Microsoft breaks into crowded CRM market via partner network

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Microsoft Corp. is a company that depends on its channel partners. The Redmond, Wash., software behemoth boasts some 360,000 resellers worldwide (about 138,000 in the U.S.), with 96% of company revenue flowing from the channel.

Despite this, the company faces many of the same challenges here as other companies, including breaking into crowded markets. A good example is Microsoft Dynamics CRM (customer relationship management), which has had to sell itself to a channel already packed with competing products.

"I just ask the channel to put us in their bag, to learn enough about us so they can sell any product based on their customers' needs," said Brad Wilson, general manager of Microsoft CRM. One way he's doing this is to price Microsoft CRM low, and aim it at small and midsize businesses (SMBs), a strategy partners should like. SMBs have yet to embrace fully automated sales tools, and it's a potent new market.

The company's reward system creates additional incentives as a partner sells more, including added assistance in marketing and more training. In addition, partners have access to free, specially designed copies of Microsoft CRM to help in their sales-tracking efforts.

"We will look at which partners we think are right in each market, and then pursue the top 50 or 100," Wilson said. "We also get a lot of demand from customers, who ask us to find the right partner for them. We'll measure penetration and, at the same time we're training the partners, we'll build end-market demand so they don't have to sell from a standstill."

Adding to partner profitability, Microsoft has an elaborate range of CRM training courses its resellers can offer customers and a broad product line, ranging from back office and accounting applications to its well-known Office suite. Office, in fact, gives its partners an entry point, a wedge with which they can gain entry to back-office needs and sell the CRM solution.

"It's not money here or there, but rather a stream of opportunities we offer partners," Wilson said, noting this product line richness. "The most important thing we can offer is leverage."

Selling Microsoft CRM through the channel hasn't been a walk in the park. Microsoft plays here in an extremely fragmented field, and its own partners sell other CRM solutions from such major competitors as Siebel Systems,, SAP, Oracle/PeopleSoft, GoldMine and Sage Group.

Microsoft CRM version 1.0, built from scratch, hadn't been considered a competitive product. But with the release of version 3.0 in January 2006, the product now is considered worthy, and the market is responding. Since its introduction, version 3.0 has gained 220,000 users worldwide, with 50,000 new users added in the last quarter alone. M

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