Penetrating the Vast, Untapped Reaches of the CRM Market
CRM is not a small market. Nor is it a niche sequestered away in a corner of the larger CRM market. CRM is a US$13.045 billion industry in 2012, and it will grow to $16.694 billion in 2015, according to Gartner. No matter how you look at things, that's a lot of money.
With a projected growth of nearly 30 percent in three years, it would be easy to assume that CRM has achieved significant penetration. But looking at the larger numbers suggests that CRM's market penetration is still tiny.
Perhaps that depends on how you define "market." Researchers like Gartner work from the data generated by purchases of software -- data that comes from people who have already discovered a technology. Estimating the number of people who have yet to discover the technology is another thing altogether.
Try this estimate on for size: In 2010, there were 3 billion email addresses in the world, according to IDC and the Radicati Group. Discarding all the unused addresses and residential addresses leaves you with 730 million business email addresses. If half of those addresses belong to people with customer-facing jobs -- sales, service or marketing -- that leaves 365 million email addresses.
That's 365 million potential customers. How many seats of CRM were sold in the past year? Roughly 15 million.
That leaves 340 million potential CRM users who have some kind of computer access (because they have email) but no CRM. That's an enormous opportunity.
There are reasons CRM hasn't reached these users. Perhaps the most obvious one is cost, but there are other things that have kept it from achieving its true potential.
1. It's Complex
CRM applications, although they aspire to help automate the supremely human activities of selling and relationship building, were created by the same software industry that automated financial reporting, ERP and other transactional business functions. Capturing and computing numbers is relatively easy when compared to what you need to do in CRM, and so in the process of translating human behaviors into data types that can be easily recorded and analyzed by computers, CRM has become rather complex.
Add to this the software industry tendency to battle competitors in a never-ending feature race, and it's not hard to imagine how increasing numbers of features and nonintuitive means of recording data can make CRM seem impenetrable to many business decision makers.
Vendors need to first appreciate the complexity of their applications and to put as much effort into simplifying things as in creating new capabilities. The first phase of this is the user interface; recent years have seen some vendors catching on to the idea of cleaner UIs, or UIs that can be personalized by the users.
2. CRM Awareness
Talk to anyone who's not in the CRM industry or who isn't a CRM practitioner about the subject of CRM, and the No. 1 question you'll hear back is "What's CRM?" This comes even as those of us in the CRM industry periodically ponder the idea of retiring the acronym "CRM" or replacing it with something that has less baggage and more applicability to managing customer relationships in a more social era.
However, the reality is this: Just as the complexity of CRM stems from its software industry heritage, so does the relative anonymity of the technology among a vast swath of potential users. At a major industry event a few years ago, RelayWare CEO Mike Morgan experienced an "aha!" moment that went to the heart of this: Even though potential customers were able to articulate their problems, they couldn't understand that vendors had the solutions for them because of the existence of a language barrier. Potential users spoke the language of their own problems; vendors spoke the language of their technology. Because of this misalignment of language, users can easily overlook the value of CRM simply because they are unaware or unable to hear how it can help them.
Vendors need to get far better about framing what they do in terms that resonate with users. Vendors must speak the same language as customers; it's much more reasonable to expect a vendor to learn the issues confronting customers than it is to expect customers to learn the jargon of the software industry.
3. Perceived Applicability
I've heard many a small business owner declare, "we're too small for [fill in vendor's name here]" -- then go on to bemoan business problems that particular application was in fact designed to solve. The problem here is often scale. There can be a mismatch in the perceived size of the problems a business faces vs. the perceived burden that a CRM application places on the business in cost, manpower and planning.
There can also be a mismatch in the way most CRM applications are created -- sales front and center, marketing and support close behind -- when a business with slightly different ways of dealing with customers looks at CRM.
For example, CRM is very useful for nonprofits, although it may take a creative director to translate CRM fields into fields that work for a nonprofit. Similarly, companies whose sales hinge on unique sets of customer circumstances may be frustrated by the seeming failure of CRM to take their unique selling situations into account.
Vendors need to provide flexible applications that can be adapted to the users' needs easily and rapidly. Insisting that the user works the way you as a CRM vendor have chosen to set up your application is not only inconsiderate -- it guarantees poor adoption and dissatisfaction among users.
4. CRM's Techno-Centricity
You'd never plop a catcher's mitt on the table and proclaim, "I bought baseball!" No, you bought a tool for playing baseball. CRM's like that. How many times have you heard someone say, "I bought a CRM!" No -- you bought an application that will help you improve the discipline of CRM, which is really about people, processes and technologies. Sellers were practicing CRM long before the advent of computers, but today's technology allows us to scale that practice up.
Sadly, it's common for CRM discussions to veer into tech-talk. Sometimes this starts with business concerns; SaaS and cloud-based CRM came about in response to high entry costs, for example. But then the tendency is to latch onto a technology concept as a selling point: Multitenancy is cool! SaaS is great! The cloud is super-neat!
However, the members of the vast, untapped market don't really want to have to learn what all these terms mean. They want something that solves problems cost-effectively and reliably. If it does this, the solution is a winner and the technology is irrelevant. If the system doesn't work and the user is forced to learn about the technology, then it's a failure.
Vendors need to realize that users are far less fascinated with technology than they are, and that it's critical to design products that make the technology nearly invisible to the end user. Users want to know how CRM will help them; they don't neccesarily want to know how CRM works.