A recent study by the Boston-based IT strategy analysis firm AMR Research Inc. predicted that the customer relationship management (CRM) market could top $16.8 billion by 2003, up from $2.3 billion in 1998.

CRM helps companies understand, establish, and nurture long-term relationships with clients as well as retain current customers. A CRM system features a customer information system (CIS), data warehouse, data mining, sales force automation (SFA), and a campaign management system. Top vendors include Siebel Systems and Clarify . But regardless of the big names, what’s the hype behind CRM, and more important, is it right for your enterprise?

What’s behind the hype?
“CRM growth, as with its predecessor, sales force automation, continues to be held hostage by the ability of the CRM manufacturer to truly meet customer needs in a given target market,” said Andrew Birol, president of the Solon, OH-based consulting firm PACER Associates . To break out of this hostage situation, CRM needs to remember what its “C” stands for. Birol reminded companies to use CRM to “focus on the end goal of the customer, instead of what their technology may or may not achieve.”

Analysts say that managing strong, long-term customer relationships will be the key to success in the e-commerce market. But CRM will not work for all companies equally—there are those that would benefit greatly from it and those that would be overwhelmed by it.

Is CRM right for your enterprise?
“CRM technology is more advanced than the needs of most midsize (under $100 million) businesses. Specifically, few organizations have the resources or needs to use the features and functionality of some of today’s hottest products,” Birol said. He suggested three points to consider when judging a CRM product’s functionality.

  1. Size: “If your firm doesn’t have a 100+ outside sales force, or several integrated marketing campaigns, many products will be overkill,” Birol said.
  2. Number of seats: “Many suppliers sell products by the seat or user. If a smaller company wants to equip its sales, marketing, and customer service groups, only 10 seats may be needed. This is not a profitable deal for many vendors,” he said.
  3. In-house resources: “CRM suppliers may be assuming that their prospects have clear goals, a long time to implement changes, and ample in-house resources to help employees learn the latest thing,” Birol said.

Keeping the portal open: Web-based customer service
If CRM seems to be overwhelming in comparison to your company’s needs and size, you might want to see past the CRM hype for now and rely on the Internet instead. “The Internet is more than a sales channel, it’s a relationship channel,” said Bob Runge, vice president of marketing for Pivotal Corp. , which develops e-business relationship management software. “The vision is shifting. It is using the Internet to get closer to customers,” he said.

Keeping customers happy won’t change despite the revolution in information and business technology, but online customer support will be crucial to having a successful e-commerce operation. “Online customer support is always going to be determined by customer expectation,” Birol said. “Web-based customer service will only work if there’s a clear and acceptable relationship between vendor and customer. Customers’ expectations have to be met.”
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