The beginning of a new year is an opportune time to assess the maturity and trajectory of the Customer Relationship Management software market. A clear understanding of the direction aids planning to tap into new capabilities, better leverages CRM software with other technology movements and can significantly accelerate your business and systems objectives.
Here are four market shifts that will impact the trajectory and value of CRM software.
Shift #1: CRM becomes the top enabler of digital transformation
CRM systems are just one category of enterprise software. But it’s a big category. Gartner advises this market exceeds $50 billion annually and continues to grow at about 16% per annum. To maintain that growth rate, software publishers are aligning their technology with other growth markets such as digital transformation.
This technology will become the most used application to power digital transformation, which itself is a part of a business transformation or reinvention strategy that figures out how to leverage digital technologies to lower operational costs, grow revenues and transform products.
CRM lowers operational costs by improving staff productivity, lowering the cost to serve customers and giving customers lower cost channels (virtual agents, self-service portals, knowledgebases) that they prefer.
CRM software grows revenues by increasing customer affinity with specific capabilities that support customer engagement, customer experiences and customer relationships, all of which are measured by increased customer share (spend) and retention.
And the technology helps transform products. The technology captures voice of the customer (VoC), customer intelligence and buyer insights which are collectively applied to create innovative products and services, including new revenue streams, new digital products or services, or new or better ways for customers to acquire, consume, use, experience or benefit from products or services.
CRM will become the default underlying technology to achieve digital transformation that uses digital technologies and channels to lower operational costs, grow revenues and transform products. If this software isn’t integral to your digital transformation objective, you’re missing a synergistic opportunity.
Shift #2: Customer Experience expands from B2C to B2B
According to Salesforce, 84% of customers say the experiences delivered by the company are as important as its products and services. And those experiences have significant profit potential as 66% of those customers say they are willing to pay a premium for great experiences.
Everyone knows that keeping customers happy keeps them coming back for more. However, while customer experience management (CXM) has become a top customer strategy in the Business to Consumer (B2C) industries, it has not achieved the same adoption in Business to Business (B2B) industries. But that’s now changing. And the technology to support customer experience (CX) capabilities is also becoming more recognized.
There are a lot of so-called “Customer Experience software solutions.” But almost all of them are point solutions. Rather than stitching together a multitude of piecemeal apps, a better approach is to start with a more comprehensive customer platform. CRM software will become that primary underlying technology for CXM. CRM software provides customer experience capabilities such as buyer journey alignment, omni-channel engagement, online self-service and next best action recommendations. The technology harvests data to deliver relevant, personalized and contextual customers experiences. Delivering differentiated CXs is equally important in both B2C and B2B industries.
CRM software provides the customer data management, process automation and information reporting to design and automate customer experiences. And platforms such Salesforce and Microsoft Dynamics 365 have extensive ecosystems, such as AppExchange and AppSource, to tie in specialty CX apps.
If you are serious about a customer experience strategy, begin with a CRM platform as the overarching technology foundation and then apply best of breed or specialty solutions as needed.
Shift #3: CRM software will expand with more industry clouds
Gartner’s Software Advice reports that 51% of CRM buyers are in four markets, including real estate, consulting, distribution, and insurance. That would suggest additional industries offer additional market growth.
The CRM software publishers have clearly taken note. Salesforce and Microsoft Dynamics have delivered their initial industry-focused CRM solutions and said more are coming. Microsoft is going a step further and collaborating with its partner network to deliver micro-vertical CRM solutions. ERP stalwarts Oracle and SAP have long delivered industry-based ERP software and suggest the same is coming for their CRM software.
Vertically focused CRM software makes a lot of sense. Wholesale distributors need real-time inventory visibility in their CRM, manufacturers need Configure-Price-Quote (CPQ), IoT and field management services as part of their CRM and retailers can use augmented reality (AR) for online or in-store experiences.
The regulatory needs of life sciences salespeople are extraordinarily different than other industries. The quoting and billing needs of software-as-a-service salespeople are unique. These two examples highlight why Veeva and Zuora have become niche-based CRM vendors with multibillion-dollar market caps.
The days of generic CRM software are in decline. Vertical solutions that solve difficult industry problems, deliver industry specific best practices and focus on what makes an industry unique will accelerate in the coming year.
Shift #4: Artificial Intelligence becomes pervasive
Artificial Intelligence (AI) has been hyped with CRM software for years. However, in the last few years the CRM vendors have delivered basic but extensible AI models and algorithms. Several vendors have delivered impressive AI toolkits, such as Salesforce with its Einstein and Microsoft with its Azure Machine Learning.
Now, business and IT leaders are finally evolving from prolonged pilots and perpetual prototypes aimed at discrete workloads to end to end processes that deliver important benefits for users.
For sales, AI is delivering guided selling and advising sales execution steps in the forms of next best actions or sales playbook plays. AI is performing conversational analytics to help sales pros interpret buying signals, or the lack thereof, in remote selling situations. It’s advising sales managers when and how to intervene with sales coaching.
For marketers, CRM AI is advising next best content artifact recommendations based on prior engagement, customer sentiment, persona and customer history. It’s applying propensity models to campaign flights and offers by target audience and channel to increase conversions. And it’s doing marketing mix modeling and campaign portfolio optimization to lower the cost per lead.
For customer service, AI is being used to improve the agent experience, deliver faster case resolutions, increase customer satisfaction, lower cost to serve and scale customer support operations. AI is adding value to most other contact center technologies. It’s making call routing more efficient, case resolution more timely, chatbots more conversant, customer sentiment more detectable and analytics more predictive. AI is identifying customers at risk of churn and recommending retention levers to keep them.
The use cases and benefits are plentiful and will be increasingly realized in the year ahead. AI is now the top driver of CRM ROI.
If you are not taking advantage of AI in your CRM system, you are missing a significant opportunity to aid user efficiency and effectiveness.