In part one of my interview with Martin Schneider, Senior Director of Communications at SugarCRM, we discussed the history of SugarCRM and the open source customer relationship management (CRM) space. Part 2 describes SugarCRM’s approach to development, their partner ecosystem, and how social media has changed CRM.
Q: About development—most of it is done by your team of programmers, right?
A: That’s correct. Engineering is done more than 90 percent in house. We have set up this model because, while we open source everything we do, we rely on our business customers, and they demand a very solid, secure code base. And you can’t have a code that everyone is constantly changing and offer a 100-percent clean and secure code for paying customers without a lot of effort. So we do everything, for the most part, in house.
Now, that said, the community builds extensions and add-on applications—tools that it can make available on our SugarForge site, where we have more than 800 application extensions. Some of these could be a French translation, for example, or tools that extend marketing capabilities, etc. Instead of putting them in the core product and confusing users, we enable everyone to grab them for free as extensions that they can plug into the platform very easily. It’s interesting also because these people receive recognition for the extensions they develop.
Q: I noticed you also have SugarExchange, which is an online marketplace for tools and add-ons. Do people have to pay for it?
A: There are some free applications available on SugarExchange, but most of them are paid. Instead of developers creating something and putting it on SugarForge, in this case there are independent software vendors (ISVs) and other partners who build really strong and stable applications and extensions. These include partners like Box.net that has an application it wants to integrate with SugarCRM. But then there are also free tools, like a language pack, that some companies will promote to attract customers.
Q: You have lots of partners like Jigsaw, for instance, and I wonder how you would classify them. Are they mostly CRM software companies, social media companies, or…?
A: Our partner ecosystem has two layers: We have our distribution partners, the typical value-added resellers, companies like Plus Consulting, Levementum, or Accent Gold Solutions, which are a great sales force for us—in Europe we sell primarily through these channels. The other types of partners include those for social media (Jigsaw and Hoover’s) and connections (with sites like LinkedIn, CrunchBase, or ZoomInfo), and we work with Box.net for cloud collaboration. We’re also working on integration partnerships with companies like Talend, SnapLogic, and DataSync, and we have partnerships with big companies like Oracle, Microsoft, and IBM. If it touches a CRM system, we are or we will be a partner with that company.
The social element is becoming more varied—we already have partnerships with companies like HubSpot and Qontext for inbound marketing and social collaboration. We’re looking into companies like Jive and Lithium for community building and management within our CRM system. We are a platform for people to standardize on. It’s not just for extracting structured data from a database, but also for using related videos and tweets or other social media content. It’s really great for us to bring in all those systems because people have been buying them in a silo and not really seeing their value across an organization. You can use brand and social media monitoring to power the decision making of sales people or a marketing person—we see all these things running through the Sugar platform, and that’s what we will achieve with our partners.
Q: Lots of people are talking about social media, and many of them are struggling to define what it is or what it should be. What’s your opinion on this?
A: It’s just like when the Web came out—CRM already existed. We had CRM before e-mail. It was difficult to track marketing activities through direct mail, billboards, and magazine advertisements. With e-mail and the Web, we had easier ways to track and manage marketing activities. It’s the same with social media: it’s just another channel that you’re going to use for sales, marketing, and support. Your CRM system will consume the data from customers to give you more insight, just like we did with all the data we had before the social media revolution.
We see social media as a huge opportunity, but it’s not a completely different concept. We’re still selling to people and the end users are looking to buy products; you’re identifying them, you’re building relationships, and you’re supporting them. So we’re just going to absorb those channels of communication into our system—it’s that simple.
Q: The role of the customer is also changing. In my opinion, social media gives great freedom to customers, like the option to share thoughts on companies and services, consult with peers before making a decision, etc. How do you see this change in the interaction between companies and customers?
A: The process was linear years ago, even before the Internet. Companies would somehow get your name, call you, come to your office, and talk about how great they were, and then you were going to make a decision. And if they closed the deal, they tried to sell you more stuff. That was fine then, but the people you used to call in a very anonymous manner now know a lot about you. But also, you can know a lot about them because they share information about themselves and their needs. I already know that they prequalify as potential customers because they visited my Web site, but they also know that they can find out more about me from their peers, before I even get on the phone with them.
That engagement strategy is much more convoluted. They don’t want me to e-mail them a brochure—they want to have a conversation and understand the real value of my products, because they’ve already seen the brochure online. But if you know what you’re doing, this is higher qualification of your potential customers. Instead of educating and evangelizing, it’s better to start the conversation further along the line. Customers expect us to care about what they really need, not what we want them to buy. This relationship is also helping companies build a buying culture rather than just selling products. It’s “how can I help you” rather than “what can I sell you today.”
To be continued…
The third and final part will cover the cloud, or software as a service (SaaS), compliance for CRM, and integration of SugarCRM with other systems.