CRM 2005: Will Technology Finally Live Up to Its Potential?

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Each year for the past 11 years, CSO Insights, as part of our annual sales effectiveness study, has surveyed companies on the use of CRM technology to understand what they are buying (or not buying) and the results they are generating from these investments. Each year I look forward to CRM finally living up to its ultimate potential—and truly helping all companies optimize the way they market to, sell to and service customers.

Was 2004 that year? Disappointingly, no. We had more than 1,000 firms, worldwide, take part in our most recent study. Of these organizations, 46.7 percent had evaluated and implemented a CRM system (either a commercially available product or an internally developed application). When we asked the organizations to rate the results they were achieving, we found the following:



Achieving significant improvements in performance: 28.4%
Achieving minor improvements in performance: 38.1%
No measurable improvements in performance: 19.4%
Do not know: 14.1%

Essentially, we are seeing the same numbers that we did in 2002 and 2003, with just more than one-quarter of initiatives generating expected significant results. And before you ask, no, I do not buy the argument that the glass is half-full in regards to the 38.1 percent that achieved minor improvements. I sat in on a number of CRM system selections in 2004, and when the final business case to justify the expense was presented to senior management, not once did I see a project team make the claim that at the end of all their efforts the company would achieve “minor improvements.”

So will the 12th year be the charm? After reviewing the study data in more depth, I am still prone to issue a prediction of a qualified no. The qualification is that success will still not be a guaranteed outcome for all projects; however, many more will be positioned to achieve significant results because of five key trends our study data surfaced:



  • On-demand applications are no longer the exception: The year 2004 was a breakout year for on-demand CRM applications. SalesForce.Com, NetSuite and Salesnet all posted significant market-share gains from the previous year. Especially in the SMB marketplace, these applications are easier to implement and maintain, as compared to hosted applications, and they are making CRM available to a whole new set of users.

  • The domain-expertise trend continues: New players continue to appear offering tools that have domain expertise for specific industries such as pharma, financial services, medical products, semiconductor and electronic products, sports marketing and industrial distribution. This trend is forcing traditional CRM vendors to create industry-focused versions of their systems to compete. The net result is that end-user companies are getting access to more out-of-the-box functionality specifically focused to deal with the customer relations issues they uniquely face in their marketplace.

  • CRM/sales process integration is improving: Several years ago, we witnessed a whole slew of press releases touting how CRM vendors and sales process vendors were teaming together to tightly integrate their separate offerings. To be frank, I was initially underwhelmed. In many cases, when you looked under the covers, all you saw were basic sales process forms now available online via the CRM application.



    This past year, I saw some mind-blowing examples of how end-user firms were able to generate detailed, insightful analyses of exactly what was working or not working at every step in the sales process through the use of analytic tools. A quick comparison of study participants who implemented a formal sales methodology, and then used CRM to activity manage the process, showed they were outperforming other firms in key areas such as percentage of more reps making quota, higher win rates and less discounting.

  • CRM providing knowledge, not just data: Another trend that is significantly increasing the value of some CRM systems is the ability to populate them with insights and knowledge vs. just data. In essence, what reps can do is tell the CRM systems the specific types of information they are interested in, and the applications then serve as a virtual digital assistant, pulling data from such areas as external data sources, internal knowledge bases and best practices repositories, providing reps with targeted briefing books on how to sell more effectively. This trend is clearly making these CRM systems more valuable, and we are seeing significant increases in user adoption rates for firms who adopt this approach.

  • Improved sales and marketing alignment: A final trend we are seeing is the improvement of sales and marketing alignment resulting from the tighter integration of sales and marketing-focused CRM technologies. Marketing tools are allowing for more effective segmentation of their markets, and the implementation of more targeted campaigns than ever before. Leads can then be processed and tracked much more easily as they are passed from marketing to sales, and CRM applications also are now supporting an effective feedback loop to improve communications between these two functional areas.

These trends all bode well for improving the ROIs that firms will see resulting from their CRM investments. Perhaps the above, combined with new advances in the CRM marketplace, will prove me wrong in my pessimism regarding breakthrough project success. I would love to be proven wrong



© 2004 CSO Insights

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