More small- and mid-sized businesses (SMBs)—companies with less than $500 million in annual revenues, or companies employing less than 1,000 people—are adopting CRM software. In 2008, AMR Research predicted that the SMB market will reach $44.1 billion in CRM sales by the end of 2011, which appears to be taking effect. Another study by Access Markets International Partners found that almost 45% of mid-sized businesses use CRM applications today and that growth in the SMB market will sprout to a 6% compound annual growth rate through 2014. A May 2011 survey conducted by research firm ITIC of SMBs found that a full 74% of survey respondents indicated they have a CRM platform, and 52% of participants said their companies use at least 50% of the CRM’s functionality. The primary drivers for the increasing SMBs adoption of CRM were the need to compete more effectively with larger companies, to improve their sales and marketing operations and better serve customers, and to meet evolving business needs and regulatory requirements.
Furthermore, customer engagement on social networking sites is driving SMBs to pay closer attention to their social communities as more and more SMBs are attempting to attract and retain customers over social media channels. SMBs that rely heavily on social media such as Twitter, Linkedin, Facebook and blogs are finding CRM vendor solutions offering easy integration with social media tools such as those provided by CDC Software, Salesforce.com and update software.
The growing SMB market has become increasingly attractive to CRM software vendors. CRM applications targeting SMBs offer easy-to-implement solutions with an opportunity for a quick ROI. The emergence of SaaS as a viable CRM option has eliminated many of the IT requirements that previously hindered adoption of CRM by small businesses. With the SaaS option, small businesses can focus on the benefits CRM can deliver for their business (e.g., leveraging the Web to acquire new customers, analyzing their marketing efforts’ effectiveness and providing better customer service to keep their customers satisfied). Furthermore, SaaS is attractive as many SMBs do not have dedicated technology support, thus raising the value of applications that operate seamlessly or can be managed remotely.
Prominent CRM vendors such as Salesforce.com, RightNow, NetSuite and SAP have targeted the SMB market with Web-based SaaS CRM software for a moderate monthly fee. Oracle has also realigned its technology to aggressively target SMBs with its Oracle CRM OnDemand solution. And Sage has released SalesLogix Today, a CRM application aimed only at small businesses.
The likely impact of this trend will be that SMBs will increasingly have a wide array of CRM software offerings at their fingertips that are in tune with their specific needs and price points.