CRM Market To Reach $16.8B by 2003

The market for customer relationship management (CRM) products and services will grow from $3.7 billion (US$) in 1999 to $16.8 billion by the year 2003, a compound annual growth rate of 49 percent, according to a recent study from AMR Research.

The market, which consists of products used by e-commerce companies to service their customers, is expected to merge rapidly with the well-established call center industry that is used today by brick-and-mortar companies to handle customer service by telephone and mail.

Effortless Service Will Keep Customers Coming Back

“There are a number of things that can happen in the e-business environment which can negatively impact the consumer’s shopping experience,” said Bill Price, a customer service executive at “Whether it is a product question, an inventory shortage, a defective item, or an article of clothing that does not fit, e-businesses are learning that they must be able to respond quickly and accurately to customer demands.”

“They are also realizing that it is essential that they communicate with their customers through a range of media options, and that these technologies must work together seamlessly for the consumer. This is placing huge pressure on the customer service divisions of these companies.”

All Forms Will Be Integrated

The study expects that online e-tailers will use multiple forms of customer service, including live interaction by telephone and chat, asynchronous communications using e-mail and fax, and computerized service using natural language-based help systems.

The study also anticipates that so-called Enterprise Resource Planning (ERP) vendors that provide supply chain software and services to leading retailers will enter the CRM market through mergers and acquisitions in order to expand their own product lines. The purpose, said the study, will be to allow their customers “to achieve a total view of the customer.”

CRM To Become Hub for Many Companies

“Companies are now developing business plans with CRM strategies earmarked as the key to revenue enhancement opportunities and customer retention,” said Dave Caruso, vice president and service director of ARM Research’s Enterprise Application Strategies group. “CRM applications, along with e-commerce systems, address these critical issues and are becoming the hub of many companies’ marketing strategies. Leading CRM vendors are expanding their suites beyond integrating sales and service to support Web interactions and e-marketing.”

Customer Retention and Repeat Orders

According to eConvergent, a Web-based CRM provider, customer satisfaction will be the critical e-commerce driver in 2000, as companies focus on customer retention and repeat orders.

“2000 will be the year of customer satisfaction because e-businesses know that customer acquisition is only the first marketplace battle,” said Rene White, senior vice president of marketing at eConvergent. “The war will be won by e-businesses that quickly move to focusing on customer retention, repeat orders, and the profitability those two bring.”

“In order to keep customers coming back, e-businesses must make customer service effortless and flawless — regardless of whether the consumer contacts the e-tailer by telephone, e-mail, fax, video or the Web. The e-business that embraces customer satisfaction, and invests in creating the ultimate customer experience, will have a critical advantage in jumping ahead of competitors.”

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