The One-on-One series here at Small Business Trends was an idea I had that I shared with SBT publisher Anita Campbell, and she was gracious enough to allow me to give it a whirl. And the first conversation I had for the series was with Jon Ferrara, who is the co-founder of Goldmine (which he sold back near the turn of the century) and more recently the founder of Nimble.
Well, that initial conversation took place twelve years ago this month, and to mark the occasion I recently caught up with The Right Reverend (my nickname for Jon) for a LinkedIn Live conversation (as part of a back-to-back show with TechCrunch enterprise reporter Ron Miller) to talk about the state of CRM, and why he’s still as passionate today about the industry he co-founded back in 1989 as he was back then.
Below is an edited transcript of a portion of our conversation. Click on the embedded SoundCloud player to hear the full conversation. And a big thanks to Anita C. for allowing me to continue doing these conversations and featuring them here at SBT, and to Jon for helping me kickstart the series and for coming back to join me for another year.
Brent Leary: 12 years ago I asked you if CRM was more important then as it was when you co-founded Goldmine in the late 80s. You said it was more important at the time. So, if I asked you today, is CRM more important now than it was 12 years ago, your response is?
Jon Ferrara: CRM stands for Customer Relationship Management, but today it stands for Customer Reporting Management because CRMs are primarily used by sales and marketing teams to pound prospects and customers. But if you think about it, Brent, what percentage of sales people are in a company? Maybe 5%. What does the rest of the company do to manage the constituency around the business in order for it to achieve its business goals? They use spreadsheets today still. Why? Because CRMs aren’t built for relationships. They’re built for command and control of leads and most outcomes of business relationships is in the sale. And so CRMs are absolutely more important today than they ever have been, but they’re misunderstood. Every business buys the CRM because they think they should, because everybody else has one, but they don’t know why they’re buying it.
It’s a frigging database for people and contacts, and everybody in the company should be using it because no matter who picks up the phone, you should know who that person is, what their business is about, who talked to them, what they talked about, and what’s going to happen and who’s going to do it, and most businesses can’t tell you that.
American Express can tell you that, but most businesses rely on some sort of email productivity suite, Microsoft or Google are the tools today. But they suck at contact management because every team member in Microsoft and Google has a separate contact database and email and calendar history, so you don’t have a shared contact database in your company for the constituency around your business.
From customers to constituents
What is your constituency? It’s more than prospects and customers. Today, to grow a business, you’ve got editors, analysts, bloggers, influencers, third party developers, investors, advisors, and prospects and customers, and what you’re doing is you’re using a CRM to qualify leads to pound them into a deal. But the outcome for 95% of the relationships you have is in the deal, so you end up in spreadsheets.
Still Passionate 33 years in
Brent Leary: What year did you co-found Goldmine?
Jon Ferrara: ’89.
Brent Leary: All right, ’89. So you’ve been involved with this for 33 years.
Jon Ferrara: Geez.
Brent Leary: 33 years and I don’t detect any less an ounce of energy and excitement for this now than you had then. Why are you still so excited and energized by this space, by the work you do?
Jon Ferrara: Because I believe, Brent, that my purpose on this planet is to grow my soul in the brief period of time that I’m here. And the best way for me to grow my soul is by helping other people grow theirs, rinse and repeat. What better contribution can I give to my fellow humans than to empower them to reach their dreams by building the relationships that they need to achieve their goals? I believe in relationship management.
I believe that it takes a village for us to achieve our things. Nobody does things on their own, and if you do what I’m going to tell you right now, which is to build an identity and share and give away your knowledge in the places where your constituency learns and grows with the intent not to bag and tag and sell them more, but to help them achieve their dreams and grow, that you’re going to have all these connections and conversations and how do you manage them?
Today, you don’t have a personal CRM. Your personal CRM is Google, Microsoft, LinkedIn, and spreadsheets. If you believe in the power of relationships, then you should invest in your own personal CRM, your golden Rolodex, and that’s why I keep doing what I do because I love to power people because it powers me.
Still coming up short
Brent Leary: Let’s talk about the shortcomings. 33 years in, what are you surprised that we’re still getting wrong with this stuff in general?
Jon Ferrara: Well, at its core, CRM is a database and a database should define what you put in and what you want to get out of it. I think that most people misunderstand CRM and so I’m just going to dissect it real quick.
A contact manager is essentially something that automates the Rolodex or the day timer. SFA (salesforce automation) is something that automates the six by nine callback card. There’s a difference. The callback card was a card that you essentially put the name of the person you’re calling, the notes on the call, and the date you’re going to call them back. “When should I follow up with you?” Okay, recall date, boom, file it on that date. Every day you pull up your cards and you call those people back. That’s Salesforce automation with a little bit of forecasting and a spreadsheet.
What happened was GoldMine and ACT pioneered relationship management and individual people loved it because they all rolled with Rolodexes and then day timers and it helped them achieve their relationship goals. SFA just accelerated that sort of relationship outreach. But then CRM was built because Microsoft came in and basically copied GoldMine and built Outlook and Outlook and ACT had to shift up in the marketplace and they grew into the needs of the customers by delivering SFA, market automation, eventually CRM.
But CRM really didn’t take hold until Siebel came in and built the enterprise CRM because management was afraid of what sales reps were doing with their individual contact databases in GoldMine and ACT. I think that we lost our way in the core of CRM, which stands for customer relationship management, now it stands for customer reporting management, because the reason they call it salesforce… you have to force salespeople to use it. No one in their right mind would use a CRM if they weren’t beat on to do it.
CRM should be about relationships not reporting
What should a CRM be about? It should be about contacts and relationships at its core to empower the customer facing business team members, not just sales people, to build the relationships that your company needs to achieve its goals and then it should have the functions to do the individual things like sales and marketing and the analytics and things you need to do for management to keep the finger on the pulse of the business.
But today, I think that CRMs aren’t delivering on the promise of relationships and I don’t think that Microsoft and Google are delivering on the promise of contact management. SFA is still a big hole, which is why outreach and SalesLoft is something that my son uses for sales as an SDR because CRMs don’t deliver SFA. CRMs don’t deliver contact management or SFA effectively and this is a big problem, and this is the hole Nimble fills.
Here’s the big problem with CRM. There’s 225 million global businesses. Less than 1% use any CRM. Why? Because you work for the CRM and you have to go to it to use it. Before meeting, if you’re diligent, you Google somebody, then you go log that in the CRM, and then you engage with them, you might engage with them on email or social or Zoom or face to face. Then you got to go back and log that in the CRM because the CRM doesn’t work where you’re working. It doesn’t live in your inbox, it doesn’t live in your Zoom or your Teams, it doesn’t live in your LinkedIn or your Twitter effectively, and it doesn’t work for you.
Your CRM should do the non-human things like automatically build in a record and log in the interactions, so you could do the human thing, which is listening and logging the note and scheduling the next task because it’s the basics that wins games and most people don’t do the basics because they’re too busy doing the hard stuff, which is data entry and typing.
Biggest failures – Adoption and Data
I think the biggest cause of failure of CRM is lack of use and bad data because you do type the stuff in, it’ll decay like fish. Most people A, don’t define what their CRM should really be doing other than maybe capturing a lead and putting it in a drip marketing thing and maybe handing it to a sales rep who could pound it into a lead, which is 5% of all the contacts in your company.
I think that they fail because they don’t deliver on the promise and the promise is really empowering that customer facing business team member to be good at engagement. To be able to engage you need to listen because you need to learn what you need to do to add value, but most salespeople don’t listen because they’re too busy typing shit in the thing, trying to log all the stuff so management gets off their back.
I think that a lot of small businesses buy a CRM because everybody else has one and they think they should have one too. They don’t really define what should go in or what goes out, and then at the end of the day, they have it, but they’re not really using it. Most people use a CRM as a contact manager.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.