Back in the old days, customer relationship management (CRM) was a simple affair: It consisted of a receptacle for customer information, a means of accessing it easily, a way to track activity on specific clients, and a few reports.
While those elements remain, a whole lot more has entered into the picture. Gartner, for one, slices the market into dozens of areas. It isn’t possible to view an overall CRM Magic Quadrant; you have to deal with CRM for Customer Service Contact Centers, Social CRM, CRM for Multichannel Campaign Management, and so on.
1. CRM and Business Intelligence Integration
The trend toward specialization within CRM is understandable in light of the economic climate. Most people think of organizations reacting to the recession by cutting costs, but another common response has been to get smarter about sales effectiveness, said Dale Vile, an analyst at research firm Freeform Dynamics. In a market where there are fewer deals going down, it has become necessary to win a higher proportion of those deals simply to maintain revenue and margins. This has led more progressive organizations to put a greater emphasis on analytics, segmentation, planning and best practice workflow within the sales operation as a way of improving targeting and win rates.
“More organizations are embedding business intelligence in the sales and service process itself, rather than treating it as a separate periodic activity,” said Vile. “We have also seen a greater emphasis on closing the loop between sales and service, and bridging the gap across sales channels, as organizations have done everything they can to protect and exploit their existing customer base and make sure that no opportunity has escaped the net.”
2. CRM and the Cloud
Just about everyone you talk to about CRM trends agrees on one thing — the provision and delivery media for CRM are shifting. Cloud-based services, social networking tie-ins and device-agnostic tools are rapidly gaining ground. Gartner predicts that almost 50 percent of customer service conversations are taking place in the cloud today, with that number increasing to 66 percent by 2013.
“With the rise of social media, the CRM space has evolved from support focused on traditional contact centers to support concentrated in the cloud, where agents can interact with their customers in real time on social networks, search and knowledge sites, mobile devices, or wherever their customers choose to be,” said Fergus Griffin, vice president of product marketing for Salesforce.com’s (NYSE: CRM) Service Cloud unit. “Customers are no longer calling the help line when they have a problem — they are Tweeting about their problems or discussing them on Facebook with their friends.”
He believes the consequence of this is that companies can’t be locked into rigid on-premise systems. With this change, it has become critical to provide a great customer experience on every channel in order to drive long-term customer loyalty and increase lifetime value. Companies that fail to meet their customers where they are in the cloud are missing the opportunity to tap into half of their possible customer service interactions, he said.
IDC concurs. The analyst firm believes that those enterprise players who lag in adjusting their products to fit this growing need will lose market share.
“The CRM applications market is on the front lines of transformation through the use of social media and social networking,” said Mary Wardley, an enterprise application analyst at IDC. “Incorporating these technologies within the organization’s CRM framework will lead to market growth.”
3. CRM as a Service
Software as a Service (SaaS) is obviously part of this. But the conversation has moved beyond SaaS, as it is now considered just one element of a greater cloud vision. Yet to date, some big CRM players have been slow to provide a SaaS option. Some do and most are moving in that direction. But if they can’t deliver SaaS, then they aren’t even in the cloud game.
SaaS, then, is probably a more tangible trend than the cloud, though one will inevitably lead to the other.
“There has then been a continuing trend towards SaaS-based deployment, with Salesforce.com being joined by others, most notably Microsoft Dynamics and its army of partners, to provide more options with regard to hosted solutions,” said Vile. Gartner numbers show worldwide SaaS revenue within the enterprise application software market (of which CRM is one of many segments) is forecast to surpass $8.5 billion in 2010, up 14.1 percent from 2009. That means it now represents more than 16 percent of the application pie.
4. Social Media and Mobile CRM
Vile, though, thinks that hype tends to predominate in this area as companies jockey for position in a rather nebulous cloud. Just about everyone says they operate in the cloud, enhance the social media experience and interoperate with a multitude of devices. But performance in the real world often falls short.
“While there has been a lot of talk about CRM systems helping organizations deal with social networks in a B2C and B2B context, there has been little action to date,” he said. “Solutions are still immature and large CRM incumbents are slow in their thinking in this area at the moment.”
They will catch up, but a lot of the innovation and best practices have yet to be fully developed After all, social media are still very much in their infancy. And device technology continues to advance by leaps and bounds. With the coming of age of smart phones and the emergence of new mobile form factors such as the iPad (and its inevitable followers), the mobile dimension to CRM is going to be another area that really heats up. This will manifest itself in a couple of ways, said Vile.
First, mobile access to CRM systems by sales and service teams are moving to the next level, with much richer functionality.
And the use of CRM systems to facilitate outreach and engagement to customers via their mobile devices will grow, in both a sales and service context.
5. Virtualization and CRM
Meanwhile, virtualization provides yet another facet to CRM evolution. Tim Hickernell, an analyst for Info-Tech Research Group, said CRM packages are becoming available in virtual machines, as well as some vendors offering VMs that can be run on partner platforms like Amazon EC2 and other cloud platforms.
“These differ from SaaS because they are not multi-tenant, but are single-tenant instances which can simply run in the cloud,” said Hickernell. “Many companies prefer this option to pure multi-tenant SaaS.”
Vendor examples in this newer category include upstarts like SugarCRM and Sage SalesLogix. But more established firms such as RightNow Technologies (NASDAQ: RNOW) also offer a dedicated single-tenant version hosted in its cloud for clients that do not want the traditional multi-tenant SaaS platform.
6. Social Media Startups
In addition, the rush to integrate social media has opened the door to another rash of startups. While most CRM vendors are wasting no time in aggregating social media feeds into their products, they struggle to provide aggregated account management features, such as centralized social network account and profile management.