Moderate, Steady CRM Growth Through 2006

Corporations will continue to make efforts to please their customers, as research from Aberdeen Group forecasts worldwide CRM spending to exhibit moderate, yet steady, growth in the coming years. Aberdeen estimates 2002’s spending of $13.7 billion to swell to $17.7 billion in 2006, resulting in a 6.7 percent compound annual growth rate.

Hosted, subscription-based software offerings from independent software vendors and systems integrators will drive growth, as revenues are expected to soar from $246 million to $2.8 billion through 2006.

Counteracting the subscription growth is the sales decline of the application license model. From 2002 to 2006, Aberdeen forecasts that total worldwide application license sales (perpetual license model) will decline 17.8 percent from $3.01 billion to $2.48 billion.

Aberdeen notes that these figures represent the revenues that can be recognized by software and service suppliers, not actual lifetime value of subscription contracts sold in a particular year.

The U.S. will lead the CRM charge, maintaining approximately 52 percent of the total market through 2006. In 2002, the U.S. accounted for $7.14 billion of the overall market, and it is expected to swell to $9.19 billion by 2006.

Despite increases in CRM spending, customer service in the government sector could stand improvement. According to an Accenture global study of more than 140 government agency executives in 15 countries among North America, Europe and Asia, 90 percent of the respondents said their agencies do not yet deliver superior service.

While 92 percent of government executives said it was “important or very important” to provide superior service, only 28 percent said their agencies are effective today at delivering services through the channels their customers prefer.

More than half (54 percent) of the respondents said their agencies involve customers in the development of customer services. However, only 34 percent of respondents said they believe their agencies are effective at delivering tailored customer services.

“Governments must take their cue from the private sector and better understand the wants and needs of their customers – the citizens and businesses they serve – and modify their processes to accommodate them,” said Steve Rohleder, group chief executive of Accenture’s Government operating group. “Fortunately, a growing number of governments are taking a step in the right direction by involving their customers in the creation of new services.”

Among other Accenture findings:

  • 40 percent of respondents said their agencies resolve customer questions efficiently
  • 34 percent said their agencies route calls and make assignments efficiently
  • 26 percent said their agencies track customer requests effectively
  • 22 percent of respondents said their agencies follow up with citizens and businesses to monitor their satisfaction with the service provided
  • 32 percent) of the executives surveyed said their agencies use multi-channel contact centers that integrate telephone, mail, email, Internet and fax capabilities
  • 66 percent report that their organizations use call centers to manage customer interactions and 81 percent predicting they will have them in place in the next three years.
  • 73 percent who said their agencies have customer contact centers rated their agencies as efficient at resolving requests, compared with 30 percent of respondents who said that their agencies don’t have call centers or contact centers

“To take customer service to the next level and tailor government services to the specific needs of their varied customers, governments must do a better job of analyzing data,” said Andrew Simmonds, the partner responsible for customer relationship management services in Accenture’s Government operating group. “That data will also help them market their services to build awareness and encourage the use of new services.”

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