Headline Feeds
It's not easy to make the top of the Forrester Wave report list in an ultra-competitive CRM market. But that's just what eGain has done.
The company received the top overall numeric score in the "current offering" category for the first quarter of 2005 and was also rated a leader in strategy. As a matter of fact, it wasn't too long ago that eGain received the top score for e-mail response management in Forrester's TechRankings evaluation.
So when the topic of trends, challenges and the future of CRM arises, eGain CEO Ashu Roy is a good person to ask. CRM Buyer caught up with Roy to get a pulse on the CRM market of today -- and take a glimpse at what is to come.
CRM Buyer: Why is the CRM 
market getting so much attention these days? What is driving the need for these solutions?
Ashu Roy: When you look at the market adoption of any technology solution even after it crosses the proverbial "chasm," it goes through three phases: unrealistic expectations, disillusionment, and "educated" adoption. CRM solutions have gone through a similar adoption curve:
- Phase 1: Unrealistic expectations (mid to late 90s)
- Phase 2: Disillusionment (early 2000s)
- Phase 3: "Educated" adoption (entering this phase now)
While CRM solutions -- marketing, sales and customer service automation -- are experiencing market demand, customer service automation is starting to become the "sweet spot." The demand for customer service solutions are driven by several factors:
Extreme competition: Relentless product standardization and commoditization, and ubiquity of information are forcing companies to emphasize customer service and customer experience for competitive advantage. As switching barriers go down, customer loyalty increasingly becomes a function of the customer's recent experience with the business. Following early adopters and leaders that have leveraged customer service software to enhance the customer experience and loyalty, mainstream businesses are now investing in customer service and CRM solutions.
High marginal returns on customer retention: There's a plethora of industry statistics and real-world data that show the value of retaining customers and how it impacts profitability -- much more so than acquiring new customers. Mining the customer base for revenue became even more important in the economic downturn.
The Internet effect: The Web has further shifted the balance of power to customers by reducing search costs and allowing them to switch suppliers easily and efficiently, pushing customer service and retention to the top of the corporate agenda. Moreover, the adoption of e-channels such as e-mail and the Web by customers are driving demand for online customer service management solutions.
CRM Buyer: What is the state of the customer service and contact software market today? How mature are current solutions?
Roy: Customer service and contact center applications have historically been focused on providing basic infrastructure to operate call centers. Now there is a move towards optimizing customer experience and maximizing the value of interactions through best practice standardization and process improvement within multi-channel contact centers that is powered by application software.
Current solutions vary in maturity -- from new solutions provided by startups to mature solutions that have proved themselves in the market over many years. However, only some of the mature solutions were built from the ground up for the Internet, while others, originally based on client-server architectures, moved to Internet architectures only recently. The latter do not have a successful track record for on-demand delivery of software as a hosted service, a deployment model that is becoming increasingly popular.
CRM Buyer: Are certain vertical markets more prone to rely on CRM solutions than others? If so, what are the hottest vertical markets today?
Roy: When you look at the demand for customer service solutions, the "hot" verticals tend to be B2C industry sectors that face hyper-competition due to product commoditization. Examples are financial services and telecom sectors. The healthcare sector is now beginning to adopt CRM due to increased regulatory compliance requirements and increasing competition, and the government sector is implementing CRM to improve "citizen service."
CRM Buyer: What are the most significant trends in the CRM market today?
Roy: Businesses are starting to leverage CRM systems for value-added activities beyond simply collecting customer data and measuring delivery efficiency. For instance, companies are increasingly exploiting customer data to create one-to-one and market-level insight, and further drive best-practice processes for agent-assisted as well as self-service that enhance customer experience, while further optimizing internal efficiencies and curbing costs.
CRM Buyer: How will increased competition impact the marketplace?
Roy: As discussed earlier, increased competition will lead to increased focus on customers. Moreover, increased investor expectations for corporate profitability will require sustained attention to customer retention in addition to the traditional focus on new customer acquisition. This will translate to continued demand for CRM solutions in general, and customer service and contact center solutions in particular.
CRM Buyer: What differentiates the leading vendors from the less reputable vendors in the CRM market?
Roy: The key differentiators tend to be domain expertise and experience in the vendor's space; track record of success in their implementations -- gap between promise and delivery; and proven expertise in delivering flexible deployments.
CRM Buyer: What should small- to mid-sized businesses look for in a CRM vendor?
Roy: Small and mid-sized businesses should look for the following when they evaluate CRM solution alternatives:
- Track record of success
- Embedded best practices
- Intuitive user experience; the solution should not require training
- Affordable on-demand solutions that businesses can easily try out before implementing
- Proven scalability to accommodate growth
CRM Buyer: How can businesses unify the customer experience across all channels -- Web, phone, e-mail, and in-person?
Roy: The key here is to use a common service process and knowledge management platform to ensure consistency of processes, content and experience across channels, and a seamless flow of work across channels, people and organizations.
CRM Buyer: How can a business determine whether or not an in-house or on-demand, hosted solution is the best option?
Roy:
- Availability of internal IT resources: In-house implementations will require IT resources.
- Importance of integration with internal data, content and infrastructure: Businesses with high integration requirements prefer in-house implementations.
- ROI time horizon: In-house licensing tends to be less expensive in the long run while time to benefit is shorter with hosted deployments.
- Customization requirements: Businesses with high customization requirements prefer in-house implementations.
CRM Buyer: Do you see any new software acquisition trends?
Roy: Companies are increasingly using the on-demand deployment model to try out solutions, establish ROI and fine-tune requirements, before bringing the solutions in-house. This helps to get them up and running quickly, scale as needed, gain a rapid return on investment and mitigate risk in the purchase process.
CRM Buyer: Where is the CRM market headed?
Roy: There will be continued demand for these solutions as companies focus on their customers and customer-impacting processes to combat global competition, product commoditization and reduced barriers to switching.
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