The changing face of CRM

By Michael Thomas

According to Datamonitor, the research, data and analytic company, the CRM market is on a positive rate growth and set to double to about 6.6 billion with a growth rate of 10.5 percent through 2012. This growth is due to a number of factors such as penetration in new vertical markets and the ease, and flexibility of deployment. In 2007 Gartner stated the CRM market was on pace to exceed US$7.4 billion so that growth is obviously on pace.

“Customer loyalty is not the measurement that is has always been and can be easily swayed and revoked based on good, bad and indifferent experiences”
-Michael Thomas

The growth is definitely a positive one especially for CRM vendors but it reveals that companies are now embracing the essential need to become better at managing all of their relationships, especially their current customers in addition to trying to find new ones. The basic foundation of having an efficient CRM solution will always be a requirement but the work begins and is dependent on the effective balance of people to adopt and use the solution, efficient processes to follow and an adaptive technology to enable it to work together.

There are a multitude of factors driving CRM growth but none has been as effective as on-demand applications also known as software as a service (SaaS).

SaaS
This factor alone represents more than US$1billion in CRM revenue and continues to rise as more companies embrace the benefits of this platform. CRM solutions delivered this way has changed the landscape and has allowed more companies access to world-class solutions. Paced by the success of CRM leader, salesforce.com, 80 percent of CRM solution has SaaS as a delivery mechanism. Here are few factors to why the SaaS model is preferred:

Cost
The lower cost of deployment as well as lowering risk has aided in the success of SaaS solutions. The pay as you go model has made it easier for companies wanting to lower the cost of ownership. The SaaS model has sliced the up and running time 50 percent eliminating the need for the usual 18-24 month implementation and upgrades are transparent.

Ease of use
SaaS CRM solutions generally are not only easier to configure but easier to the end user causing them to embrace and utilize the tools more. The integration of the CRM solution with popular tools such as Microsoft Outlook or other e-marketing solution assists in positive adoption which is a key factor in the success of CRM implementations.

Flexibility
The deliverability of SaaS over the Internet allows access virtually anywhere. The whole movement of web-enabled applications coupled with service-oriented architecture (SOA) allows a multitude of configurable solutions that will aide in collaboration with other applications giving companies a holistic view of the health and efficiency of their business.

Web 2.0 and customer experience management
While positive growth in web-enabled CRM systems has made it easier for companies to manage their relationships, it has also changed the way that prospects and customers interact with companies. Web 2.0 strategies and technologies have made this interface bi-directional, meaningful and relevant. Consumer generated media such as blogs, podcasts, social networking as well as solutions such as YouTube has given a global voice to the customer that cannot be ignored.

This venue has given to a new term, customer experience management, which allows the experience a customer has with your company to be expressed good, bad or indifferent. Companies cannot control what is being expressed about them but by managing this exchange they can react, learn and adjust accordingly. The power shift has changed and staying on top of this change will require new ways of handling customer interactions. The key to managing all of this is the ability to capture and measure it. Customer loyalty is not the measurement that it has always been and can be easily swayed and revoked based on experiences good, bad and indifferent.

All of this has giving emphasis on the next phase of CRM called by some as CRM 2.0. Regardless of how CRM is defined it will always be the underlying foundation of managing relationships. Executive support, strategic process planning and user adoption will always be the defining factor of success above the technology chosen.

Michael W. Thomas is National President of the CRM Association (www.crmassociation.org). In 2004 he received the CRM Magazine Most Influential CRM Leader Award. He co-hosts the radio show “Technology for Business Sake” www.businesstechnologyradio.com and his CRM Blog can be seen at www.crm2.blogspot.com.