CRM for SMB: Weighing our options

A few days ago, I posed this question, via Twitter and emailed a similar question to about a dozen business owners:

Who do you use for CRM? Especially interested in hearing about Salesforce alternatives with strong funnel reporting for 10+ person teams.

I received a ton of feedback, and many people asked that I share what I learned. We haven’t made a decision yet, but we’ve done a bunch of due diligence, and here’s my preliminary summary.

Some background:

We’re presently running Salesforce.com’s Group Edition, and our license caps out at ten users. We’re bumping up against that cap now, and need to make a change in the not-too-distant-future.

We’re presently paying $950 per year for up to 10 users. I don’t know where that pricing came from, but we’re pleased to have it and feel like it’s a great deal. We do suffer some inadequacies with the Group Edition, chief among them are no support for third-party integrations and no access to our data via the Salesforce API.

To eliminate those inadequacies, we’ve planned an upgrade to the Professional Edition when we hit our 10-user cap. The time is nigh, and a few things are causing me to scrutinize the decision to renew with Salesforce:

1. Price: $65 per user per month for Salesforce’s Professional Edition. Our price for 12 users would be 10x what our price is for 10 users. While we would be able to integrate with third-party applications, that just feels like too much, especially given pricing for alternatives.
2. Terms: Pay in advance for a year. Salesforce no longer offers a month-to-month option — not even at a premium monthly price. If we commit to Salesforce for a year, we’ll inevitably invest in all sorts of integrations over the course of that term, and our switching costs twelve months from now will be MUCH higher than they are for us at present. I find it highly annoying that they won’t give us a month-to-month option for a couple months, so that we can make sure it’s a good fit before we commit for the long haul. The other practical downside of the yearly commitment is that you don’t have the option to evaluate alternatives at any time in the year, and what always happens is accounting says, “Hey, it’s time to write another big check to [service provider that requires pay in advance for a year],” and you think, “Man! I need to make sure we spend a couple months evaluating alternatives before next year’s renewal period,” and then you repeat that cycle every year thereafter.
3. No real try-before-you-buy. Our rep told us we could not upgrade to Professional for a limited period to try it out with our own data. We would have to sign up for a trial and play around with an empty account. While my SaaS business is not quite the size of Salesforce.com, I understand our industry well enough to know that if a business of the size and scale of Salesforce doesn’t allow users to do that, it’s by design.
4. High Ratio of Sales & Marketing Expense: Salesforce is losing money on nearly $3 billion in revenue, and spending roughly half of their dough on sales and marketing. They are a sales company, not a technology company.
5. Few of the people I spoke with are super pleased with their Salesforce investment: Our Salesforce.com rep says they boast a 94% retention rate. I find that stat questionable, as I believe more than 6% of businesses shut their doors each year (someone please help me find this actual stat). I suspect she likely misspoke, and her 94% stat probably comes from something like the percentage of current Salesforce users who replied to a survey indicating that they intend to continue using Salesforce.com when given the option of answering either Yes or No (I couldn’t find details about this; if anyone can, please let me know, and I’ll update this post). I’m especially skeptical of her stat because, of the roughly ten replies I received from entrepreneurs, about half said they used Salesforce, and while all expected to continue doing so, only one said he loved it (see quotes at the bottom of this post). To quote one of the folks who replied:

“They get you addicted to the crack and then they jack up the price. It’s quite a business.”

So what shall we do? We want a pipeline-focused CRM solution that’s robust, extendable, affordable, and easy for our sales, support, and marketing team to use. I have a feeling we’re going to bite the bullet and upgrade, but the commitment is significant enough to our business that we’re thoroughly vetting alternatives before proceeding. Our options, as we see them presently:

1. Stick with Salesforce, and pay the price. This is the easiest solution in the short term, but it will be costly over the long term, and the deeper we invest in Salesforce, the more difficult it will be to switch at a later date. Remember: there are still companies using Lotus Notes because the switching costs are so high.
2. SugarCRM. On a side-by-side feature comparison, SugarCRM seems to offer everything we need and want, at slightly under half the price. To add to that, several of the entrepreneurs whom I asked about CRM pointed me to a well-regarded Atlanta-based CRM consultant and reseller who’s particularly experienced with SugarCRM. According to our contact there, a migration from Salesforce.com to SugarCRM would be pretty straightforward. Some cons: I know a lot of Salesforce.com users, and I don’t know many SugarCRM users; migration-related consulting fees could run as high as $10k (but might be $0, and would more likely be under $5k); One of the folks who replied (who has far fewer seats than we would need) really disliked SugarCRM, called it “DIY,” and was contemplating a switch to Salesforce; Like Salesforce, SugarCRM has only one payment option: pay-in-advance-for-a-year — that means we’re committing for the long-haul.
3. Capsule. We gave this product a look a few years ago when they were called Javelin. I liked them then (they seem to have moxie, have a pipeline-focused system, and they’re affordable at only $15 per user per month), but they didn’t strike me as robust. Simplicity is often a feature rather than a drawback, so we’ll give them another good look.

I’ll update this post when we make our ultimate decision. If you have any suggestions for us, I’d be grateful to receive them.

I’ll close with a handful of the representative comments business owners shared with me about their own CRM.

Software company with about 5 users:

I feel your pain and we pay about $2K in SF licensing right now. We are sort of ‘meh’ on switching right now, but I think as we start to add more licenses it could become more of a conversation around here.

Equipment reseller with about 15 users:

My experience is switching from Infusionsoft to Salesforce. It was a complicated experience and cost $15,000 in consulting + $10,000’s in extra blood, sweat and tears (lost productivity, emotional capital, focus). If you switch, unless you have a super simple setup, it could be quite an ordeal, as it was for me.

The pros in my mind of Salesforce:
· It’s the standard

· Other apps integrate

· Other sales reps are familiar (so when you hire one, they should be familiar)

· Video training is available on the platform

· Robust community of support

· It has fantastic reporting (my biggest benefit)

· It is super customizable by my team and with outside help.

At this point SF is worth it big time – and I have the professional edition for 12+ people.

Lessons learned:
· Let your team customize it (and they’ll like it even more)

· Read the Salesforce best practices on amazon (skim it)

· Fix issues quickly to give the team a wow response factor

Software company with about 5 users:

We used Sugar, then Zoho and now Salesforce. We went with SF for the enhanced reporting/dashboarding and integration with Pardot.  It has definitely taken a while to mold SF to our needs and there is still more work to be done. But I feel like this has been more our issue than the software’s. Just trying to figure out how best to use the tools it provides. Sugar was so long ago, I hardly even remember it. Zoho seemed to work pretty well for us, but again the reporting and Pardot integration pushed us to SF. If you have a solid list of what you are looking to accomplish and you can confirm it works within Zoho, it’s definitely one to consider.