Venture capital is often referred to as an apprenticeship business because so much important learning comes from day-to-day experiences. Yet, as an article published by the Business Development Bank of Canada (BDC) explains, you can shortcut the learning process by learning from experts: “Your learning curve can be shorter—and your results better—if you learn from pros who’ve already mastered key … ... read more
Here is What’s Wrong With CRM
There’s a fundamental problem with Customer Relationship Management (CRM) platforms and it starts with the name. CRMs are built with a focus on the customer (the “C”). The problem is that our network connections are more than just customers. They are people.
People, Not Just Numbers
When we think of our relationships as “customers”, we tend to think of them as transactions. We prioritize pushing them through the sales funnel, rather than building a strong rapport. This breeds a culture of taking over giving. From the start of the relationship, we are focused on the end. This mindset causes our relationships to suffer and limits our ability to build and maintain a strong and valuable network.
But there’s an even deeper problem with CRMs. In addition to being objectified as customers, our network connections are “assigned” to companies.
Prospect A, for example, “belongs” to Company X. The traditional CRM hierarchy is such that contacts belong to companies (accounts). While this model might have made sense in 10 years ago (when job switching was less common), it is now antiquated.
Why We Hop Around
As Millennials entered the workforce and the sheer number of startups has increased exponentially, there’s been a trend towards “job hopping”. A study by LinkedIn found that Millennials and Gen Z are much more likely to switch jobs as compared to previous generations. Whereas Gen Xers averaged approximately two job changes during their first 10 years out of college, Millennials averaged twice as many (approximately 4 jobs) during their first decade out of college.
Many reasons explain the shift towards job hopping. While there was once a stigma associated with job hopping, this is no longer the case. In fact, job hopping can be a “win-win” for both the employee and the employer. According to studies, job hoppers can advance in their careers more quickly than others and companies gain employees with more diverse experience. In fact, employees who remain at a company for more than two years are paid 50% less than others.
The barriers to entry for entrepreneurs has also declined. With the rise of the cloud, entrepreneurs can build faster and cheaper than the past. Therefore, entrepreneurs are moving around faster than their predecessors and starting more companies. A study by Harvard Business School found that serial entrepreneurs tend to be more successful than one-time entrepreneurs.
Hopping Does Cause Headaches
For venture capital specifically, the traditional CRM makes it difficult to follow entrepreneurs as they pursue different opportunities (even company name changes can cause an issue). This is especially problematic for VCs whose strategy is to invest in promising entrepreneurs, rather than promising ideas or companies.
“I never invest in sectors, I invest in entrepreneurs.” – Kanwal Rekhi, Managing Director at Inventus Capital Partners
Other industries and professions also feel the pain of traditional CRMs, including sales, recruiting, marketing, business development, real estate, and even nonprofits. A 2016 study revealed that 85% of all jobs are filled via networking (as opposed to directly applying for a job). Success can rely on successful relationships and if a person leaves an “account” then you lose them as a “contact”.
Why Affinity Prioritizes People Over “Customers”
At Affinity, we help businesses maximize the value of relationships by identifying your company or firm’s most important people, in context. Using machine learning and natural language processing, Affinity syncs with your communication streams extracting and analyzing important bits of data. We then weave this into actionable insights for any team to accelerate their business goals.
Affinity’s relationship intelligence algorithm also allows you to search through our smart filters to find people that fit a specific search. For example, “who should I meet with from the biotech industry during my upcoming trip to New York City?” Affinity will surface every person in your network and/or your team’s network, that fits your query. Affinity will also proactively let you know when there’s been a lull in your relationship with a key individual or company.
We're living in the age of the customer. Relationships are built around people, not “customers”. According to Salesforce, 79% of business buyers think it's very important or absolutely critical to interact with a salesperson who is a trusted advisors. Strong, genuine, and transparent relationships are top-of-mind. High-performing sales teams are nearly three times more likely than their underperforming counterparts to say their sales organizations have become more focused on personalizing customer interactions.
The tools we use to manage our relationships should reflect the changing sales landscape that is increasingly defined by the strength of customer relationships. Despite the ubiquity of CRMs, there are a host of problems and issues associated with traditional CRMs. Affinity’s technology was built to prioritize all your relationships and provide actionable insights on the people who matter most.
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