Overcoming The Limits Of Traditional CRMs For Private Capital

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Overcoming The Limits Of Traditional CRMs For Private Capital

Affinity‘s Co-Founder, Ray Zhou, wants to bring relationship intelligence to the world because every opportunity begins with a relationship.

Private capital deal flow is unique. Despite this, some firms use traditional customer relationship management platforms (CRM) that are best suited to managing linear, transactional sales cycles where data quality and accuracy aren’t non-negotiable. Why is this?

Many have good reasons to. As private capital firms scale, they turn to traditional CRMs as a solution to manage multiple funds, strategies or geographies—and sometimes all three. With complex front and back office processes, it’s understandable to want one system that encompasses everything.

The desire for simplicity makes sense. However, it comes with significant compromises in areas that really matter in private capital, like activity capture and relationship intelligence.

There’s an inherent trade-off between operational simplicity and quality of software. Increasingly, we’re seeing a trend toward best-in-class tools that exist within a broader connected tech stack—but it’s certainly not the only way to optimize a CRM for private capital.

The Limitations Of Traditional CRMs In Private Capital

Firms face many challenges when working with a traditional CRM, many of which boil down to adoption. The systems are typically difficult to use, and many end up becoming “empty warehouses,” lacking the data that would make them work as intended. It’s a compounding problem, and when talking to firms with traditional CRMs, it’s not uncommon to hear investors share sentiments like, “We have that? I didn’t know. I’ve never logged in.”

This is frustrating for the Ops professionals responsible for implementing the CRM and for management who find reporting on deal flow or portfolio performance impossible. Team members resort to using spreadsheets again, creating a disconnected data experience that slows a team down and can stymie the success of a fund.

Three Ways To Create A CRM That Delivers For Private Capital

For firms that are able to make the switch, many are choosing to move away from traditional CRMs toward more specialist systems that can speak to each other. This can lead to smoother operations and better outcomes.

But it’s not the only option.

Ripping and replacing a system as fundamental as a CRM is hard, and some firms will find their existing software delivers on some of their needs—like support for multiple strategies and management of back office processes—but not all of them. In these situations, there’s an increasing number of specialist solutions that sit on top of the traditional CRM.

As mentioned above, activity capture and insights driven from relationship data are two of the most crucial missing capabilities for deal teams. These can be added via integrations. With an integration that automates data entry and improves the accuracy of relationship intelligence, many more dealmakers will be inclined to use (and trust) the CRM.

The third option is to implement a solution that acts as a skin for the traditional CRM. This will make the UI more private capital-friendly but won’t improve any of the underlying functionality of the system.

What To Look For In A CRM Integration

I believe there’s the most potential in option two, finding a solution that integrates with the existing CRM to increase its utility in private capital. These three considerations will help ensure you choose the right solution:

1. Native Integration: Beyond being able to visually see data in the CRM, you want to be able to play around with it. Without native integration, your solution won’t help you operationalize your data. This includes building reports in the CRM using your data and setting up triggers like an alert to notify an account owner if there’s been no communication for a specified period of time.

2. Vertical Expertise: When a vendor has already solved problems for your industry, they come with a wealth of knowledge and best practices. Avoid needing to reinvent the wheel to resolve your firm’s challenges by seeking out this level of specialization.

3. Ease Of Deployment: Even with solutions that are built on top of an existing system, deployment can take months. Ask the vendor for a timeline and examples of similar implementations to assess the potential impact on your firm.

Evaluating A Change To Your CRM

Ultimately, CRMs are bought for outcomes. Firms want to see more potential opportunities earlier than their competitors; they want to raise their next fund faster than the last one or they want to structure and act on their team’s complex network of relationships. All can be achieved with higher user adoption. The most important thing when evaluating any change is to be clear on which metric it will move and what operational leverage you’ll achieve.

The role of traditional CRMs in relationship-driven industries is changing—and there’s a definite trend toward more specialist solutions—but these core systems are certainly not obsolete. If it’s too difficult to replace, work with your operational or platform team on a roadmap to integrate newer technologies. There are growing options to augment your CRM in ways that bridge the gap, increase user adoption and drive fund goals.


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