CRM Trends for 2005

Twelve months ago, CRM faced some resentment in many organizations, but as the year progressed it began proving its value.

“2004 was mainly a year of validating that CRM works, rather than [focusing] on major new functionality. A lot of companies focused on governance and integration, making what they had more valuable and more useful,” said Erin Kinikin, vice president of Forrester Research. “If you look at the success of Salesforce.com, [it] took the same old CRM and made it approachable for salespeople. So innovations were around usability and accessibility, not major new functionality.”

Efforts to make CRM more accessible included uniting customer data across different systems and applications both within an organization and with its vendors. Customer data integration and real-time analytics made many scowling senior executives pat themselves on the back for approving CRM investments years ago. “2005 is going to be much less about collecting the data and much more about figuring out how to organize and use it,” Kinikin told CRM Buyer.

Mid Market Hot

“We still see most CRM in the upper mid market where there are at least 50 sales reps or service agents,” she continued. Forrester finds that nearly half of the mid market wants to run licensed CRM applications like Microsoft CRM, SalesLogix, Salesforce, Goldmine, NetSuite and Pivotal. But by the end of the year, Kinikin says, most vendors will offer both hosted and licensed CRM solutions. “I think we’ll see SAP enter the hosted CRM market, and Microsoft may try to buy its way in,” she said.

Many CRM providers — including Salesforce, Salesnet, Siebel and Netsuite — are avoiding acquisitions and opting instead for partnerships. SalesLogix/Best Software and Goldmine — the more established players in the mid market — are holding their own against these reinforced competitors.

“The trend is for more flexible and customizable CRM applications,” Kinikin suggested. “On the architecture side, this means J2EE and .NET as well as better integration into middleware and business process management hubs from TIBCO, SeeBeyond, IBM and others. On the user side, licensed apps will take a cue from Salesforce’s success and allow the business user to customize their own user experience, improving productivity.”

Hosted Hotter

Salesnet Inc. released the first industry-specific on-demand editions for advertising/media sales, automotive, commercial lending and telecom services in 2004. “We recognize that CRM isn’t a one-size-fits all approach,” said Dan Starr, chief marketing officer. “Providing a solution that adapts to specific business needs is a demand we saw from our enterprise client base, and we will continue to address that in 2005 through our vertical strategy.”

With partnerships and an ear to the ground about industry-specific needs, Salesnet expects to broaden its CRM footprint beyond sales force automation to marketing and campaign management, customer service tools, compensation management and more.

On-demand CRM vendors such as Salesnet enable companies of all sizes and resource levels to access data in real time and use advanced reporting and forecasting options and sophisticated workflow capabilities. Tellabs and American Express have adopted Salesnet’s on-demand CRM, and so have smaller businesses like Jubilations Cheesecakes and OtterBox. For these up-and-comers, Salesnet Express manages sales affordably through a quick-to-deploy and easy-to-use Web-based service.

“As an on-demand vendor, we can spread the cost of a highly secure infrastructure across tens of thousands of users, allowing our customers to sleep easily at night knowing that their data is probably safer than if it was in their own building,” said Starr.

“Two thousand four was a watershed year for on-demand CRM,” said Tien Tzuo, chief marketing officer of Salesforce.com. The company had 12,500 customers and 195,000 users as of the end of October 2004, vs. 8,000 and 110,000 a year earlier. New to Salesforce.com were SunTrust, Nextel and Staples. The company has nearly equal numbers of small, medium and large customers, said Tzuo.

Salesforce.com, too, enables customization of its CRM product. It launched Customforce.com in November and Supportforce.com in September. The latter enables clients to manage and share their customer service information through all support channels.

“Companies are realizing that their salesforce and sales channels are strategic competitive weapons and that CRM can be used to make them more effective,” said Tzuo.

Analytics Here To Stay

“Analytical CRM is 100 percent of Quadstone’s business, and we had another growth year in 2004, definitely reversing the trend of 2001 and 2002,” said Mark Smith, president of Quadstone USA, which launched version 5 of its CRM software in 2004. The vendor plans to launch a portal add-on in the first quarter of this year for improved publishing and dissemination of analytic results.

In order to keep up with demand for better analysis of data, Quadstone added new functionality in internal collaboration, helping analyst teams work more closely with business customers so that both groups become accountable for applying the findings and business customers have a way of communicating what kind of analysis matters to them.

A new practice in customer satisfaction analysis assists clients in identifying the root causes of satisfaction by merging survey and operational data. Smith said the telecommunications and insurance industries have become big fans of the new functionality.