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Why You Shouldn’t Be Afraid to Replace Your Manufacturing CRM

Brett Ames , June 11, 2020


The Endowment Effect, Status Quo Bias and the Sunk Cost Fallacy are all related biases that buyers of any product or service consciously, or typically subconsciously, incur after buying and implementing a SaaS service they have purchased. These are related behavior biases and they all impact decision making within manufacturing leadership organizations, to their own detriment. 

For buyers of an enterprise SaaS enterprise software CRM product, the implementation and buying of a Manufacturing CRM involve a significant investment in time, money as well as professional risk. So they are particularly susceptible to these biases. 

It is imperative for manufacturing IT decision-makers to take a long, hard, systematic look at their CRM system, particularly when the implemented system is a very expensive CRM like Salesforce. If the executives and sales leaders find their CRM system is failing the salespeople and sales leaders, the only decision that makes sense in the long run is to replace it. This is a tough decision but ultimately the best one for the business, not to mention the decision maker’s career. 

Here are biases to avoid when assessing your manufacturing CRM and other front-end systems. 

What is the Endowment Effect?

  • When the buyer of any good or SaaS service applies a bias when evaluating the value, and the continued licensing, of the service. In this case, the CRM.
  • Typically the Endowment Effect causes service owners to overvalue (versus undervalue) a given service that's been purchased, usually by them. “I bought it, it must be good.”
  • Results in influencing the CRM purchaser/decision-maker to continue licensing a CRM that isn’t producing an ROI for the business vs. other CRM solutions that can replace an implemented CRM and make and save the manufacturer money and improve sales.

What is Status Quo Bias?

  • This decision making bias is simply when a product decision maker opts to maintain the status quo with the given product, in this case, the CRM system.
  • When the option for the decision-maker is to rip out and replace the existing CRM system that they have spent blood, sweat tears and their professional reputation implementing, they are reluctant to do so.

What is Sunk Cost Fallacy

  • Deeply related to the Endowment Effect, this is when a decision-maker takes into account previously invested resources of time, money, and effort to make a decision to keep service.
  • Particularly important and difficult to avoid in enterprise CRM solution decision making where effort in implementing is involved, data has been collected in the CRM system.

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Decision-makers in manufacturing IT have to avoid these biases and continually assess and understand, objectively, the cost-benefit of their CRM system versus other CRM applications. CRM solutions like Verenia CRM integrate with any ERP, CPQ, 3D system and are extremely inexpensive to implement and license. ERP integration with any system is particularly important for any front-end system for order fulfillment.  They provide superior functionality versus extremely expensive CRM solutions like Salesforce at a fraction of the SaaS per user price.

Here are some signs your CRM is not performing:

  • Bad Opportunity, Pipeline data. If your sales and service people hate, or are just confused by your CRM, inaccurate or incomplete data in reports will result.
  • Salespeople are not using the CRM mobile app. Pretty much all CRMs have mobile solutions, but are your sales and service people using it? If not, you are underserving them.
  • Are your salespeople using the CRM to track leads and quotes? If you walk by a salesperson’s desk and see that they are tracking leads with a spreadsheet and not your CRM, then your ROI on that salesperson is zero and they dislike or don’t understand how to use the application. 
  • Does your CRM integrate with a CPQ application with a leading product configurator that supports bills of materials and work orders routings? CPQ is table stakes for any complete front-end manufacturing solution. The best practice is for the CPQ to be native to the CRM platform.

The Endowment Effect, Status Quo Bias and the Sunk Cost Fallacy are all related biases that prevent IT decision-makers from making changes in their IT stack, particularly in CRM, that would benefit them and their companies. 

Recognizing these biases and making a change in your CRM system to a sales solution like Verenia will involve up-front cost, but is easily and inexpensively implemented and the SaaS costs are tiny in comparison to an expensive vendor like Salesforce. A solution like Verenia will also yield increased sales and reduced costs almost immediately for manufacturers. Verenia is specifically built for manufacturing and much easier for their salespeople to use, providing a 360-degree view of their customers, aiding salespeople instead of creating data entry work, resulting in accurate data for sales leaders. It is also paired with the industry-leading Verenia Product Configurator, creating a complete front-end solution.

Tags: CPQ, Product Configurator, Configure Price Quote, CRM, Saas

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See how your organization can increase sales, reduce costs and differentiate your brand by using Verena's CPQ and CRM solutions
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Request a Demo
See how your organization can increase sales, reduce costs and differentiate your brand by using Verena's CPQ and CRM solutions
Schedule Demo