Mid-market CRM still slow to adopt 24 October, 2006 By Vanessa Ho

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The report, entitled "Mid-Market CRM: Vendor Strategies for a New Frontier," indicated that just 35 per cent of medium-sized businesses (100-999 employees) in the US are currently using a CRM product.

Laurie McCabe, the report's author and vice-president of SMB insights for AMI-Partners, said there are several reasons why CRM adoption is still under-penetrated for medium-sized businesses.

"Medium-sized businesses don't have a lot of IT resources and so when they think about deploying another application it is a daunting challenge for them. Another reason is until recently there haven't been a lot of solutions that have been keyed into mid-market customer requirements such as ease of use, ease of deployment at a lower cost with not much IT resources needed," said McCabe.

The report examined several vendors in this space that include market leaders like salesforce.com, Microsoft CRM and RightNow as well as challengers such as NetSuite, Entellium and SugarCRM.

"The vendors covered in report are making a major play in the mid-market. All have a targeted mid-market channel and product strategy [but] CRM [for the mid-market] is kind of a new frontier for vendors. For a long time it was only big companies that implemented CRM," said McCabe.

Targeting the mid-market is tough, she added, because medium-sized businesses have the same kinds of requirements as enterprise companies but less resources and budget. As well, every mid-market company are different and vendors have to take a slightly different approach on how they position themselves in the marketplace, said McCabe.

In order for vendors to better entice medium-sized business customers, McCabe suggested in her report that vendors need to take a more granular look to see how they can be a better fit for the mid-market. The report listed each vendor and what areas it does best and should be targeting its CRM products to.

"Each of them have to do a better job at zeroing in on the segments of the mid-market that their products are going to be most in-tune with and clearly communicate how its CRM solution will help a [customer's] business," she said.

As well, vendors need to also fine tune their channel strategy so that the channel players understand the differences in terms of CRM offerings and client base and making sure its portfolio of solutions has got a good mix for the kinds of customers the channel is dealing with.

Finding the "right" channel strategy is critical for vendors that want to succeed in the mid-market, but the job isn't easy, McCabe wrote in her report. Many vendors struggle to come up with a profitable, successful channel formula that provides medium-sized businesses with the attention they need.

"As a channel partner, I want to be able to serve my existing clientele well and have a good mix of [products] to take to them and what are some other things that can be picked-up to bring in new markets," said McCabe.

For end-users, McCabe said it is critical for them to do their homework prior to choosing a CRM solution like asking such questions as whether the CRM product is hosted or can run in-house or whether or not the solution is industry specific and if it has mobile capabilities.

"End-user customers have to do a drilldown with vendors so they pick [a product] that is really keyed into their needs. There are lots of choices out there and they shouldn't settle," said McCabe.

She added that if the vendors mentioned in the report keep on the path of tailoring, fine tuning and segmenting to the mid-market, she expects CRM adoption to become more mainstream in that area.

"The signs are good that [growth] could accelerate beyond the forecasted growth (of 9 per cent calculated annual growth over five years," McCabe said.