Beware Little CRM Tools
CRM Technology Rule #1
Avoid small CRM software vendors.
When it comes to CRM, 99% of the time, technology doesn’t matter. But here’s when it does matter: You don’t want to be on a rinky-dink little CRM platform and have it go out of business or get bought, choose a beloved, large-scale CRM platform only to see it go to seed.
Having an entire ecosystem is a big deal. People have learned that lesson the hard way with CRM. Even a $5.85 billion company such as Siebel can be bought, and see its fortunes change. What’s happened since Oracle closed its acquisition of Siebel in 2006? Just one major release. Whereas in the same time frame, Salesforce.com put out four releases per year, and added such features as Twitter, Facebook and Microsoft Outlook integration.
Cross The CRM Software Chasm
My “avoid small CRM players” argument has been dinged as a “sales pitch.” But I’d argue that it’s really a reality pitch. (And for the record: Innoveer doesn’t sell or profit from the sale of any CRM software purchase.) In my reading of Geoffrey Moore’s Crossing The Chasm, when a market becomes mature, it collapses to a leader that has about 80% market share and earns probably 90% of the market’s revenue. Meanwhile, every other company is fighting for the 10% of revenues left over.
With the market-leader’s dominance comes a related, platform effect, meaning that the market leader naturally attracts and fosters a large ecosystem of third-party experts, who make possible and reinforce the vendor’s success.
Numbers also tell the story. How much does a company spend on CRM software R&D? For Salesforce.com, with 6,000 employees, 2010 spending on R&D was $132 million. Compare that to some of the smaller players, such as SugarCRM, which doesn’t disclose revenues but has 154 employees on LinkedIn, or Sword Ciboodle, which has 109 employees on LinkedIn. Do their revenues even add up to what Salesforce.com or Microsoft spends on CRM R&D every month?
Preview CRM Success +5 Years
Picking the non-commoditized option is a sure way to hurt yourself. Now, while Moore’s argument is a great, broad-strokes concept, the CRM market is still evolving. Meaning that when it comes to picking the non-commoditized option, we’ve always recommended that companies look at the top options: Oracle CRM On Demand, Salesforce.com, and Microsoft CRM Dynamics. For life sciences, also evaluate Cegedim, and if you’re an SAP shop, by all means investigate using SAP for CRM.
Pick The Gorillas Or Start Job-Hunting
If you’re an IT manager, sales executive, or marketing executive, and you pick a solution that’s not the gorilla in that space, you need to have a really good reason for doing so. Otherwise, you’ll be looking for a new job.
For example, before selecting new CRM software, Innoveer client Aggregate Industries asked Gartner Group which CRM vendors it could take a “long journey” with. In other words:
- Which software vendors will likely still be in business in a few years?
- How does their functionality compare?
- Will they maintain their products for the long term?
- Do they boast an ecosystem of third-party consultants, vendors, support and maintenance options?
Based on the company’s needs, and Gartner’s assessment, Aggregate produced a short list: Oracle CRM On Demand, Salesforce.com and — possibly — Microsoft CRM.
CRM Smackdown Draws Heavy Hitters
Both my analysis of cloud versus on-premise CRM software and smackdown of CRM vendors have drawn complaints from smaller CRM vendors, who ask why I’d recommend just the large players.
Here’s the short answer: If you’re going to buy a CRM product, buy it from a company that’s not just going to be around for a while, but also growing and aggressively innovating. Because outside of the market leaders, except in some very specific situations, the little contenders don’t add up.
Learn More
Which CRM software is best? Read our CRM Smackdown to find out.
But to ensure that your CRM program excels, don’t start with technology. Instead, ensure your CRM program achieves your business goals. To help, review our “top 10” marketing, sales or service steps to see how your program compares to best practices and our benchmarks.
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12:44 David Kern commented March 21st, 2011
I beg to differ. Companies shouldn’t choose a CRM tool based on the size of the company (unless you want to be a “number” and not a customer). Companies should choose a CRM tool that fits their business and can be tailored to fit their sales process. Companies should choose a CRM tool that’s adopted by their sales people. Without that, it’s just another wasted purchase. I’m not saying that the larger companies are “bad” – I just think it’s the wrong reason to invest in a CRM solution.
10:33 Rick Faulk commented March 28th, 2011
Why a Goliath CRM isn’t Always the Right Solution
With respect to this post, “Beware Little CRM Tools” where Innoveer Solutions CEO Adam Honig asserts that any CRM that is not from Saleforce.com, Oracle, Cegedim or Microsoft is too small of a vendor to be worth considering.
While I certainly wouldn’t refer to our product as a “little CRM tool,” I feel the need to defend, as he refers to them, the “smaller” players in the CRM industry.
For those of you not familiar with Innoveer, they are a CRM consulting firm that claims to offer a “vendor-neutral perspective. “ It seems to me that it is a bit of a contradiction to make such a claim while categorically writing off all small CRM vendors and only advocating the mega-CRM firms they are partnered with (and receive compensation from).
Find the CRM that fits YOUR company and your needs.
Finding the right CRM for your company is a delicate process and there are many different things that should be considered. To name just a few…
• Is it easy to use?
• Is it compatible with other programs your organization uses?
• Will it adapt to the specifics of your unique sales process and your sales teams
• Is there a service team to help you get set-up correctly from the start?
• Will it be scalable as your organization grows?
• Does it have all the key features your organization requires?
• Does it offer too many features your organization will never use, but you’ll be paying for?
While there are many more considerations, one thing that I don’t think belongs on this list is that the CRM vendor be a large corporation. And I certainly wouldn’t call it “CRM Technology Rule #1.”
Does bigger mean better?
When you’re looking for a car, do you limit your search to only the largest car manufacturer and the largest dealer? Or even just one kind of car? Of course not! You look for the car that’s designed to match your needs, is built solidly and fits within your budget. Finding the right CRM is no different.
Honig seems to believe that all smaller CRM vendors are only lesser forms of the bigger players in the industry. And, more importantly, that they all have nothing to offer to his customers – now or in the future.
I didn’t join this company to build a CRM that fed off the table scraps Salesforce.com and the other large vendors left behind. I joined Landslide to create a CRM that did things differently, one that filled an unfulfilled need in the industry. If the big boys spend so much money in R&D, then why haven’t they created the perfect CRM already? The truth is, like any business, no one has exclusive rights to innovation.
You can’t ignore that Salesforce.com is a huge player in the CRM industry, and that alone is going to draw a lot of companies to it. We have a saying here at Landslide, “no one ever got fired for settling with Salesforce.com.” But CRM is not a one-size-fits-all kind of product, and a large share of the market doesn’t mean that organization is the best out there. Fast food giant McDonald’s may be the largest burger restaurant in the world, but that doesn’t mean they make the world’s best hamburger.
What’s the right size CRM for your SMB?
As a (currently) mid-sized CRM vendor, we’re able to do a lot of things that the bigger players can’t (or won’t) provide. And we do that because there are enough people out there who are not just looking for a one-size-fits-all solution. They’re looking for the solution to THEIR situation … the solution that works best for them.
We want them as a customer, not just so we can get their business. We take the time to give them the personal service that helps to make what is arguably a complicated tool a whole lot simpler. In fact, I give out my personal cell phone number (978-886-9999) to every new customer we add to the Landslide team because I want to make sure they’re getting the right solution for their business. I’d encourage any customer of Salesforce.com, Oracle or Microsoft CRM Dynamics to try and contact the CEO of those companies. Costumer support is just one of the many things I would argue that we do better than our large corporate competitors.
But ultimately, this is not a discussion about who’s the biggest and best CRM or what vendor has the most bells and whistles. The perfect CRM for your company is one that fits your specific needs. It’s as simple as that. After all, you’re investing in something that will change your business – and your bottom line. But you can’t expect to find that perfect CRM solution if you start things off by narrowing your options down to the 4 biggest vendors in the industry.
And … by the way, we get new customers every month that switch from Salesforce and Microsoft Dynamics to LandslideCRM!
01:40 Adam Honig commented March 30th, 2011
David & Rick,
Thanks for taking the time to comment and even write a whole blog post in response!
I hope that Landslide Technology does have that special something that breaks through the clutter and becomes a dominant player in the CRM software market. Salesforce.com, Siebel and even Oracle were once companies of less than 100 people who had a big dream and executed on it.
At the same time, your analogy of buying a car is a great way for me to illustrate my point. I might like to drive an Alpha Romeo — let’s pretend that I have a weakness for fast cars and all things Italian — but without a dealer network in the US to repair it, parts available and technicians trained it could cause me some serious headaches.
I know about this first hand, because my Dad owned a MG Spider and after that company left the US market there were a couple of appointments he missed due to “technical issues”. And I’m pretty sure a call to the CEO of MG wouldn’t have fixed the problem.
Adam
(I didn’t see a way to post a comment on your blog; can you let me know if I’m missing something?)