Midsize CRM Mania

By Cindy Waxer

An October 2001 Jupiter Survey of 563 executives reported that 49 percent of small to midsize businesses plan to implement CRM technology within the next 12 months. These same companies will spend upwards of $651 million on their CRM solutions, and by 2006 will make up 19 percent of the CRM market – up from 10 percent in 2001.

Vendors have been quick to respond to this new demographic. Recently, midsize companies have witnessed a bumper crop of scaled-down solutions as traditionally enterprise-oriented vendors such as Siebel Systems Inc. and PeopleSoft Inc. vie for a slice of today’s mid-market pie – not to mention the enhanced offerings of smaller vendors including Interact Commerce, who have long been catering to the CRM needs of nascent businesses.

Why the sudden explosion of mid-market CRM solutions, salespeople and seekers? Simply put, midsize companies can no longer afford to ignore the perks presented by such a tool. Awkward cold calls and one-size-fits-all marketing campaigns might have satisfied yesteryear’s consumers, but these days, successful customer acquisition and retention hinges on a company’s ability to build strong relationships. Not to mention the impact a CRM solution can have on a company’s ability to forge strategic alliances with key partners and resellers.

That’s not to suggest, however, that there aren’t critical factors separating today’s CRM-seeking midsize companies from their moneyed counterparts. Far more cost-conscious, midsize companies lack the financial luxury of being able to load-up on CRM licenses to accommodate a five-year deployment process. Instead, they’re looking for shorter implementation cycles without a hefty price tag.

In fact, Gartner Group analysts estimate that a typical CRM installation for a midsize company, including software, consulting fees and company labor costs [three separate items? No comma originally after software], runs about $250,000 to $500,000. All of which can represent a sizable investment to a company whose annual revenues dip below the half-a-billion-dollar mark.

Today’s midsize companies also demand more bang for their buck. Contact management, call-center automation software, email management, sales force automation – they are all crucial components of CRM technology that midsize companies expect to find in a single, cost-effective solution.

It’s for this reason that an increasing number of vendors are beginning to rethink their marketing initiatives to accommodate the purchasing behaviors of small and midsize businesses. After all, based on the projections of CRM pundits, those who manage to satisfy the needs of today’s midsize companies will be those who dominate tomorrow’s CRM market.