• According to Computer Economics, only 6 percent of e-commerce will be transacted in the developing world this year, and this figure will only rise by one percent by 2003. The slow growth potential for e-commerce in the developing world is attributed to high access costs and a lack of infrastructure. Analysts say that it will take at least a decade before e-commerce becomes a truly global phenomenon.

• According to Competitive Media Reporting. Siebel Systems ranked as the 18^th top newspaper advertiser in 1999, spending approximately $5.4 million.

• When more than 400 IT or development managers at corporations having more than 2000 employees where asked by Evans Marketing Services in May 1999 if they expected to deploy any Linux apps in the next year, only 16.5 percent said they did; however, 6 months later, 29% said they did.
• The number of companies running Linux on any of their servers increased from 17.5% in May 1999 to 34.2% in December 1999 – a 95% increase. While this number includes all companies with any servers running Linux, the number of companies running Linux on more than 25% of their servers increased from less than 2% in May 1999 to almost 13% in December. (Source: Evans Marketing Services)

• Although many early adopters have been in education and research labs, IDC notes that Linux users are most concentrated in the computer/IT industry (particularly ISPs and software developers) and educational institutions. IDC expects that over time, Linux servers will pervade all vertical markets.

Education 14.3%

Telecommunications/ISP 8.7%

Manufacturing 7.2%

Systems Hardware Supplier 7.2%

Systems Integrator/Reseller 6.7%

IT Consulting/Other IT Services 6.2%

Engineering Services 5.1%

Professional Services 4.6%

Government 4.1%

Finance 3.1%

Media 3.1%

Retail 3.1%

Insurance 2.1%

Healthcare 2.1%

Transportation 2.1%

Banking 1.0%

Other Industry 10.3%

Primary Function of Linux Servers Installed at US Sites, 1999

Web Server 42.1%

File/Print Server 26.0%

Email Server 23.2%

Domain Name Systems 15.3%

Firewall/Privacy/Cache 14.7%

Databases 10.5%

Application Development 8.1%

Application Server 6.3%

Experimental/Testing 6.3%

Gateway 5.8%

Networking 2.6%

Systems Management 2.1%

Backup 2.1%

Technical Apps 1.1%

Other 1.1%

(Source: IDC Linux Survey, September 1999)

• Based upon a March 2000 research study conducted by Evans Marketing Services consisting of in-depth interviews with more than 300 Linux developers, it was found that Linux developers need tools. Of 11 tool categories, only two (compilers and editors) were rated as adequate by more than 75% of the developers. Judgments on other categories, such as debuggers, profilers, modeling tools, error detection tools, GUI frameworks, testing tools and code management tools ranged from slightly less than 50% rating them as adequate all the way down to only 10%. Over half of the Linux developers are still predominantly using command line tools and utilities.
• In addition, the study found that 87% of Linux developers did not care if the tools they used were open source or proprietary. "There is a huge opportunity here for a vendor to fill this market need," said Janel Garvin, vice president of Research for Evans. "Linux has shown fast growth up to now, but development tools are enormously strategic to an operating system, and there is a crying need for tools if Linux is going to survive."

• A December 1999 survey of 300 IT managers by InformationWeek Research found that 26% of respondents use Linux, up from 14% in March 1999. Most use Linux for Web or intranet servers, but the survey revealed growing use of Linux for database, e-commerce, and other server-based applications as well.

• In addition, InformationWeek found that Linux is particularly attractive for small- to medium-size companies because the basic kernel is free and carries no per-user licensing costs.

• George Weiss, research director at the Gartner Group, says that Linux will evolve into a more fully functional enterprise operating system by 2001.

THE CRM MARKET

• According to a recent research report from ActivMedia Research, websites focusing solely on quality, price, convenience and product availability, which are now considered "givens" online, are missing the boat in terms of building a loyal customer following. Overall, the Web has become an excellent selling vehicle; however, vendors must pay attention to high-leverage online opportunities where consumers are not yet well served by established websites. High-leverage means that if a new entrant or existing vendor can excel in particular performance dimensions they will stand out against the field and thus are more likely to be in a position to take market share.

Benefits of a CRM Strategy

(Source: Coopers & Lybrand Survey of 800 North American companies)

Benefits % of Respondents Reporting Improvements

Enhanced target

Marketing 30-40%

Improved customer

Segmentation 30-35%

Increased customer

Retention 25-30%

Increased x-selling

Capabilities 20-25%

Differentiated customer

Segmentation 20-25%

• While end users expressed relative satisfaction with the technology, the pre-sales consultation and post-sales service they received from their vendor could be improved. One of the crucial factors in this context was price.
• The consensus among respondents was that CRM products were overpriced. However, CRM is an explosive market and prices are anticipated to somewhat decline in the mid-term.
• "Expectations have been raised through the high price tags attached to leading CRM products. Such high prices are not uncommon in emerging markets because the competitive advantage offered by the product lies in its ownership. When mere ownership of the CRM solution fails to provide that competitive advantage sought by users, they will look for complete out-of-the-box systems, improved and wider scopes of functionality, and price reductions in order to achieve more rapid returns on investments and better services from vendors. Indeed, users will be looking for all the elements of a competitive market that are lacking in the vendors of CRM at present," said Frost analyst Andy Tanner Smith.
• The vast majority of respondents that indicated that they were already using a CRM solution also implied that they were either in the process of expanding their solution or looking to enhance it in the near future. Most interviewees suggested that they would return to their current vendor. This means that a fifth of users would consider looking around for more suitable options, mainly driven by discontent with their current CRM system.
• Siebel Systems currently has leadership of the overall CRM market and is set to continue to lead in total sales.
• Products being touted by vendors as complete solutions fail to provide the features that clients require. Many vendors offer base products rooted in salesforce and marketing automation or customer service technology and add functionality through third vendors.
• The integration between disparate technologies is of key concern to users and potential users.

• A recent study by Cahner’s In-Stat Group estimates that some 252,000 Websites will use eCRM applications by 2004, with eCRM being deployed predominately on retail business-to-consumer sites. The In-Stat research also reveals:

• The potential eCRM market is huge. Approximately 1,600 out of 95,000 medium to large business Websites currently are using more than one eCRM application.
• By 2004, the total market for eCRM will reach $1.8 billion.
• Where many on-line businesses were initially enamored with traditional CRM applications, they are beginning to re-evaluate the efficacy of these technologies to meet their specific Web-based business needs.
• A small group of vendors whose core business is Web-based customer interaction technologies are taking the lead in the eCRM market. However, some well-established CRM heavy-hitters such as Oracle, Quintas and Interactive Intelligence are likely to enter the eCRM market in the near future.

• The Yankee Group projects that the eCRM market will grow $4.5 billion in 2000.

• Shoppers contacting customer support are less than satisfied with merchants’ customer support efforts.
• Buyers rated 10 key service attributes based both on merchant performance and importance to the consumer. When merchant performance is compared to buyer importance, customer support consistently rates as highly important to buyers, but is poorly executed by merchants.

10 Key Service Attributes & How They Rate

High Importance, Low Performance

• On-time delivery
• Product information
• Level and quality of customer support

High Importance, High Performance

• Ease of ordering
• Product prices
• Production selection
• Product representation
• Product shipping and handling

Low Importance, Low Performance

• Website navigation and looks

Low Importance, High Performance

• Posted privacy policies

• What is not immediately obvious here is what online merchants are not offering. 30% are not offering live phone support, 65% are not offering online order tracking, and 87% do not offer 24-hour support.
• Given the benefits of shopping online, including being able to buy at any time of the day or night, the incorporation of online order tracking and 24-hour customer support will become major points of differentiation in the near future. Customers expect these types of offerings on merchant sites. More than half of buyers queried expect e-tailers to offer online order tracking systems, while almost half expect 24-hour live customer support.
• Buyers who had contacted customer support preferred doing so by phone (52%) rather than by email (40%). Among those who did not contact customer support, email (50%) would be the preferred method of contact, followed by phone (39%). Few (10%) of those who did not contact customer support would actually want to use instant messaging to do so.
• When surveyed about how they would like merchants’ customer support to respond to their requests, consumers preferred to receive answers by email (66% for those who did contact, 74% for those who had not contacted).
• Overall, the main reason for calling customer support was to check on order status. Also, those who contacted customer support spent 46% more per order on average than those who did not.

Reason for Contacting Customer Support

Percent

Late delivery on order 24%

Get status of backordered items or out

Of stock items 21%

Incorrect, incomplete or damaged orders 16%

Ask question about an item for sale 15%

Get general information or a catalog 13%

Cancel all or part of an order 9%

Provide credit card number or other

Payment 7%

Incorrect charges on bill 5%

Get help on using or assembling an order 2%

• Buyers who contacted customer support rated merchants low overall – on all attributes as well as on overall satisfaction.
• Of the 10 service attributes, level and quality of customer support had the highest correlation to repeat purchase behavior, indicating that it is the most important driver behind a buyer’s likelihood to purchase from a merchant again.
• Among those who contacted customer support, 18% are highly unlikely or unlikely to buy again from that memrchant. If these consumers hold true to this claim, a memrchant stands to lose 5% of its annual revenues and 4% of its customer base every year – not to mention long-term loss of repeat business.

TECHGUIDE.COM WHITE PAPER ON CRM

A recent white paper discussing CRM from techguide.com provides some interesting information, including:

• Service leaders (companies that provide superior service to their customers) enjoy the following advantages over their low-service competitors:

• They grow twice as fast
• They experience a 6% annual market share growth vs. a 1% share loss (they take customers away from their competition)
• They can charge 10% more for their products and still take customers away
• Because of this, they enjoy a 12% vs. 1% average return on sales

• The numbers definitely show that the practice of providing superior customer service increases shareholder value and creates a competitive advantage that is worth the investment.

• Industry statistics show that 68% of customers who walk away from a relationship with a vendor do so because of poor customer service, and this happens at all levels

• When you look at the costs of sales, there are similar reasons for managing relationships effectively.

• Business is sold to new clients after an average of eight to ten calls
• It is sold to repeat business after an average of two to three calls
• When you factor in the amount of time spent on researching the best way to approach new clients, and preparing account plans, etc., the statistics show that it is anywhere from five to 15 times more expensive to acquire a new customer than it is to retain an existing one
• In financial terms, this means that a 5% increase in customer retention can result in a 25% to 85% increase in profitability

• Retention rates double from 40% to 80% after inception of a CRM program and the amount spend by each customer per year also increases dramatically

• Looking at a three year time span, starting with year one of the relationship, customers double spending in year one, triple spending in year two, and spend three and one-half times as much in year three. For example:

Year One Year Two Year Three

Program $16.00 $32.00 $40.89

After Loyalty

Program $35.00 $96.00 $141.53

• The distribution of estimated call management savings for collections call centers is shown below:

Cost Area Percentage Call Savings

Toll Savings 41.7%

Reduced Abandons (toll) 3.0%

Staff Savings (reduced agent

Cycle) 37.7%

Reduced Abandons (staff) 13.5%

Not Recalling Abandons 4.0%

• Staff savings represent the largest portion of the total. The rest is made of toll savings. This is primarily due to the treatment of callers and the excessive time they spend in queue, on hold and being transferred. The savings are a graphic illustration of the tangible benefits associated with automating customer-centric processes and intelligently managing work across the enterprise, which also will result in dramatically better treatment for all customers.
• The areas that have the greatest impact on the success or failure of a CRM initiative in an enterprise include:

• Ability to integrate interaction and fulfillment processes
• Anywhere, anytime, anyhow customer service
• Intelligent work management
• Easy access to information
• Rapid application, design, development and deployment
• Customizable tool kit including process definition tools
• Flexibility and agility
• Scalability
• Manageability

• Survey conducted with CTOs at 41 Fortune 1000 companies. Respondents represent the following industries:

Agriculture/mining/construction 3.5%

Manufacturing 36.9%

Transportation/utilities 9.3%

Wholesale 2.7%

Retail 10.3%

Finance/insurance/real estate 30.8%

Services 3.5%

Medical 1.9%

Other 1.1%

• Overall, they believe B2B will have enormous economic significance, reaching $1.5 trillion in aggregate revenues in the United States in 2004 (representing about an 11% penetration).
• 54% of enterprises are now purchasing on the Web, up from 46% 6 months ago. More than 87% of enterprises indicated that, if they are not currently buying on the Web, they will within one year, up from 86% six months ago. Only 7% say they will never buy on the Web, down from 11% six months ago.
• Of those that purchase on the Web, 87% use it for indirect materials (office supplies), 52% for maintenance and repair items, and only 35% for direct materials. In GS’ view, more complex technologies are required to capture widescale direct spending, the crown jewel of B2B.
• Betweem 2000 and 2001, expenditures on Internet-specific projects should increase at least 25% on average. The total dollar amount expected from revenue, expenses and support of e-commerce transactions should also increase from 2000 to 2001.
• More than 42% of enterprises will spend more than $500,000 on B2B software in 2000, up from only 18% 6 months ago. Enterprises are spending less on the simple front-end (Website and procurement), and more on complex functions (e-markets, supply chain, distribution). 41% of enterprises are increasing B2B spending specifically to accommodate customer demand, up from 31% 6 months ago.
• 42% of enterprises plan to join e-markets, up from 36% six months ago. Over 50% of respondents indicated they would develop an e-market internally, up from 53% six months ago.
• Only 48% indicated that B2B had unclear ROI, down from 64% six months ago. The main constraint for respondents was that they were waiting for a new generation of solutions to evolve before they embraced B2B.

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