Forrester: CRM Market Will Rebound After Shrinking in 2002

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After dropping 5.4 percent in 2002, the customer relationship management market will grow from a projected $42.8 billion in 2002 to $73.8 billion by 2007, predicted a report released yesterday by Forrester Research, Cambridge, MA.


Other findings in "CRM's Future: Humble Growth Through 2007" included:


· Professional service firms and outsourcers will comprise more than half of the CRM market, and growth at consulting firms will drive the CRM services segment to $41.9 billion in 2007.


· The CRM applications category will regain its footing from 2002's loss as annual growth jumps from 6.8 percent in 2003 to 14.0 percent in 2004. This expansion will taper to 12.5 percent by 2007.


· Marketing automation applications will represent the fastest-growing CRM segment. While growth between 2002 and 2004 will hover around 14.5 percent, the segment will expand at a 17 percent rate thereafter -- reaching $928 million in 2007.


· Dragged down by a slowdown in Internet commerce software, customer-facing channel apps will experience the slowest annual growth rate in the CRM market -- 7.3 percent over the next five years.


Finally, the report said that firms with revenue of $1 billion or more eventually would extract value from their CRM investments by evolving through three phases of maturity.


The first phase, channel integration, involves building data models and cleansing and synchronizing customer data across offline and online channels. The second phase, process redesign, involves tracking customer behavior and cost across channels, and establishing channel migration incentives. The third phase, continuous optimization, involves continuously tuning their channel and customer mix by adjusting products and services, and adjusting customer interactions based on lifetime value.


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