Relationship Building

Off the Shelf vs. Custom-Built CRMs

Last Updated:
October 12, 2023

In the private markets, it’s all about building long-term relationships. For example, suppose you met a founder at a conference five years ago, kept in touch with him, and developed a relationship over time.

In that case, that founder might call you when considering whether to exit his business. In other words, when you nurture and foster relationships, you increase your odds of closing deals.

But how do you do this at scale? The obvious answer is to use a customer relationship management (CRM) platform. Unfortunately, most CRMs are intended for sales reps managing a sales funnel and traditional sales pipeline. Generic CRMs excel at guiding prospects down a linear sales process, which is very different from what is needed to foster long-term relationships with your network.

Since CRMs are not designed for deal-driven teams, the logical step would be to buy a generic CRM like Salesforce, Microsoft Dynamics, etc., and hire a consultant to customize it to fit your firm’s needs. If there is a large enough budget, a more ambitious option is to consider hiring a development company to build your own CRM system from scratch.

In this article, we go over why working with a CRM consultant to heavily “customize” a generic CRM such as Salesforce or hiring a software development firm to build a custom CRM is a risky and potentially expensive option that can result in a failed implementation.

Instead, most private market firms would be better served by an off-the-shelf relationship intelligence CRM designed for deal makers. These systems can easily be adapted to fit your firm’s unique workflows without reinventing the wheel.

Why You Should Not Build a Custom CRM

Very Expensive to Develop

CRM systems are complex pieces of software that are challenging to develop, primarily if the code has to be written from scratch.

Aside from the code, the consulting firm must also create the user interface, specific integrations, and the database. Once the first version is released, quality assurance testing must take place to ensure all bugs have been resolved.

This cumbersome process can take months or years to complete and cost hundreds of thousands, if not millions, of dollars. And this is only the beginning; there are other important considerations, including the time it takes to implement the system and integrate it with other apps or technologies your firm currently uses.

Long Implementation and Initial Roll-Out Periods

Implementing software that has yet to be exhaustively used and tested will result in an initial rollout period where users will spend considerable time finding and reporting bugs. Business processes must be adapted to the new software during this transition period and exhaustively tested to ensure they work accordingly.

This initial stage will require many extra development hours to ensure the software works as planned, integrates with other parts of the tech stack, and all bugs are properly resolved.

Expensive and Ineffective Training

Most off-the-shelf CRMs include well-designed onboarding programs and access to training resources, including videos, articles, guided tutorials, and knowledge bases to help teams get value out of the software right away. As part of their support program, CRM vendors include periodic check-ins with customer success managers who are well-versed in the private markets and your firm’s processes and use cases.

In the case of a custom-built or heavily customized CRM, the consultant or development group will not create and provide a well-structured training program with videos, articles, and other on-demand resources. You’ll either need to pay extra for any training materials or, as is most likely the case, your team will be responsible for creating the required training and onboarding assets.

If your team has any questions about best practices or getting the most out of the product, there won’t be a dedicated customer success manager available to help immediately.

The last thing you want when implementing a new system is to get stuck with a steep learning curve.

Reliability and Software Updates

Custom build software is less reliable than off-the-shelf products that benefit from extensive feedback and continuous use by hundreds or even thousands of users from the private markets.

To ensure the custom CRM system keeps working as intended and is not vulnerable to security exploits, the availability of updates and bug fixes will also depend on the development firm you initially hired to build the tool.

If your custom system needs a new update or patch, the development firm will charge extra; you don’t need to worry about this expense with off-the-shelf SaaS systems.

Lack of Technical Support

Busy deal makers are in the business of building relationships and closing deals- not testing software. Spending hours navigating a newly developed system full of bugs without access to on-demand customer support and with little documentation will result in wasted time and a failed implementation.

Due to their bespoke nature, custom CRMs need more support than their off-the-shelf counterparts. The reality is that consultants and development firms do not have the support infrastructure and personnel who understands your industry, unique nomenclature, workflows, and other intricacies of the private markets. If you encounter a technical issue, you must pay extra to fix your problems. Additionally, you must pay a hefty maintenance fee if you require perpetual support.

No Scalability

As your firm expands and you need a CRM with more functionality, features, or integrations, your system must grow alongside your team. Custom systems require you to pay extra development hours to add new functionality.

On the other hand, off-the-shelf CRMs for the private markets constantly push out updates and develop new features based on new technologies and customer feedback to help their clients get more value from their system.


Your relationships are your firm’s most valuable assets, and your CRM is where all your relationships, interactions, and network intelligence reside.

If you lose access to your CRM or the data were to disappear, what would that mean for your business?

Relying on a consultant or development shop is risky, especially if they were to go out of business or cease to support your application. As for financial risk, you are at the mercy of the consultant or company to code and deploy new updates, which means they can set their prices and exceed your allocated budget.

Why an Industry-Specific CRM Makes Sense

Implementing a new CRM system can either be a never-ending and expensive endeavor or a seamless experience that will result in your firm reaping the benefits of relationship intelligence, becoming more efficient, and closing more deals.

Here is why firms in relationship-driven industries should consider a flexible and customizable relationship intelligence CRM designed by a team of former VC and PE investors who understand the needs of the private markets.

A Team Who Understands Your Unique Business

Working with external CRM consultants and a development team that does not understand the inner workings of your industry to build a custom solution can be frustrating.

On the other hand, hundreds of firms in the private markets trust 4Degrees as their CRM and system of record, which means we understand your business. From our sales team to our support reps, we’ve talked to thousands of users and know how private equity, venture capital, investment banks, and M&A teams operate.

Our job goes beyond providing you with a tool to leverage the power of your relationships; instead, we see ourselves as collaborative partners who work with our customers to understand their pain points, get the most value from our platform, and ultimately close more deals or secure more mandates.

By collecting valuable feedback from users, we build and ship new features and implement new technologies to add value without charging extra for each feature we ship or software update we deploy.

We recognize that not all firms are looking for a rigid out- of-the-box turnkey CRM system, so our professional services team works with most of our clients to customize our off-the-shelf solution to fit your firm’s unique workflows, processes, and business needs while providing you with periodic system updates and access to our in-house customer support and customer success resources.

Faster Implementation and Onboarding

When working with a consultant or custom CRM software developer, onboarding and implementation may go by the wayside since the priority is to build and test the custom CRM solution.

Unsurprisingly, most failed CRM implementations fail due to a lackluster rollout, adoption, and onboarding process. A CRM platform that does not fit within the firm’s business processes and has low adoption rates due to a lack of training and support is a recipe for disaster.

Most ready-made CRMs include robust onboarding programs where the vendor takes the time to train team members on the system, and a dedicated customer success manager is assigned to the account to ensure users at all levels are getting the most value from the platform.

For example, at 4Degrees, our team exclusively focuses on working with deal-driven teams in the private markets. Since we understand your industry, you will not need to spend valuable time explaining your business and unique industry processes to us. This may not be the case with a custom CRM system where the development team is not well-versed in the intricacies of your industry.

Transparent Costs

When building your own CRM, you never know the direct and indirect costs of the platform’s development, implementation, and maintenance/support costs. Managing a CRM development and implementation project is challenging; most custom CRMs result in cost overruns. CRM experts often compare custom software implementations to a home renovation since projects usually take longer and cost more than initially projected.

Lack of focus and scope are the worst enemies of custom CRM implementations. The same is true when customizing generic sales CRMs such as Salesforce to fit the unique needs of a specific industry such as private capital and investment banking, real estate, etc.

On the other hand, by working with a cloud-based CRM vendor, you will have clear visibility into how much you will spend each year. Most CRM vendors have implementation costs contingent on the scope of the customization work required by the client. However, once initial implementation work, such as template creation, API development or integration development, data migration, etc., has been completed, you will only pay for the number of users plus any additional service packages or modules your firm requires.

Most off-the-shelf CRMs delivered via Software as a Service (SaaS) include updates, security patches, and new CRM features in the subscription cost.

Working with an experienced CRM vendor is more cost-effective and less time-consuming than hiring a consultant for custom CRM development.

Access to a Free Trial or Sandbox Environment

When you work with a development company to create a custom CRM platform, your team cannot access the actual system nor experience the user interface and functionality until the project is done and the software is ready to be tested and implemented. This involves considerable risk since if the system fails to meet expectations, there will be a cost overrun, and the implementation timeline will be affected.

In the case of a turnkey system, most vendors offer a free trial period where the firm can even use their customer data to try the system and ensure it works for their intended processes. Vendors might also provide a sandbox environment where potential customers can test the CRM with dummy data to ensure the platform and its various functions work to solve their specific pain points.

Key Takeaways

Larger enterprises or some specific businesses might benefit from working with a development team to build a custom CRM to automate particular processes within the enterprise. However, most firms in the private markets would be better served by a different type of CRM that understands their business and provides industry-specific functionality such as relationship intelligence.

As a relationship-driven firm, your relationships are your most important assets. So, using an unproven product to store all your institutional knowledge, deal information, and contacts can be risky. Spending unnecessary time, energy, and resources developing a platform to try and solve pain points that other platforms can address either off the shelf or with little customization is not a sound financial or strategic decision.

If you are looking to activate your firm’s relationship network to drive proprietary deal flow, eliminate data entry and automate your workflows, your team will significantly benefit from implementing 4Degrees- The relationship intelligence CRM for deal-driven teams. To learn more, click here to request a demo to see 4Degrees in action.

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