Less developed markets offer growth opportunities for operational CRM vendors.

Asia-Pacific, the Caribbean and Latin America (CALA) will have average growth rates of 20% and 14% respectively compared to just 4% in North America. Therefore whilst large enterprise software houses are strapped for resources, the best move will actually be for them to start building up both reseller networks – for example in Eastern Europe, and new satellite sales and support offices, for example in parts of Asia, where direct presence is a prerequisite to gaining end-user trust and confidence.

In the larger markets of North America and Western Europe, one of the mantras chanted over and over by vendors has been that they believe in the power of the SME market. Indeed, penetration of core CRM applications among SMEs in almost all verticals and national markets is low, and there is much room for growth.

In North America, the low-end of the market will grow at almost three times the rate of the high-end, and in EMEA, the low-end is expected to grow twice as fast as the high-end. But this does not mean that large enterprise applications vendors are well positioned to take advantage of this growth.

The key to selling into smaller businesses is the establishment of a pre-packaged, very low-priced product with 80-90% of the functionality of the high-end version. Direct sales into the low-end are therefore prohibitively expensive.

However, finding good resellers who possess ‘solution selling’ rather than ‘product selling’ skills is a challenge. It is therefore likely that smaller CRM vendors who focus exclusively on the SME market, and have a lighter sales structure, will be in a better position to generate profits from the low-end.

Another unknown factor in the low-end of the market is the entry of Microsoft. Microsoft is currently in the process of identifying and qualifying a reseller network for their upcoming CRM release. This will undoubtedly shake-up the competitive landscape in the SME sector.

Related research: Datamonitor, Operational CRM: Identifying Niche Opportunities in a Maturing Market (DMTC0869)

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