Global business upheaval caused by the Internet is driving companies to reassess their business strategies and secure customer relationships. IDC estimates this renewed focus on winning and retaining customers contributed to an astounding 71% increase of worldwide customer relationship management (CRM) revenues in 1999, creating a $3.3 billion opportunity. While growth will slow, it will remain solid at a compound annual growth rate of almost 30% through 2004, bringing the market to $12.1 billion.
"In an era in which the competition is one mouse-click away, the need to solidify and deepen relationships with valuable customers has never been more important," said Mary Wardley, director of IDC`s Customer Relationship Management Applications research. "This need is creating enormous opportunities in the market for customer relationship management applications."
IDC divides CRM applications into three segments: sales automation software, marketing automation software, and customer support and call center software. In 1999, the sales automation segment was the largest, just edging out customer support and call center applications. However, this year, the customer support and call center segment will become the largest part of the market. Through 2004, marketing automation applications will be the fastest-growing segment of the market.
"It`s no exaggeration to say Internet technology is having a profound impact on marketing perhaps more so than on other CRM segments. In this new e-environment, marketing is taking on a new and highly strategic importance and becoming much more closely aligned with sales and customer service," Wardley said. "Marketing automation applications are redefining, if not reinventing, the possibilities of understanding and interacting with customers."
North America represents the largest opportunity for CRM vendors. In 1999, it accounted for more than 70% of the market`s revenues. However, revenues in North America will grow slower than revenues anywhere else, and by 2004, the region`s share will have declined to 64%. The CRM market in Western Europe will grow faster than any other region. Revenues there will increase at a compound annual growth rate of 36%, compared to the overall market`s 30% rate.
Overall, the CRM market is very fragmented, and competition is vigorous and dynamic. No supplier beyond the top five had more than 2% market share.
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International Data Corporation (IDC)
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