This month, my phone bill is peppered with calls to the 305 area code.
Trade-show conversations and inbox messages had given me the idea that CRM was heating up in Latin America. But I didn't have to make an international call to check it out. CRM software vendors expanding into Latin America are increasingly setting up shop in South Florida. Why there and not São Paulo or Buenos Aires? Miami is convenient because of its abundance of Spanish speakers, the small time difference between it and South America, and the small physical distance between it and the rest of the United states.
Latin America represents only 3 to 4 percent of global IT spending, according to Alex Manfrediz of IDC's Miami office. But though this percentage is small today, it's expected to grow over the next few years. Manfrediz estimates that CRM spending in Latin America lags about one year behind that in North America and Europe. (Others I talked with put the lag at two years.) "Of course it depends on the industry and the company," Manfrediz says. "Some Latin American companies have been doing CRM for as long as U.S. companies have. But they're the early adopters." Generally, Manfrediz points to companies in the telecommunications and financial services sectors as the most likely early adopters.
Manfrediz cites several reasons for the increasing importance of CRM in Latin America. First, as in other areas of the world, competition for customers is increasing due to deregulation in the telecommunications industry and consolidation in financial services. "Companies are fighting for every last customer, using the latest and greatest technology," Manfrediz says. Second, global market efficiency pressures are beginning to affect Latin America. Latin America's days of isolation are dwindling, he says. In order to compete globally, Latin American companies need to attract and retain customers and be efficient. And one way to do that is by automating processes.
Brazil, Mexico and Argentina are the largest IT markets in Latin America, according to IDC, a business and technology analysis company. "Brazil and Mexico especially are engaged in CRM a lot now," he says. Argentina is somewhat of a laggard in the CRM arena, he says, because there is more business and cultural resistance to automated solutions in Argentina, and current economic conditions have depressed IT spending. But this is starting to change. In Argentina, and in all of Latin America--where personal relationships have always been essential in business--increased Internet usage is eroding resistance to automation, Manfrediz says. "The Internet is helping people overcome their aversion to the impersonal nature of automated solutions."
To get an idea of what's happening with CRM in Latin America, I talked with three very different vendors about their experiences.
The first was Enterprise Development Systems (EDSI), an 80-employee provider of market intelligence to the high-tech industry that thinks the Latin American CRM market is waking up. EDSI sees its biggest market as Brazil, followed by Argentina and Mexico.
Javier Hildago, a Venezuelan who moved with his parents to America at the age of one, went back to his native country for secondary school and then returned to attend college in the United states, is in charge of EDSI's push into Latin America. He traveled to Buenos Aires last October to attend Expo Management 2000, the biggest Latin American trade show for e-business.
In Argentina, Hildago realized that Latin Americans have a narrow view of marketing. They love trade shows, says Hildago, on which they spend large amounts of money. They want to meet their prospects face-to-face. Leads come from people they know. "They're not familiar with cold calling," Hildago says. EDSI's business depends on cold calling, though, with agents engaged in outbound telemarketing campaigns to find and qualify leads for EDSI clients. "No one in Latin America has seen our type of service," Hildago says. "Because it's state of the art, it's difficult to buy into. People like to see competition, and we're the only ones. We have to educate the market."
EDSI plans to open a dedicated Latin American office in a few years, but for now, the company hires native Spanish and Portuguese speakers to work out of its Atlanta offices. Some of its native speaker employees have moved up from Miami. Because the time difference between Atlanta and South America is not great, the agents can easily place calls from EDSI headquarters.
"Massively expansive" is how David McFarlane, president and chief operating officer of e-marketer Xchange, describes the Brazilian market and its 120 million consumers. The 500-employee company offers software and services that customize offers based on customer profiles, synchronize offers across all customer channels in real time and track the responses. In October 2000, Xchange partnered with Xerox Brazil to offer a hosted version of its e-marketing solution in that country.
Although Xchange trumpets the importance of giving customers a single experience across all channels, McFarlane admits that the Web is less developed in Latin America than it is in North America. "Latin America has more propensity for call centers," he says.
The ASP service is very important for Latin America, where many companies don't want the hassle of installing their own sophisticated solutions, according to McFarlane. "With the ASP solution, the customer doesn't need an MIS department, and there is no capital acquisition," he says. "Installing the solution is not worth the investment for many customers in Latin American, and in the U.S. too, for that matter."
McFarlane feels the time is right to move into Brazil. "The economic climate is good. Interest rates are down. Productivity is up. The GDP (gross domestic product) is rising at 3 to 5 percent a year. It's an exciting time in Brazil, and the economic optimism is felt by consumers," he says. The Internet has given consumers power, according to McFarlane, and Latin American companies are valuing customers like never before. This newfound recognition of customer value is similar to what existed in North America a couple of years ago, he says.
Latin America represents less than 5 percent of Xchange's revenues, but the company has already started translating its software into Spanish and Portuguese. (The Xerox ASP offering however, is available only in English.) Boston-based Xchange is planning to open a Latin American office soon and is considering several locations. "Miami is tempting," McFarlane says, "with its wealth of local language capability. It's a quicker trip than São Paulo, and we'd benefit from the North American infrastructure."
Based in Spain, Telephonica de Espana is the leading Spanish- and Portuguese-speaking telecommunications carrier in the world. Through affiliates in Latin America, Europe, the U.S. and Africa, Telephonica offers services in 25 countries.
Two years ago, Telephonica decided to group its call center expertise in a new business called Atento. A wholly owned subsidiary of Telephonica with headquarters in Miami, Atento provides outsourced call center services and employs 45,000 to 50,000 agents. It has Latin American call center operations in Brazil, Argentina, Chile, Colombia, Peru and Puerto Rico.
Atento's basic platform includes best- of-breed software from vendors including Lucent and Vantive. The company provides traditional call center services, such as outbound telesales campaigns, and is gradually integrating more advanced CRM functionality, mainly for bank and other telecommunications company clients.
Latin America is Atento's least developed market. "Traditional call centers are still all most companies have there," says Carlos Graham, executive vice president of global marketing and sales for Atento. "The transition from traditional call center to integrated CRM outsourcer needs to be made." Atento sees a huge potential for growth in demand for its services, based on the underdevelopment of the market.
Similar to EDSI, Atento found it had to play the role of market maker in Latin America. The company sponsors events where it invites potential clients and explains the benefits of its outsourced call center offerings.
In Graham's opinion, CRM is growing in Latin America for the same reasons it is in the U.S. and Europe. "Today it is so easy to copy products and replicate technology," he says. "The only thing that differentiates a company from its competitors is how it handles the relationship with its clients and whether it is able to anticipate their needs before they leave."