G2 Crowd wants to disrupt Gartner’s Magic Quadrant through a real-time, crowdsourced platform of peer reviews and social analytics targeting the CRM and marketing automation markets. The new “Grids” service launches June 1.
The platform, free to explore, analyzes and correlates about 15,000 peer reviews that it has aggregated since its launch in February.
CEO Abel Goddard says G2 Crowd will sell access to its crowdsourced data and provide comparison tools that customers can use. The value is in the data and how it is segmented. Customers now pay a one-time fee of $199 to get the CRM data. Abel envisions it becoming a subscription model.
Grids feeds peer reviews, web traffic, Twitter, LinkedIn, and other social media data into an algorithm to determine how companies are perceived. The peer reviews are weighted more heavily than other data.
Reviews so far put Salesforce.com and Microsoft Dynamics in the lead for the CRM market. Leading marketing automation companies include Marketo, Pardot and Hubspot. G2 Crowd will eventually add more market segments to its Grids platform.
Gartner’s Magic Quadrant has helped it reach $1.6 billion in revenues. The methods it uses for Magic Quadrant rely on analysts, each of whom are specialists in their fields. These analysts talk with customers, conduct market research through Gartner and then define the leaders.
Due to the amount of research required, Gartner often has to limit the number of companies in the market that it reviews, Abel said. Startups and smaller companies, while they may be innovative, don’t get an analyst’s attention. By contrast, G2 Crowd’s reviewers determine what companies get reviewed, helping customers get a picture of the market, as well as large and small companies.
Prior to starting G2 Crowd, Abel founded Big Machines, a sales configuration vendor that grew to $50 million in revenues before being sold to private-equity partners. In the 11 years he ran the business, Abel said they would pay $75,000 per year to Gartner, whose customers often are the companies it researches and ranks. The payment gave them access to the analysts and their presence at events, including user conferences. Abel believes, and so do many in the tech market, that this kind of relationship affects how Garner does its reviews. Abel says it’s similar to Wall Street analysts that get paid by the customers it researches.
The sales model has changed as the Internet has emerged as the main marketplace for enterprise applications. New companies now leverage fast development cycles, APIs and subscription models to sell their services. Data is mixed into algorithms and packaged as services. The CIO is no longer the sole gatekeeper for what applications a company buys and sells. That reflects a shift in the market. The buyer is not one person but dozens, maybe hundreds or thousands of people in an organization. It’s these people who need guidance from their peers. Much as consumer services use peer reviews to help people choose products so also is the need for enterprise technologies.
Gartner has provided valuable services to organizations over the years. But it’s a model that comes from the IT age. Its way of doing business aligns with the giants of a former time, now challenged to find their way in a faster, more agile world. To its benefit, Gartner has a high degree of visibility. Its data is used daily by journalists like myself. But it does not provide the insights that a customer can get from real-time data. That’s the difference for G2 Crowd. If it can leverage this advantage, its crowdsourced platform will certainly grow in scope and pose a challenge to Gartner.