4 Startups Inventing the Future of CRM: How Artificial Intelligence is Disrupting the Sales Tech Stack (part 2/3 of the Changing Face of CRM)
“If you want to know where to make money over the next two decades, look for companies that are finding ways to automate jobs that are currently being done by humans — that you wouldn’t have thought previously could be done by a machine. Truck drivers are one thing and Google as well as Tesla have a great headstart in disrupting that market, but lawyers, doctors, customer service and sales reps — there are companies that are turning these professions into lines of code, and they’re going to make a lot of money.”
- Keith Rabois of Khosla Ventures (early investor in PayPal, LinkedIn, Square, YouTube, Yammer, Palantir, Lyft, and Airbnb among others)
Customer Relationship Management (CRM) software is a roughly $25bn a year market today and Gartner projects that it will be the fastest growing enterprise SaaS segment over the next few years, reaching over $40bn in annual spend in 2019. The importance of this market is being underscored by the all-out war between tech titans Microsoft, Salesforce, and Oracle who have already spent close to $40bn in the past two months on CRM-related acquisitions including LinkedIn ($26.2bn cash), NetSuite ($9.3bn cash), and Demandware ($2.8bn stock). Companies today are striving to leverage what is rapidly approaching the zettabyte scale data loads that customers are uploading to the cloud every year, and most CEOs understand that getting a better customer 360 will be a key driver of their firms’ success. Ten years from now looking back, 2016 will be recorded in the annals of technology history as a year of transformation in the CRM industry, and it behooves us as participants in this market and users of CRM systems to understand how what’s going on today will affect the future of the customer journey and our roles as sellers.
This is the second of a three part series (read first post here) aiming to provide insights into the current state and the trajectory going forward in the CRM industry. I am going to focus here rather narrowly on artificial intelligence since it is the talk of the Valley and is rapidly coming of age. Startups are using recent advances in natural language processing and machine learning algorithms to attack every vertical in the market, promising to automate roles in the workforce which we traditionally thought only humans could do.
As a salesman, I selfishly hope and pray that being in a profession which is primarily concerned with understanding and relating to humans, something machines to date have not been so great at doing, will prevent me from being automated out of a job myself. There are reasons to believe that salespeople will continue to maintain their value as interpersonal relationships are often what moves the needle in most B2B and B2C enterprise sales environments, but that doesn’t mean that the fundamental nature of sales processes will change dramatically over the next 3–5 years.
A burgeoning field of sales automation tools like bots that help salespeople make data entry and cleaning easy, as well as AI powered trainers that guide sellers through their sales motions offers the hope that instead of just automating salespeople and eliminating our roles, we’ll actually gain some tools that can make us much more effective and spend less time doing the things that none of us like to do, and more time winning business and helping our clients succeed.
Ask a venture capitalist in the Valley today what the hottest sector for early stage investing is and what they’re most optimistic about in terms of impact on the future and nine out of ten will tell you they’re betting on artificial intelligence. Y-Combinator, renowned as the most elite startup incubator globally, has caught the fever and an increasingly large proportion of the classes of companies they’ve produced in the past two years are dedicated to solutions based on breakthrough AI technology. Within the sales automation space, a couple in particular have caught my eye:
1. People.ai (YC S16)– The company recently emerged from stealth and will be presenting at Demo Day at the end of the month. People.ai aims to harness data about interactions like emails, calendar meetings, phone calls, and moreto recognize patterns in the behavior and activity of successful salespeople and then empower less skilled reps with an AI trainer. The trainer teaches them how to mimic sales eagles that are successful, and whom many reps often feel intimidated by, so that lower tier performers can replicate the activities and sales motions that lead to more closed deals. Based on my initial review of the founding team as well as screenshots of the product (they haven’t gotten back to me for a demo request but I will update when they do), this seems like one of the most promising sales tools that I’ve seen in awhile.
2. Nova (YC W16)– Personalization is the gold standard in sales and customer service and Nova aims to use AI to generate personalized email and message templates that lead to a higher lead to opportunity conversion rate. Nova’s tech crawls the web for details about a lead’s identity and then finds mutual connections like schools, causes, or friends to create some sense of shared experience or contacts that will result in a greater probability of the person responding. Then the algorithm uses a natural language processor to write a high quality personal introduction. Nova claims its users generate 3x as many meetings via its templates compared to the standard impersonal ones that so many bad/lazy salespeople use.
3. Elucify– Getting contact information for leads is a huge pain point for salespeople. Elucify aims to solve this by using an AI powered web crawler to reference many data sources and make sure that salespeople have the most up-to-date and correct version of their client’s contact information. The solution plugs into your CRM and aims to improve the success rate of connecting prospects. While wearing my venture capitalist hat I’m not exceedingly impressed with Elucify compared to the above mentioned companies, it’s still an interesting application of AI to crack a problem that many salespeople face.
While Y-Combinator represents the cream of the startup crop, I also want to mention one company based in New York that has eschewed the incubator route. Much interest in chatbots was spurred recently by presentations from Satya Nadella and Mark Zuckerberg at their respective companies’ developer conferences. They share a vision that chatbots will be the future of marketing, sales, and customer service. So far customer service has been the first application for much of the recent advances in chatbots/NLP technology, but I think we’re coming closer to what starts making me uncomfortable in terms of a machine taking my job — fully automated, or at least hybrid, salesbots.
These will require further advances in NLP technology, however, and even if machines may be getting better at reading human behavior they’re still pretty awful at mimicking it. And at the end of the day many buying decisions made are ultimately made by humans who base their decision on how likeable/trustworthy/credible a salesperson is. That said, an intriguing application of bot technology was recently announced with the launch of Troops.ai, a company based in New York and founded by Dan Reich, former founder of Spinback (acquired by Buddy Media).
Troops.ai aims to be a sales trainer akin to People.ai, except instead of developing a training methodology based on best practices culled from top-performing reps at a certain company, Troops aims to build an interactive chatbot that reminds salespeople when to follow up with leads and log their CRM data as well. I think the idea has its merits as sales managers often spend a surprising amount of their time simply making sure that salespeople are doing the CRM hygiene components of their job. Considering that one of the greatest pain points for enterprise CRM buyers that I hear is lack of adoption, i.e. salespeople are too lazy or don’t see the value in entering all their interactions or logging customer data and notes into CRM, I think that Troops.ai could gain strong traction in the market and has a high probability of getting acquired.
These companies are just the tip of the iceberg and as Microsoft pours money into Cortana, Apple into Siri, Google into Google Now, and Facebook into M Messenger, we are going see a fundamental revolution in human/computer interfaces. Speaking into devices and giving voice commands to a digital assistant is going to become the norm and it is going to enable drastic increases in productivity and efficiency. As salespeople we should be both very excited and very daunted by this future and it behooves us to give serious thought to what our roles will look like in the future as they continue to evolve with the technology that supports us.
Next week we’ll take an even deeper dive into what the tech giants are doing with artificial intelligence and how that will transform customer engagement and the customer journey for both consumers as well as in enterprise sales environments. Stay tuned, Smith, there’s more coming soon!