With 2002 safely behind us, it is time for some optimism regarding the potential of the CRM market,” stated K. S. Ferguson in a Current Analysis Perspective dated January 20, 2003. True, 2003 is going to be just as challenging a sales environment as the previous year.

Based on the dismal sales in 2002, it may not seem that the recession is an opportunity for CRM, but it is. That is, CRM is more crucial in times of weak spending as companies are challenged to attract and retain customers. This is a struggle across industries; companies that will survive this recession will be those that understand and act upon the fact that relationship management is a competitive differentiation. While CRM vendors have long tried to position their applications as mission critical, the industry needs to make a comprehensive and collective push in 2003 to focus on building the entire market for CRM as a strategic business imperative.

What is really missing from the CRM market is a sense of urgency. Buyers are postponing CRM investments, when companies desperately need to find new and innovative ways to differentiate themselves through their messages and customer interactions. Similarly, for many CRM vendors the end goal is gaining market share, when CRM vendors need to shift their emphasis to doing a better job to convince prospects that CRM is a strategic business investment that shouldn’t be put off.

Let’s start out with a well-documented assertion: the investments to acquire a customer can be quickly nullified if the business systems and organizational culture aren’t designed to emphasize ongoing quality relationships. This gives IT buyers a simple ROI starting point that can be qualified with the switching costs and other factors in acquiring and losing customers that are specific to each industry. The fact is that with increased choices in most industries, customers are switching from vendors more often on the basis of poor customer service and/or other mismanaged attributes of the relationship. The difficult economy further intensifies the need for companies to make CRM investments as buyers are more selective in their spending, in addition to maintaining higher expectations of customer service.

CRM technology alone isn’t the answer to acquiring, retaining or encouraging more purchases from customers. In tandem with the technology, there must also be a cultural and process evaluation to embrace a customer- centric approach. This is an area where CRM vendors must work more closely with their system integrator and consulting partners so that customer expectations are properly managed and the necessary corporate and individual buy-in for the CRM system is instituted from the get-go.

In order to build the overall market for CRM in 2003 and emphasize the strategic value of a CRM implementation, CRM vendors must first put aside market share goals as their primary motivation. It is clear, based on the collective customer base of both the analytic and operational CRM vendors, that there are significant sales opportunities for CRM. Instead of thinking about the competition as the next CRM vendor, CRM providers should think about the competition in terms of status quo. Companies are getting by with the systems that they have, and CRM vendors need to push them to think about an organized, broader, enterprise-wide CRM strategy.

Finally, CRM as a component of an e-business solution must integrate into customers’ existing application infrastructure. This means that CRM vendors that haven’t done so need to start moving in the direction of Web Services by embracing open industry standards to facilitate heterogeneous application environments, thereby increasing the flexibility, customization, and investment protection for customers.

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