SMB Customers Are Key to CRM Health

As the importance of the SMB segment in the CRM market increases, many vendors are jockeying for position in the burgeoning space. A report released this week by Aberdeen Group focuses on the how the distribution channel--partners, resellers, value-added resellers, and distributors--view the CRM market It states that with enterprise markets for CRM nearly saturated, many of the established, big CRM vendors and service providers are expanding their businesses to include the SMB market. The Aberdeen report concludes that sales, support, and distribution of CRM products into the SMB market are very different from enterprise companies. So, even as leading application and service providers like Siebel Systems, IBM Global Services, SAP, Accenture, and PeopleSoft, try to shift into the expanding SMB space, smaller CRM vendors, partners, and resellers are better positioned to take advantage of the boom. "It's clear to me that the midmarket has always been buying, but they buy a little differently, which means vendors have to sell differently," Denis Pombriant, vice president and managing director of Aberdeen's CRM practice, says. "They are looking for more training, complete product sets, and vendors who can hit time and delivery objectives. These smaller customers do not have the luxury of extra resources to cover a shortfall." Thirty-three percent of the survey respondents acknowledged that CRM was already important to the SMB market, 23 percent thought that it would become so within the next 12 months, 28 percent put it in the next 12-23 months, and 1.2 percent responded never, according to the report. Nearly 42 percent of the respondents indicated that CRM was a valuable tool for their customers, 29 percent thought CRM was valuable, but difficult to sell and install, and 16 percent said that CRM is something they need to carry just to be competitive. Seventeen percent of the partners said that the average deal size was $250,000 or above, while 32 percent indicated it was between $10,000 and $49,000. Those figures include hardware, software and service sales. Fifteen percent of the partners responding claimed that between 75 percent and 100 percent of their total revenues come from CRM service and sales, 19 percent generate between 25 percent and 75 percent of total revenue from CRM, and 25 percent make 10 to 25 percent of revenue from CRM. The research showed that Microsoft, with its MS CRM, which came out nearly a year ago, has made--and will make--the most impact in the CRM space. Siebel was voted second, and Best Software was a close third. Partners say they are choosing to do business with companies that will be around for the next two to 10 years. "The results from this research highlight the strategic importance that the partner channel places on the value and importance of CRM solutions today," Karen Smith, research director, and the report's other coauthor, said in a statement. "The results may also serve as a leading indicator of what partners believe are their key issues as they work to grow this key market, and of what the CRM vendors themselves face in attempting to recruit these partners into their camp."