(This article originally appeared in Forbes)
If you’re a manufacturer you’re all about standard costs, variances, cycle counts and bills of material. If your company distributes products you need to know about replacement cost, obsolescence reserves, turnover and FIFO. If you’re a construction company it’s about job costing, applied labor, bidding and deadlines. If your company performs services in the field you want to stay on top of your truck locations, group scheduling and time and materials.
These are the core financial things that drive businesses in these industries. Naturally, they’re important. Which is why most of our clients, once they reach a certain size and depending on their industry, migrate to industry-specific accounting and financial systems that can address these issues and do things like order entry, inventory management, mobile billing, cost accounting and job tracking.
But does it make sense for your Customer Relationship Management system to also be industry-specific? I get these questions all the time. “We need a CRM geared towards manufacturers,” one business owner who is researching CRM applications recently said to me. Another one insisted that she wants a “CRM system that’s specifically for the construction industry.”
When I get these questions I usually say no, you don’t need a vertical or industry-specific CRM application. It’s not there aren’t some great choices out there. But from what I see, most of the CRM applications targeted at industries like manufacturing, distribution, service and construction come with significant downsides. Here are four that immediately come to mind.
There’s a smaller community.
Industry-specific CRMs are, by definition, targeted at a smaller market. Which means that the maker of a manufacturing-specific CRM application is only marketing their products to manufacturers and competing not only against other industry-specific CRMs but mainstream products that also position themselves as solutions. So in the end, a vertical CRM application only has a small slice of a limited number of customers. That also means a significantly smaller community of companies, developers, partners and others that provide support for a product. It’s simply less options for a user.
Pricing is usually higher.
The makers of industry-specific products do not have the economies of scale that their larger, better capitalized competitors that sell horizontally do. That’s why, when you do your research, you’ll find that these specialized applications cost more than their mainstream competitors. The makers will spin this as the price you pay for something so specific. But really you’re just paying to help a company cover its overhead that is only supported by a smaller number of customers.
Inadequate capitalization of the vendor oftentimes poses a problem.
Smaller CRM providers will likely have less money in the bank than their mainstream competitors. Investing your time and more importantly your data with these companies is riskier. Relying on them to have the funding necessary for keeping their product up to date and integrated with other key applications – let alone providing the platform and security you need – is also more of a gamble. Capital is important for a software company because you’re not just buying a product. You’re forging a long term partnership with information that is core and critical for your business.
Finally, there’s just the question of need.
How “industry-specific” do you really need to be? I realize that your selling customized widgets or providing specialized services but in the end aren’t you just dealing with people? Prospects? Customers? Partners? Aren’t you doing the same things, regardless of your industry like following up on quotes, managing marketing campaigns, tracking leads and forecasting sales? If your company relies on bills of materials, job costing, mobile ordering or e-commerce sales then you need a financial system to address those needs. But for your CRM needs, aren’t the relationship building activities similar, regardless of your industry? For the great majority of my clients they usually are and can be addressed either with a simple add-on template or just by customizing a few fields and reports.
I don’t want to completely discourage someone from an industry-specific CRM. There are sound reasons for going that route. You might be in an industry – wealth management is a good example – where there are deep integrations with larger platforms (such as financial services companies) or key applications that you’re using which are harder to find in a horizontal product. If you choose the right product you may find yourself within a community of others that share similar issues and can help you solve problems that are unique to your business. There are excellent industry-specific applications on the market created by solid companies with many happy customers.
It’s just that, when it comes to CRM, I’m not sure so the price – or the risks – of an industry-specific CRM application is worth it. Take a look at a few, compare them to some of the more popular options, and see if you agree. I bet you will.