CRM buyers and sellers must understand is that CRM is an evolutionary process: The speed of CRM adoption by companies is not a straight line steadily reaching toward infinity; there will be stops and starts along the way, landslides or avalanches between ice ages. The current tectonic shift has unearthed the CRM agency business model.
Posted Mar 31, 2003
Demand for CRM should be inelastic during bull and bear markets. In other words, CRM still makes sense when budgets constrict, forcing you to spend limited dollars more efficiently by focusing on your most profitable customers.
A little over a year ago virtually every analyst and prognosticator deemed CRM invulnerable to the forces of the current recession. Siebel, Oracle, E.piphany and others were cited as stocks that could withstand the landslide occurring in every sector, and for some time they did. But based on more recent adjustments to past predictions it seems as though the landslide is taking most CRM vendors with it.
Given the economy it's understandable that a CRM expense would receive added scrutiny, but to give up on CRM--the solution best suited to saving an enterprise money by eliminating wasteful sales, marketing, and customer support practices--would be a mistake. After all, during the boom of the late 1990s it was visionary to evolve into a CRM environment, but now, during the bust of this new century, is it wise to abandon that vision?
The Agency Angle
OK, try telling a budget-strapped marketing manager or IT procurement officer to drop millions on a CRM package while layoffs remove coworkers and scuttlebutt about Chapter 11 filings hit far too close to home. However, there is a solution that circumvents the expense of CRM purchases by a company, and that is the use of an agency that uses CRM software on behalf of its clients.
What CRM buyers and sellers must understand is that CRM is an evolutionary process. The speed of CRM adoption by companies is not a straight line steadily reaching toward infinity. There will be stops and starts along the way, landslides or avalanches between ice ages. And the current tectonic shift has unearthed the CRM agency business model.
Consider the following recommendation from the Forrester brief: "Multimillion-dollar [CRM] sales, service, and marketing-suite deals never reached the predominance that many assumed they would. Today, they are extinct. To flourish in this environment [CRM] vendors need low-cost sales channels optimized for small deals and departmental purchasing."
No entity works more closely with a marketing department than an advertising agency, which means that no entity can "sell" CRM better than an advertising agency. Of course, not all marketing departments know that their external agencies know CRM, and far fewer agencies actually know CRM. But some do, and it's those agencies that should now come to the fore as hardcore CRM vendors fall back.
The strong demand for CRM marketing tools further feeds the need for agencies to take a leadership position in CRM initiatives. Corporate expectations don't get slashed with budgets, so marketing managers will be challenged to produce more results with fewer resources, which will force them to lean even harder on their external agencies. But only those agencies capable of creating, executing, and measuring CRM campaigns can help their clients during this current economic slump.
By their very nature, agencies enjoy the high times and suffer through the pain of their clients. True business relationships are not always rosy--there always comes a time when an agency must do all it can to help its clients through a down time. In other words, if you want to share in the celebration, be there during the depression. CRM should be the tonic that ails marketing managers in this economy. Just a short time ago those very same marketing managers were toasting CRM as a replacement for external agencies. How long before they turn to agencies and ask, "Brother, can you spare some CRM?"
About the Author
As the vice president of marketing at Grafica.eCRM Corp., Jason Bacharach is responsible for the overall strategic direction of the marketing department, which includes strategic planning, new business development, media, interactive advertising, marketing research, and public relations. Since coming to Grafica in 1994 Bacharach has played a pivotal role in the agency's growth from a 16-person shop to a $106 million full-service, CRM-based integrated marketing agency with 90-plus employees. Bacharach is a past recipient of Gold and Bronze Effy Awards.