"In 2016, the 'verticalization' of CRM solutions will be accelerated," predicted the co-founder of a sales technology company in a CIO article from earlier this year. "A real estate salesperson has different needs than a medical device salesperson, and companies are increasingly realizing that they could benefit from using industry-specific CRM solutions. These vendors' built-in best practices and processes provide a level of expertise that companies just don't get with a generic CRM solution."
He's right. There will be more "verticalization." Getting an industry-specific application will be the right decision for many businesses in the next few years. But it will be a wrong decision for even more. I know this because I know my clients.
For example, Rachel Boschen did not get a vertical customer relationship management (CRM) system for her company. And she made the right decision.
Rachel works for the New York Daily News and her team provides digital marketing services for the publisher's customers. Her department assists customers with designing and placing the best possible promotions to help their businesses grow and then tracking their results. It's a niche offering by the company but one that's been growing fast. Rachel needed a system that would replace her existing database for managing leads, contacts, and services and for tracking jobs for all the publications' customers and those prospects who might be interested in getting help.
At first, Rachel thought she'd look at an industry-specific CRM system. There are lots of good, specialized systems that are targeted at the publishing industry. In fact, as CRM has become more popular, there are many good, specialized systems that are targeted at many other industries--from manufacturing and distribution to legal, real estate, and accounting firms. Just like the tech executive above said.
None of the products my company sells are vertical. Rather, they're horizontal and can be customized for all industries. Including the publishing industry. Good CRM systems are like this.
At the New York Daily News, Rachel chose to install Insightly, a very popular small and medium-sized CRM system. My company doesn't sell this product, but we've done work with Insightly before. Insightly, like so many other "horizontal" applications (i.e., Salesforce, ZohoCRM, Microsoft Dynamics, Sugar, Sage) is not geared to any one specific industry. They don't need to be.
Rachel customized Insightly so that it would match her business needs. And, like most of my clients, it really didn't need that much customization. I've learned that if you're a wealth manager, a maker of clay pots, a buyer of specialty hardwoods, a seller of Native American masks, or a publisher providing digital advertising services, you're all pretty much doing the same thing: doing business with people.
The Downsides of Vertical CRMs
So regardless of your industry, the most critical thing is having a database of all the people who you're doing (and hope to do) business with--their demographic information, open tasks, closed activities, interests, opportunities, email correspondence, products they bought, products they would be interested in buying, services performed, etc. Rachel is tracking all of this in Insightly. She also plans to track service calls and projects and integrate these activities with her website, so that visitors can submit information directly into her system and automated workflows will send responses, schedule future tasks, and generate reminders and alerts.
Sure, vertical applications do this. And there are many great ones. But I've found they come with downsides. Because they're more geared towards a niche with lower volume, they tend to cost more--whether you buy them stand-alone or as "add-ins" to your existing CRM system. They are usually made by third-party companies with fewer technical and training resources, smaller communities, and a higher risk of support problems if there's integration involved. They also add another layer of risk to the buyer--what happens to your system if the vertical software maker disappears from the scene?
But the biggest problem I see with these vertical applications is overkill. Many of them come chock full of great features and functionality. Yet most of my clients never use more than 20 percent of these features. And the features they do use can be easily added to any mainstream CRM by customizing a few fields, screens, and reports. I'm not saying that there aren't uses for a good vertical CRM application. But for the great majority of the small and medium-size firms, like Rachel's, that I know...it's just not needed.
Is This Really Necessary?
If you're thinking of buying a CRM geared towards your industry, or an add-on that lays on top of an existing CRM that does the same, be careful. Ask yourself first, "Is my business that different and so unique that I need to get specialized software?" Maybe you can live without that vertical application for a while, use your mainstream CRM as best as possible, and then revisit in a year and decide whether a vertical is really necessary or if holes can be filled more affordably just by customizing your existing system.
At that time, you may find yourself making a different decision. I know Rachel did.