CRM Vendors Move to the Latin Beat
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. 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 this percentage is 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.
Manfrediz cites several reasons for the increasing importance of CRM in Latin America. First, competition for customers is increasing due to deregulation in the telecommunications industry and consolidation in financial services. Second, global market efficiency pressures are beginning to affect Latin America, and automated processes can help companies compete.
Brazil, Mexico and Argentina are the largest IT markets in Latin America, according to IDC, a business and technology analysis company. Of the three, Argentina shows the most esistance to automated solutions, but this is starting to change. In all of Latin America, increased Internet usage is eroding resistance to automation, Manfrediz says.
To get an idea of what's happening with CRM in Latin America, I talked with three vendors about their experiences.
The first was Enterprise Development Systems (EDSI), an 80-employee provider of market intelligence to the high-tech industry. EDSI sees its biggest market as Brazil, followed by Argentina and Mexico.
Javier Hildago 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, as they want to meet their prospects face-to-face. "They're not familiar with cold calling," he 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. 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. 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. The 500-employee company offers software and services that customize and synchronize offers 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.
McFarlane admits that the Web is less developed in Latin America than it is in North America. For example, the ASP service is very important for Latin America, 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 America."
McFarlane feels the time is right to move into Brazil. "The economic climate is good. 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. 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, the company offers services in 25 countries.
Two years ago, Telephonica decided to group its call center expertise in a new business called Atento. Headquartered in Miami, Atento 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. It employs 45,000 to 50,000 agents, and has operations in Brazil, Argentina, Chile, Colombia, Peru and Puerto Rico.
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 based on the underdevelopment of the market.
Like 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."