Is there a missing zero in the CRM equation?

Is there a missing zero in the CRM equation?

Summary: CRM is often seen as a technology for businesses, but once in awhile, though I'm still of the "its a strategy and set of programs" school first, you find a refreshing and smart way to look at the technology. This guest post is by CTO and co-founder of SugarCRM Clint Oram on why CRM is a technology for a person at a business. Not as subtle a difference as it sounds. Read up and let me know what you think.

SHARE:
TOPICS: Tech Industry
6

While I'm in the midst of assessing all the candidates for the CRM Watchlist for this year, I've solicited some guest posts for your reading pleasure and for the benefit of your thought from people who I think have something to contribute to the industry discussion. Prior, you've seen both Allen Bonde's piece on "small data" and Alan Berkson's piece on storytelling, both incredible and both by people with the same sounding names in case you didn't notice.

Well, I'm breaking the Alan/Allen tradition here, and putting forward something by a smart thinker and friend, who is currently the CTO and is a co-founder of SugarCRM, Clint Oram. For those of you who don't know Clint, first, you should. Second, he is a good man who always has unique takes on things roiling in his head and I am happy to say, I've been persuasive enough to get him to put one down on digital paper. 

Clint goes through something which is almost irrefutable here - which is that CRM is for the single user and there are a lot of them in the world that aren't using it yet. But that isn't the whole thing. Its meaningful beyond that.  But I'll let Clint fill you in.


Take it away, Clint. The stage is yours. 

CRM as a software concept has been around for a long time, and its definition has evolved over the years. But at the heart, we are talking about customer-facing individuals inside various organizations using software applications to acquire and support customer relationships.

And for the most part, business has been good. One need only look to IDC or Gartner’s projected growth numbers to see an industry that is expected to hit at least $30bn in revenues in the next few years. There are some giants in the industry, and some smaller and niche players. In short, we are talking about a mature market that must have penetrated a majority of its potential user base.

Right?

Well, maybe not. And to be honest, more like “definitely not.”

You see, when we talk about CRM as a multi-billion dollar business, we are still only talking about a user base of less than 30 million users of packaged CRM software. And, this would seem to be a healthy industry, and in some sense it is. However, when you look at other software markets, we see a HUGE gap in terms of today’s market penetration for CRM versus the potential.

The gap becomes ever more clear when we look at similar “relationship management” tools available today. LinkedIn, perhaps the most popular professional relationship management tool for individuals, has more than 200 million users. Facebook, clearly the largest personal relationship network, counts over a billion users.

Now, we are not saying there should be a billion CRM users in the world. But why are there not 200 million? Surely, across this planet of seven billion people, there are 200 million business professionals that interact with customers as part of their daily work?

So, why the huge gap between users of CRM and the more consumer-oriented relationship management tools?  The answer, it might seem, lies in the history of CRM design and delivery. Since CRM pre-dates the Internet, social media, etc. – it has traditionally been designed in such a way that benefits managers before the “front line” everyday users of the software. And this frankly made some sense for the first generation of CRM software: why build for the user when the decision maker is the manager?

Also, CRM was born out of relational databases which required rigid data structures, and was thus primarily viewed as a point of data capture and consolidation – not as a resource for customer-facing employees.  And, the cost and complexity of conventional CRM meant that usage was usually limited to sales or support organizations – meaning individuals inside organizations that should have access to customer insights, did not. That is why CRM has, when compared to its true potential, seen sluggish user adoption and growth for the better part of the past two decades.

On the flip side, let’s look at consumer applications like LinkedIn. They are flexible, simple, and work anywhere.  There is pretty much zero learning curve, and the value to using the system is apparent – users get more out of the system then they put in. Data is free flowing, easily shared, and available anywhere. The cost is minimal, with a freemium version providing enough benefits to ensure users stay on the network.

By learning from consumer applications and services like LinkedIn, we can see how CRM can close this gap, and fill in the missing zero that will bring the industry from one with 20 million  users to one with more than 200 million.

We believe that CRM tools MUST be easy, and built for the individual NOT the manager. Getting started should not require a week of training. Getting useful data into (and out of) the system should be seamless, and not an issue for IT. The user must get something back for every action they take in the system. Mobility should not be an afterthought – but rather systems need to be designed from the beginning to offer meaningful, intuitive user experiences across any device.

Also, a CRM system should be priced in a way that is more in line with the needs of the organization. While not every single employee may need the system, surely more than quota-carrying sales reps will touch the customer and as such should have access to the right information and history to make informed decisions, or at least put the customer in the right direction any time they engage.  Squeezing every cent out of a company via overpriced subscription licenses models is not the answer. As an industry, we need to better align value received with the price paid, and understand the true nature of CRM usage across different departments, and price accordingly.

The good news is that a lot of CRM providers are listening. Mobile and social has crept into the design process of some providers, but we have a long way to go. Only by aligning CRM designed for the individual, with proper pricing to truly equip everyone who should be using CRM with the tools they need – can we bridge this gap, and find the missing zero.

Topic: Tech Industry

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

6 comments
Log in or register to join the discussion
  • Making a system easier to use is not easy to do

    I agree with much that Clint has to say, but making a system easier to use is not easy to do. Often, the simplification of a UI for the novice CRM user leads to obscuring key features and data for the expert CRM user. Just look at all the criticism Microsoft has received over the changes in Office or Windows. Personally, I found it extremely difficult to find things in Microsoft Word when they moved away from the menus to the ribbon. And don’t get me started on the Windows 8 start screen. It is pretty, but the only time I go there is when I’m looking for app that was previously available from the start menu. Now I have to go to the start page and search for the app. Sure, I can customize the Windows 8 start page, but that is a huge waste of my time, especially considering that I use many system simultaneously and I would need to customize them all.

    I’m going to repeat the point I’m trying to make because it is so important. Making a system easier is an excellent goal, but it is very hard to do while trying to keep both the novices and the experts happy. Part of the problem is that the CRM has become the central location for all customer data within an organization. This can be a lot of information and it can be difficult to make it all available in a pretty UI.

    At SplendidCRM, we watch and follow SugarCRM very closely and we are waiting for the chance to properly evaluate the new UI in their version 7. But it has been several months since 7.0 has been released and we have yet to see their 7.0 Community Edition. There are even rumors that SugarCRM may abandon open-source all together. The die-hard folks at SuiteCRM got so frustrated that they created a new fork of the SugarCRM 6.x code base.

    Paul Rony
    President
    SplendidCRM Software, Inc.
    paul@...
  • Current Number of Total CRM Users

    Great article! Our data, which we publish here - http://www.capterra.com/infographics/top-crm-software - shows that the top 20 CRM vendors alone have over 31 million users. SugarCRM is one of nine vendors with over a million users. But there are over 400 additional CRM vendors and I would not be surprised if they all combined to bring up the total users to 40 million. A bit more than the 20-30 million stated here.

    Could there eventually be 200 million? I'd be curious to hear how you calculate that. There are roughly 25 million businesses in the USA that employ roughly 140 million people. I believe I have read that roughly 1 out of 7 people are in sales / customer facing roles. So that would be a total pool of 20 million Americans? Maybe triple that number to get to maybe 60 million potential CRM users worldwide? 40M out of 60M is much closer to saturation than 20M out of 200M.
    B2BSoftwareDude
  • Redefine Who CRM Users Are

    Yes, I agree a great article and would like to tender a different vision for CRM users going forward. This will require abandoning our notion of who the “user” is. If we define the user as the individual capturing, consuming, managing and sharing the information in CRM systems, then the very persons, organizations and groups that are represented as customers and prospects in a CRM system will form the largest “user” community of CRM.

    Doc Searls dubbed this VRM – for Vendor Relationship Management, sort of the reverse image of CRM. While personally I’m not keen on this label, his fundamental idea is becoming a reality, albeit very slowing in some cases, but rapidly in others.

    The largest users of LinkedIn, Twitter, Facebook, Google, et al ARE the very people, organizations and groups comprising customers and prospects in CRM systems (although some say they are also the product). As personal clouds and personal data vaults, such as Personal.com et al, become more pervasive, CRM systems and personal data management (aka VRM) systems will be indistinguishable. In fact, we might also find ourselves compensating “customers” and “prospects” for the “right” to even use “their” data.

    Not to belabor this point, but just consider the rise of wearable sensor devices. In the past the only data sensors were salespeople manually capturing data, purchased third-party data and data derived from other data. But wearable sensors and universal internet access have made customers and prospects themselves the largest generators...users of data.

    As their data is fed into personal data vaults and “sold” to businesses that individuals choose to share their data with (i.e. loaded directly into CRM systems), the large number of data capturing points will be customers and prospects themselves. They’ll even manage their own contact data and profiles on their personal cloud systems no differently than they now manage their profiles on LinkedIn, Twitter and Facebook.

    The implications for CRM systems are far-reaching, especially for users on the business – the receiving side of all this data. In 5-15 years we can potentially be talking about how to manage the billions of users!
    Peter Perera
  • Unique perspective!

    Loved this post Paul – really refreshing and unique perspective on CRM from Clint and though I agree with it, I think there’s a middle ground between highly usable, low learning curve software and the comprehensive functionality of business software which provides sales, marketing, customer service and many other departments with what they need.

    However this middle ground is getting harder to find, with functionality only ever increasing. For instance we at Maximizer CRM are constantly rolling out integrations with marketing automation software like HubSpot and social media like LinkedIn to improve our software’s value to the user. As a result, to ensure we get it right in terms of usability we update the software based on customer feedback every 6 months.

    Mike Richardson
    Maximizer CRM
    www.max.co.uk
    Maximizer CRM
  • Optimized CEM is Achieved Through Shared Information

    The future of CRM, and more importantly customer experience management (CEM), requires solutions that help companies more effectively manage human interactions. This requires taking the intelligence from all past interactions related to the company, both digital and human, and leveraging that intelligence about the prospect, customer or partner to help the company continue the interactions in a meaningful way. Sales, marketing, customer service, product management and any other departments that come in contact with the prospect, customer or partner, should all have the same universal 360 degree view of the contact should they find themselves speaking with them. With technology like the cloud and software-as-a-service, there is no reason to keep this information divided. We are no longer talking about information being stored on a desktop or even an on premise server so why not have valuable data shared universally throughout the company? Experience matters, through a universal understanding of each individual a company comes in contact with, regardless of department, all individuals within the company can create positive experiences.
    Nick Hedges
  • The clue to more adoption is in the comparisons made

    IMHO the limitation to CRM uptake has been cost.
    The article compares adoption of LinkedIn (currently over 300Million) and Facebook (over 1Billion) based on ease of use etc. but negates the fact they both have zero cost as their main user acquisition strategy.

    Think that doesn't matter much? Imagine, what if both LinkedIn and Facebook started charging you minimum $30 per month for the same as you get for free now, how many users would they have?

    SugarCRM was in a good position to be the one to adopt a similar Freemium business model by continuing to develop the CE version and offer a free hosted version, but instead has decided to drop it completely. Shame, they never realised how to maximise the competitive advantages of this version.

    Lastly the other annoying thing to me, all commercial CRM pricing is based on all users on same version (i.e. Starter, Pro, Enterprise, whatever), they just don't want to allow a mix depending on different users in same company having different needs.

    Do the above, and you'll quickly get your 'missing zero''.
    marketingdiy