Picklist vs Object

Picklist:

• Values are static or nearly static
• Values can be maintained by an administrator
• All selectable values are displayed at once (drop down menu)
• The total number of values is relatively low (I’d suggest a maximum of 100, but the actual limits are much higher)
• You want to use controlling and dependent picklists (see “Field Usage & Field Types” in Fields) — this can be done to some extent with lookup filters (see Lookup Filters) and a little bit of creativity, but the net result isn’t quite the same
• The picklist value does not have any other associated data (e.g. the lead’s favorite brand is Dell; no other information about Dell is needed)
• Values do not need to be validated via the API (there is an AppExchange workaround to this, which I have not personally used)
• Values are captured in web-to-lead submissions (web-to-lead does not support custom relationship fields).
• You want to capture multiple values without creating multiple records (e.g. the lead’s favorite brands are X, Y,Z; use a multi-select picklist instead of a many to many relationship)

Custom Object:

• Values change frequently
• Values can be added/changed by users
• Selectable values can be searched for by users (lookup dialog box)
• The total number of values is high
• The value has associated data (e.g. the lead’s favorite brand is Dell; Dell’s address is X)
• Values in this list are used in multiple references (e.g. the lead’s favorite brand is Dell; a marketing campaign is sponsored by Dell as well)
• Values need to be validated via the API (useful for integrations)
• You want to use delegated administration (see Delegated Administration) on your custom object