Endgame for CRM?

To coincide with Dreamforce 2018, the titan of tech events, Freshworks released a report with the headline: “69 percent of SMBs are unhappy with their current CRM and plan to switch.

The timing of the release was surely a deliberate thumb in the eye for Salesforce, by far the dominant player in the CRM market, not least for SMBs. The research, conducted by Forrester, also revealed a split between the people buying CRM systems, and the people using them. Buyers were much more likely than users to believe CRMs were easy to learn and operate, and that training was sufficient. “This study suggests that a massive shift in CRM market share is coming, and it will be quick and dramatic,” said Freshworks’ CEO Girish Mathrubootham (Freshworks itself is a vendor of “simple” customer engagement software.

Meanwhile, Chris Smith, co-founder of Curaytor, and author of The Conversion Code, had put his name to a lengthy blog post, pointedly titled “Death of a Sales Force,” the main theme of which was that “sales people and the CRMs they use are going away” — an apocalyptic vision of CRMs dying “a swift death…due to self-inflicted wounds.” And just in case the headline wasn’t clear enough, when CRMs cease to exist, ” the people holding the smoking gun will be Salesforce themselves.

Curaytor itself offers a marketing and sales platform, including a “sales tool that stops deals falling through the cracks,” together with a marketing coaching service. Was there a real problem with the concept of CRM in general, or Salesforce’s market-leading instance of it? Or was this a case of smaller vendors taunting the giant in the space?

I reached out to Curaytor and spoke with Jimmy Mackin, Chris Smith’s co-founder.”Chris and I have thought deeply about this. We’ve spoken to sales people who thought CRMs were going to make their lives easier, but the opposite seems to be true now.” He drew a distinction between the needs of sales representatives and the needs of their managers.

CRM hasn’t helped with conversions

“The ultimate tool needed for sales people is different than the tool needed for sales managers. Traditionally a CRM, in its original form, existed to simply help people manage contacts, but any technology gets more complex over time, and they’ve added so many features that are totally unrelated to the sales experience, and are much more geared to helping managers keep track of what people are doing. I think we’re going to see a return to the days when a CRM is nothing more than a simple tool representing the best people you should follow up with — based on whatever criteria are important. All the other stuff, the integrations, settings, reporting, lead assignment — all that will be very much hidden in the background.”

But surely Salesforce’s proffer has been precisely that of adding functionality to its basic CRM offering as users require, including delivering alerts and surfacing next-best-action recommendations? “The feeling that somehow you can add another feature to an existing platform like Salesforce, and that’s going to solve your problems, I think is very misguided. This is at the heart of the issue. If you look at the average conversion ratio of a lead, it’s under one percent. What a lot of technologists fail to ask themselves is whether a feature is going to empower users to increase that percentage.

All the platforms out there, he said, have “added and added” features, but the conversion ratio is still the same. “I think we need a new way of thinking. If you ask the average sales rep, they have enough features; they don’t need more.”

Isn’t it also the case that the nature of the sales person’s role, especially in B2B, has changed dramatically, with so much more of the customer’s journey being complete before any contact with the vendor is made? “You’re right, in that the consumer’s behavior has changed and the technology hasn’t caught up. And more specifically, the sales rep’s behavior hasn’t adjusted. Traditionally, a rep was given a list of people to follow up with. It used to be a print-out, now it’s in the cloud and is accessible to everybody. Sales managers track how many calls the rep makes every day, because in their minds, if you follow up with enough people, you will generate some deal.”

Unfortunately, consumers now will do everything they can to avoid speaking with a sales rep. “So the only reason a sales rep exists in the modern era, is that there’s a certain level of deep personalization that’s required that you can’t automate.” In a high touch sales context, like an expensive B2B deal, a rep needs to exist. “But this means getting your questions answered by a sales rep, not being sold on the product. That’s now the job of marketing.” By the time a transaction hits the sales person’s desk, the discussion should be about implementation.

That’s a perspective which seems to leave little room for sales between marketing, and service and support. “The ability to have a conversation with somebody, and get them excited about the value of a product, is still a skill set you need to have,” Mackin insisted. “It also needs to be a deeply personalized conversation. It doesn’t work at high volume. How could you possibly ask an interesting question if you’re literally making 200 calls per day?”

One solution, Smith observed in his blog, had been to insert an additional role, the sales development rep (or inside sales assistant), whose job it is “to wade through the piles of garbage in our CRMs and the new leads coming in to find the needles in the haystack so that the ‘real’ salespeople can maintain a positive mindset and laser focus on pitching and closing pre-qualified prospects.”

People over-estimate the value of great technology, said Mackin. “The points of differentiation are very small at the end of the day. It’s the execution that matters.” If one solution has features another solution lacks, it doesn’t automatically mean your business will prosper with the first solution: “In fact, the very opposite could be true.” At Curaytor, Mackin said, “we build tools to support the strategy, not the other way around. And that’s a very important distinction.”

The evolution of consumer behavior, and the need for sales behavior to adjust in response, made sense to me; as did the observation that the kind of personalized interaction necessary in high-cost B2B contexts is spread too thin if technology encourages a high volume of contacts. But did this mean CRMs were really dying?

Price pressure will determine how this plays out

I turned to Manny Medina, CEO of sales engagement platform Outreach. Based on previous conversations, I knew Medina could be highly critical of Salesforce, but after all, his platform does integrate with Salesforce. Is CRM on its last breath? “I think it’s a little bit too early to be calling that,” he said. “The way that this will play out is you will see a lot of price pressure. Salesforce’s growth is based on price increases, and just larger deals. I think the revolution will start at the lower end of the market.” A smaller company, with reps living on Outreach, data being dumped into Redshift, and reports running in Tableau, might well question the need for a CRM at all.

What’s more, although pipeline is a great metric, it’s not the only one, said Medina. Brands are interested in lifetime value and revenue efficiency. CRM is not the best solution for those kinds of insights. “Its premise is data storage, so that you can track pipeline. That’s fairly constrained for the scale of the tool you’re buying. People will buy CRMs, because that’s what they’re used to; but they use them mainly for opportunity tracking.” When your needs exceed what CRMs can provide, you buy additional solutions, he continued. “The revolution is not going to be televised. It’s going to be slow and around the edges.”

Another much-cited challenge when it comes to effectively utilizing Salesforce and other CRMs is ensuring that reps actually update the records. Medina says a solution like Outreach can do that automatically. “The collateral gain is that your rep now has time to think, and at the account level.”

Congruent with what Mackin had told me, sales reps will evolve to become revenue professionals. “They’re not going to be compensated on their number. They’re going to be compensated on the number, and the efficiency with which they reached that number.”

The new way of B2B selling, according to Medina, is a mix of outbound and inbound, based on accounts rather than individuals, as often targeting — even at the enterprise level — likely users of the product rather than (initially, at least) senior managers. “That way, you buy yourself support,” he said. “You need the tools that allow you to do all that: funnel conversion tools, communication tools, workflow tools, analytics and predictive tools, that allow you to work the account effectively.”

But aren’t CRMs designed to support an ABM approach? “What you need to overlay on the CRM is the ability to figure out the right pitch for the right person — at scale. If you don’t have a tool that is automating the vast amount of communication you have to do across the account — and you have to do it with five accounts at a time — you’re going to lose it. At the very least you need a sales engagement platform to move deals forward. You need an analytics platform to see what’s converting and what’s not. And you need a data source, so you’re never at a loss who to follow up with. In my mind, that’s the core stack.”

Salesforce, again, would likely claim that all this can be done within the Salesforce eco-system. Is it just that Salesforce doesn’t do all these things well? “Salesforce is now recognizing the fact that they need to start creating workflows. If you pull up your phone app for Salesforce, it’s great at querying and data retrieval, and maybe some note-taking. But it doesn’t create the workflow you need.” It doesn’t tell you who to call next, and their relationship to the last person you called, said Medina. “That layer of intelligence hasn’t existed.”

Medina and Mackin are not on precisely the same page here. When I asked Mackin whether it was a good idea to add a sales engagement solution to an existing CRM, he mused “Does you CRM need another CRM? In some instances, yes.” Curaytor emphasizes coaching and strategy, and values of the human marketing skill-set.

For Medina, it’s not just about changing playbooks. “But without having a platform that allows you to manage all those engagements, you’re going to miss out. You’re going to be people dependent.” It’s like the industrial revolution, he said: “A good machine will carry the day. Now we have the data science and the technology to be able to predict, or at least get closer to likelihoods of buying. That is way more scaleable than just swapping out your CRO and hoping for the best.”

Moving from contacts and leads to an overview of the account: “It’s like the matrix,” said Medina. “You’re seeing the system. That is where this is going. It’s not so much CRM versus not-CRM, it’s about reps learning how to penetrate accounts.” The goal is to translate account mapping into software so that it’s available to all reps.

Right now, then it’s about adding one or more agile tools to an existing CRM. “But play that forward,” said Medina, “and all you’re using CRM for is storage, then the natural outcome of that is price depression. So Salesforce is going to be very worried about what happens in that world. Either they become multi-cloud, like they’re trying to do right now with the Marketing Cloud, and Support Cloud, etc. Or they try to move up into the action layer, giving the rep intelligence and insights.”

Clearly, Medina believes, they’re doing both, but driven by the need to show continued growth, by going after very large enterprises, or even governments as customers, they’re getting more out of touch with how to “innovate at the user level.”

In effect, where the Chris Smith sees the corpse of a sales force, and a smoking gun, Medina sees slow atrophy as Salesforce is challenged at the small-to-medium end of the market by lighter weight solutions which are more directly responsive to the need for revenue efficiency.

But either way, from these perspectives, it’s endgame for traditional CRM.

We reached out repeatedly to Salesforce for comment on this article, but at time of publication they had not identified a spokesperson.

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