Frost & Sullivan Survey Finds CRM Products Lackluster

A new end-user satisfaction survey conducted by Frost & Sullivan, the international marketing consulting company, reveals that the perception of the overall CRM (customer relationship management) market performance from a client perspective does not correspond to the hype whipped up around vendors and solutions in the marketplace.

Expectations from the marketplace have been created by vast amounts of market hype. Vendors have up until now fuelled this hype and reaped the benefits of high profile early adoption.

The study highlights a distinct lack in product maturity and costeffectiveness, as well as general disgruntlement amongst end-users about the performance and capability of the CRM solutions available.

Andy Tanner Smith, Industry Analyst at Frost & Sullivan, points out: "As users grow increasingly reliant on the functionality and the data integration offered by CRM products, vendors are gearing their efforts towards fulfilling the criteria applied by the end-user. The market is expected to experience a shift to electronic CRM (eCRM) which aims to embrace the Web as an access channel."

As vendors begin to discuss their solutions in terms of the next wave of eCRM, the market is open for any vendor of sophisticated, yet sensibly priced offerings. The study emphasises that the current crop of vendors falls some way short of this.

The market is typified by fierce competition between vendors that have differentiated their products and services along a number of lines. These include, but are not limited to, product functionality, integration with existing systems, ease of use, and the range of target markets.

Frost & Sullivan suggest that CRM vendors need to practise much more of what they preach. CRM applications do not always live up to customer expectations and users' needs are not fully catered for. Whilst users expressed relative satisfaction with the technology, the pre-sales consultancy and post-sales service they receive from their vendor could be improved.

One of the most crucial factors in this context is price. The consensus amongst our respondents was that CRM products were overpriced. However, CRM is an explosive market and prices are anticipated to somewhat decline in the medium term.

Tanner Smith adds: "Expectations have been raised through the high price tags attached to leading CRM products. Such high prices are not uncommon in emerging markets because the competitive advantage offered by the product lies in its ownership. When mere ownership of a CRM solution fails to provide that competitive advantage sought by users, they will look for complete out-of-thebox systems; improved and wider scopes of functionality; price reductions in order to achieve more rapid returns on investments and better services from vendors. Indeed, users will be looking for all the elements of a competitive market that are lacking in the vendors of CRM at present."

Tanner Smith continues: "The vast majority of respondents that indicated that they were already using a CRM solution also implied that they were either in the process of expanding their solution or looking to enhance it in the near future. Furthermore, most interviewees suggested that they would be returning to their current vendor. This means that a fifth of users would consider looking around for more suitable options, mainly driven by the discontentment with their existing CRM system."

A winning strategy has to be matched by completeness of offerings and strong marketing in order to convey that message against the backdrop of an increasing competitive landscape. This vendor will have access to a large untapped pool of medium sized enterprises that have need of the full range of CRM functionality but lack the resources to invest in the current spectrum of solutions on offer.

Frost & Sullivan's study does not believe that there is a single vendor that satisfies these criteria at present.

Suppliers that can offer the complete solutions are likely to penetrate the market successfully. Siebel Systems Inc takes leadership of the overall CRM market and is set to continue to spearhead total sales.

Products being touted by the vendors as complete solutions fail to provide the features that clients require. Many vendors offer base products rooted in sales force automation, marketing automation or customer service technology and add functionality through third party vendors. The integration between these disparate technologies is of key concern to users and potential users. As such, Frost & Sullivan conclude, the absence of mature CRM offerings clearly inhibits market growth.

Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the Information Technology industry for market trends, market measurements and strategies. This ongoing research is utilized to complement a series of research publications - such as the Pan Asia Customer Relationship Management Software Markets: Taiwan and South Korea (4200)- to support industry participants with customised consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press. Report Code: 3713, Publication Date: May 2000, Price: 3,950 Euros.

Contact Frost & Sullivan's Public Relations Department +44 (0)171 915 7824 kristina.menzefricke@fs-europe.com, www.frost.com.