Los Angeles, CA (PRWEB) October 24, 2013
CRM systems have a buyer power score of 3.4 out of 5. The higher the score, the better the negotiating conditions are for buyers. Buyers benefit from low market risks as well as favorable price trends. However, the market's structure significantly lowers the buyer score.
Medium-to-large businesses almost always require CRM systems to manage their sales, marketing and customer support services. There are no real substitutes for these systems. Product specialization and market share concentration are also high, meaning that there is a limited number of providers. In addition, CRM systems are deeply integrated with the buyer's software systems and business processes, raises switching costs for buyers and locking in the buyer with their supplier, says IBISWorld analyst Andrew Yang.
Fortunately, buyers benefit from very low market risks. Major vendors in this market include Salesforce, Oracle, SAP AG and Microsoft Corporation. Many CRM system providers are well-established corporations with low bankruptcy risks. Providers have low supply chain risks and do not depend on any critical inputs to produce the software. Buyers can expect reliable and steady access to CRM systems.
Pricing trends have been favorable for buyers. While demand has steadily increased, market competition and a switch to subscription pricing models have pressured price increase. In the three years to 2013, prices have remained stable with low volatility, but will accelerate slightly in the three years to 2016. An improving economy will increase the number of businesses in the United States and encourage investment in computers and software, including CRM systems, continues Yang. Also, increasing market share concentration will reduce price competition in the market.
To reduce the risk of price increases, buyers should negotiate long-term contracts to lock in monthly subscription rates, or discuss volume discounts that allow users to pay reduced monthly rates. Buyers can also negotiate deals where additional features, such as analytical software or customization capabilities, are included with the purchase of a CRM system. Buyers can also request training services from their supplier, which will help end users get accustomed to the new CRM system and increase user adoption.
Buyers pay for the use of CRM systems on a monthly basis. The main determinants for CRM system pricing are the type of tracking and analytical features that are included with the system. Other factors that affect subscription rates include the options for customization and the available data and file storage.
Tracking is one of the basic functions of CRM systems. Most CRM systems are able to record the time spent on tasks and basic activities. For an extra cost, CRM systems also come with more powerful tracking capabilities, such as opportunity, product and competitor tracking. These additional functionalities allow the buyer to better understand developments inside and outside the organization.
Higher-price CRM systems include powerful analytical tools that can help deliver key insights and help improve the decision-making process. Buyers should look into package deals that include analytic software with the purchase of CRM software.
Customization can help buyers create a CRM system that better captures their sales and marketing processes, delivers a better user interface as well as delivers critical information. Lower-price CRM options offer limited customizability, where only the sales process can be customized. Higher-price CRM systems offer more extensive and powerful customization options, such as the ability to customize dashboards, forecasts, mobile applications and websites.
Users of CRM systems may need to store files and data onto the system. Buyers can pay for higher data and file storage limits. Data and file storage is measured in megabytes and can go as high as 800 megabytes per user.
For more information, visit IBISWorld’s CRM Software procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of Customer Relationship Management (CRM) systems. CRM systems are software systems designed to manage a company's sales, marketing, customer and technical support processes. CRM systems come with many powerful tools to manage customer data, track activities, analyze data, and manage workflows and processes. This report focuses on software-as-a-service (SaaS), or "on demand" CRM systems, rather than software-as-a-product (SaaP), or "on premise" CRM systems. With SaaS CRM systems, the system is installed and managed on the provider’s premises. The buyer accesses the CRM system through the internet.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.