Is Economics Killing Off Small Business CRM?

November 12, 2007 by Scott Gingrich

I’ve been noticing a disturbing trend in CRM that could have a major impact on small business…the move to eliminate single license versions of products.

Case in point: FrontRange has officially dropped their GoldMine standard product. The option available to new users is to buy their GoldMine Corporate product which comes with a 5 license minimum.

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And FrontRange isn’t alone.

Another popular CRM package with deep Open Source roots is SugarCRM. You can get their OpenSource offering free, but if you want the added features of their Pro system you need to buy a minimum of 5 licenses.

SugarCRM’s argument is that the OpenSource version is suited for the very small businesses and don’t need the added capabilities like:

  • Sales Forecasting
  • Campaign Management
  • MS Outlook Integration
  • Reporting

I disagree. Today’s savvy entrepreneurs are looking for sophisticated, easy to use software to run their businesses and CRM is no exception. I think for SugarCRM (and others) to claim that businesses with fewer than 5 employees don’t need access to these tools is patronizing spin to hide the true motives.

The question that I think begs asking and that reveals the truth of the matter is “Why don’t they just sell single licenses”? You can argue that it’s just as easy to sell a single license as it is to sell 5 licenses…and you’d be WRONG!!

The truth, as I see it, is that smaller companies with less than 5 employees (and I count myself amongst them) are:

  • much more cost conscious (CHEAP),
  • don’t have the same server and technology infrastructure,
  • are less sophisticated and don’t have the IT resources to deal with the technology.

There’s an old expression “It takes just as much work to sell a small deal as it does a big deal, so sell the big deals.” I think the reason CRM manufacturers are moving towards the 5 license deals is that as software prices come down, it’s too time consuming (expensive) to sell to the smaller companies that don’t have the resources and sophistication of businesses with at least 5 employees.

More than ever, it’s important to do your due diligence when selecting which software solution is right for you. If you are looking at a software that is still licensed for the “under 5″ company, be sure to ask them about their plans to continue supporting that market space. If you see a company starting to offer versions for larger companies, then double your efforts to get a straight answer about their commitment to the “under 5″ space.

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