The biggest market dynamic in the CRM SMB market is the entry of several large business application providers, notably Microsoft Business Solutions, Siebel Systems, SAP, and PeopleSoft, the Boston-based IT consultancy said.
Some would suggest the large enterprise space is now over-saturated, Aberdeen’s “Mainstream CRM – Through the lens of the partner channel” study stated.
The SMB market requires very different sales, support and distribution strategies than the ones that work with enterprise-scale customers, the report said. The SMB market is dominated by the channel, by small and independent value-added resellers (VARs), partners or distributors that sell, install and provide services for what is often a broad variety of applications and technologies.
According to Karen E. Smith, research director, CRM practice for Aberdeen, resellers have identified Microsoft as their number one CRM vendor.
“Microsoft is new to this space but they’re also the most popular,” she said. “If you’re a decision maker at a company and your job is on the line, you want to ensure you choose a vendor who you know will still be around in a few years.”
Of the channel partner survey results, Aberdeen found:
More than one-fourth (28 per cent) of the total respondents currently sell and support CRM software, and an additional 19.6 per cent plan to sell CRM software within the next 6, 12 or 18 months;
Approximately 42 per cent of the respondents indicated that CRM was a valuable business tool for their customers; 29 per cent thought that “CRM can be valuable, but is difficult to sell and successfully install;” 16 per cent felt that CRM “is just another business application, but one that we need to carry to be competitive;” and only 0.8 per cent agreed with the statement “CRM is just a bunch of hype.”
Approximately 17 per cent of the respondents indicated that their average CRM deal size (defined as a combination of hardware, software and service sales) was $250,000 (U.S.) and above; the largest majority, 32 per cent, indicated that their average CRM deal size was between $10,000 and $49,000;
About 15 per cent of the channel respondents generate between 75 per cent and 100 per cent of their total revenue from CRM sales and service; 19 per cent generate between 25 per cent and 75 per cent of their total revenue from CRM; and approximately 25 per cent generate between 10 per cent and 25 per cent of their revenue from CRM;
Another 33 per cent said CRM is a cost-effective solution for SMBs, 23 per cent thought it would be within the next 12 months; and 28 per cent said it would within the next 12 to 23 months. Only 1.2 per cent responded “never.”
Smith told eChannelLine the rules are changing. Under the old – and possibly, current – rules, partners earn margin by providing a combination of hardware, software and services to the customer, with each of those three product areas providing important margins back to the partner. This engagement model apparently is under fire, however, and some vendors – notably Microsoft – are changing the rules of the game. By changing (lowering) the certification standards required to sell the MS CRM Standard Edition version of its product, Microsoft has opened its CRM floodgates to tens of thousands of Microsoft value-added providers, many of which may not understand or care to understand the intricacies of CRM, she said.