A couple months ago, Lauren Carlson, Customer Relationship Management Software Analyst at Software Advice, wrote a detailed blog post about the 3 core types of Customer Relationship Management (CRM) solutions – Industry Specific, Generalist, and Do-It-Yourself.
Lauren did a great job of summarizing and describing these three categories, and you can find her original post on Software Advice’s Blog. However, I wanted to elaborate on some of the benefits and downfalls of each based on my experience.
These solutions are what I referred to as being Industry Specific. They are catered to a specific set of needs that arise from a niche sales cycle or product. Oftentimes, these solutions come about because of information needs that arise at certain points during the sale.
A great example of this is the automotive industry. There are an incredible number of auto-specific CRM solutions that cater to the specific needs of dealerships. These features may include:
1. Integration with top Dealer Management Systems (DMS)
2. Built-in credit score and background check processing
3. Price negotiation tools based on credit score, down payment, payback period, and other mitigating factors
4. Driver’s license scanning for contact profile creation
5. Industry-specific terminology and buzzwords
All these features pertain to that specific industry, and these needs aren’t readily transferrable to other sales models. So, a vertical market was born to manage those data points seamlessly.
However, as Lauren noted, there are problems with solutions like this. She made two great points in her original post (again, found Here).
There’s another problem, though. In my experience, vertical solutions tend to be more feature focused and less sales focused. By that, I mean these tools provide the measures of gathering data to make a pitch to a customer, and then they typically fall flat. They don’t provoke a sales process or next step for building a customer relationship.
Real Life Example: I recently spent a couple thousand dollars on new furniture. I must have visited 10 different stores. I always got full price quotes, inventory levels, payment plans based on credit scores, discount offers, etc. But, each time, I resolved to sleep on the decision.
A couple days later, all the sales reps dutifully followed-up with me and … no, just kidding. Only ONE sales rep called me back. (She also sent a thank you card for stopping by.) Turns out, she keeps a personal binder of contacts and reminders just for that purpose. She’s a great salesperson compensating for a limited vertical CRM. Guess who got that commission.
This is an extremely broad category of CRM solutions that I previously described as “Generalist.” These are relatively stock solutions that can then be customized (to varying degrees) to fit the needs of most organizations. These solutions tend to focus more on the process of selling, since their features are generic enough to be applied en masse. Now, to be completely accurate, there are two sub-categories of these systems:
1. Hosted – These are CRM solutions that are hosted on the “Cloud.” This means information is stored on the Vendor’s database, and the customer accesses this information through the Internet. Hosted solutions tend to be more cost effective, easier to implement, easier to use, and utilize the “point and click” customization Lauren talks about. Hosted users are also always running the lasted software version as updates are pushed periodically to all customers as a part of the monthly fee. These solutions include OmnipriseCRM and Salesforce.com.
Benefits: In addition to the benefits above, Hosted CRM requires less maintenance and IT know-how of the customer. These systems are also known for their integration capabilities with other software. This allows sales teams to use multiple best-of-breed programs that work together in harmony (and real-time), sometimes eliminating the need for a vertical solution.
Downfall: These solutions tend to be less customizable because of their turnkey nature. Custom fields and classifications can be used, but most other fields and pages are hard-coded into the system, forcing you to use much of the vendor’s terminology. However, these are usually relatively easy work-arounds that can be addressed during training.
2. On-Premise – These are solutions that a customer purchases outright and maintains internally. The customer purchases a version of the software, and that version is then installed on the customer’s computers. These solutions do not offer online access without additional configuration or investment. Implementation tends to takes longer and be more expensive. These solutions include Goldmine, Microsoft Dynamics, and ACT!
Benefits: Because each customer runs a specific version of the software, extensive customization is common and often considered a routine part of implementation. Entire pages, forms, custom modules, and terminology changes may occur, allowing the customer limited ability to “re-invent” this version of the CRM.
Downfall: In addition to the higher cost, longer implementation, and (usual) limits in accessibility, these solutions also suffer from periods of lacking innovation. Since customers buy a single version of the software, they get no updates until the next version is purchased and implemented. This means that if a company decides not to upgrade, then they quickly fall behind in the technology race. Additionally, re-customization is often necessary with each version upgrade.
While Lauren is most definitely right – building your own CRM is cheaper and easier today than it has ever been – I would still quickly say is remains the most expensive and dangerous of the three categories. Without experienced (and costly) developers and consultants working side-by-side with you, there is likely to be a large deficit on the annual report from where this project failed. I’ve already mentioned before that 50-70% of CRM initiatives fail, and those statistics include implementations with established software vendors who have been in this business for decades.
Software Advice may be the exception to that rule. In their case, CRM software IS their business model. They understand these solutions and processes because they consult with end-users and software vendors alike on a day-to-day business. The average company doesn’t have near the resources or knowledge of business software that they do. Their great team and sole dedication to their system is what keeps it alive. I would say they are in the top .1% of companies in that regard.
Lauren does an excellent job detailing this CRM type, so I’m going to forego sounding like a broken record and assume you know what to do from here (hint: Read Her Article).