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Battle for small-market CRM looms large

A small-market battle is on for the estimated 98% of businesses in North America that do not have CRM operations in place.

The battles may not be as ugly as Oracle-PeopleSoft or, but the competition is just as heated in CRM's small market, where customers are looking for more than just a low-cost option.

Just ask the decision makers.

Vicky Blocker, marketing manager with America's Lending Partners in Chicago, recently selected Best Software Inc.'s ACT application. With growing revenue ($13 million annually, a number expected to double this year) and seven seats to deploy, she looked at FrontRange Solutions Inc.'s GoldMine and a hosted service from before settling on ACT because it fit in well with company needs, Blocker said.

She wasn't just out for the cheapest option.

"We were going from having no CRM product to needing something that was going to handle a lot of difference facets," Blocker said.

She considered ease of adoption, scalability and flexibility. Cost fit into the equation but wasn't a primary factor, Blocker said. Because of rapid company growth, scalability is a key element, too, she said.

Crowded market

Blocker and others have plenty of choices these days. At least a half-dozen small-market vendors are courting the estimated 98% of businesses in North America that do not have a CRM operation in place. More appropriately called "contact management," the account service aspect of CRM is vital to small businesses -- generally defined as those with fewer than 100 employees -- that depend more on word of mouth to spur sales than on large direct-marketing campaigns.

For the small, mom-and-pop operations, cost is certainly a factor in making CRM decisions, but cost is not the only consideration and probably not the most important, according to Karen Smith, research director with the Aberdeen Group in Boston.

"I would not say it's all price for them," Smith said. "They really are looking for personalized local customer care and service. If they have a problem with computers, they may not have the internal IT resources that an enterprise company has. They want to be able to call someone to help them bring the system back up, because if not, they lose dollars."

Wendy Close, CRM research director with Stamford, Conn.-based Gartner Inc., said a recent survey she conducted with 112 small and midsized businesses -- all of which recently adopted CRM -- found the top reason that the companies' selected their software was features, followed by ease of implementation, total cost of ownership and finally, price.

New options for SMBs

It may be easier than ever for smaller companies to find a good price because competition in the small and midsized CRM space keeps on growing.

The new kid on the small-market block is Mountain View, Calif.-based Intuit Inc., which announced its first foray into CRM -- QuickBooks Customer Manager -- in August. With a stable base of customers using its bookkeeping software, Intuit found that many of its customers were using the back-office software for contact management. Hoping to serve this need, Intuit looked into making a CRM acquisition but decided instead to develop its own contact manager. The product, expected to challenge the other small-market players, is focused on companies with 20 or fewer employees.

While QuickBooks Customer Manager sells for a one-time fee of $79.95 per user, Intuit is highlighting another perk.

"Making it simpler is critical to what we do," said Charles Var, director of corporate communications. After all, Var said, "a pencil and paper is our biggest competitor."

Like Intuit, Best Software, owned by parent company Sage of London, offers low-end accounting software through its Peachtree application as well as contact management with ACT. By also offering SalesLogix for small and midmarket businesses, the company says it has the SMB market covered.

ACT's general manager, Greg Head, emphasizes how easily the application can be customized and integrated with accounting software, e-mail, Microsoft Word and Excel, and PDAs. ACT customers are primarily businesses that need to simply manage customer relationships, such as online or retail stores. Additionally, ACT has sold well to small workgroups within companies, Head said. For example, stockbrokers who have their own database of customer information and don't want to share it across the company use ACT.

Once businesses have grown beyond 20 employees and are looking to add sales force automation (SFA), Best Software pitches SalesLogix. Anthony Wooten, vice president of product marketing, said it's a large jump to the higher level of functionality.

FrontRange Solutions, Colorado Springs, Colo., also touts the ability of its GoldMine software to grow with companies.

"Part of our philosophy is a lot of businesses don't stay small," said Mike Smith, director of executive communications. "To us, the midmarket starts with the small market."

Basic GoldMine acts as the company's contact manager, providing the ability to migrate up to the more sophisticated corporate edition, which keeps the same interface with greater flexibility. FrontRange's Smith sees customers doing fewer features-and-functionality comparisons and looking more at business processes and how the applications fit in.

The Microsoft factor

The wild card in the small-market equation is Microsoft, which is "not going away for sure," said Aberdeen's Smith.

Earlier this year, Microsoft released its inaugural CRM software, designed specifically for small companies or divisions of large ones and featuring tight integration with the software giant's Outlook e-mail client. In the next few months, Microsoft will issue version 1.2, an international edition that tacks on multilanguage support and new reporting capabilities.

Add to the mix a bevy of hosted CRM providers promising fast deployment and ease of use and a commitment from the larger enterprise players to scale down their offerings for small organizations.

It's enough to make a small-business CRM decision maker's head spin.

America's Lending Partner's Blocker recommends testing the trial versions of applications to determine what works best for individual organizations.

"I didn't want our CRM to be the biggest pull for me during the day," she said. "I don't have the time."


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