CRM Watchlist 2014: For the 1st time ever: The Watchlist Elite, Part II

We move on to the CRM Watchlist 2014 Elite specialists - Blackbaud, Infusionsoft, Xactly. They each dominate their market, they each have a culture to be proud of and...other things. Read on to see what they are doing and what they should be.
Written by Paul Greenberg, Contributor

So far:

And the Winners of the CRM Watchlist 2014 are....

CRM Watchlist 2014: Winner of Lifetime Achievement - Amazon

CRM Watchlist 2014: For the 1st time ever: The Watchlist Elite, Part I

The Elite Specialists

Previously, we took on the Elite Generalists – salesforce.com and Microsoft as those companies who have huge impact in the business world in general. But impacting broad markets isn’t the only way to become a Watchlist Elite. There are a number of companies who have impact in a single domain that can be hugely powerful. To have that impact now is an achievement, no doubt. But to be built to carry that impact forward from now through years to come? That’s a whole other level. 

When I look at the three Elite Specialists – Blackbaud, Infusionsoft, and Xactly – each of them owns a market – and I do mean owns. While their competitors in that market might yell at me and argue with me – and they would be remiss if they didn’t – there is no question that each of the three not only has the product scope, but the corporate chops at all levels to maintain their dominance in their space. What makes each of the three interesting though isn’t just where they are, but where they are going and how they are going about it and who they have making the effort.  In other, their potential “impact longevity” is taken into account. I’d love to tell you that I have an algorithm that makes these assessments e.g. (m+c+pd/rm*vis/mis(pe-pc))/mimpact = il  (which of course is impact longevity). But I don’t.  What I have is a good idea after reviewing the “evidence” that a company is doing what they should to maintain their likelihood of having an impact for years to come – in a holistic way.  The things I’m looking at include:

  1. Mission and vision and its articulation and how it permeates the company (or doesn’t).
  2. Management teams readiness for meeting the needs of the company for impact over years
  3. Financials for sustainability and investment in those things needed for impact (not revenue [er se)
  4. Technology and roadmaps
  5. Partnerships and alliances from the standpoint of ecosystems, strategies for the present and future, and mutual benefit
  6. Market presence – how top of mind in the market is the company.  How obviously visible are they? Market share is among the criteria that I examine.
  7. Thought leadership – what kind of content are they providing and thinking they are driving that gives them mind share – which over time can lead to market share.
  8. Outreach to persons and companies who can benefit (or hurt) their impact in the market
  9. Corporate culture – how ready is the culture to support, sustain, and nurture the efforts of the company in the market place.
  10. Context – where do they play? What do they do relative to others in a position to be compared to?

These three other vendors meet the criteria in spades. They are each serious players in their areas of expertise with a clear vision, strong management, a solid culture that supports innovation (and they can prove it rather than just say it); innovative thinking or at least smartly focused if not the former and an understanding not just of market dynamics but of human (e.g. customer) behavior and how to think about it – and respond to the customers without breaking the bank – which is stable.  But most important, as you will see to all three, is that each have a culture that not only sustains their business model but actually encourages breaking boundaries, enhancing innovation and at the same time, is, for the most part, a great place to work for employees. These are great customer-facing companies, Elites, because they are great places to work.

So, with that, let us get on with the show.  Introducing (in alphabetical order) the remaining vendor 2014 CRM Watchlist Elite – Blackbaud, Infusionsoft and Xactly.


While they may no longer be the #1 scorer, they are still easily the most dominant player in nonprofits, arguably the most dominant of anyone company in any single vertical. Their revenues are continuously on an upswing – some through acquisition, some through just, well, they own nonprofit. In fact, their run rates at this point are around $500 million. The dramatic increase in their revenue between 2012 and 2013 is due mostly to their 2012 acquisition of Convio, their chief rival in the nonprofit space – and one that gives them deep CRM capabilities that go much further than any other company in the nonprofit area.  So all they’ve done in the last year plus is strengthen themselves. They have three products that are CRM:

  1. Blackbaud CRM – Their comprehensive platform for nonprofits. It’s a large ticket offering that spans all the capabilities that a significantly sized nonprofit needs to sustain its operations e.g. fundraising, major giving, event management, membership, campaign management, content management.  It has multiple infrastructural and technology layers – e.g. security, processes, database audit, reporting, web services of various stripes and hues. It is .NET which of course points to something that I will illuminate later. (pun intended).  This is not for the faint of heart though because of its huge set of capabilities and and the complexities of the architecture. But if you are an enterprise level nonprofit (which is $100 million and up in the nonprofit world), it works for you.
  2. Luminate CRM – This was part of Convio. It is Force.com built, cloud based and multichannel. It is obviously at its best when integrated with salesforce.com and gives Blackbaud an entry point into the lucrative marketplace that salesforce provides. As does salesforce, it uses Amazon Web Services for its cloud provision. It is also a proof point and precursor for what they should be doing with other platforms and CRM integrations.
  3. Raiser’s Edge – these are the data services that tie together the other offerings of Blackbaud. It is a system of record in combination with an extensive set of tools that can analyze giving or apply processes and business rules to the customers’ transactions and interactions. Prioritization and personalization are part of the offering and it seems to be one of the most lauded parts of the Blackbaud portfolio.

This is as comprehensive a specific offering as any offering that a general CRM suite provides. But coupled with their other products and their service offerings, there isn’t a decently sized nonprofit on the planet that wouldn’t find what they need from Blackbaud.

Keep in mind something. That isn’t a small statement. Nonprofits are only united in their government 501(c)(3) classification. Other than that, they don’t really resemble each other. They can be a museum like the Museum of Modern Art (MOMA) in NY or they can be an association like the American Medical Association. They can be a public charity like the American Red Cross or Doctors without Borders or they can be a cause related entity like the National Resource Defense Council.  Ad infinitum. Totally different raison d’etres, totally different objectives (Museum = sell tickets; AMA = lobby). So it is no mean feat for a company to be able to provide for all of that. The breadth and the depth of the offering has to be both staggering and yet, has to provide for the common elements.  They do that.

But note something. I said “decently sized” not “every” and therein lies something that I will address in a bit.

You could argue credibly that they own the nonprofit market. Several years ago, a CRM Idol contestant who had a nonprofit CRM offering was queried about their target market by the CRM Idol judges.  Their answer? “Anyone that Blackbaud doesn’t want.”  That’s what I mean by a dominating presence.

What makes this something that is ripe to continue to be as dominant as it is, is that there is a culture that supports the mission and vision.  Think of it this way.  The type of person who works at a nonprofit is typically the type of person who wants to give back in some way to a community or participate in a cause or crusade. It is a person who believes in service. Blackbaud’s culture is the culture of a nonprofit even though they are a for-profit. For example, they did a survey of their own staff. Their findings bear all this out.

  1. Eighty-four percent (84%) of their employees said that Blackbaud’s work with nonprofits was important to their decision to work at Blackbaud
  2. Eighty-one percent (81%) work with nonprofits as volunteers
  3. Twenty-one percent (21%) sit on nonprofit boards.

Blackbaud encourages this behavior both for the good works that it entails but also for the value in learning what the unique challenges that nonprofits face are. Volunteers are given extra vacation time to volunteer, similar to salesforce’s 1:1:1 program. Starting last December, Blackbaud launched a website to share learnings and ideas that would allow small for profits to build give-back programs into their DNA. In other words a great culture that is smart enough to think synergistically so that they can integrate their business mission with their corporate philanthropy. 

Yet, there is an odd gap in the portfolio of Blackbaud that I think to complete themselves holistically and to impact a market that they haven’t really made their bones in, that they have to deal with. Which is a great segue into….

What they have to do

  1. 1.       Start thinking about the smaller nonprofits – Let’s face it, when you offer as much as Blackbaud does with Blackbaud CRM, Luminate CRM and Raisers Edge, you also don’t come cheap. For example, if all you want to do is track email usage, you can use Blackbaud Online Express which uses your Raiser’s Edge database to keep track. The smallest package for just that function is $200 a month, not exactly the stuff that a small nonprofit can afford. To complete the circle, to understand the needs of the small business market, to expand their good corporate citizenship, paying attention to the small nonprofit is something that is of importance beyond the money to be made when a company is as dominant as they are. I have been contacted multiple times over the last three years or so by small struggling nonprofits and asked what I recommend. When I ask them what they are looking at, if Blackbaud was even a consideration, they have told me that “it’s far too expensive” and that even if they could afford it, “with the turnover that we (small nonprofits) have, the learning curve is way too high. We’d be constantly training someone to use it and we can’t afford the staff or the time to do that constantly. It’s not intuitive (simple) enough.”  That seems to be a gaping hole that can be addressed and should be by a company that attacks the nonprofit market at the level of Blackbaud. In fact, in an examination of their material in multiple places, I could find little evidence of anything but selling to small nonprofits. I’d be fixing this one by developing a program to provide free or low cost applications and services to the small nonprofits and/or developing a specific application and service set for the smaller nonprofits.
  2. 2.       Expand thought leadership beyond the “how to” and to broader markets – There is no question that Blackbaud is a complete solution for a nonprofit of some size.  However, they are also a strong CRM offering for those nonprofits that got stronger with the acquisition of their chief competitor Convio in 2012. This led to their three distinct and full CRM products Blackbaud CRM (their flagship); Luminate CRM (renamed Convio) and The Raisers Edge (see above)  Interestingly, though, they have little visibility in the CRM market though extensive visibility in the nonprofit world. They would be remiss to not expand their outreach into the CRM market in a similar way that other verticals like Nexj or other vertically specific applications. For example, over history, Amdocs has maintained a strong focus on telco as their prime market and are built for that, but they’ve played an historic role in CRM in its early days when they spent time “out there” reaching into the pure CRM marketplace which then benefited them. They don’t do it anymore, though they are around (shame on them) but it is an instructive case on the value of broad outreach.  Do what Amdocs did once which is to provide content that is conceptual. Right now, their CRM content consists of a couple of pieces of literature that are both focused on an ROI calculator for CRM evaluators and an ebook on implementing Enterprise wide solutions which apparently applies to CRM. That’s nowhere near sufficient. Start throwing out pieces on trends; on best practices; on use cases; videos that highlight a concept in the world of education or the nonprofit work they are doing. Whatever. The purpose of the content is to establish Blackbaud as intellectually memorable leaders in the nonprofit CRM world. 
  3. 3.       AR/PR program needs to expand now, not eventually – they have been admittedly focused on the institutional analysts of Gartner, Forrester, et. al and recognize the limitations of that as an exclusive focus. They speak of a program to expand to analysts and influencers in specific areas they intersect like CRM, the Cloud, SaaS, etc. They plan to do the research, engage third parties etc.  The reality is, 2014 Is their year to do this, not to just talk about it. They need to look at the influencer landscape and decide who they are going to get in touch with and start lining it up with briefings to the people they need to talk to.   This is an imperative if they are to continue to grow.


In their own way, the rise of Xactly – at least in Watchlist terms has been quite an achievement. They gone from not winning in their first attempt to Elite two years later, which is more of a reflection of their fast evolution in the marketplace than anything else.

Xactly is a smart company.  What they’ve managed to show in that two years is that they are focused, innovative, and well-rounded and well prepared as a company to achieve ongoing growth and increasing impact in the compensation market and in a part of the sales market.

Let’s look at the three parts:

  1. Focused – To be a great company, you have to be cognizant of the little things in addition to the big picture. That means for example, the subtleties of messaging as well as the “eyes on the prize” stubborn on the vision perspective of the Amazons and the salesforce.coms of the world. Xactly has been both. Two stories. For several years, their messaging was “Incent Right, Sell More.” They realized that if they don’t focus on the “sell more” part and leave the message at “Incent right” that they would not only have greater cross-company opportunity but also keep focused on what they do well – compensation technology.  Focused on the little things. This dovetails with their bigger picture vision to help companies “Incent Right” which has been their sole focus for eight years.  Stubborn on the vision. Focused.
  2. Innovative – Rather than just a. treat compensation as something that is mechanical, they understood that they had to provide a capability to make it a way to drive customer engagement and loyalty. Nothing supports desired sales person behaviors better than rewarding those sales people for those desired behaviors. So, rather than just say, well then, let’s do something that everyone does (because everyone does), the good folks at Xactly decided to implement gamification. “Wait!” you say, “that is something everyone is doing.” Yeah, but not the way Xactly is. Xactly recognized the correlation between compensation and the rewards from gamification.  To that end, not only did they develop the technology for gamifying sales via non-cash contests, leaderboards, badges, social notifications etc. they also developed a special gamification platform they called FOX (Friends of Xactly – a little too cutesy for my taste) that rewards Xactly customers with redeemable points for their participation in the Xactly environment (for feedback, reviews, case studies, following Xactly on Twitter, etc). This goes to the heart of # 3.
  3. Well-rounded company with primo culture – This company is prepared for success at multiple levels.  They have a solid experienced, and pretty imaginative management team, a PR/AR/IR program that is driven by Blanc and Otus that actually works; they are active in the industries they need to be – compensation, sales, CRM etc. They are building a body of content that supports their work and market at multiple levels (see cool CEO Chris Cabrera’s new book “Game the Plan” for example. A big cut above most vendor driven books).  They have a solid baseline set of integration partners (important in this instance). They’ve won awards up the wazoo. But what makes them standout more than almost anything is that they have a culture to be incredibly proud of.  They call it CARE – which stands for customer focus, accountability, respect, and excellence. They make it part of how they do things at the company. They engrain it without beating it into every employee. In fact there is a story that the CEO, who is actively involved with Xactly’s employees bets the incoming training class his paycheck that any random employee they pick will know the core values of the company – and there are 300. He has never paid up – ever. The thing that makes this culture the real deal, as opposed to someone marketing it incessantly without proof, is that they understand that all human beings are self-interested and thus need to be given something in return that makes them feel valued for their actions. So they do several things. They compensate the top 10% of their employees each quarter for their activities be they due to great customer satisfaction or work in philanthropy, among other things. They also have a quarterly award called the Who C.A.R.E.s? Award that goes to the top 2% of the organization that comes with stock. The other part, which was surprisingly either ignored by many of the submissions, is that they spend a lot of time on giving back to the community with the XactlyOne nonprofit arm. They give money and spend time in helping a wide range of local and national charities to their great credit.

Their culture is so strong and their value is becoming pervasive. As a result, they are they recognized by the media for their excellence – with The Wall Street Journal naming them (2x) as one of the “Next Big Things” and Fortune Magazine saying they are one of the top 25 Great Places to Work in the small workplaces category.  More importantly, their customers recognize their value with their most recent quarter seeing a 99% renewal rate.

It is increasingly obvious why they won the Elite designation this first time ever year.  But, of course, like any other company there are things that they can do to have even more impact.

What they have to do

  1. Think ecosystem – When a company has the opportunity to be dominant in its space (see above for what that means), it has to think differently about how it does things. For example, traditionally even the largest most dominant companies would think about partnerships by thinking about different groups of partners – Value Added Resellers (VARS), Independent Software Vendors (ISV) and channels and alliances. They would have partners along the line of what Xactly has – technology, implementation, consulting, international, or variations on their particular scheme.  However, the 21st customer be an individual or an institution, demands a lot more of companies due to the commoditization of the products that the companies typically offer or the easy availability and similar pricing due to the advantages and growth of ecommerce and standardized delivery options (among many other factors).  What that means is that the companies that compete in an area have to provide more than what they offer as a product. Optimally, if they are dominant enough and savvy enough, they will think of ecosystems. What is the full array, the full market basket of products, services, tools and consumable experiences (PSTE) that their customers would like to see; how much can the company provide natively; how much through partners and how much not at all. This kind of ecosystem thinking works because it transforms channels into a highly functional array of PSTE that allows the customer to choose what they want to get from the company to have an effective transaction/interaction with them. Xactly has this opportunity but hasn’t taken it yet. It would involve a bit of a cultural shift (it always does) but they are poised to do it.  2014 is the year that this should occur.
  2. Expand their partnerships – While Xactly has a truly comprehensive, impressive group of partners in the four areas mentioned above, it is not sufficient for the kind of impact and growth they need to achieve in 2014-15. Think of it this way. They are specialists in sales compensation nonpareil.  But that said, they are specialists, not generalists. Luckily, they offer the whole package when it comes to sales compensation.  But the bulk of their partners (with the exception of Cognizant) when it comes to implementation, consulting and international are Tier 2 in terms of visibility and market exposure and scale.  They have few relationships that are strategic. Yet companies like Microsoft or consulting/Sis like Elite winners Accenture or Ernst and Young Advisory are prime targets for the kind of strategic partners that can propel Xactly into a magnitude higher level of deals and a significant amount of visibility.  There are several others (among them other Watchlist winners) that they should be considering. They need to start a much more aggressive line of thinking around go to market partners than they have to date.

This is a company that is moving forward fast.  They need to stop thinking of themselves as small and begin to think of themselves as important and I think 2014 is the year that this can be done.  They are big enough, they are smart enough and doggone it, they are good enough.  


I’ve known Infusionsoft since around 2004 or so. In fact, the only CRM analyst/influencer/Journalist who has known them possibly longer is my Playaz BFF Brent Leary. I think he introduced me to them, though my memory is kind of hazy to be frank.

One thing that characterizes this incredibly fast growing company is that it is different. It is not a “think in the box” company nor is it a company that you can think about as you might think of others in the software technology space. 

The reason?

Because, in fact, Infusionsoft is not actually a technology company though they have paradigmatic small business technology applications. They are a services company that serves small businesses that are limited to a maximum of 25 employees. EVERYTHING they do from the soup to the nuts we’ll briefly examine here is because of their focus on that absolute proscribed marketplace.

If you think about it, and you’re in this highly focused a market place, scalability is not their concern. Playing in other markets is not their concern.  What is their concern is providing the best possible ecosystem for this underserved market and doing it while still making money – which is of course, because they are a business.

Infusionsoft delivers on this with what might be largest exclusively small business focused vendor in the software world – and this from a company that isn’t truly a software vendor. They have been so visibly successful that Goldman Sachs in 2012 invested $54 million in them – something that, if you know Goldman Sachs, is so out of character I can’t even characterize it. J   Small business focused companies with small prices on big things is not the Goldman Sachs wheelhouse, but they trusted the future of the Infusionsoft business model so much they threw the money to them.   

A well placed trust it is.  Not only has Infusionsoft delivered the revenue ($39 million in 2012),  but what Infusionsoft provided in 2013 and beyond is the trappings and the framework, for a complete Service Ecosystem, A clearinghouse for all that 25 and under small businesses need for software, training and tools.

What does that mean you might ask?  Okay, let’s look at it.  They provide:

  1. Software – their software actually uses the paradigm of work as these companies do it, which does NOT follow a traditional CRM technology pattern. That means though contact management, task/calendar management, email integration, data management via integrations with other tools, campaign management, email and multimedia marketing, web page development, SEO, sales force automation, ecommerce and promotional tools, referral management, and social channels management all exist but are done through a unique workflow that I can only ask you to take a look at rather than let me try to describe it. (Note: if you want to see it, you’ll have to register. Just sayin’. If it were me, I’d have an additional demo to look at without registration. Maybe they do and I’m not finding it.).
  2. Marketplace – This is an ecosystem that is a bit broader in scope than other like marketplaces. You find not only certified third party applications, but integrations, thought leadership, educational and marketing content, and human beings – e.g. consultants and developers.
  3. Standard Services – Kickstart services where business analysts work with customer companies to figure out how to start out with Infusionsoft.  Of course, otherwise support services are available post setup.
  4. Educational services – not just what to do with Infusionsoft but business services that are specific slices of how to run a small business.  They have their Help Center which is where you can get a huge library of “how to” print, video and audio information on Infusionsoft or copywriting or marketing to social sites.  They also have Infusionsoft University which is at Infusionsoft HQ, where you can get the in hands on training you need to work with the products and services that you desire.  They have on online “virtual academy” for Infusionsoft training and webinars on multiple topics.
  5. Financial Support – Over the past several years, Infusionsoft raised $175,000 that was donated to organizations that facilitated micro-loans to entrepreneurs in developing countries.
  6. CustomerHub – This is a very interesting and, I think almost unique to small business at the moment service which allows customers to upload, share and distribute multimedia content in the cloud.  This is offered at the enterprise level by the very interesting PR-focused marketing technology company, Vocus, but Infusionsoft is first to market for the smallest businesses.  There is another company on the horizon who is planning on offering a similar program for equally small businesses but they aren’t out with it yet.

This merely touches on what they do for small business. Their vision is simple “To help small businesses succeed” and they are organized to do that well beyond providing technology.

This has paid off in spades. At their annual ICON conference in 2013 they had 2500 attendees who were clearly passionately involved with the company. This year they expect 3000 of the same. What is noticeable is the presence of the same kind of fanboy that made Apple iconic. Infusionsoft seems to command that kind of respect in the small business world.   They have 18,000 VSB (very small businesses) that they serve.  They are noticed by the market.

They also addressed their weaknesses in 2013. Small businesses were getting involved in social channel communications and this was an area that Infusionsoft couldn’t help them in. No longer. They acquired GroSocial in January 2013 and integrated them into their offering very quickly. Now they are able to offer a social marketing campaign builder, social analytics and template social network design capabilities.  A long way from last year’s “nothing.” J

They also have a full bore analyst outreach program which they were lacking in 2012, overcoming something that would have prevented them from getting to the next level.

But that doesn’t mean there is nothing for them to do. There always is.

What they have to do

  1. Start shifting the model; its time – Infusionsoft is so much more than a software company for very small businesses. They are a full service ecosystem for those small businesses – a Small Business Center of Excellence. They know that. They are constantly filling the holes in the ecosystem with the marketplace, with their partners, within their own offerings.  This year is the year to start planning out the new model so that they can begin to execute in 2015.  Their applications are what applications should be – enablers of the businesses they support.  Their services go well beyond software implementation; they extend to training small business persons how to monetize, operationalize and market.  They have offerings that provide small businesses with cost-effective services that they otherwise wouldn’t have access to. But that said, it isn’t a cohesive unified offering – at least not as it is presented. Instead it’s as you see it above – lots of stuff that Infusionsoft does. Time for Infusionsoft to start planning a much deeper, more unified view of its own offerings and to plan on putting the infrastructure in place to support this small business ecosystem. Then they can reap the benefits in 2015-2016.
  2. Recognize that competition is on the horizon – There is a lot of competition on the horizon, thus underscoring the urgency of item #1. For the time being Infusionsoft remains the market leader, but companies like Zoho, BlueCamroo, the unnamed company mentioned above and dozens of others are entering this untapped marketplace. Infusionsoft has some time right now because under 25 employees is not the sweet spot of even a lot of the small business focused companies, but it will be. Time for them to move on #1 and make their differentiators clear in anticipation of a very crowded, highly competitive marketplace.
  3. Escalate the thought leadership which has fallen back – Interesting, with all the practical advice that Infusionsoft has been providing to their customers and all the tools that they are teaching them to use, one area that they haven’t been strong in is the true thought leadership built around ideas and strategic vision.  This is reflected in their keynotes at ICON which tend to be strongly focused on the pop culture kind of thought leader, as if those types (e.g. SharkTank) have a lot of wisdom to dispense. Some of them do have wisdom to dispense. There is no reason to think that popularity has to be equated with mediocrity. It doesn’t. But what Infusionsoft isn’t providing is the strategic guidance to their network of customers and prospects, pointing out the trends that the customers should be mindful of in their businesses (e.g. the lateness to social being a good example) or the new business models that are defining success. For example, Iron Tribe Fitness, one of my favorite Infusionsoft customers has an interesting focus on lifestyle in their gyms as part of the whole approach to fitness – in a market place that is uber hot – health services which in the 21st century involve wellness and lifestyle beyond just the workouts themselves.  Tell the story, identify the trends, situate it in the bigger picture and show what can be done with a singular business model – don’t just use it for marketing.  That’s thought leadership as Infusionsoft needs to being acting on in addition to what they are doing – an approach that they haven’t taken since Clate Mask’s book of several years ago.

This company is seriously hot. They are without a doubt a dominating influence in a growing market that is increasingly being eyed by other companies. Over the years, they have been consistently high scoring and this year in the first year of an Elite designation, they are an Elite. Do what they seem to be on the path to do and they will continue to be an Elite and remain ahead of the pack. This is one company whose fate is almost entirely in their own hands. Strong hands.

So the Elite specialists – dominant in their markets and with promise of things to come. But, as always, it is up to them to choose whether or not they do what they must to continue the hegemony.  We will see, won’t we?  

Up Next: The CRM Watchlist 2014 Elite Part III - Accenture, EY

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