New research confirms what many marketers have already suspected: It’s harder than ever to attract new customers and retain existing ones.
Competition for customers is heating up — or as London-based Ovum, a global research firm, puts it, "hotting-up." Colloquialisms aside, the fight for customers appears to be kicking into high gear.
And the reason is clear. Customer relationship management (CRM) and e-commerce will be the fastest growing enterprise applications through 2018. According to the global analyst firm’s newly launched software forecasts, customer-engagement systems will be the fastest growing enterprise application between 2013 and 2018.
Better Experiences, Lower Costs
E-commerce and CRM solutions are predicted to see compound annual growth rates (CAGRs) of about 10 percent. Enterprise applications that support innovation, such as product lifecycle management (PLM) and innovation management platforms, are close behind, with an expected CAGR of 8 percent.
The research, contained in Ovum's Enterprise Application Software Market Forecasts, confirms that companies want to strengthen customer engagement capabilities while reducing costs, explained Jeremy Cox, principal analyst, customer engagement, Ovum.
Ovum found similar trends in its ICT Enterprise Insights reports, which found growth is the priority, followed by greater customer focus, compliance, cost reduction and innovation across a global population of 6,698 enterprises.
Cox said globalization and disruptive technologies — particularly social networks, cloud computing and mobile — have had a "massive impact, raising customer, consumer and citizen expectations and giving them greater power."
Organizations have become "fiercely competitive" for customers, and are capitalizing on the latest IT solutions to help them "adapt quickly enough to remain relevant to consumers,” Cox added.
Striking a Balance
Keith Dawson, practice leader, Customer Engagement at Ovum, told CMSWire today that businesses should look to the current generation of enterprise IT applications to balance the tension between their cost constraints and their need to reach more customers, in more ways. "It’s hard to strike that balance, but the data suggest that as the expectations rise for richer customer experiences, smart investments in IT applications will help smooth out bumpy processes," he said.
What's the biggest takeaway from this research for companies that want to attract new customers and retain existing ones? He responded:
The short answer is that as the environment around customers changes, companies have to adapt. That means that customers are empowered with a broad array of devices, contact channels and options to choose from when dealing with companies. It’s often hard for companies to discern exactly who a contact is and what the history of the relationship has been, especially as they become more mobile. So investing in customer engagement technologies, especially at the CRM layer, becomes ever more important. Companies need to become even more flexible and responsive then they already have."
Dawson said it is extremely important for companies to stay up-to-date with CRM and e-commerce technologies — and noted complacency is a risk.
"They are increasingly the cockpit for businesses to control the overall flow and processes for engaging with customers," he noted. "There is a lot of dynamism in the technology landscape in this area, meaning more frequent feature upgrades and deployment models offered by vendors."
What industries are spending most? Ovum predicts manufacturing and healthcare verticals will be the biggest spenders by 2018, "driven largely by the need to innovate."
Healthcare investment will nearly double between 2012 and 2018 from $12.2 billion to $22.9 billion, while manufacturing investment will grow from $14.6 billion to $23.9 billion over the same period.
Geographically, the biggest growth in spending for enterprise applications will occur in China, India, Brazil and the Middle East and Africa, where business will invest between 13 percent and 16 percent. The slowest growth will in spending will be in Europe and the US (between 7 percent and 8 percent). Cox qualified those statistics, however, noting that Europe and the US are starting with a much higher base.
Ovum is a division of Informa plc, a London-based business and academic publishing and event organizer.