.

To learn more about data service providers and CRMs and how to make them work for your firm, download this free guide, Inside the Modern Dealmakers Tech Stack: 3 Core Components Plus One to Grow on.