The renewed interest on winning and retaining customers contributed to an impressive 71 percent increase in worldwide customer relationship management (CRM) revenues in 1999, creating a $3.3 billion opportunity, according to research by International Data Corp. (IDC).
While IDC expects the growth rate to slow, it will remain solid, with a compound annual growth rate of nearly 30 percent 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 CRM 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, in 2000, IDC predicts the customer support and call center applications to 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.”
According to IDC, the largest opportunity for CRM vendors is in North America. In 1999, it accounted for more than 70 percent of the market’s revenue. However, revenues in North America will grow slower than revenues anywhere else, and by 2004, the region’s share will have declined to 64 percent. 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 percent, compared to the overall market’s 30 percent rate.
As a whole, IDC found the CRM market to be very fragmented, with rigorous and dynamic competition. No supplier beyond the top five had more than 2 percent market share.
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