Statue of Thomas Jefferson in front of the United States Declaration of Independence.
PHOTO: Mrs. Gemstone

Many companies have “fuzzy thinking” about Customer Relationship Management (CRM) software, believing it can be the “customer data system of record” when that’s not the case. Peter Reinhardt, CEO and co-founder of marketing technology vendor Segment, shared those thoughts in an interview with CMSWire after his company last month spearheaded the 200-plus-company “Platform of Independents” that declares CRM is not enough for managing customer data and creating customer experiences. Segment is a customer data infrastructure software provider that also offers a Customer Data Platform (CDP), which is often compared to CRM. 

“There are a lot of people who have a little fuzzy thinking on CRM,” Reinhardt said. “They’ll say CRM isn’t just a sales tool and that customer relationship management is broader than that. It's really a sort of customer data system of record, and they start thinking about it in this vague, unclear category label. And they stop thinking about CRM as the actual physical tool that it is, and they start thinking about it as this broader concept." These practitioners need “something materially different,” according to Reinhardt. And that is best-in-class tools across every channel. CRM is only one tool, and it's specifically for sales. “We're trying to … clarify what we're really talking about when we talk about a CRM," Reinhardt said.

So what's behind this 200-plus company effort? Is this a legitimate effort that will lead to substantial changes in the ways marketers think about CRM and approach building their stacks? Or is this a clever marketing campaign by one vendor? 

Underlying Principles: Flexibility, Choice, Opportunity

The Platform of Independents launched Jan. 16 with a press release and advertisement, or "declaration," in the Wall Street Journal (PDF). They've got a CRM Is Not Enough Website, too. It is composed of Segment, Airship (customer engagement), Amplitude (product analytics), Drift (conversational marketing), Iterable (customer engagement), Mixpanel (product, user behavioral analytics), Outreach (sales engagement), Pendo (product experience), Radar (location data infrastructure) and Tray.io (general automation), as well as more than 190 co-signatory companies. They are united by a “set of underlying principles” that include:

  • A world of choice, where businesses are free to build a technology stack with the tools that they need, not just the one their CRM suite has chosen for them.
  • A world of flexibility, where data can be used across every department to exceed customer expectations, not just in sales and marketing.
  • A world of opportunity, where every business can have the technology and ability to be customer-first.

Related Article: 200-Plus Companies Unite Against CRM

Legacy CRMs Don’t Integrate Well 

The declaration claims legacy CRM systems, although not citing any vendor particularly, have acquired more than $30 billion worth of technologies in the last two years but do not integrate well with other marketing technologies, even within their own ecosystem. A best-of-breed approach to martech software, including technologies provided by this Platform of Independents, is the best approach. They can actually integrate well and are not locked in by a large vendor, according to Reinhardt. “A lot of partners are super excited and interested," Reinhardt said. "It felt like it put a point on something that they've been feeling for a while. Our customers felt the same way.”

Representatives from Salesforce, Oracle, SAP, HubSpot and SugarCRM — which each provide CRM software — did not provide commentary when contacted by CMSWire. 

Some Marketers Are CRM Believers

Yet still, Segment and others still have to face the facts that many marketers have faith in CRM to go beyond a sales tool for learning more about prospects and customers. Marketers are CRM believers, according to the Forrester study on aligning technology and data. Most marketers (40%) chose CRM as the number one tool to effectively provide identity resolution — over Customer Data Platforms (35%), Marketing Cloud (30%) and Data Management Platforms (27%). CRM was second (36%) behind Data Management Platforms (39%) when respondents were asked which martech tool could deliver AI/machine learning to optimize and automate campaign creation and performance.

Related Article: What's the Difference Between a CRM and a CDP? And Why You Should Care

Market Confusion Confirmed

David Raab, founder of the CDP Institute, found that number on identity resolution surprising because “most CRMs are terrible at identity resolution and can’t import data from all sources.” Raab called this “a sign of great market confusion,” which would back Reinhardt’s “fuzzy thinking” claims.

Asked about the Platform of Independents pledge that CRM is not enough, Raab said CRMs were designed for a specific purpose of enabling sales or phone agents to have informed individual conversations. “To do that,” he added, “the systems are designed to capture information as it’s entered by the agent and to quickly call up past information. That’s important but it’s quite different from capturing information from all sources, unifying it, and then sharing it with any system that needs it.”

Big sales and marketing suites have tried to expand from their base in CRM to cover all channels. But that, Raab said, is very difficult to pull off and has led to lots of custom-built integrations across different products within those suites. “It’s very difficult to connect outside systems into that architecture, although many buyers don’t realize that until it’s too late,” Raab said. “What’s really needed is systems that were designed from the start for multi-source data gathering, unification and sharing. That is what this group is promoting.” 

Studies Supports Best of Breed, Data Management Struggle

Some industry numbers also back the Platform of Independents’ claim about best-of-breed being successful. According to Gartner’s Marketing Technology Survey 2019, martech teams increasingly take a “best-of-breed” approach to selecting new technologies. Fifty-seven percent of marketers prefer to build their stack through various solutions from different providers, versus 29% who prefer an “integrated suite” approach. 

Further, industry numbers show marketers still struggle greatly with mastering customer data management. According to the Forrester report we cited earlier, those that manage customer data reported that improved data management capabilities would put their key goals more in reach: 85% believe that reducing time spent on data management would positively impact their ability to improve customer experience, and 76% believe it would help them win new customers, according to the Forrester researchers.

But best-of-breed isn’t everyone’s choice. Julia Fedorenko, a long-time CRM user and now independent consultant focusing on marketing strategy and operations, brand value and omni-channel customer experience, said that from the business owner's perspective, sometimes it’s easier to go with a single provider that has a significant partner ecosystem to cover most of the needs rather than handpicking dozens of separate solutions. “The ‘paradox of choice’ is quite applicable here,” she added.

Related Article: Why Marketers Can't Realize the Full Potential of Their Martech Stack

Marketing Ploy for Segment?

Data and technology opinions aside, is this nothing more than a clever marketing and public relations play by Segment and the co-signing companies? If so, it's working. “My initial thoughts is this is a marketing campaign,” said Joe Stanhope, vice president and principal analyst for Forrester serving B2C marketing professionals. “They are taking an admittedly clever tact to differentiate themselves and some of their partners and compatriots in a way to get a message out to potential clients that there are alternative approaches to working with large technology vendors.”

Stanhope questioned the Segment-led initiative’s “call to action.” Similar efforts, he said, like the Adobe-Microsoft-SAP Open Data Initiative and the programmatic advertising alliance between AppNexus, MediaMath and LiveRamp, went further than a press release or website. Given, it's been less than a month since Segment's effort debuted. “I did not interpret this,” the Forrester analyst added, “as a legitimate attempt to actually unify some consortium of technology. There is nothing in here that reads like that. It’s really just complaining about large tech vendors and saying that there is a best-of-breed alternative and they would like to help you with that.” Stanhope said it would be "fantastic" were Segment and the other companies to pull off something similar to past data-unification efforts between multiple companies and "back this up with a legitimate answer."

Segment: Marketing's Not the Goal

Asked what the Platform of Independents’ call to action is, Reinhardt said it’s twofold:

  • If you're assembling your martech or customer experience stack, consider the providers in this Platform of Independents and the best-in-class tools across all channels.
  • If you are a partner, join the Platform of Independents, commit to being tightly integrated and commit to being a best-in-class tool in the area for which you’re an expert.

Asked if this was a marketing ploy for Segment, Reinhardt said the effort is “advantageous” in a marketing sense but that marketing isn't the goal. He wants to start a conversation where people actually realize there is a better outcome for themselves, which is to buy these best-in-class tools. It’s about “getting at this fuzzy thinking” and having people think a little more clearly about what their overall stack needs to look like. 

Related Article: Do Marketers Really Need CRM? 

CRM a Big Fight for Small Vendors

But, the fact is: CRM is huge. It’s a big fight for Segment and others to take on. Smaller vendors often go big with guerrilla marketing when taking on the mammoths, armed with multi-billion advertising budgets, in their tech space. (Take Evergage’s Adobe Summit trolling, for example). Certainly, if Segment wants to take on CRM giants like Salesforce, Oracle, SAP, Microsoft and Adobe, it needs all the attention it can get. Segment isn't tiny. It has grown considerably since its first commercial product launched in 2013. The San Francisco-based vendor has 500 employees now and has raised $300 million in venture capital for a valuation of $1.5 billion

But it’s a pebble among mountains when it comes to some companies that promote CRM, starting with No. 1 Salesforce. Salesforce has 18.3% of the CRM market share, according to a report in June by Gartner. SAP (8.3%), Oracle (6.0%), Adobe (4.8%) and Microsoft (2.7%) compose about 40% of the market. Worldwide spending on CRM software grew 15.6% to reach $48.2 billion in 2018, according to Gartner, as CRM remains both the largest and the fastest growing enterprise application software category.

The Platform of Independents does not cite any CRM vendor particularly. Given the opportunity to match any large CRM vendor to the claims made by the Platform of Independents, Reinhardt told CMSWire, "All of these big companies."

CRM's Not Enough: Of Course It Isn't

Stanhope challenged the Platform of Independents' claim that "CRM is not enough" because, he said, "I don't know if anyone would argue that," not even the CRM giant. "I don't even think Salesforce," Stanhope added, "is sitting there saying CRM's good enough. That's why they keep building on their existing products. And other vendors are continually expanding beyond some of their core legacy capabilities."

Stanhope called the CRM declaration valid in the sense it goes back to the idea that data is very important to companies today, and there are a lot of ways to use it. "It's important to have portability and access to this data to make a business successful," he said. "And there's more than one way to do that. That's valid."