Abstract：How and Why CRM vendors think China CRM market as a dilemma? Why Salesforces cannot be copied not matter in China or in the USA or in Europe? But why we believe that there are still the opportunity to do something in CRM?
1. How far is CRM from the “outbreak” in China Software Market?
As Salesforce became a B2B Software Giant, it not only brought the CRM of the US and Europe but also formed an important business track of B2B SaaS market in China. Now there are Salesforce teamed up with Ali Cloud to enter the Chinese market, and also Baidu had enter CRM Market early this year so that the CRM that had been quiet has become lively again.
Since Salesforce is already hot, the CRM market in the US and Europe is already very mature, and the Chinese CRM market will also erupt. Can Salesforce’s success be copied over?
One of the important reasons why CRM has a market in the US and Europe is that US and European companies have rigid requirements for sales specifications, management processes and transaction compliance, and CRM becomes a necessity.
But Chinese companies do not have these requirements. Sales management is indeterminate and on-demand, and is the biggest feature of Chinese-style marketing management. This makes it difficult to form a set of business rules and management models, and CRM lacks the foundation for the company.
Because CRM is a “standard” requirement for US and European companies, Salesforce does not need to educate and convince customers. All it has to do is replace: SaaS CRM with new technology and a new platform, replacing the customer’s legacy system (including reporting and tools). Salesforce can re-divide and occupy a large market share in a stock market, relying on SaaS to bring greater benefits to users than traditional software.
The Chinese Salesforce imitators do not have such a basic environment, and more are doing CRM education and cultivation work. There is neither a stock market nor an incremental market, and the company’s acceptance of SaaS is not high.
Even Salesforce, after entering China, did not meet expectations. There is data showing that Salesforce has spent about $200 million in revenue in the Chinese market for 2018. If the data is accurate, it is only about 1% of its global revenue. On the other hand, there are so many CRM vendors in the first camp in China during the same period, indicating that the demand for CRM is very limited.
If Salesforce is not convinced in China, the domestic CRM manufacturers are not served; this is not so much a CRM problem as it is a “ShuiTu” problem – which means the problem came from the local culture and minds.
In summary, the Chinese CRM market is unlikely to be “retired” in the short term; as for the domestic CRM market, it will only have erupted, and it is only the wishful thinking of startups and investors.
Even so, the great success of Salesforce in the United States and Europe, is still led to a large number of follow-up replicators and VCs betting CRM track, relying on Salesforce replication, can get rid of the CRM dilemma?
2. why the success of Salesforce can not be copied?
The success of Salesforce, even in the US and Europe, is a phenomenal benchmark that is difficult to replicate in real-world situations:
Founder Marc Benioff, as vice president of Oracle and sales manager in North America, knows how to market. He has been adhering to the SaaS road of business for 20 years without changing direction, and ultimately guided Salesforce to success.
Beyond CRM ecosystem
Relying on capital strength, through large-scale acquisitions, it quickly complemented and enhanced all the shortcomings of business and technology, forming a complete ecosystem, not just a CRM.
20 years of industry accumulation
In addition to the platform ecosystem, Salesforce’s most valuable is the accumulation of industry solutions and practices. The span of 20 years is too large, and there are too many things to accumulate. It is difficult to surpass the road that bends again.
The amplification effect of capital market
Only doing CRM does not have a market value of hundreds of billions of dollars, and the ability to expand the ecosystem gives the capital market a huge imagination, and the market value is further enlarged.
In summary, it is almost impossible for startups to copy Salesforce. In fact, most of the problems that Salesforce imitators are currently facing are not problems that can be replicated, but their own survival problems.
3. The imitator’s dilemma
In order to attract capital, the startups that choose the CRM track say they want to be China’s Salesforce. I thought that as long as I copied the Salesforce platform and products, I could replicate its success in the domestic market.
However, once you get into practice, you will encounter these fatal problems:
Marketing efficiency is very low
Although CRM has a set of classic marketing theories, as an IT business system, it is itself a vaguely unclear boundary, which leads to very low market and sales efficiency.
It is difficult for CRM to explain the corresponding business like financial software; it is also difficult to give customers a reason to buy, that is, to solve the business pain points of the company. If CRM is a salesperson, it can help the salesperson shorten the sales cycle and increase the transaction rate. In fact, the salesperson still “quickly” deals in his own way; it is difficult to prove whether a transaction is related to whether or not to use CRM. . If CRM serves the management of sales leaders, the entire process of data visualization, etc.; but the data required must be provided by the salesperson, which does not guarantee the accuracy and completeness of the data.
For a large number of SMBs, these are not the focus of their concern, and fast transactions are just what they need; and expanding the big customer market seems to be the way to solve marketing problems.
Delivery quality affects the renewal rate
Because of the lack of standard industry and field CRM business frameworks like Salesforce, the effects of market propaganda claims, salesperson commitments, and customer-added needs will eventually fall into the hands of implementation consultants, and the implementation process becomes a new creative process. .
This requires the implementation consultant to have superior business understanding and project management capabilities, otherwise several weeks of projects may become a protracted project.
For traditional software projects, regardless of the customer’s final use or not, as long as the project acceptance and payment, the project will be successfully delivered, and will not affect the revenue; for SaaS delivery, delivery and promotion will not be renewed if it is unsuccessful. A single is a loss of business.
Customer success cannot guarantee success
Maybe you will say: Even if there is a problem with marketing and delivery, isn’t there a CSM? If this logic is required, the level of implementation is higher than that of pre-sales, and the business capability of CSM is higher than that of implementation (in fact, CSM must be a business expert in the field), the capacity model of this organization, for SaaS startups Said the request is too high.
The reality is that most of the CSM is the role of the original customer service; for the business and improvement problems in use, the CSM outside the project is difficult to accept.
The reason why these three issues are discussed separately is because the result of their joint action may cause the renewal rate to decay rapidly: because it is not easy to sell, more out-of-range projects will be generated; the delivery success rate of over-range projects will be lower. , resulting in a lower renewal rate.
Renewal rates are always the root of SaaS’s business. Do you want to copy Salesforce? Let’s take a look at the renewal rate of its 400,000 customers: 97%.
4. Why do you or him/her or I have to become Salesforce in China?
While Salesforce-style success is hard to replicate, the marketing and sales is still the most likely track for success in 2B SaaS startups.
Salesforce’s important contribution to the field of CRM is to create a large logic matrix containing CRM, many of which are segmented business modules, which can be used as a single point of business to dig deep into value and make easy-to-reach entrepreneurial projects. Business under the CRM concept can be further subdivided, such as market automation, sales automation, sales enablement, contract fulfilment, service automation, and even customer success.
In fact, the US and European CRM market are not only Salesforce, but also big fish in smaller ponds in more subdivided areas, such as Hubspot, Pipedrive, Salesloft, Seismic. , Act! (CRM for SMB), Zendesk, and Gainsight (CSM).
Vertical field CRM is another corner of overtaking. Compared to a complex platform eco-type CRM like Salesforce, vertical CRM is equivalent to a solution tailored to an industry or domain. Because of the templating effect, the complexity is lower, and it is closer to the actual business of the industry customers, so it is easily accepted by industry customers, such as Demandware (e-commerce platform, acquired by Salesforce), Veeva.
More importantly: the marketing segmentation of business and vertical domain CRM can effectively improve marketing efficiency and implementation efficiency, control delivery quality, and CSM in narrow business areas is also easier to train, which can get rid of the three major problems faced by Salesforce imitators.