Small Business CRM Spending Expected to Outpace On Premise

Cloud-based business applications are garnering considerable attention from U.S. small and medium businesses (SMBs). According to AMI-Partners’ latest U.S. SMB Cloud Services Study, the software-as-a-service customer relationship management (or, SaaS CRM) market—already representing 570,000 U.S. SMB firms—is set to undergo double-digit year-over-year growth in the next five years. During this period, spending on SaaS CRM will outpace on-premise CRM by a margin of nearly four to one.
The advent of cloud services has changed the U.S. SMB landscape tremendously and has allowed small and medium-size firms to acquire enterprise-class solutions such as CRM, at significantly less total cost of ownership (TCO). In the past, customer management has been a prime business concern for these SMBs—especially in light of the recent effects of the slow economy. Customer retention and acquisition have been a prioritized investment area for many SMBs who are still enduring business setbacks. According to AMI’s research, a majority of U.S. SMB decision makers are giving careful consideration to how they approach the marketplace and engage both existing and potential customers.

“Customer engagement on social networking sites,” says Jacqueline Atkinson, Research Manager at AMI-Partners, “is driving SMBs to pay closer attention to their social communities. But it is the influence of the cloud that affects their decision to adopt more advanced customer solutions.” “Such market trends are creating the right conditions for the integration of social media with CRM applications for enhanced interactions with customers. In fact, U.S. SMB CRM users are a third more likely to engage in social media activities for business than firms who do not use CRM,” Atkinson continued.
Like “traditional” CRM applications, social CRM solutions are back-end processes that allow companies to efficiently analyze customer-related data extracted from social networking sites. Many social CRM solutions provide user-friendly tools to help businesses “listen” to online conversations and communicate more effectively with customers over social media. The aim of social CRM is to better understand in what ways virtual communities engage with brands and how companies should interact over various social channels.

More and more SMBs are attempting to attract and retain customers over social media channels,” explains Ms. Atkinson. “Enterprise social CRM can translate what these companies readily perceive on their social communities into actionable insights for timely business planning. SaaS CRM vendors offering a social component, such as with its Radian6 platform or Sage’s SalesLogix Cloud CRM application, will be influential in moving SMBs toward leveraging social CRM. These vendors consequently are poised to capture more of this growing SaaS CRM market.”