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Defining and forecasting the CRM market has always
been a nightmare. Unlike other products that are
easier to get a handle on, such as networking ports or
messaging systems, CRM is very much a holistic
approach to customer service. As such, trying to
quantify what is essentially more of a philosophy than
a discrete product has produced countless headaches. I'm
sure most of you reading this article have come across
an analyst quote at one time or another.
There is an industry analyst for virtually every
market. Recently I was amused, but not surprised, to
see a beef industry analyst interviewed on CNBC.
Apparently the flank market is on the rise but the
prime rib industry is in the decline. It reminded me
that if you look hard enough there is an expert on
everything. Let me begin by explaining the methodology
most analysts take when examining a market.
When we approach a market, generally the first step
is to interview most of the major participants. This
is generally just a conversation with several
well-positioned executives followed by an in-depth
survey of their sales over the last several quarters
and previous year. Generally, we believe that if we do
this to all of the major market players, we can
produce an analysis of the market this is both
credible and accurate. However, the CRM market is
different.
DISTINCT NUANCES
In the CRM market as a whole, there are over 100
players. Each one has a different definition of the
market and each vendor has a vastly different product.
Trying to produce a market share with these
participants would be like comparing milk to a malt
liquor. There are extremely different audiences.
Anyone claiming a dominant market share in CRM without
specifying a particular product segment, is just
blowing smoke.
However, a competent analyst's skills transcend the
ability to simply interview executives and mail
surveys. A good analyst can exercise informed judgement
and create a segmentation that in the future,
hopefully, others will follow. This has been the case
with CRM.
Recently I had a conversation with several
well-informed executives at Avaya, which purchased
Quintus and became a leader in CRM. The company came
up with a view of the CRM market so unusual, it is now
trademarked. Avaya looks at the CRM market through
something called the "CRM Hierarchy of Needs," in
reference to the early 20th Century sociologist
Abraham Maslow. To quote Maslow, "Human beings all
experience a hierarchy of needs, from basic physical
needs to higher needs of emotion and ego.
Self-actualization is the highest need and the driving
force of human personality." With a bit of
imagination, CRM can be looked at the same way. While
I enjoy Avaya's perspective, it wasn't perfectly
appropriate for a multi-vendor segmentation.
MARKET SEGMENTATION
Using Avaya's approach as a starting point, I've
segmented the CRM market into four very specific
levels.
Level 1: Basic self service, skills based
routing, predictive routing, support for multiple
media such as voice, e-mail, and Web. This is bare
bones-CRM, simply the ability to queue multiple
contact methods together.
Level 2: Seamless access to different
customer databases and histories, outbound campaigns.
Slightly more complex, Level 2 lets an organization
make use of different islands of customer information
in a single, clean format.
Level 3: Delivery and fulfillment
management, front and back office integration, and
business process automation. Level 3 automates the
entire sales process so that the right hand knows what
the left hand is doing.
Level 4: Customized, personalized, customer
experience. Customer segmentation and prioritization.
This is the ultimate in CRM. Each customer is treated
differently based on their needs, preferences, and
importance.
With this segmentation, the CRM market becomes much
less confusing. A vendor who has 10,000 systems of
e-mail management installed can't claim CRM dominance
compared to a company with 500 installations of Level
4.
I still stand by the belief that CRM is an
intelligent philosophy by which to run a business.
Most vendors will follow the natural migration from
Level 1 to Level 4, though it is not always the case.
Some may skip steps or leave out certain processes
depending upon individual communications needs.
Hopefully, from an analyst standpoint, this sort of
segmentation will clear up some confusion about the
market. The next time a reporter calls and asks who
the leader in CRM is, I'll be able to answer more
intelligently.
Brian Strachman is senior analyst, Voice and
Data Communications, Cahners
In-Stat Group. To correspond with the author,
please send your comments to brians@instat.com.
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