What’s the True Size of the CRM Market?


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I guess it’s how you define the market, right? Doing a quick search on Google tells me there are a lot of marketers (I’m assuming) out there being charged with understanding this market with searches like:

  • How is the CRM market defined?
  • How large is the CRM market?
  • How big is the market?

They are doing this most likely because they are new players in the market and they want to validate their focus. However, the way the market is defined today doesn’t leave much room for new entrants to seize a huge share. The real successes are going to redefine the market; kind of like Salesforce did over 10 years ago – only much differently. Unfortunately, new innovation will go hand in hand with a new definition of the market and the markets actual size (potential), not an annual figure put out by analyst groups.

My understanding is that analysts size the market by talking to the vendors who typically know what they have in their pipeline and/or their channel partner pipelines. This could very well be the land of hopes and dreams, but it’s what they have to work with; even if I’m not sure how valuable it is. Personally, I don’t see how this information could be leveraged successfully by a new entrant; especially one with an innovative business model (if there is one).

What I’m interested is in the size of the CRM market; not the size of the traditional CRM category vendors’ pipelines. Where will we find room to grow? Will we continue using the same channels for marketing and delivery? In order to cut to the chase let me outline what does not define the CRM market (in my humble opinion):

  • Any software category + services
  • Sales Force Automation seats + services
  • Marketing Automation seats + services
  • Social Listening seats + services
  • Customer Service / Contact Center seats + services
  • Community Management seats + services
  • Social Sales seats + services
  • Business Intelligence seats + services

These are all tool oriented areas that we find available to solve the convenient category needs of the current (and former) hype cycle(s). What functional jobs do they get done? I would suggest none and you would probably point out that they are aligned with functional areas of a business; so I must be wrong. But I would remind you that that’s not what a functional job is. If I were to suggest that your job is to grow a business year over year, could you succeed using these tools alone? No way. It takes more than that.

Companies don’t purchase CRM software simply to put an IT department to work. Nor do they do it to automate sales forces, either. The reason so much money is spent is because companies are trying to compete and that must mean they want to grow and be profitable; even if they aren’t quite sure how to do it. Can software do that for you? I don’t think so. But software can do things, don’t get me wrong.

We are currently at a point where technology is becoming so close to a utility that we can almost use it, and pay for it as needed. That’s coming. Additionally, access to cloud allows us to build platforms to begin looking for new ways to integrate the value chain even better than before. And one of the places that this might occur is with services that traditionally required a substantial force of sharp dressed consultants to invade your business and pursue the continuing creation of more work for themselves.

With what will we replace all of the hard work and expense we traditionally have incurred with in-house technology? Will we begin to see multi-sided platforms developed to productize services we used think were unreachable for the middle market and below? There will certainly be money left over for that. The foundation has been laid and it’s time to build higher order services on top of the technology we have increasingly made simpler, cheaper and easier to access. Do we really need more Contact Managers? Possibly. Isn’t it time, however, we began envisioning ways to implement services through new platforms that help companies achieve the outcomes they currently find relevant?

If so, isn’t this what CRM was really supposed to be about? Not a salesperson’s slick relationship building skills but an entire organization’s ability to attract and retain customers? If that’s the case, we can no longer measure CRM by the number of seats a vendor projects to sell to sales people this year. The market becomes huge as we break free from product category thinking, and everything will need to work together; not just sales and marketing but strategy, systems, services, metrics, feedback and improvement. CRM is not about the sales, marketing and service departments any more. It’s going to become so much more. It already is, it’s just that we still tend to view it from the perspective of what we know; not what we will know.

CRM is currently at the moment in time the buggy whip manufacturers found themselves when they believed buggy whips were an industry; instead of realizing they were in the transportation industry. They were unable to see that automobiles would replace horses and buggies, and thus completely disrupt them. Platforms designed to help companies achieve true and repeatable business outcomes should be the future – and sustainable business outcomes will never be achieved through the sales department, the marketing department or the customer service department. There will be plenty of opportunity to segment and categorize this to death. But, we should all agree that the number of seats the current band of CRM vendors plans to sell in a year (or 10 years) is not the size of the CRM market. Not even close.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.

Republished with author's permission from original post.


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