The customer relationship management (CRM) software industry suffered through a second year of declining new license revenue in 2002, according to Gartner, Inc. Worldwide CRM new license revenue totaled $2.8 billion in 2002, a 24.7 percent decline from 2001 revenue of $3.7 billion. In 2001, the market declined 6.4 percent.

"'The slow economy, combined with buyer behavioral changes and priorities, have had a huge impact on sales of new license revenue for the CRM software vendors,'" said Tom Topolinski, vice president for Gartner's worldwide software applications research group. "'Smaller deals, tactical projects, longer sales cycles and heavy competition have caused CRM vendors to struggle.'"

All regions of the world experienced a decline in new license CRM software revenue in 2002. North America, the largest region for new license CRM software revenue, experienced a decline of 27.6 percent, while Western Europe dropped 22.4 percent. Asia/Pacific suffered a 15.2 percent decline.

Source: "Gartner Says Worldwide CRM New License Software Revenue Declined 25 Percent in 2002," June 12, 2003

"'CRM requires far more sophisticated forms of KM, such as collaboration, active knowledge sharing among CRM professionals, engaging customers in communities, and using e-learning as a customer value-added service,'" said Kathy Harris, research vice president for Gartner. "'Ultimately, CRM needs KM to enable innovation and collaboration among and between customers, employees and business partners.'"

"'CRM uses many emerging e-learning techniques. Sales is a hotbed for major account sales simulations, and customer service and support employs simulations to develop customer service techniques,'" said James Lundy, research vice president for Gartner. "'Marketing uses e-learning processes to educate the customer in business skills, in products and services, and to enable the customer to select the best product by modeling their requirements against product specifications.'"

"'In field sales, good indicators of the need for KM include frequently having to get back to a customer with critical information, having to start from scratch when configuring a product, proposal or history for a client or prospect, and not knowing who can help in solving any of these business problems,'" said Dale Hagemeyer, principal analyst for Gartner.

Source: "Gartner Says Knowledge Management is a Key Factor in Long-Term Success of Customer Relationship Management," May 5, 2003

"'At the heart of businesses efforts that are succeeding in today's increasingly competitive business environment is a recognition of the value of PRM,'" said Robert DeSisto, vice president and research director for Gartner. "'Most businesses that depend on a multitier distribution channel with demand-network partners to provide value-added services — such as global distribution, vertical marketing and sales reach, or localized operations and customer support — have come to recognize that those indirect relationships must be properly orchestrated to compete effectively.'"

"'Businesses must evaluate their multitiered distribution processes and capabilities with their demand network partners,'" said DeSisto. "'The ultimate goal for manufacturers should be to implement technology that will make it easier for partners to do business with them at a lower cost to serve.'"

Source: "Gartner CRM Survey of Sales Organizations Shows Partner Relationship Management as Having the Highest Return," April 29, 2003

Although lowering costs is the most common benefit cited by businesses for implementing CRM applications, a recent Gartner, Inc. survey revealed that 41.9 percent of the total number of software licenses bought by businesses go unused.

"'Buying more software licenses than needed may seem like a wise investment in the short term, but over time it costs more,'" said Beth Eisenfeld, research director for Gartner. "'Through 2005, businesses that continue to buy more CRM software licenses than they need -- and those that deploy less than they purchase -- will incur a 20 percent to 30 percent increase in total cost of ownership compared to businesses that carefully plan their CRM software license purchases.'"

Source: " Gartner Survey Shows 42 Percent of Purchased CRM Software Goes Unused," March 6, 2003

"Customer retention must be the No. 1 priority for financial services' CRM strategies, but a new survey by GartnerG2, a division of Gartner, Inc. showed that acquiring new customers is often the main goal. In the first quarter of 2002, GartnerG2 surveyed 117 U.S. retail marketing departments in the financial services industry (banking, investment, insurance and credit cards) via the Web to state their CRM priorities."

"According to the survey, the primary marketing focus for retail financial services marketing departments was on new customer acquisition at 43 percent, or cross-selling at 30 percent. Customer retention was the No. 1 priority among just 9 percent of those surveyed. GartnerG2 analysts said this is a major mistake among financial services organizations."

"'Customer retention should be the first line of defense in a financial services provider's CRM strategy," said Kim Collins, research director at GartnerG2. "However, most financial services companies do not even have a clear definition of customer attrition, much less a way to accurately identify and respond to early warning signs that a customer is likely to exit.'"

"GartnerG2 analysts also pointed out that acquiring new clients costs nearly five times more than retaining an existing one. "On average, that's $280 spent to find a new customer vs. $57 to keep one. If you are losing high-value customers, the costs go up substantially to acquire a new customer and grow that relationship to the same level," Collins said."

Source : "GartnerG2 says Retail Financial Services Companies Must Make Customer Retention No. 1 CRM Priority," August 8, 2002