Yep, It's Still the Age of the Customer

5 minute read
David Roe avatar

Still need evidence that Customer Relationship Management (CRM) technology is hot? Then take a quick look at recent research from Gartner, which shows CRM spending in Europe remains strong despite continuing economic problems.

Half of the 102 businesses surveyed in 30 countries and 20 industries in the fourth quarter last year plan to increase spending an average of 2.5 percent on CRM projects this year.

Opportunity Knocks

Apart from providing considerable opportunities forCRM vendors, it also demonstrates enterprises are stillputting customers at the heart of their business, at least in Europe. They are also willing to invest in technology that will not only develop customer relationships, but will also keep those relationships healthy.

The results echo a wider study on global CRM spending which was published last month. That showed thatspending on CRM is being driven by five areas of technology:

  • Social
  • Mobile
  • Big Data
  • Cloud
  • Internet of Things

In that report, Gartner estimated that, globally, investment in CRMwould rise to $23.9 billion this year, with cloud-based technologies accounting for 49 percent of that.

Currently, software as a service (SaaS) or cloud-based CRM deploymentsrepresent more than 40 percent of all CRM deployments, and are likely to reach 50 percent in 2015 as more and more enterprises look for agile technologies to respond to business challenges.

The European survey, gives some more insights into those trends even if the study may be considered regional. However, the link between business in Europe and the US are so strong that, generally speaking, what applies in the US also applies in Europe, and vice versa.

"The survey findings highlight the continuing trend for organizations to commit to improving the management of their customer relationships," said Jim Davies, research director at Gartner. "We are observing an increasing number of large, transformational projects being undertaken as organizations look to embrace social and mobile interactions for sales, marketing and customer support.

CRM in 2014.jpg

European CRM in Figures

Digging a little bit deeper into thosefigures, the research shows Gartner is expectingthe CRM market in Europe to grow by 9 percent this year reachinga market value of $5.5 billion by the end of this year.

More than49 percent of all that technology will be through SaaS — a little ahead of the global figure where this level of spending outside of Europe will only be reached by the end of next year — a dramatic increase on the figure of 1 percent in 1999.

In fact, in terms of revenue, growth in CRM delivered through the cloud will be $2.3 billion this year, a growth of 24 percent on last year.

Driving Forces

The survey participants were also asked to identify their three primary objectives for 2014. For the fourth consecutive year, the research found increasing customer satisfaction is the overriding objective.

However, a new goal was added to the list this year. Customer engagement pushed its way to No. 2 as organizations try to get closer to develop more beneficial relationships.

Learning Opportunities

Just behind customer engagement is the creation of a single customer view through investments in master data management and governance technologies. The objective is to provide a more joined-up customer experience across multiple channels, productions and functional areas.

An interesting aside here is that in previous research revenue/growth-oriented objectives had been the third priority. This would seem to indicate that organizations are beginning to realize that good customer engagement and experience means good revenue growth.

CRM in 2014

Growth appears to be this year’s theme rather than cost savings. That's  a change from previous years in which organizations looked to cut costs associated with sales, marketing and customer service. In fact, cost cutting did not appear in the top half of participants' objectives.

This also suggests that should organizations be looking to make savings, the are avoiding cuts anywhere that might impact negatively on customer experiences.

When asked to name the biggest obstacles threatening the success of their customer initiatives, participants overwhelmingly cited the lack of a clearly defined CRM strategy as their number one concern.

If gaining a single view of the customer was the most significant issue in 2013,this year the majority of organizations cited the lack of a clearly defined CRM strategy as their biggest concern this year.

This possibly suggests that quite a lot of progress has bee made since last year. Organizations have finally begun to realize thatthey do, in fact, need a strategy and that no amount of technology will help them if that is not in place.

In the past 10 years, the report says, customers’ trust in big business has declined rapidly. They have become more willing to complain or switch vendors if they receive a poor experience. They are also more inclined to tell others about it, particularly across social networks.

The report also adds that mobile adoption has caused fundamental shifts in how, when and why customers engage with each other and how they expect to be able to engage with organizations. These two factors combined are forcing enterprises to rethink or even develop CRM strategies.

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