An open letter to CRM software start-ups…

Curiously, I had three companies contact me this week about CRM software they were launching. One part of me wants to applaud anyone who has the gumption to invest their time and money in developing software, the other, my independent CRM consultant side, is about as receptive as the lady impatiently trying to fill out the customer satisfaction survey I mentioned yesterday.

This isn’t because I think all CRM vendors are rogues. I do – though some are more loveable ones than others. It’s because if you’re promoting new CRM software to someone who’s been who’s been around the market for a while, they know the life expectancy of a new entrant to the market, and they know – because they’ve helped companies go through it – the expense and pain of replacing a product because the vendor hasn’t got the resources or inclination to develop it anymore, or files for bankruptcy as Entellium did in December. So we – or maybe it’s just me – as a risk averse group of battle-scarred veterans, who see one of their basic roles as managing risk for clients, just aren’t going to be pointing clients to products fresh out of beta.

But OK, let’s say the product’s been around a little while; the initial bugs have been ironed out, you’ve started to build a client base, would we work with you then? Well maybe, and really this is the reason for the post – when would we work with a new on the block vendor? It comes down to one simple question: ‘what do you do better than established vendors?’ because all things being equal I’m going to stay with the tried and trusted. Why? Because I see my role as delivering a game-changing CRM system, a system that can really enhance the client’s business, but with minimum risk. I don’t see my role as implementing the hottest, new technology.

Which brings me to my main concern (and the reason for writing this post) – when I put this question to new vendors the response is generally on the lines of it being easy to use, and at that point my heart sinks. While I understand where this originates from – vendors recognize that there are big issues with user adoption of CRM systems and see technology ease of use as the answer (wrongly I would argue, but let’s leave that for another day) – the problem is that virtually every vendor entering the market in the last 10 years has been ploughing the ease of use furrow, and so even if your product is genuinely, ground-breakingly, earth-shatteringly easy to use I see it as extremely difficult for a new entrant to get traction when everyone is yelling the same thing. (Please see ‘Positioning; The Battle for Your Mind’ by Trout and Reis for a more thorough examination of why.)

So how does a new vendor get traction? I think it comes down to basic strategy: focus on the needs of one sector of the market as Interaction did with the legal market, or differentiate (but not on ease of use) as Salesforce.com did with their ‘no software’ positioning, or be the cheapest as Sugar have looked to do through their ‘commercial open source’ approach.

But whatever you do, to gain our attention at least, it has to offer something overwhelmingly different than the things on offer from the established ‘lower risk’ options, and the ease of use thing isn’t going to cut it; super aggressive pricing, functionality not available elsewhere, a laser focus on the needs of an underserved market, well maybe. Which is not to say that just because this is what we look for, you won’t be successful selling your software, it’s just to explain why we might not bubble over with enthusiasm when presented with something brand new.

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