There's something about customer relationship management (CRM). While other sectors in the IT world are struggling, CRM vendors are holding their own despite the down economy by helping enterprises retain customers and build sales pipelines.
Worldwide CRM market revenue totaled $9.15 billion in 2008. That's a 12.5 percent increase from 2007 revenue of $8.13 billion, according to Gartner. Enterprise investments in technologies focused on customer retention, analytics and on-demand solutions drove the growth even as new strategies emerged in 2009.
"Despite financial market volatility, the worldwide CRM market enjoyed its fifth consecutive year of double-digit growth as businesses continued to invest in solutions across all subsegments," said Sharon Mertz, research director at Gartner. "Actual market growth was moderated by a stronger dollar but reflects higher contributions from emerging markets."
The bottom line: CRM continued to grow through 2009 because it adds value to the bottom line of enterprises looking to do more with less. Three keys to CRM success in a down economy are perfecting low-cost customer service, analyzing and optimizing marketing, and finding warm sales leads through social-networking platforms. This combination, experts agreed, is making CRM software an indispensable tool in the enterprise.
Critical Customer-Retention Strategies
In a down economy, two factors are vital to every business: Providing superior customer service at a lower cost and understanding customers' needs.
Superior customer service is critical to retaining the customers you already have -- especially if those customers represent long-term value -- rather that acquiring new customers, explained Vinay Iyer, vice president of enterprise marketing, CRM solutions, at SAP.
"Providing superior customer service requires companies to go the extra mile to understand customers' needs, resolve their issues quickly, and offer them more value beyond the product itself, such as initiating a customer community to share knowledge," Iyer said. "However, companies need to do this at lower cost of service so they can still be profitable. Here's where making available self-service capabilities -- portals, or social-media communities -- can be big cost-saving opportunities."
Understanding customers' needs means offering tailored products, packages and pricing. Because customers in a downturn do not want to be oversold items they don't really need, he explained, companies need to listen to customer sentiment -- both by leveraging direct customer feedback as well as by listening in to social-media conversations -- and determine what best to manufacture, package, price, sell and so on. By being responsive to customers' current needs, Iyer said, companies can gain great credibility and trust.
"Support the customer through all channels the customer chooses to interact with. Beyond traditional call centers and direct sales, customers are also doing business through newer e-commerce and social-media channels such as Facebook," Iyer said. "Launching promotions to benefit from 'trusted network referrals' in Facebook is an important emerging channel. Companies need to experiment and learn from doing business through these new channels -- while still retaining all existing channels."
Critical Customer Analytics
As the tough economy causes significant changes in customers' behavior, companies with systems in place to understand and track these changes stand the best chance of prospering, according to Larry Mosiman, the customer intelligence product marketing manager at SAS.
Likewise, he continued, companies with established processes for making informed decisions regarding the most valuable campaigns -- which ones to run when and where, and how to communicate with their most valued customers -- are being more successful at focusing their tightened budgets. On the other hand, those that don't are having a much harder time.
"The primary focus of many companies in this tough economy is customer retention. A key strategy being implemented to improve retention and drive customer value is to leverage customer analytics and optimization to make smarter marketing decisions," Mosiman said.
"Analytics and optimization enable companies to distinguish between their valuable customers and those that aren't, and it enables companies to communicate with more relevant messages in a time and manner preferred by their customers. This greatly improves the effectiveness of their marketing activities, often increasing retention by as much as 30 percent."
The Social-Networking Story
According to Gartner, interest in social networking and social software also escalated in 2008, as businesses were confronted with the sales, marketing and serviceability impact of increasing consumer participation in online forums. CRM vendors continued to jump on the social-media bandwagon in 2009.
The latest release of Dow Jones Companies & Executives software works to help business-to-business marketing teams leverage social-selling opportunities. The software promises to put an end to cold calling by identifying reasons to call companies and connect with prospects that have a real need. The patented tool taps into a sales professional's social networks to target organizations.
Here's how it works: Dow Jones has created a comprehensive mapping of key executives based on their work histories. When coupled with contacts listed in an organization's in-house e-mail such as Microsoft Outlook or opt-in social networks, including LinkedIn, the company said this mapping can provide a path of connections to decision makers. The relationship maps highlight connections of varying degrees of separation, from a mutual contact to a third-degree relationship.
"Sales management's key challenge is to enhance sales effectiveness to improve performance and increase revenues," said Simon Bradstock, vice president and managing director of the Dow Jones Enterprise Media Group. "Our solution offers a new approach, enabling social selling, which provides sales teams with timely, qualified reasons to call, as well as warm introductions. This drives activity and helps teams focus on the best opportunities."
Searching for Opportunities
Triggers in Dow Jones Companies & Executives program also indicate potential future activity, opening up further opportunities in the medium to long term. For example, based on independent research, 90 percent of companies that appoint a new CFO also experience other leadership changes within 12 months. That opens up selling opportunities for companies in human relations or outplacement industries.
Another statistic shows that 75 percent of companies that appoint a new CFO undergo expansion of operations within 12 months through joint ventures, partnerships and/or establishing a subsidiary, indicating future opportunities for salespeople targeting real estate, human relations and benefits, IT, construction and manufacturing industries.
"Our most recent survey of over 1,000 companies found that only 39 percent of firms surveyed reported a conversion rate of qualified leads to first calls of greater than 50 percent," said Jim Dickie, managing partner, CSO Insights. "Salespeople need to come up with compelling reasons for prospects to want to talk with them."