Implementing next-generation CRM to drive business growth

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Spending on customer relationship management (CRM) software is expected to see the largest increase of all the application software markets worldwide in 2011, according to a survey by analyst group Gartner.

Overall, the poll revealed that 31 per cent of respondents expect an increase in application software spending in 2011. The report predicts that the CRM market will recover as buyer confidence returns and as businesses begin refocusing on growing revenue as opposed to just reducing costs.

In comparing their 2011 fiscal budgets with 2010, 42 per cent of Gartner's survey respondents indicated that they expect to increase spending on CRM in 2011, compared to 39 per cent on office suites and 36 per cent on enterprise resource planning (ERP), which ranked second and third, respectively.

CRM: a strategic investment

These findings were mirrored by those from a newly published, exclusive Computing survey of 130 business decision makers at UK organisations.

Twenty-three per cent of those with no current CRM system answered that they had plans to deploy one within the next year, while 54 per cent said they did not. Combined, those already running a formal CRM and the remainder that plan to install one soon represent over 80 per cent of the organisations surveyed.

A further seven per cent said that they would probably install a CRM system in the longer term. This illustrates the degree to which CRM software has penetrated sales and marketing departments in organisations of all sizes.

According to more than half of the Computing survey respondents (53 per cent), their CRM has increased the availability of information, leading to improved customer service and retention. Forty-three per cent said that CRM allows for better targeting of marketing activity and 35 per cent cited improved visibility of cross-selling opportunities. Other benefits mentioned include better post-sales support and faster deal closing – enjoyed by 31 and 29 per cent, respectively.

"The impact of these sales- and support-related benefits in today's challenging economic environment cannot be overstated. Conservative estimates of the cost of winning a new customer relative to maintaining an existing one put the figure at around four times the amount. While the direct cost of losing customers can be measured, there are also less tangible costs. A lost customer may have some influence in their industry – and word can spread fast with the use of social media," the Computing white paper stated.

Delivering improved customer retention

"It is, perhaps, these concerns that mean that the benefits to sales and marketing teams in particular are uppermost in the minds of those respondents planning to implement CRM software this year. Eighty per cent of these decision makers stated that improved customer retention and more precisely targeted marketing activity are benefits that they hope to realise from their deployment."

Hai Hong Swinehart, research analyst at Gartner, said that main areas of investment in CRM will include software-as-a-service- (SaaS-) based deployments; and technologies enabling customer loyalty management, cross-sell/upsell opportunities, and more-targeted levels of customer service: "Along the way we can expect market shifts as acquisition activity escalates, adoption of SaaS grows, and service providers become a more visible force in the market."

David Beard, pre-sales manager for Enterprise at Sage, agreed with this assessment, noting that organisations are now waking up to the benefits of next-generation CRM solutions.

"CRM packages are now more customisable than ever before. They've evolved to be able to take advantage of the growth of technologies such as web-based delivery as well as recognising the importance of harnessing the world of extended information – be that across multiple corporate departments or from the world of online sources. In addition, with CRM now being delivered on demand as SaaS, this has further accelerated the rate of overall innovation in CRM software," Beard told Computing.

Gartner's Swinehart explained that buyers of CRM are now focusing on investments that promote customer retention and enhance the customer experience, and they are increasingly interested in technologies that encourage development of customer communities and social networks. Marketing automation remains the market segment with the strongest growth, with the greatest demand coming from campaign and lead management and analytics.

Taking CRM to mobile devices

Beard added that these next-gen CRM offerings no longer just offer point solutions – such as just sales force automation or customer service: "Today's innovative CRM solutions deliver benefits right across an organisation. The result is that customer retention improves, cross-department communication is improved, while data and work duplication is reduced - with better visibility of the business to everyone in the business."

Looking to the future of CRM technology, Beard pointed out that the proliferation of mobile devices, particularly smartphones, reflects a major shift in business' technology usage: "The consumerisation of such technology is pushing business to enable their staff more effectively – taking CRM to the device. Rolling out CRM to these devices so that sales teams can continually update customer information is a logical step for businesses that put customer service and retention at the top of their agenda," he concluded.