CRM Market Trends - Call for Speakers

by Faulkner Staff

Docid: 00017733

Publication Date: 2303

Report Type: MARKET

Preview

To successfully compete in today’s global economic climate, enterprises need to remember that customers drive business success. Since it can cost five times more to gain a new customer than to retain an existing one, it is important for organizations to accurately pinpoint which customer populations most directly drive their profits and what incentives will keep these customers loyal and happy over time. One way to accomplish customer retention is by implementing customer relationship management (CRM). This report discusses the issues facing organizations during implementation of CRM, identifies the key players and trends, and provides guidance in evaluating solutions.

Executive Summary

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Customer relationship management (CRM) can assist in cutting the cost of
doing business while fostering improved levels of customer satisfaction in
the areas of sales, marketing, and service. In order to successfully
compete in today’s global economic climate, enterprises need to remember
that customers drive business success.

Since it can cost five times more to gain a new customer than to retain
an existing one, it is important for organizations to accurately pinpoint
which customer populations most directly drive their profits and what
incentives will keep these customers loyal and happy over time. One way to
accomplish customer retention is by implementing customer relationship
management (CRM).

Enterprises continue to launch CRM initiatives as a means of cutting
the cost of doing business while fostering improved levels of client
satisfaction. Some companies base implementation on price, but the primary
consideration is to determine if the CRM system being considered meets the
enterprise’s requirements.

While a mature technology, the CRM market continues to expand with new
capabilities, thanks to the cloud and mobile technology, and new
customers.

Market Dynamics

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The central benefit of CRM is its ability to improve customer
relationships. According to Shopify, this ability manifests in five ways:

“Improved communication with customers – A CRM allows
you to send personalized communication to individual customers or
customer groups easily.
“Support of [the] prospect pipeline – A CRM can help
you identify what types of outreach are most appropriate for a given
prospect or customer based on their history of engagement.
“Increased customer satisfaction – [A] CRM can help
you effectively respond to customer requests, monitor engagement, and
provide a high-quality, individualized customer experience.
“[The provision of] data-backed insights – A CRM can
analyze sales, customer support, and customer engagement data to provide
insights into customer acquisition, experience, and retention.
“Increased employee job satisfaction – Since a CRM
can track a customer’s journey from first touch to maintenance, sales,
marketing, and service, [employees] can use this info to have more
effective interactions with customers.”¹

The theory behind CRM calls for customer data to be captured in several
areas of the enterprise, stored in a central database, analyzed, and then
distributed to customer touch points. Such touch points can include a mobile
sales force, inbound and outbound call centers, Web sites, point-of-sale
(POS) systems, bills, letters, direct marketing channels, and any other
parts of an enterprise that interact with customers. Because the prospect of
using such data to automate cross-selling and up-selling provides a
clear-cut benefit, many enterprises are turning to CRM systems to help them
put the data to work. CRM systems are used to collect, manage, and
distribute data, with the goals of providing a better understanding of
customer behavior and affording a personalized experience for customers.

In the commercial world, the importance of retaining existing customers
and expanding business is paramount. Common wisdom holds that acquiring a
new customer generally costs around five times more than it costs to
retain an existing customer. The costs associated with finding new
customers means that every existing customer is important.

Throughout all industries using CRM, various factors influence the
market.

Artificial Intelligence (AI)

AI helps CRM users determine such things as leads, upsell opportunities,
and marketing prospects, and analysts expect AI to continue to expand in
all aspects of CRM. AI assistants, called chatbots, are increasing in use,
often being a business user’s or consumer’s first line of interaction with
a company. These chatbots can use several data sources to handle various
customer needs by using AI to, for example, set up appointments or suggest
problem solutions.

General Data Protection Regulation (GDPR)

The European Union (EU) General Data Protection Regulation (GDPR) imposes
new rules on companies, government agencies, nonprofits, and other
organizations that offer goods and services to people in the EU, or that
collect and analyze data tied to EU residents, regardless of location.
CRM, like other IT solution providers, must comply with GDPR and other
strict privacy statutes like the California Consumer Privacy Act (CCPA).

CRM in the Cloud

This software application delivery model was previously referred to as
“hosting” and is also commonly referred to as Software as a Service
(SaaS), but the definition always includes the fact that the application
does not reside on the purchasing company’s own computers but elsewhere.
In today’s cloud model, a vendor offers an application for use by
customers over the Internet, and charges customers for its use, precluding
the need for them to buy a similar application. Providing CRM application
access to customers without requiring them to make any upfront investment
can be an attractive option for small and mid-sized businesses with
limited budgets and technical personnel. In this approach, the CRM suite
is offered on a pay-as-you-go basis, and users need only a browser on
their PCs to access it. As with other IT solutions, cloud is becoming a
dominant CRM delivery vehicle.

Mobile CRM

One factor influencing growth of the CRM market – and, indeed, all
technology markets – is the large number of intelligent connected devices,
including tablets and smartphones. Analysts agree that mobile CRM will
continue to expand, since it allows marketers and sales personnel to have
convenient and ubiquitous access. Some would argue that mobile CRM is
essential to today’s work environment which features increasing numbers of
remote and hybrid workers.

Social CRM

This aspect of CRM is the use of social networks (such as Facebook or
Twitter) to build or reinforce business relationships. This market
continues to grow, with entries by newer firms as well as established CRM
companies. As highlighted by Salesforce, “With Social CRM, a customer can
contact a business via a social channel, and that interaction can be
tracked and managed in the same way that a traditional CRM system tracks a
telephone or email inquiry. Put simply, Social CRM enables businesses to
engage with customers on social media, then leverage that engagement to
offer better service.”

Objections (primarily by corporate in-house legal departments) are based
on the same concerns of “loose lips” that plague all companies with
employees using social networks. We’ve all seen news items of employee
firings over things they’ve posted on these networks that either share
corporate secrets or disparage their employers.

CRM Analytics

The CRM analytics market continues to fuel sales of CRM software.
Analytical CRM applications evaluate customer data for patterns that help
enterprises to craft marketing campaigns and build targeted sales pitches.
Among other benefits, CRM analytics can help identify which customers:

Are most likely and least likely to repurchase a product; and, more
generally,
Contribute the highest profits over time.²

Market Leaders

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As reported by Apps Run The World, the worldwide CRM applications market,
valued at $52.8 billion in 2021, will reach $58.8 billion by 2026, a
compound annual growth rate of 2.1 percent. Salesforce led the pack in
2021, with an impressive 31.3 percent market share. Adobe was number 2,
followed by Oracle, Microsoft, and SAP.³

Salesforce Einstein

Helping set the direction for CRM tools is Salesforce Einstein, which the
vendor boasts is “the only comprehensive AI for CRM,” adding that with
artificial intelligence:

“Sales can anticipate next opportunities and exceed customer needs.
“Service can be proactive by resolving cases before they happen.
“Marketing can create predictive journeys and personalize experiences
like never before.
“IT can embed intelligence everywhere and create smarter apps for
employees and customers.”

As analyst Karl Greenberg reveals, in a major development, “Salesforce is
making CRM talkative by integrating OpenAI’s ChatGPT generative AI model,
[giving] chat functions to … Einstein AI and other platforms.”⁴

On March 7, 2023, Salesforce launched Einstein GPT, “the world’s first
generative AI CRM technology.” According to the company, “Einstein GPT
will infuse Salesforce’s proprietary AI models with generative AI
technology from an ecosystem of partners and real-time data from the
Salesforce Data Cloud, which ingests, harmonizes, and unifies all of a
company’s customer data.”⁵

Market Trends

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CRM Market

When viewed in all its dimensions – not just applications – the CRM
market is robust. As projected by Precedence Research, the CRM market,
valued at $61.57 billion in 2021, is expected to reach $170 billion by
2030, expanding at a compound annual growth rate (CAGR) of 13.3 percent
from 2022 to 2030.⁶

Market Drivers

The CRM market is fueled by several factors:

The increasing popularity of cloud-based CRM,
especially among small-to-medium-sized enterprise (SME) clients

The escalating importance of customer
retention and lead generation capabilities

The continuing demands of certain high-use CRM
sectors, such as:

- Retail and consumer goods
- Banking, financial services, and insurance (BFSI)
- IT and telecom⁷

Market Trends

In evaluating the future prospects of CRM, SuperOffice, a European
supplier of B2B CRM software, cites the following market trends:

CRM Clients are not taking full
advantage of CRM features and functions – “Research suggests
that although 91 percent of organizations with more than 10 employees in
their workforce use CRM systems, 82 percent of them use it only as a sales
tool, while a little over 50 percent use them for calendar management and
email marketing.”

The main concern of CRM clients is
delivering a high-quality customer experience –

“Customer experience is now the key brand
differentiator in business.

“86 percent of buyers are willing to pay more
for a great customer experience.

“59 percent of customers are willing to switch
brands due to a poor experience.

“Customer spending increases 140 percent
following a positive experience.”⁸

Strategic Planning Implications

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Planning a successful CRM implementation hinges on many factors, almost
all of which center on scrupulous planning and a deep understanding of
corporate strategy. The hardest work will happen during the internal
requirements gathering, before a vendor is ever approached. Effective CRM
is less about technology and more about processes being applied to an
enterprise’s relationship with its competitors, and customers.

Efficient deployment of a CRM system involves a comprehensive strategy
development process. The procedure includes requirements gathering, as
well as attention to business, operating environment, integration, and
networking considerations. However, the first step should be an assessment
of the condition of the enterprise. Goals should be defined early, so that
the enterprise knows exactly what it wants to achieve, what physical parts
of the business (departments) will be affected, and what technological
pieces (infrastructure, architecture, etc.) need to be updated, modified,
and integrated to reach the goals.

CRM implementations are notoriously expensive. However, the least
expensive vendor is not always the best choice, so price should not
be the primary consideration. What should be the primary consideration
is whether the CRM system being considered meets the
enterprise’s requirements. The second most important consideration is
whether the system is scalable; if it is not, it has a lower chance of
ever achieving ROI.

It is important for enterprises to implement in phases. ROI is easier to
achieve – and demonstrate – in a phased implementation. The early phases
should be small and tactical, with easily measured ROI; the investment in
later phases is then justified by those early phases, which were
successfully implemented. Each phase that is successfully implemented
creates greater executive support, and therefore a greater probability of
success, for subsequent phases.

The lengthiest part of the CRM implementation will be the initial
requirements gathering. A sound requirements document is the blueprint
from which the development teams will work, and it should be both accurate
and thorough. The technical aspect of the implementation, including the
configuration of servers, the writing of code, and so on, is usually the
easiest phase to estimate accurately, while the reconciliation of customer
data and its integration are among the most difficult to estimate with
precision. The safest path is to create a time estimate and then double
it.

In conclusion, with so many CRM choices, making the correct one can seem
daunting. It is critical to first define the strategy and objectives, and
then define the processes that will yield the best results before defining
required functions and picking applications. Most importantly, it is
important to remain flexible and open to change throughout the many CRM
application selection processes.

References

¹ Shopify Staff. “What Is CRM? A Guide to CRM Software
Types, Benefits, and Features.” Shopify. October 18, 2022.

² Kinza Yasar. “CRM (Customer Relationship Management)
Analytics.” TechTarget. October 2022.

³ Albert Pang, Misho Markovski, and Aleksandra Markovska.
“Top 10 CRM Software Vendors, Market Size and Market Forecast
2021-2026.” Apps Run the World. September 23, 2022.

⁴ Karl Greenberg. “ChatGPT Powers Up Salesforce’s Einstein
AI.” Artificial Intelligence | TechnologyAdvice. March 8, 2023.

⁵ “Salesforce Announces Einstein GPT, the World’s First
Generative AI for CRM.” Salesforce, Inc. March 7, 2023.

^6-7 “Customer Relationship Management Market (By Component:
Software, Services; By Deployment: On-Premise, Cloud, Hybrid; By
Application, Marketing and sales automation, Customer management, Lead
generation and customer retention, Others; By End User: BFSI,
Manufacturing, Retail and consumer goods, Health care, IT and
telecommunications; By Solution; By Enterprise Size) – Global Industry
Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast
2022 – 2030.” Precedence Research. May 2022.

⁸ “The Future CRM Market: Trends to Keep an Eye On.”
SuperOffice AS. December 16, 2022.

Web Links

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