The importance of the relationship between a company and its customers cannot be overstated. Customer Relationship Management (CRM) has emerged as one of the most significant software sectors, because of its ability to help companies gauge (and engage) their customers and turn complex user behavior into simple metrics. And despite the fact that CRM software’s existence isn’t entirely new, the market is expected to reach more than $80 billion in revenues by 2025. That’s in part because of a new group of emerging successful startups taking on gaps left by CRM giants, such as Salesforce.
Salesforce has enjoyed a virtual monopoly in the space, accounting for about 20% of the global CRM market. Following last month’s $15.7 billion acquisition of Tableau Software, Salesforce appeared primed to continue to dominate the industry, bolstering the company’s new focus on data visualization and business intelligence to understand their users. Salesforce’s blockbuster acquisition though may be an admission that they are starting to feel the squeeze to its market share. Especially as these growing sales tech startups are solving the end-users major pain points that CRM providers have long ignored.
Interestingly, Salesforce shares fell as much as 5 percent following the announcement, shedding light on the fact that the large CRM providers are, in fact, losing ground to alternative CRM startups.
The Problems
We are seeing this shift in the CRM market for three main reasons: CRMs fail to provide actionable data, they are designed for executives – not the end-user, and CRMs prices make them unattainable for the average business.
Inaccurate and Unactionable Data
While CRM data helps managers understand the who and what of their customers they are missing the most important piece – the why. Most sales managers have little idea why some of their salespeople are consistently hitting their quotas or why certain territories outperform others. CRMs are unable to answer these questions because they often are filled with stale and incomplete data. Most sales and marketing professionals will even admit that a fair portion of their CRM data is stale. To solve these problems, CRMs need to be layered with actionable data, such as specific notes about key accounts or geospatial information.
Not Designed for The End Users
On top of stale data, many CRMs also contain inaccurate or incomplete data due to low CRM adoption. CRM usage rate remains notoriously low across industries, in fact, less than 37% of reps actually use their company’s CRM. Field sales reps, in particular, have extremely low adoption rates because CRM platforms are not designed for the workflow of a mobile-first representative.
Hidden Pricing Adding Up
Pricing is becoming an increasingly competitive issue. While CRMs may not appear too expensive upfront, they often charge more hidden additional fees. For example, at first glance, it appears that the basic CRM package costs just five dollars to use. However, companies looking to have more than five users will need to fork out at least seventy-five dollars monthly per user. Since 91% of companies with more than 11 employees now use CRM software, the fact is, nearly all companies are paying a hefty sum for subpar CRM capabilities.
Inaccurate and Unactionable Data
Many startups are finding success in the CRM market through leveraging Location Intelligence (LI) and designing their app with the end-user in mind, leading to much higher adoption rates.
By building a CRM around geospatial data, these platforms can draw on multiple layers of data to provide holistic and visual analysis to outside sales representatives. This enables reps to plan their time more strategically through managing everything from travel logistics to location-based prospecting. Geospatial data, in particular, is playing a bigger role in helping sales teams understand where they should direct their efforts to hit future sales goals. While most CRMs place heavy emphasis on using data retrospectively (what could we have done better?), geospatial data applied effectively can offer useful predictive insights, such as heat maps that clearly show which areas are bringing in the most revenue and which are consistently underperforming.
Startup CRM platforms are also cutting into the market by helping field sales representatives automate everyday tasks and data input while on the road. Statistics indicate that providing mobile CRM solutions have facilitated a 15% spike in productivity for their end-users. Mobile-first map-based platforms can allow reps to quickly find prospective customers, plan more efficient routes, and visualize which accounts need follow-ups and when. These insights also yield higher-quality data back into their CRM and allow managers to have an accurate understanding of the KPIs that are driving results in the field.
Lastly, while the big players average out to around $75 per user by month, startups can act as a standalone solution for smaller businesses who can’t pay the large price tag. Many startups offer pricing between $25 – $30 per user per month, almost a 50% markdown in price.
Big CRM platforms have succeeded for years by providing software that only benefit behind-the-desk workers. As data visualization and accuracy have become more pressing issues for sales teams, big-name CRMs will continue to feel the squeeze by startups who have spent years intently listening to customer feedback to provide them with a system that operates the way that businesses operate.
by Matthew Sniff
Founder & CEO, Map My Customers
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