CRM helps businesses understand customer buying habits
and demands by applying various processes to a database of customer
information. These include lead generation - finding out which
customers are most likely to buy again - and cross-selling, where
existing customers can be sold other products and
services.
Other processes might include opportunity management,
forecasting and quoting, customer support, and customer data
management and analytics.
A secondary aim of CRM software is to improve the business's
interaction with customers - ultimately to facilitate sales. CRM
does this by giving frontline staff - often contact centre agents -
access to databases containing detailed customer information, such
as personal details, order history, buying preferences, problems
and concerns.
CRM is now pervasive in most industry sectors because
paper-based systems, or even Excel spreadsheets, are no longer
viable ways to store and manage customer data. A CRM system, on the
other hand, can automatically link disparate information about
customers from various sources in an orderly and efficient way, and
deliver customer data quickly to sales and customer service
staff.
Another benefit of CRM is that it can help firms to retain
customers. With the cost of acquiring a new customer put at up to
five times more than getting an existing customer to make a new
purchase, retention is an important sales driver.
John Radcliffe, research vice-president at analyst firm Gartner,
said, "The creation, maintenance and deployment of accurate,
complete and timely customer information and insight are the
foundation for CRM.
"Strong customer information strategies give organisations the
ability to optimise customer interactions and deliver consistent
customer experiences."
CRM used to be the province of large organisations, but now
there are more options available to small and medium-sized
companies, particularly through "on-demand" services, such as those
from Salesforce.com and RightNow Technologies.
These give users access to CRM applications over the internet or
a dedicated network, so they can be used and billed much like a
utility such as gas or electricity. Small businesses lack the
resources available to larger organisations, and the on-demand
model allows them to deploy CRM at a lower cost than buying,
managing and maintaining their own system.
More suppliers are entering the already packed CRM market given
its continued growth. Mary Wardley, IDC's vice-president for
enterprise applications and CRM software, said that the trend for
businesses to adopt CRM would continue through to 2010.
"IDC research shows intentions among user organisations to
increase spending on various functional CRM categories, with a
majority claiming continued investment at the same level.
Intentions to decrease spending are low," Wardley said.
Most larger enterprises tend to choose
Oracle's Siebel or
SAP's MySAP CRM package.
William Band, principal analyst at Forrester Research, said,
"During the past three years, SAP has worked steadily to fill out
its CRM offering, resulting in end-to-end process integration
support that no longer comes at the expense of missing CRM
functionality.
"Meanwhile, Oracle's strategy for Siebel has become clear: to
promote the product and brand as the most fully featured system,
with a breadth and depth of functionality for many industry
verticals."
Although the Oracle and SAP systems carry a hefty price tag,
there are also mid-market versions which are more affordable to
SMEs. Oracle sells Oracle Siebel On Demand and Oracle Siebel
Professional Edition, both for the mid-market.
Band said that Oracle's Siebel CRM product had the most users by
far. "The product is best suited for buyers who value advanced
functionality tailored for specific industries, customer insight
through strong analytics and customer data management, and the
ability to support global organisations," he said.
"SAP's CRM suite, on the other hand, is particularly strong in
sales, marketing, partner channel management, and analytics but
offers less support for customer data management requirements. The
product can scale to support global deployments and offers many
industry-specific process solutions," said Band.
One suite that covers both the large enterprise and the
mid-market is
Microsoft's Dynamics CRM. It also integrates
with - and shares the same look and feel as - the rest of the
Microsoft software stack.
Liz Herbert, senior analyst at Forrester Research, said that the
Microsoft brand had helped to sell the company's relatively new CRM
suite, and that it had gained more than 7,500 users since its
introduction in late 2003.
"Microsoft provides all-round core CRM capabilities in an
intuitive, Outlook-style user interface, and leverages other
Microsoft technologies like Sharepoint and SQL Server Analysis
Services to deliver more advanced capabilities," Herbert said.
For businesses that do not want the relatively higher costs,
complexity and longer implementation cycles of installing an
on-premises CRM application, on-demand can be a cost-effective
alternative.
Oracle, SAP and Microsoft all offer hosted versions of their
software, and on-demand software in general has had a very good
reception from users, with adoption facilitated by secure broadband
networks and the internet.
On-demand CRM service providers let users access the application
via a browser, and pay a per-month, per-user set fee for usage.
Predictable costs - typical fees are £40 to £50 a month per user -
have driven the popularity of on-demand services.
A major proponent of on-demand CRM has been
Salesforce.com. Herbert said, "Salesforce.com
continues to provide easy-to-use, strong sales force automation
functionality and has been expanding its capabilities in areas like
customer service, partner relationship management and
marketing."
But she warned, "Touting its system as CRM for everyone,
Salesforce.com does not offer deep industry-specific editions,
which can mean unnecessary work on customers' plates when they have
to start with a generic deployment and create their own
verticalisation."
The main on-demand alternatives to Salesforce.com come from
RightNow Technologies and
NetSuite.
RightNow is trying to differentiate its products by offering
on-premises as well as on-demand CRM, subscription pricing or
traditional licensing regardless of deployment option, and
embedding artificial intelligence into the suite, to aid the
customer interaction process.
David Norris, associate analyst at Bloor Research, said RightNow
offered a high-quality service. "What RightNow provides is an
on-demand or in-house CRM offering. But whereas most CRM offerings
are huge, bloated affairs designed to cope with eventualities so
rare that no one will ever use 70% of the functionality, RightNow
has focused on getting the core 100% right.
"This means that when you buy into RightNow you know that the 26
modules will all work, that they will all work together, and that
they can be deployed readily. And with the on-demand model you only
need to pay for things as you use them."
According to some analysts, one thing that CRM software could
still do better is actually managing the customer relationship by
aiding each interaction that agents have with customers.
Some of the alternative CRM suppliers are attempting to address
this. For example, Entellium has worked on the customer support and
usability sides of its suite. And Maximizer Software, which claims
over 7,500 enterprise users, provides a full-function CRM suite
with customer self-service and automated service capabilities.
Several CRM suites also offer the option to extend their
functions through further application development. One example is
Onyx, which is aimed at the upper mid-market and small enterprises,
particularly in financial services, government and healthcare. The
suite has customisation capabilities, although analysts warned that
this meant more effort would be required to implement, maintain and
upgrade the software.
Another fully extensible CRM application is the open source
suite SugarCRM. This gives users free code to manage their basic
sales, service and marketing activities, but they also have the
freedom to build on that code using their own IT resources or with
add-ons available through open source CRM partner and developer
communities.
"Open source CRM promises freedom from supplier lock-in,
flexibility to tightly map the software to business processes, and
extensibility to grow with changing business needs," Herbert
said.
But she added, "On the downside, the solution requires a fair
amount of IT resource to maintain and is not backed by the deep
pockets of a Microsoft or an SAP."
Other CRM suites worthy of evaluation are NetSuite, which has a
product that covers enterprise resource planning, accounting, and
e-commerce, and is designed for industries that require tight
integration between the front and back office, such as
distribution, high-tech, online retail and wholesale.
Sage SalesLogix and
FrontRange's Goldmine are other mid-market
CRM suites recommended by industry analysts.
For users looking to dip a toe in the water, analysts agree that
on-demand CRM is a good option, because it can offer set fees and
comprehensive tools to migrate data on and off the supplier's
database.
But for organisations that want all the features, as well as
hands-on IT management, existing users will argue that running one
of the larger CRM suites on-site is the only way to go.
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