In a recent post, I pointed out that Salesforce.com spends the same percentage of revenue on sales and marketing as it did a decade ago. Since CRM is sold, in part, as a way to make sales organizations more efficient, it seems odd (to say the least) that Salesforce.com spending has remained constant.
Nobody from Salesforce.com got back me on that, but I did receive a lengthy comment/explanation from Abinash Tripathy, the CEO of Helpshift, a Salesforce AppExchange partner, who suggested the following explanations:
- Increased competition especially in the SMB markets for both support and marketing automation.
- Saturation of sales automation market forcing Salesforce.com to move further up market where acquiring new customers is expensive
- Salesforce.com was "late to the mobile party" thereby opening opportunities for vendors with more mobile-centric products.
- Salesforce.com has been slow to deliver on their platform approach roadmap, thus making their sales process more expensive.
Essentially what Tripathy is saying that the Salesforce's competition is making better products, thus forcing Salesforce.com to spend more money on sales and marketing in order to convince people to buy it.
Before blaming Salesforce.com itself, though, I did a bit of digging and I'm darned if I can find ANY examples of "big" CRM reducing the cost of sales and marketing for any publicly help companies.
What's going on? Decades of CRM and no cost reductions? Sales and marketing costs flat? How can that be?
My theory is that CRM has failed to generate cost savings for two reasons:
1. CRM programmers don't respect salespeople
CRM applications are designed by programmers who fundamentally don't like sales people. I have never met a programmer who didn't think salespeople were stupid and usually slimy.
It's impossible to design useful software for people you don't respect and it shows in the design of most CRM systems, very few of which appear to be based on what salespeople really want.
This attitude permeates the entire CRM industry. I have many times heard CRM vendors suggest that salespeople should be forced to use CRM, as if salespeople were luddite clerks wedded to using typewriters.
Salespeople, however, are always the early adopters of any technology that helps them to sell. The fact that salespeople resist using CRM should cause us to question CRM, not the intelligence of the salespeople who are asked to use it.
2. CRM is sold as a management tool not a sales tool.
CRM is mostly sold to sales managers (and their bosses) as a tool to track, analyze and measure sales performance.
While that sounds reasonable on the surface, consider that salespeople are already the most measured group of employees in business, because nothing is more obvious than the inability to make your sales numbers.
As currently sold, CRM becomes a way to micromanage every stage of the sales process, creating an oppressive "big brother" environment that adds little or nothing to the ability of salespeople to build customer relationships.
As a result, CRM starts to increase, rather than reduce, sales and marketing costs in the following ways:
- Salespeople begin spending time subverting the system (or entering the minimum to keep management off their backs) rather than developing relationships and making sales.
- Sales management wastes time and energy on power struggles to make the system work in the face of passive aggression and resistance from the top performers who don't see the value.
- The company incurs the expense and effort of installing the system and training the sales team, an effort that will only pay off if the CRM installation is successful. (CRM installations historically have high failure rates.)
Personally, I think "big" CRM, as represented by monolithic products like Salesforce.com and Oracle, is a concept whose time has come and gone.
Most salespeople are probably better served with free (or nearly free) apps that provide simple capabilities, like managing contacts.
That salespeople love such apps is a good indication that they're helping salespeople to sell more, more quickly, which inevitably reduces sales costs.