The Poker Dynamics of CRM
Having just completed our 2008 Sales Performance Optimization survey of over 1,500 companies worldwide, the similarities between poker and CRM come to mind. The percentage of companies "buying in" and implementing a core CRM system (from Oracle, Salesforce.com, Microsoft, etc.) continues to increase: 70 percent of the firms surveyed, an all-time high. And the buy-in trend should continue: Of the 30 percent that reported having no CRM system installed, 43 percent said they wanted a seat at the table, and that they planned to implement CRM this year.
The steady increase in technology adoption over the past four years is being primarily driven by software-as-a-service (SaaS) solutions. The SaaS model has made CRM financially and technically attractive for a growing number of firms, especially small and midsize businesses (SMBs).
Once CRM gets in, many companies decide to double-down by increasing the number of CRM technologies they use. When we asked the firms with core CRM systems installed what other CRM tools they had implemented (or were planning to implement in 2008) we discovered a strong tendency toward drawing to an inside straight -- adding technology to aid the sales force. (See chart, below.)
Topping the list are collaboration tools such as top pair Cisco Systems' WebEx and Citrix's GoToMeeting. Other technology sectors offer three or four of a kind when it comes to vendor options. Lead management includes applications such as Eloqua, Manticore, and Vtrenz. Chief sales officers beginning to see the power of analytics are turning to systems like those from Cloud9, LucidEra, i-Snapshot, and others. Kadient, OutStart, and Salesforce.com's Koral, among others, are gaining ground in the sales knowledge management space. Leading sales process firms such as SPI, the TAS Group, Knowledge Advantage, and Market-Partners are now seeing their methodologies being integrated directly into CRM systems. And an increasing number of sales organizations are opting to replace homegrown incentive management systems with commercial offerings from Xactly, Varicent, and Centive, to name a few.
The final trend we're seeing is that some existing CRM users are throwing in a bad hand and looking for a re-deal. What do I mean by that? As part of our study, we asked the 70 percent of firms that have already implemented a core CRM application if they had any plans to replace their existing solution -- and 13 percent said yes. We then further segmented the study data based on length of time an application had been installed. In looking at firms that had their current CRM application in place for three years or more, nearly 1 in 5 acknowledged plans to replace that system in 2008.
Why the desire to switch? Part of it is dissatisfaction or disenchantment with the hand they'd been dealt. When we asked executives to name their main sales objective for 2008, increasing revenues topped the list. Yet when we asked CRM users to tell us the top three benefits they were achieving through the implementation of CRM solutions, revenue improvement came in seventh. In other words, some organizations are opting for the newer generation of CRM solutions in hopes of achieving the real objectives they turned to CRM for in the first place.
But the ultimate realization to be drawn from the study data? That CRM is considered "table stakes" in business today, the ante required to compete. An ever-increasing number of companies are getting great at leveraging the available tools, and in doing so are watching their chip count rise. As a result, these successes are making CRM a game that all companies need to play -- and play well -- if they're going to remain competitive.
And that's no bluff.
Jim Dickie is a partner with CSO Insights, a research firm that specializes in benchmarking CRM and sales effectiveness initiatives. He can be reached at firstname.lastname@example.org.
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