I Can CRM Clearly Now

Jupiter Media Metrix releases new study on CRM growth

NEW YORK  February 25, 2002  Jupiter Media Metrix, an Internet and new technology analysis and measurement company, today reports that more U.S. businesses will spend $500,000 or more on customer relationship management (CRM) technology (26 percent) over the next 24 months than they will on other large-scale infrastructure initiatives such as supply chain management (19 percent) and content management (23 percent).

Jupiter forecasts that as the percentage of service contacts made online quadruples from two percent in 2001 to nine percent in 2006, CRM spending in the U.S. will rise to $16.5 billion in 2006 - up from $9.7 billion in 2001. Jupiter analysts have found that although most companies plan to increase CRM spending, few realize the benefits of improved customer intelligence.

"The overarching theme spurring CRM investments is the desire of businesses to cost-effectively improve customer satisfaction," said David Daniels, Jupiter senior analyst.  "However, businesses must realize that investing in CRM technology does not alone ensure that they will be able to implement the organizational changes needed to gain a competitive advantage.  To execute a CRM strategy effectively and strengthen relationships with customers, businesses must appoint a senior-level CRM guru who reports to the CEO and coordinates all CRM activities."

According to the Jupiter CRM Spending Model, growth in CRM technology for operational contact centers - which makes up 54 percent of CRM spending - will remain fairly constant over the next five years, but will slow in 2006 as the market matures.  Spending on analytical CRM software - which includes marketing-centric applications - will grow from $5.2 billion in 2001 to $8.7 billion in 2006 and will ultimately account for 53 percent of the CRM market.  Jupiter analysts have found that companies investing in analytical CRM applications will benefit from a consolidating vendor landscape, which will bring improved standard features at slightly lower costs.

Financial Services Companies Take the Gold

Financial services firms, which will spend $3.1 billion on CRM technology in 2001 and $5.4 billion in 2006, will be the single largest market for CRM systems.  In a recent Jupiter Executive Survey, 25 percent of financial services companies said they had budgeted more than $1.5 million for their operational CRM infrastructure in the next 24 months.  Jupiter analysts attribute this to consolidations within the financial services industry that have spurred large projects which often require new investments in common systems and platforms.  Other high CRM spenders in 2006 include retail ($3.2 billion  - up from $1.7 billion in 2001) and telecommunications businesses ($2.9 billion - up from $1.9 billion in 2001).

"While the high-tech, telco and financial services industries were early adopters of CRM systems, more than half of the companies in these industries have yet to deploy their operational CRM infrastructure completely.  Jupiter analysts caution that many companies are still missing opportunities to capture their intellectual property, such as product information and answers to routine service questions, and automate the sharing of it with customers. Businesses must adopt a road-map to implement CRM incrementally," Daniels said.

For more information on the future of CRM, see the iSource Global Enabled Supply Chain article on CRM in the April/May 2002 issue.