Few could have foreseen all of the extraordinary events that shaped 2004 in the CRM industry. Tom Siebel resigned as CEO of his own company. A heated battle between two of the fiercest competitors -- Oracle and PeopleSoft -- ended in an unlikely and unfathomable acquisition. And the hosted vendors cashed in on one of their most lucrative years in history. It was a wild ride in 2004.
SearchCRM.com recently asked a panel of gurus how they think the CRM market will evolve throughout 2005. After the exciting events of 2004, it's hard to imagine any more change. Still, these experts and analysts have reason to believe we can expect plenty of activity in the coming year. Here's what they predict…
By Sheryl Kingstone, Program Manager, Customer Relationship Planning Service, Yankee Group
As in 2004, CRM in 2005 will continue to be a roller coaster year. Companies will begin to prioritize revenue generating activities as compared to reducing costs. As a result, a shift in IT and line of business budget dollars will be allocated toward improving customer-centricity. Businesses initiate CRM projects for a variety of reasons. Many do so because they can increase revenue by better understanding their customers. By gaining insight into both individual customers and target market segments, these companies can boost sales and optimize top-line business performance. Key areas to watch are the following:
On-Demand CRM Suite Vendors
Salesforce.com, RightNow Technologies, NetSuite and Siebel CRM OnDemand are solutions that offer subscription-based applications for sales, marketing and service. All have added some customer-facing functionality. For example, Salesforce.com improved its web self-service and customer service applications, while NetSuite added improved e-commerce capabilities. Siebel CRM OnDemand is adding more customer-centric selling functionality that will guide the salesperson toward the most applicable customer messaging. RightNow Technologies added sales and marketing functionality to its customer service and support module.
Marketing and Sales Effectiveness ISVs and Content Management/Portals
ATG, Vignette, Pragmatech, Sant Corporation, Savo Groupo can assist enterprises with their customer-centric CRM initiatives. These vendors assist can assist sales and marketing professions to increase sales effectiveness and decrease administrative time through the delivery of in-context information more dynamically, from multiple internal and even external systems. Critical functionality includes flexible content and data integration, exposed metadata, taxonomy and natural language search and pure web architectures.
Vendors in this market that moved beyond historical or operational data analysis based on prebuilt models toward real-time multichannel interactive communications will begin to win more budget dollars. Leading vendors include Teradata, Epiphany and Unica.
Database Marketing Providers
Database marketing vendors help enterprises understand the value of their customer data. Companies such as Harte-Hanks, Experian and Acxiom provide valuable services that not only clean and enrich existing corporate data, but also provide services to help accurately mine the data for customer segmentation, loyalty and retention. These providers quickly became an integral part of many CRM initiatives. Now that the technology platforms are more flexible, many companies are looking for strategic services to assist with direct mail and improve other channels of customer communications, such as contact center cross-sell opportunities and improved e-commerce initiatives.
By Denis Pombriant, Managing principal, Beagle Research Group
For the last two decades we have seen a pattern emerge in which the first half of the decade was relatively bad economically and the latter half was much better. This year marks the beginning of the second half of the decade and there are indications that the pattern will continue. The first order of business is clearing out the dead wood. That means businesses and business models that have run their course so look for consolidation.
Starting with hardware there is too much capacity in PCs so look for three or four of the top ten PC makers to be merged or bought out. IBM is mum on the idea that they are shopping their PC division around but the company could sell off the PC division to a Chinese company in the next year. Look for fewer software companies as weaker performers are absorbed by stronger players. Larry Ellison is on record for saying that he wants Oracle to be one of those acquiring not one being acquired and the PeopleSoft deal is simply one chapter in that saga.
Also look for emergence of new business models. The most intriguing is Salesforce.com's evolving ecosystem model based on Sforce and CustomForce. Essentially the model is about building software ecosystems around a few large vendors as centers of gravity. It results in a two tier model in which much of the market access — sales and marketing is devolved to the center leaving members at the periphery able to provide more for less — more service and less cost. Those are the two ultimate drivers of everything.
By Michael Lowenstein, Senior Vice President, Customer Management Center of Excellence, NOP World
Marketers - - and, by that term, I also include sales and customer service functions - - will have to make certain that all systems and processes, particularly wherever messaging and experience touch the customers, focus on the relationship and the emotional elements of engagement. It will no longer be enough to have customer management, service, and loyalty approaches that merely execute on the functional, rational, and tangible aspects of value delivery, i.e. what marketers and researchers understand as cognitive. It has been proven over and over that the real opportunities, and much of the leveraging power, of brands, products and services will come from the affective, or emotionally bonding, aspects of delivery. Optimizing this, that is creating the highest levels of customer advocacy, means that a supplier can get attractive, and profitable, lifetime purchase levels. Perhaps even more important, active advocates create buzz, viral connection with others, and positive peer-to-peer communication, which is far more relevant and trusted within the marketplace than conventional advertising and PR. Advocacy is rapidly becoming the metric of future success; and, as Lee Iacocca so wisely used to say, companies will either lead, building a passion for customer commitment and advocacy into their DNA, or, they will be followers or be forced to get out of the way.
By Paul Sweeney, president of the Sweeney Group Inc.
I expect we will see continued evidence that the CRM industry has matured and stabilized. With this maturity, I expect to see fewer companies buying into and implementing "CRM". Rather, companies will talk about sales and marketing projects that seek CRM benefits -- avoiding the somewhat tarnished "CRM" word. I also expect to see at least one or two high profile mergers as market leaders attempt to expand and deepen their product portfolios. Finally, I expect to see consulting firms focus their marketing efforts on business process design and integration, responding to their clients desire to squeeze more value from their CRM systems.