(This post originally appeared on Forbes)
I was discussing customer relationship management options with a prospective buyer named Julia a few months ago. She’s the VP of Sales at a relatively small (250+ person) company. Julia’s been in sales for over 20 years, and she’s worked with a few CRM systems. Now she’s tasked with replacing her company’s old application with something cloud-based.
For a senior executive at a small to mid-sized company, this task isn’t easy. The CRM market in 2020 offers many, many choices. But there are also many unknowns. Will she need significant customizations? Will there be enough resources to help support her implementation? Will the new system integrate with her existing financial system? Compounding the dilemma is cost: why is there such a disparity? Why is one system priced so much lower (or higher) than another?
Julia talked to about a dozen different CRM providers and every one of them tells her that their product is the best. And for all she knows, every one is telling her the truth. Making the decision even harder is that the CRM system will be a core company application which means it will require a significant investment of both time and resources. The failure to choose and implement the right one will be Julia’s failure and no one else. This is not an easy decision.
In the end and with her job security and reputation in mind, Julia chose Salesforce. It was an unexpected choice for some of the colleagues helping her evaluate the different applications mainly because Salesforce was by far the most expensive option among the final candidates and seemed to offer about the same level of features, support and scalability. So why Salesforce?
“Well,” she admitted to me. “You don’t get fired for choosing IBM.”
IBM, if you’re too young to remember, was the Salesforce of its day. For arguably about 30 years – from the 1950’s to the 1980’s – IBM was the epitome of technology companies. It’s blue-suited, red-tie employees (yes, they were mostly male because it was the 1950’s to the 1980’s) implemented software and mainframe systems at some of the largest companies in the world. Its reputation for world-class service was widely known. IBM is still a great and massive company today but over the past few decades it’s taken a backseat to other, more celebrated technology companies like Google, Microsoft and Facebook. But back in the day, IBM was, without argument, the company that every tech company wanted to be.
Which is why when an executive like Julia chose an IBM system back then, even though the price was usually much higher than its competitors, management understood. It was by far the most conservative decision. And besides, you get what you pay for.
In the CRM world, Salesforce is the IBM of the 2020’s. The company has built its brand to be synonymous with CRM (case in point: its stock symbol is, you guessed it: CRM). It was one of the very first to the cloud and remains dominantly first in market share. But even though Salesforce has the largest brand and the most recognizable name of any CRM application, is it necessarily the best? Of course not. As great as the Salesforce ecosystem is, the company has many formidable competitors that offer their own cloud-based solutions for a much lower price point.
So when Julia went to her CEO with her decision to purchase Salesforce she did so knowing that she would be challenged about the additional expense. But she also knew that her CEO could argue that although another CRM may be more cost effective, even a better solution. But, they’re not Salesforce.
Should you choose a software that comes at a lower cost and seems just as good, even better than Salesforce? Or should you go with the easy, risk-averse option. In the twenty years we’ve been implementing CRM systems I’ve found that, when an application is implemented the right way with a competent internal and external team it really doesn’t matter what brand you go with. I’ve seen many companies implement many CRMs other than Salesforce happily and with a much lower investment.
So why does Salesforce win over executives like Julia? It’s because executives and managers like her want to keep their jobs and they’d rather pay a little more for less risk. This decision may not be in the best interests of the companies they work for- or maybe it is. But it’s certainly in theirs. You don’t get fired for buying IBM…sorry…Salesforce.
(Note: My company implements a dozen CRM applications, including Salesforce)