BLOG. SMART PRACTICAL BUSINESS ADVICE

The Hidden Costs of “Free” CRMs

When it comes to growing your business, "free" CRMs can end up costing you more than you think.

WORKetc Benefits of CRM

While getting coffee a couple of days ago I overheard someone in the line behind me say one of the most cliched lines ever set to music: “The best things in life are free.”

That may very well be true in a sort of metaphysical or emotional aspect (some of us might actually have to start paying for all that “free” clean air soon). In business, however, one of the first things an entrepreneur has to learn is that the word “free”, more often than not, comes with strings attached.

In the CRM space, in particular, the idea of managing all contacts, sales, and marketing without having to pay a dime is extremely tempting, especially for entrepreneurs just starting out.

Of course, it all sounds too good to be true, and more often than not, it is. You may not pay anything upfront, but these “free” CRMs have their share of hidden disadvantages and financial downsides.

In fact, they may even end up costing more time, effort, and money than if you go straight for the right paid solution in the first place.

Fewer Features, Fewer Benefits of CRM

Feature disparity is the most easily evident difference between paid and free (also called “freemium”) CRMs. The latter tend to have restrictions on the number of contacts and storage space.

If you hit the limits and need more, you’ll need to pay for them — that’s where the “freemium” term comes from. If you don’t want to upgrade to a paid version, then you better start culling your contacts list just to free up space.

More advanced functionalities like email marketing, sales insights and reporting, and deep integration with commonly used third-party apps such as G Suite or Microsoft Office are also often not offered in free versions. Again, you’ll have to get past a paywall to gain access to these features.

While the limits imposed on free versions of paid CRMs are usually enough for the smallest of small businesses or the first few months of a brand new startup, continued growth is likely to quickly outpace the capabilities of these systems.

There’s a way to keep your CRM free without sacrificing a lot of the bells and whistles, though: open-source CRM. Of course, just like freemium CRMs, there’s a caveat attached to that “free” description.

Open-source CRM can be incredibly powerful — enough to compete with the benefits of CRM that more expensive heavy hitters bring to the table — but you’ll have to do everything yourself. And when I say everything, I mean everything, from installation to customization to troubleshooting.

You can pay someone to do all that, but then that would mean you’re essentially paying for the system, making the “free” part nothing more than a slight misnomer.

Lack of Customizability

WORKetc Benefits of CRM - Custom Sales Process
Custom Sales Process in WORKetc

Every business is unique. A purely digital graphic design firm, for instance, will have different workflows compared to one that focuses on printed output.

Customizability, therefore, is very important when it comes to selecting the right CRM for your business. A CRM is supposed let you make more streamlined and efficient workflows, so it has to be able to adapt to how you currently do things.

Unfortunately, free CRMs aren’t well suited for customizability. That means you’ll likely have to make your processes and workflows fit the system, instead of the other way around.

Let’s say you’re using a free CRM that lets you track your sales process with the generic “Cold”, “Warm”, and “Hot” stages. That may be enough for when you’ve just started creating your sales process, but what about when you begin to encounter prospects that don’t quite fit snugly into those three stages?

For example, you meet a prospective client who is very interested in your services but isn’t quite ready to buy in just yet. That doesn’t fit the textbook definition of “Hot”, but that’s pretty much what you’re stuck with.

Without the ability to customize your business processes in your CRM, marking that client as “Hot” is the only option you have. A paid CRM that allows deep process customization, however, would let you just make new stages such as a “Hot – On Hold” stage that more correctly describes that particular client.

An open-source option will let you do as you wish, but again, you’ll still need either a lot of time and effort or a paid consultant to turn it into a viable system.

Substandard Support

The level of support that you get is one of the biggest discrepancies between free and paid CRMs. Unfortunately, users often only become aware of it once they’re already neck deep into their new free CRM.

When it comes to CRMs, you don’t just buy and forget. This is true even when you opt for a paid system. Setting up and successfully deploying a free CRM is can be an even harder task, since you usually don’t have access to professionals to walk you through the entire process.

More often than not, you’re going to have to do everything yourself — from importing your business data into the CRM to troubleshooting any possible hiccups that may arise to training others how to use it. Instead of speeding up your workflow, your free CRM can end up eating resources that you could be using to grow your business.

Let’s say you’re importing old data from a bunch of Excel spreadsheets. Your free CRM accepts CSV imports, but how do you format and tag each cell so all your data end up where exactly where they should? Or maybe you want to do the opposite and export data to another CRM. How do you make sure the exported file is compatible with your new system?

Some free CRM users have built quite robust communities that you can turn to for help, but slogging through forum posts and sometimes-outdated FAQs can never quite measure up to getting help from professionals whose sole job is to help you get the most benefits of CRM. Plus, it takes time to sift through all that information — time you would be better off spending securing new clients.

Aside from making the setup and deployment much harder than it really has to be, having nobody to guide you through the process means you run increased risks of data loss. Also, if you’ll be using the CRM as a team, you might not even get buy-in at all from your employees. All your time and effort end up being wasted.

Zero Scalability… Unless You Pay

WORKetc Benefits of CRM

You’ve read all the forum posts and FAQs, struggled with adapting your business processes to fit your CRM, and somehow managed to really get your business to take off. Now your company is growing. More clients, more staff, more intricate processes and workflows.

The problem is, most free CRMs simply aren’t built to handle rapid business growth. The hard limits on features and contact entries see to that.

Your new sales team is asking for email marketing and integration. Your finance guy wants to be able to use QuickBooks Online to track your invoices. Your projects have grown big and numerous enough that you can’t handle them with spreadsheets anymore. And support? The daily influx of tickets has become a veritable flood.

Scalability is one of the biggest disadvantages when it comes to free CRMs. Freemium systems give you the option of upgrading to a paid system, but that will likely just cover the CRM part of the equation.

Projects, billing, support — those will require different apps, each with their own monthly subscriptions. Oh, and don’t forget about having to learn how to use them, too. You and your teams end up spending even more time, effort, and money to get those new systems up to speed.

Who Pays for Free?

Ready to finally move on to a paid version of your free CRM? Cool! Just be aware that even though you’ll be getting all the extra perks that come with being a paying customer, you’re likely still not 100% getting your money’s worth.

Unlike freemium games and apps that make money through ads, sponsorships, and in-app purchases, the development of free CRM versions are often subsidized by paying customers, with or without their knowledge.

Software development costs money, after all, not to mention support, marketing, and hosting fees. Those costs can be shouldered by taking a tiny percentage of revenue from paying customers to make the free version even more enticing to prospective users.

The per-account cost is different for every CRM out there, but there’s always a point where they just can’t go any lower. They have to take the money from somewhere to cover all losses sustained on free accounts

So once your business gets successful enough that you can afford the paid version, you’ll be subsidizing the account of other small business owners who are using the free version.

This isn’t necessarily a negative, especially if you look at it in a “pay it forward” sense. Other, bigger companies basically paid for the free version that you used to use, so why shouldn’t you turn around and do the same for some other small entrepreneur?

Still, it bears mentioning as it’s not really something that CRM companies shout from the rooftops. And when your budget is very tight you’d definitely want to know that you’re not paying more than you need to.

Now, how do I know this? Because it’s what we did in the very early days of WORKetc. The freemium version of our app definitely brought in a lot of customers (which we were in turn hoping would drive a lot of positive word-of-mouth our way), but we quickly found out that the freemium model definitely wasn’t for us.

WORKetc had no angel investment, no VC investment — I pretty much funded WORKetc out of my own pocket during those days. All the profits from our customers went right back to making our product even better. And at that point those profits were all coming from maybe 10% of our user base.

We decided to focus instead on those few paying customers (100% now since we ditched the free version), and it paid dividends. Functionality grew by leaps and bounds, we now have a pair of native mobile apps, and we’re now even switching our infrastructure onto the world’s biggest cloud network.

Invest in Your Company’s Future

WORKetc Benefits of CRM Growth

As enticing as it may seem at first glance, a free solution is almost never really free when it comes to growing your business. All of the hidden costs mentioned above — be it time, effort, or money — could easily pay for a paid CRM system twice or thrice over.

Just think of it this way. Remember that coffee I mentioned I got at the start of this article? That cost me $3. Getting that first cup of coffee is part of my daily ritual, so at $3 per day, five days a week for four weeks, that totals to $60 every month.

If I can spend that much on coffee but balk at getting a premium CRM (especially one that has way more benefits of CRM than the average system can) at roughly the same price per user per month, then I should probably look at my business’ cashflow a bit more closely instead of shopping around for a free CRM.

At no time is the saying “time is money” more true than when you’re growing a business. Price is equal to value, and you’ll get more long-term value by investing in a system that can grow and scale alongside your business no matter how big it becomes.

Which WORKetc features have given you and your company the most value so far?

COMMENTS

ChristopheJ
Friday 27, Jan 2017 6:05 PM

We chose for WorkEtc because of its customizability. Just like with our own software, the software should follow the user’s process and not the other way round.
What I value most however is the good support we receive – something I don’t think you can get in a free solution.

Donna Grindle
Saturday 4, Feb 2017 12:18 PM

As a long time customer we have been able to reap the benefits of the solution in many ways.

First, our business plans and focuses have changed many times and each time we have been able to quickly and easily adapt WORKetc to our latest needs.

The integration with G Suite (one of our original reasons for selecting this solution) is by far the biggest value to us. Doing all my work in so many places would make me crazy now. It may be a key reason we have been able to adapt to a lot of changes over the years so easily.

Thanks guys! We always sing your praises when folks are telling us about the “free” solution we should be switching over to like they use. In a few minutes I can point out the value we get is substantially more than the money they save by paying nothing.

Branden
Wednesday 8, Feb 2017 10:36 AM

Before we moved to WORK[etc], my boss spent about a month determining what we needed (or could need) and trying to find everything that ticked those boxes. That’s the step that people who got stuck with the freemium models don’t do. They don’t plan ahead, they plan for just this second.

Jaymes Baker
Monday 6, Mar 2017 10:33 PM

When I think of free software I think of Opensource, it’s a great community project but typically built to simulate a paid service. In the 90s you knew it was junk when it asked you to download a toolbar, but now a days you agree to give them your private information. In the end sometimes Opensource gets a slight edge, but it’s established companies and hard working employees that push out a supreme product. You can’t find a “free” cross platform CRM with the establishment and quality like Work[etc]

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