Is $CRM dead?

On Friday 31 May 2024, Salesforce experienced a 21% drop in shares after missing earnings forecasts for the first time since 2006. This expected event indicates a potential long-term trend impacting enterprise SaaS companies. In this article, I am exploring why and how pharmaceutical & medical device GTM teams should react.

BACKGROUND:

Salesforce's 18-year growth period aligned with low interest rates, during which Salesforce + Partners (Veeva CRM, IQVIA OCE, Pitcher) GTM teams:

• Saturated the CRM market
• Maximized account penetration
• Increased sales quotas and expanded teams

Now, with high interest rates and low growth, customers are reassessing Salesforce licenses:

• Realizing many licenses are underutilized or unused
• Recognizing teams can maintain productivity without Salesforce + Partners
• Questioning large expenses

33% of SaaS spend is waste

Pharmaceutical and Medical Device CFOs are increasingly present in renewal discussions, demanding significant discounts. Research suggests 33% of SaaS spend is waste, likely to be corrected in the next four quarters.

GTM STRATEGIES FOR $CRM:

Lower Prices: SaaS prices have risen 18% YoY. Proactively reducing prices at the top of the market can retain key accounts.

Expand Downstream: Leverage brand equity to take out smaller vendors and consolidate the market's lower end.

Reduce Sales Quotas: Set realistic goals, considering the market shift and sales efficiency.

Pursue APAC Growth: Despite market saturation in the US and EMEA, APAC presents high growth potential due to its lag in software adoption.

Adopt Consumption-Based Pricing: Offering usage-based pricing ahead of competitors can fuel stronger growth.

GTM STRATEGIES FOR $VEEV:

Innovate: With competition coming through the $CRM and $IQV expanded partnership, CRM is set to move beyond data storage, to customer relations orchestration.

Shifting Partner Dynamics: With implementation partners wary of current business models, and collaborating with direct competitors, the balance of power is transitioning towards the negotiation table. Key industry players such as 微软 , 艾昆纬 , Salesforce , Pitcher , Exeevo , Platforce , Trueblue are expected to offer competitive pricing and demonstrate increased adaptability in delivering customized solutions to meet specific client needs.

The Patent Cliff: In light of 拜耳 's huge stock drop, reaching its lowest point in over a decade, pharmaceutical companies are prompted to reevaluate their spending on CRM systems. Bayer's stock plunge led to a loss of approximately $8.3 billion in market value. These events emphasize the need for data-driven decisions and strategic adaptation to ensure sustainable growth amid market uncertainty. With Bayer confronting a myriad of challenges, including a controversial takeover and patent expirations, the entire pharmaceutical industry is urged to reassess its investments and prioritize cost management.

Improved Usability: Whilst testimonials demonstrate that Veeva Systems is perceived as an effective tool in the pharmaceutical and medical device sectors, enabling companies to elevate their commercial and medical engagement strategies, market feedback regarding price, usability of licenses and user experience is less glowing.

With a drop of 19.82% over the past 3 months, Veeva's stock is in no better shape than Salesforce. As I previously stated in a LinkedIn article in August 2023, Veeva's Surprise Departure from Salesforce Sparks Excitement is a big opportunity for the CRM market to drive both innovation, and cost reductions.

Legacy CRMs won’t cut it anymore.

It is estimated that the leading pharma CRM vendors hold the following approximate market shares:

• Veeva: 30-40%
• Salesforce: 20-30%
• IQVIA: 10-20%
• Oracle: 5-10%
• SAP: 5-10%

GTM STRATEGIES FOR CHALLENGERS:

One Size Fits All Does Not Deliver: Creating an adaptable solution that caters to both Established and Emerging Markets, as well as the needs of Commercial and Medical+ teams, involves designing a versatile workflow that effectively addresses the unique requirements and objectives of each group. This approach ensures the solution enhances field performance and accommodates the diverse demands of field professionals across various geographies and functional roles.

Evolve the System of Record: Omnichannel execution entails the native integration of customer relations information logging, content management, event management, as well as marketing automation much - MUCH - further than the basic RTE capabilities.

CRM vs. CDP: In light of available Customer Data Platforms (CDPs), reconsider if CRM is necessary or if a Next Best Action (NBA) tool can efficiently capture data in a logging system, in a compliant form, without the need for expensive CRM licences.

CRM Essentials & AI: Either avoid the noisy AI discussions or go all in on AI embedded in CRM. Address current field operation needs with adaptable solutions, while leveraging competitive pricing outside the US and EU markets. Dive deeper into this topic here: The sunk cost fallacy of pharma CRM

KEY TAKEAWAYS:

1. Economic pressures will heavily impact the market. Future CRM winners will deliver value at significantly lower unit prices. It's crucial to discuss and implement these recommendations now as the world has changed, technology evolved, and we must adapt to macroeconomic shifts.
2. To effectively address vendor lock-in concerns and progress integrated Pharma CX and EX strategies, pharmaceutical and medical device companies must foster adaptability, focusing on data ownership, and seamless integrations. By thoughtfully managing relationships with software providers, organizations can balance innovation with stable long-term partnerships and create exceptional customer and employee experiences.
3. 拜耳 's staggering 45.67% stock drop over the past year serves as a stark reminder for pharmaceutical companies to remain agile and proactive in their strategies amidst industry challenges and market volatility. Investors' concerns are evident, prompting questions about Bayer's responsiveness and its potential as a sound investment. With substantial financial losses, limited innovation, and high expenses, Bayer's current circumstances appear to validate the market's reservations.

PS: If you are a pharmaceutical or medical device Commercial, IT, GTM Leader, I highly recommend reading Navigating Vendor Lock-In Concerns or dropping me a note to learn how we can help you navigate the changes in the CRM / MarTech / NBA ecosystem to your advantage.