IT & CRM Market Statistics for Small/Medium (SMB) businesses
In 2005, IT-spend ranged from $16,500 for two to 19 employee companies to $821,000 for mid-market enterprises with 500 to 1,000 employees.
And in 2005, the US SMB and mid-market-focused web hosting market was $4.4 billion and growing at a rate of 6%. The market for online marketing and advertising was $1.3 billion and growing at a rate of 49%. 60% of SMBs attribute “lower expense rates” and “increases in productivity” as driving factors for adopting software-as-a-service.
A study reports that of the CRM software licenses purchased in 2002, a whopping 42 percent is unused—at an estimated waste of $1 billion to $1.26 billion to companies that purchased the software. When you think that the entire CRM software revenue forecast for all of 2002 was $3 billion, that’s a lot of money to be throwing away in a tight IT economy.
Forecasts indicate worldwide Customer Relationship Management (CRM) spending to exhibit moderate, yet steady growth. They estimate 2002’s spending of $13.7 billion to swell to $17.7 billion in 2006. In fact, Aberdeen predicts, revenue from small and medium businesses will exceed that of larger enterprises.
A recent survey of several hundred companies nationwide regarding their focus on customers revealed that two years ago, the percentage of companies that put themselves in the category of “extremely” customer-driven was 48 percent. Today, it’s 63 percent, and looking into the future two years down the road, 81 percent say their organizations will be “extremely customer-driven.”
CRM Market Growth
The pace of CRM Software New License Revenues Worldwide has slowed from the frenzied spending pace of 2001, when $3.74 billion was spent in comparison to $3.03 billion this year, revealing that companies are now taking a more thoughtful and planned approach.
Thee market for CRM applications is expected to grow 30 percent to 35 percent this year(2005), about half of last year’s rate but still healthier than most other software categories.
IT advisory firm Gartner
As many as 85% of companies that buy CRM software to automate sales efforts don’t pick the right tools because they fail to define business objectives or develop processes for meeting objectives.”
Gartner analyst Robert DeSisto
Major global corporations now lose, and must replace, half their customers in five years. A typical company’s customers leave at a rate of 10 percent to 30 percent per year. Frederick Reichheld, author of “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value”.
Increasing customer retention by just 5 percent can increase profits by 25 percent to 95 percent.
Bain & Company
Patronage by loyal customers yields 65 percent of a typical business’ volume.
American Management Association
Web master affiliate programs are predicted to represent 20%, or $53 billion of all e-commerce sales by 2005, compared with less than $11 million in 2001.
CRM Benefits / ROI Statistics
A recent ROI study relating to successful CRM implementations found companies have yielded returns ranging from 16 per cent to more than 1,000 per cent. Over half of the companies surveyed yielded returns of between 50 per cent and 500 per cent. IDC
The bulk of those (ROI) returns were seen in increased productivity and business process enhancements. “CRM almost makes everyone in your organisation a sales person, since they are selling your business in one way or another. For instance, customers often say things to support staff which could be used as a sales opportunity.”
“The support person might not know it but because the information is recorded, a sales person can see it and use it to follow up on. Just the recording of the information has many benefits for other departments.”
New research shows that:
- 55% of consumers would pay extra to guarantee betterservice
- 52% have experienced poor service from a big name retailer in the last year
- Ill-informed staff is biggest customer service bugbear
- Young consumers are more demanding, with one in ten 25-34 year olds willing to pay more than 20% extra for improved service
More CRM Benefits. Benchmark studies reveal that CRM applications account for:
- Revenue increases of up to 41% per sales person
- Decreased sales cycles of over 24%
- Lead conversion rate improvements of over 300%!
- Customer Retention improvements of 27%
- Decreased sales and marketing costs of 23%
- Improved profit margins of over 2%
CRM Vendor Trends
“..The 17 leading SMB (CRM Vendor) companies all declared they were doing more implementations now than in 2004, with eight of them handling at least 60 percent of customer implementations… Of the winning enterprise vendors all but one does 70 percent or more of its implementations in house… He notes that CRM implementation by vendors is a trend that he predicts will eventually reach 90 percent..”.
Barton Goldenberg, CRM Award Winners Survey, March, 2005
Small Business CRM Growth
The CRM market for small and midsize businesses is projected to grow at nearly three times the pace of the overall market. This represents a 17.2 percent compounded annual growth rate between now and 2008, compared to 6.5 percent for the entire CRM industry. That growth will see SMB share of CRM business expand from less than 17 percent in 2003, to more than 27 percent in 2008.
Datamonitor report, “CRM For Small to Medium Business.”
Please feel free to submit further CRM Market Statistics.