Over the past 15 years, Salesforce.com has risen to be the undisputed leader in CRM. However, says Gartner, the CRM market overall is showing single digit growth, so companies like Salesforce could be disrupted. A mobile-social offering targeted at sellers of peer-to-peer marketplaces like Etsy and Shopify and priced based on its performance could gain enough momentum to create a new CRM leader. Here's a playbook for it based on what I've learned working at Siebel and Facebook.
How Salesforce disrupted the CRM market a decade ago.
When Salesforce entered the CRM market, it took a disruptive approach by:
- Focusing on the SMB market first, which until then didn't have access to sophisticated CRM capabilities that only large companies with big IT departments could afford to buy and maintain,
- Creating a web-based service, which was easy to use and upgraded itself in the cloud, in contrast to the cumbersome "install base" of an Oracle or a Siebel, and,
- Inventing the SaaS business model (Software as a Service), which transformed heavy upfront infrastructure investments into monthly recurring budget line items.
For several years, Salesforce was discounted by the market leaders of the time, Siebel, Oracle and SAP, until it was able to sign a marquis account (Merrill Lynch) right on their turf: Fortune 1000 companies. The rest is history and today, about half of CRM software revenue is delivered by SaaS, with Salesforce as the #1 vendor, according to Gartner.
Peer-to-peer marketplaces represents a perfect opportunity to disrupt Salesforce.
Today, Salesforce is struggling to make the transition to the mobile-social era and this creates an opportunity for entrepreneurs. Beside, one key difference in today's landscape vs. the one Salesforce disrupted, is the fabulous distribution platforms that social networks have created, particularly with the rise of peer-to-peer marketplaces like Etsy, Massdrop and Shopify.
Peer-to-peer marketplaces are companies like Etsy for arts & craft, Shopify for boutiques, MassDrop for consumer electronics. They are disrupting e-commerce players like Craigslist and eBay. One of the reasons sellers move their catalogs to these peer-to-peer marketplaces is that they benefit from a huge social distribution platform, which makes their marketing effort significantly easier. In other words, they have access to multiple, well-targeted communities of millions (sometimes billions) of buyers who have something in common, an interest, a hobby, a passion. Yet often these sellers lack the tools necessary to keep buyers engaged and increase customer lifetime value.
How to create the winning CRM solution of tomorrow.
Going from the same playbook Salesforce used a decade ago, here's how disrupting CRM today could look like:
- Target power sellers first. Unlike hobbyist sellers, power sellers often have the desire to learn how to grow and run a real business on top of these peer-to-peer marketplaces. As they transition from novice to pro, they lack tools such as real-time analytics, a customer database, and pricing optimization.
- Build a mobile-social service, which power sellers (and particularly Millennials) want to use and which includes capabilities such as contextual push notifications, social reviews & ratings, simple and smart analytics, easy messaging, etc.
- Price based on performance, which clearly links advertising spent to consumer acquisition (with metrics like CPM), retention marketing spent to engagement (with metrics like sales) and offers pricing optimization.
CRM tools would need to be built on top of these peer-to-peer marketplaces, either by the marketplace itself, or by a developer ecosystem. Base is an interesting example of a CRM solution that has been gaining traction with its mobile-centric user experience relying on push notifications, map view of leads and deals, and on-the-go analytics. Tact alleviates the overhead of logging meetings and notes by extracting information from calendars and emails. Refresh (acquired by LinkedIn) is another service that could provide social CRM by expanding its capabilities to establish stronger connections with people during and between meetings. Last but not least, Kit takes CRM to the next level with its SMS-based service that acts as your personal marketing assistant, reminiscent of blockbuster movie Her.
The CRM market is ripe for disruption and the combination of the mobile-social revolution and the demand created by sellers of peer-to-peer marketplaces is creating a perfect storm. For a while, Salesforce would likely ignore the threat of a company providing such service much the way its predecessors ignored Salesforce. This will result in many opportunities for marketplaces and their developers to innovate and create value.