💃 The 2 Words Your CFO Hates 🕺

Good morning, Salesforce Nerds! “You’re on Microsoft Dynamics?! Why don’t you switch to Salesforce, the #1 CRM in the world?!”

Here’s one huge reason - Switching Costs.

SCENARIO

Let’s say a company has 100 Salesforce Enterprise Licenses.

🧮 100 licenses @ $300 each = $300,000.

What if the company switched to Microsoft Dynamics @ $225 per license?

🧮 100 licenses @ $225 each = $225,000.

That’s a $75,000 savings in licensing!

Why wouldn’t this company make the switch to Dynamics and stack those sweet savings 💰💰?

💸 What about the cost of training salespeople on a new CRM?

💸 And the Dynamics implementation expense?

💸 And the converting of the Salesforce team to a Microsoft team, either through re-skilling or firing/hiring?

💸 And the downtime while transitioning from one CRM to another.

💸 And the stress for marketing, sales, and technology teams during all of the project meetings, business decisions, and going from a CRM you know to a new CRM.

Welcome to Switching Costs, the shadowy, large-looming expenses incurred when switches are made.

WHAT IS IT?

What Are Switching Costs?

Switching Costs are the costs incurred switching from one product, service, or resource to another.

And the costs are not always dollar bills 💵.

They also materialize as-

🕰️ Time - to ramp down and up.

👥 Resources - to manage the switch.

👩‍❤️‍👨 Relationships - partners, vendors, and…coworkers lost to the switch.

🥵 Stress - switching CRMs, for example, will be stressful for implementers, project teams, sales and marketing frontlines and managers.

💸 Opportunity Cost - what could the business be utilizing money, time, resources, and emotional health on other than switching? Product enhancements and improved service to increase revenue?

WHY SHOULD YOU CARE?

Switching Cost Impacts

Switching impacts everyone, from the frontline to the C-suite.

Successful switching, like changing ERPs, can take years.

And sometimes NOT switching is the best move for the company, even if it’s not the best move for an individual or business unit.

Here’s some examples 👇

EXAMPLES

Switching Cost Examples

Here are some progressively more complex examples of switching costs-

Switch from Teams to Slack

🕰️ Time - One minute.

👥 Resources - Communications. Maybe pull down a backup of data. Flip the switch. That’s it.

👩‍❤️‍👨 Relationships - You won’t hurt any relationships switching from Teams to Slack 🙂.

🥵 Stress - Probably the opposite! No one is gonna miss Teams.

💸 Opportunity Cost - You might lose a few bucks if you’re already Microsoft-bundled, but the happiness of your company more than makes up for it!

Switch from SFDX to Gearset

🕰️ Time - Maybe a week or 2.

👥 Resources - Here’s where the audience matters. The devops team’s processes are isolated from the rest of the business - no salespeople are creating branches. A high functioning devops team can swap out their devops tooling in a week and not miss a beat. We’ll get to the other end of the spectrum in the next example….

👩‍❤️‍👨 Relationships - SFDX is a free resource, so you’re not gonna burn any bridges with the mothership. And you’ll gain great relationships with the amazing group at Gearset!

🥵 Stress - Minimal, but it will be there. There will always be some anxiety when you make a change in your high-touch tech stack.

💸 Opportunity Cost - You weren’t paying for SFDX licenses, and now you’re paying for Gearset licenses. But SFDX requires more overhead to manage, maintain, and enhance. Gearset gets all those sweet SaaS benefits like constant shipping and amazing customer service.

Switch from B2B (Contacts/Accounts) to B2C (Person Accounts)

🕰️ Time - a bigger and more complex lift.

👥 Resources - you will need tech and business resources to successfully make this change. And the business, those adorable sales and marketing teams, will need to be trained on Person Accounts. Why and how they’re different than Contacts (and why it’s called a Person Account?!). The audience the switch impacts matters!

👩‍❤️‍👨 Relationships - IT and the business always have great interactions, right? Salespeople always like when you mess with their current state, right?

🥵 Stress - Project meetings, executive summary updates, time commitments to the business. Yeah, there’s some stress.

💸 Opportunity Cost - Minimal for this specific case. Converting from B2B to B2C is business critical and done for short and long-term outlooks.

Switch from Dynamics to Salesforce

🕰️ Time - Perhaps 4-6 months for a 100 user org.

👥 Resources - A dedicated project team that likely includes 3rd party vendors (Salesforce consultants), as well as the company’s IT and business teams.

👩‍❤️‍👨 Relationships - You’ll make new relationships with your project partners…hopefully they’re good ones 😃.

🥵 Stress - This will be stressful for the company making the switch. It will be high-effort for the consultants; their stress levels will depend on their experience.

💸 Opportunity Cost - Changing CRMs is a big decision. All of the money, time, and resources committed to it could certainly be spent elsewhere. For example, more marketing to create more leads for sales to convert into revenue 🤑.

Switch from Netsuite to JDE

🕰️ Time - ERP changes are hard! At least 1 year if you’re doing it right 🙌.

👥 Resources - A lot of resources. JDE and Salesforce partners. Internal teams that include IT and the business. Executives for decision-making and cost-monitoring.

👩‍❤️‍👨 Relationships - ERP rip ‘n’ replaces are battles. Not everyone makes it through to the end. The project team that you start with will NOT be the project team at go-live, some individuals won’t make it that far.

🥵 Stress - ERP implementation. Nuff said 🥵🥵🥵.

💸 Opportunity Cost - If you nail it, you’re good for 10yrs. Worth it. If you fail it, you just burned over a million dollars and might need double to get to go-live.

TAKEAWAY

Final Thoughts

Understanding switching costs elevates your decision-making abilities to executive levels.

Switching costs are high, but don’t always show up as a line-item in the P&L.

Experience in frontline and leadership roles during a switching event is valuable exposure to the 10,000 pound necklace stakeholders wear during the switch.

Sometimes the best solution is to do nothing 🤷🏻. When the business is making money and the only people complaining are cost-centers (IT), then doing nothing could be the correct path.

What’s best for company is not always what’s best for everyone in the company. Switching costs are a perfect example of this.

SOUL FOOD

Today’s Principle

and now....Your Salesforce Memes