Lora Bentley spoke with Roy Russo, former JBoss developer and co-founder of LoopFuse, and Michael Harvey, EVP, Centric CRM. The companies recently announced they will be fully integrating their software. LoopFuse offers closed-loop marketing software, and Centric CRM specializes in CRM systems.
Bentley: How did this partnership come about? Who approached whom?
Russo: It's actually a funny story. When we first started out, the first CRM vendor we integrated with, in an aim to be CRM agnostic, was Salesforce because they're the 800-pound gorilla in the space, right? We were trying to cast a wide net.
We knew about Centric CRM, but we didn't have any inroads to communicate with them. Oddly enough, we have Matt Asay on our board of advisors. He's a pretty influential guy in open source. He mentioned in a blog that he met with the Centric guys, and that gave rise to the opportunity in our board meeting to tell him, "Listen, put us in contact with those guys. We really want to work with them." Our business models are very similar, the direction in which both startups are going is very similar, so it's a natural fit.
Harvey: Just to reiterate, Matt Asay basically facilitated the introduction and told each of us, "Really, you should talk to those guys." I think literally the day after he made his comments, we were in touch and on the phone and going forward. And that was maybe six weeks ago, Roy?
Russo: Yeah. That's the advantage of working with an open source company. I don't have to go through all this red tape just to talk to someone with a VP title.
Bentley: Why are the integrated products better for customers than CRM and closed loop marketing systems that are deployed separately?
Harvey: The best way to think about it is you still have these silos where the marketing information, consumer behavior on a Web site, things like that, are not tied into the customer service group. Integration, obviously, breaks down silos. That's, at its most basic level, why integration is better for customers.
For example, you can imagine a case where an end customer is hitting a Web site-maybe they're doing research over a period of hours or days-and eventually, they do something-download a white paper or request additional information-where they actually identify themselves. So LoopFuse is basically tracking that whole history and finally "Aha! They've given us an e-mail address." Now they're someone I can actually communicate with. LoopFuse can continue to watch what they do, I can do things like send them a campaign with some kind of offer, and at some point, I the marketer can say this person or group of people who, say, downloaded a white paper and spent at least 10 minutes on my Web site I'm going to call those hot leads, and I'm going to pass them to my sales force.
And now, because the products are integrated, basically with the press of a button, I've gathered up this group, I've defined it, and I've said, "Put it in the CRM system and assign it to the sales team." My sales team starts working those leads, and they start assigning opportunities and things. That information is also part of the integration, so within LoopFuse, the marketers can see what has actually happened to those leads: "Guess what? Thirty percent of them have opportunities in the needs analysis stage, and another 30 percent actually closed and lead to $100,000 of net new business." And I can look at that and say, "Geez, it cost me $10,000 to run this campaign and I've now generated $50,000 of business out of it." I've now closed the loop and can assign an ROI to my marketing activities. As Roy says, "That's the holy grail." In this day and age of key words and Web sites and all that, there is no reason for any marketing to be done that can't be measured.
Russo: Your use case was perfect, but there's one thing I wanted to add. When we first dove into JBoss, at the time JBoss only had an application server. As the company evolved, the "stack" concept evolved with it. And the idea was, "This is not one monolithic piece of software-it's the entire middleware stack." So you ended up with Workflow Portal, cost-stream capabilities, Hibernate for database access and so on. JBoss essentially got into the stack concept.
Aside from paving the way for legitimate, professional open source, they also paved the way into the whole stack idea for open source. What they found was there's an inherent benefit to buyers going to one vendor-that "one throat to choke" concept. That's where we are now, working together. It's the idea that a buyer comes to one of us and gets all their marketing and sales software in a box, essentially.
Bentley: Of what significance is the open source nature of the products?
Harvey: The traditional proprietary model was to create that "single throat" by one vendor being responsible for trying to ship everything [b]ut one doesn't have to look very far to see that products from a single vendor often don't integrate terribly well either.
The whole open source piece is that Roy and I can be working at completely separate companies and yet we can deploy this nicely integrated solution that uses open standards and allows communities and third-party developers to actually inspect the code to see how the integration was done and perhaps take their own crack at improving it. You get these stacks being delivered that integrate very nicely together and don't have to be supported by a single vendor.
Russo: The open source angle-and I'll speak for LoopFuse only here; I don't know the Centric pricing model-but it does afford LoopFuse a very rapid innovation time and how that translates into cost and pricing is it buys us a lower cost of sale, lower cost of marketing, lower cost of development and support. Clearly, when we're seeing lower costs within our business, that lower cost is passed on to the consumer. And that's what we're seeing now, with most of our competitors being eight to 10 times what we're priced at for similar features and functionality.
Harvey: The other point that I would make - I tend to like to get very concrete about things - is that from a user perspective what this means is that a customer will be able to go to our Web site and actually download, for free, updated versions of the products, in source code form if they want, that will integrate. That's part of the interesting dynamic of open source: The way you get development and sales and support and marketing costs down is to create very broad diffusion, and you do that by getting lots and lots of people to use and look at and play with your product, and report bugs back and all the rest.