No Holds Barred

The continued economic downturn has CRM vendors trying a variety of aggressive sales and promotional tactics to get noticed, be heard above the noise, and jump start sales. Some are offering deep discounts on products and services; a few are giving away products or services; many are launching aggressive advertising campaigns; and most are stepping up public relations efforts. A handful has gone so far as to take pot shots at rivals via the media.

Back in November, G2X Inc. started offering for free an unlimited number of licenses for its Agility Web-based contact management application to companies that purchase a minimum of 100 user licenses. The offer is designed to help gain some recognition for Agility, which started shipping last April, says Dave Glucksman, director of marketing for the New York--based company. To participate in the G2X special offer, however, companies are required to pay an 18 percent annual maintenance fee based on the total number of users, and are required to make a minimum purchase of the company's Level 1 Service package, which is priced at $25,000 for 100 users.

First Choice Software Inc., which provides add-ons and tools that work with Amdocs ClarifyCRM suite of products, also started giving away software. For the duration of its offer, the Austin, TX--based developer was giving away any of its more than 50 products, which include applications and development tools, to anyone committing to three year's worth of maintenance fees, according to David Sirkin, director of marketing.
Sirkin says the privately held company is expecting a good response to this special offer, but he also anticipates it will result in a "zero net for the bottom line" as the volume of new sales makes up for the loss of revenue.

Analysts say they are not convinced that giving away software will appeal to CRM users.
"I have mixed feelings," says Kelly Spang, an analyst with Current Analysis. "This might work for business productivity applications, but I'm not so sure about how well it will go over in the CRM space. CRM data is mission critical, and giving things away is not going to make users jump from system to system."

Spang notes that back in 2000 Oracle Corp. had some success in giving away an online sales management module from its expensive CRM application, but the buzz about the program died down shortly after the initial announcement. Oracle officials claim the program, called sales.oracle.com, is still going strong with more than 15,000 active users, and call it a success.

Still, Spang says, there is much more value in giving away support, rather than products.
Some industry watchers say discounting is smart, but expected as a tactical way to get business at the end of the year and get business in the pipeline for the first quarter of the year. However, according to Denis Pombriant, vice president and managing director of CRM at Boston-based market research firm Aberdeen Group, discounting doesn't address the fundamental problem. He says instead of gimmicks and sales, CRM players should spend more time identifying organizations that will spend in the next year on CRM projects. "Discounts are what induce businesses to close deals," Pombriant says. "That is not what entices businesses to spend in the first place."

When it comes to marketing, Pombriant says that targeting their messages rather than taking a broadcast, scattershot approach would better serve most CRM vendors. UpShot Corp. and SalesLogix were among those CRM players targeting their messages by defending their CRM territory and doing some marketing by firing barbs at Microsoft Corp. prior to the release of its MS CRM product.

In early December UpShot issued a press release titled "Microsoft Dropping Lump of Coal in CRM Industry Stocking." The press release details how, from online CRM-- provider UpShot's perspective, MS CRM signals more client/server headaches for users.

But UpShot is hardly the only vendor that is vocal about the competition. Recently PeopleSoft's CEO Craig Conway was quoted about the lack of profitability of ASPs and Net-native CRM solution providers--particularly Salesforce.com. Salesforce.com fired a few shots of its own when it recently unveiled a new multimillion-dollar advertising campaign attacking market leader Siebel Systems Inc. "In tough times people will do almost anything to be heard," Pombriant says.