Magazine article CRM Magazine

The Vendor Vultures: CRM Providers Are like Scavengers These Days, Eager to Poach from a Competitor's Client List

Magazine article CRM Magazine

The Vendor Vultures: CRM Providers Are like Scavengers These Days, Eager to Poach from a Competitor's Client List

Article excerpt


It's becoming increasingly difficult to identify a CRM vendor's key competencies or customer base. The game of moving upstream and attracting new customers seems to have grown more complicated--with the mainstays in the CRM industry entering new sectors, marketing to new segments, and even targeting competitors' customers with the lure of better offers.

One key player in this still-shifting competitive landscape is, which, despite breaking the billion-dollar mark in annual revenue and a much-publicized effort to target enterprises, decided 2009 was the time to introduce what some called a long-overdue offering for contact management. (See our cover story,"The Next Billion Dollars," page 21, for an in-depth look at the company on the 10th anniversary of its founding.)

At a single-digit monthly price point--just $9 per user--Salesforce Contact Manager is the company's fifth edition of CRM, and, harkening back to its roots among small-and-midsize businesses, the first geared toward small-business owners and entrepreneurs.

"We could definitely see ... Salesforce Contact Manager edition taking away some customers from Act! [by Sage] and from [FrontRange Solutions'] GoldMine," says Denis Pombriant, principal and founder of CRM consultancy Beagle Research Group. (Perhaps not coincidentally,'s product launch came just days after Sage had unveiled the latest version of its Act! by Sage contact management solution.)'s low subscription rate might seem attractive, he adds, but won't amount to much long-term savings over the three-digit purchase price for competitors' installed software. Is it enough to worry the established contact management players? Maybe, Pombriant says, but this is a relatively untapped market with room for all. Plus, he adds, "Sage has been doing a lot of things with Act! in anticipation of ... some direct competition from a larger company." isn't the only "larger company" crowding in. When Sage's biggest reseller, Dallas-based MIS Group, unexpectedly shut its doors in early July, software giant Microsoft swooped in, offering a 25 percent rebate and a 50 percent discount on licensing for any Sage customer who moved to Microsoft Dynamics. Such poaching is expected when a company hits a bump in the road, says Laurie McCabe, partner at consultancy Hurwitz + Associates. She adds that, while the public may have been surprised by the closing, Sage still has a couple thousand CRM partners and doesn't appear to be in jeopardy. "If I saw a big Sage shop going out of business every week, I'd start getting really concerned," she says. "In this economy, this seems to be a blip, not an ongoing, spiraling trend."

McCabe also notes the long legacy of CRM scavenging, suggesting that what goes around comes around: "When was a wee little one, it was all about what business [it] took away from Siebel [Systems]." Scavenging, she adds, may even be unavoidable to a certain degree."It's almost a staple in [a vendor's] marketing and spin in the CRM business," she says. "Once it starts I don't know if you can afford not to fight back--you have to fight back."

Scavenging for the competition's customers might be nothing new, but it seems to cluster, says China Martens, an enterprise software analyst with The 451 Group. …

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