Market Perspectives

ISG Research is happy to share insights gleaned from our latest Buyers Guide, an assessment of how well software providers’ offerings meet buyers’ requirements. The Customer Relationship Management: ISG Research Buyers Guide is the distillation of a year of market and product research by ISG Research. This research is part of a portfolio of ISG Buyers Guides in CRM covering marketing, sales, customer service, partners, platform, digital commerce and sales engagement.

Customer Relationship Management (CRM) systems have long served as vital tools for enterprises, helping them gather and manage information about prospective customers, sales activities, customer accounts and post-sale services. These systems are designed to centralize and streamline customer interactions and data points, making them accessible and usable for various organizational roles. CRM systems can be broadly categorized based on three main functions that they primarily enable: marketing, sales and service.

ISG defined CRM as the processes and activities that enable an enterprise to manage and operate customer relationship across marketing, sales and service. CRM systems help enterprises understand and target potential customers through data-driven marketing and sales strategies. This involves segmenting customers based on demographics, behavior and preferences to deliver personalized marketing campaigns. CRM aids in lead generation and nurturing, ensuring that marketing efforts are effective and lead to higher conversion rates.

 In the sales domain, CRM systems manage interactions with potential and existing customers. They track sales activities, automate processes like follow-ups and updates, and provide insights into sales forecasts and performance. This helps sales teams manage their pipeline more efficiently, prioritize leads and close deals faster.

Post-sales service is crucial for customer retention. CRM systems provide service teams with the tools to manage customer inquiries, complaints and support requests through a unified platform. This ensures timely responses, consistent communication and satisfactory resolution of issues, ultimately enhancing customer satisfaction.

Historically, while the term "Customer Relationship Management" suggests a comprehensive management system, early CRMs primarily functioned as methods to capture information. They enabled marketing, sales and service teams to access and organize relevant information but provided limited intelligence and predictive capabilities. The structure of most early CRM systems was straightforward: they essentially functioned as siloed applications and underlying databases, allowing users to query and retrieve information as needed and providing forms to input new data.

The scope of CRM systems has expanded to include service and support, and the rise of digital commerce has required that they integrate with finance, human resources, manufacturing, fulfillment and delivery software. Enterprises have looked for enhanced, low-cost integrations and the ability to automate processes across departments and teams to improve the customer experience. Providers have also responded with low-code and no-code orchestration and workflows, plus more productized integration and connection capabilities.

In the last decade, CRM systems have evolved significantly, particularly with the integration of artificial intelligence (AI). Many AI tools are built around improving the management of data. Marketing teams now utilize AI to score leads more effectively, identify which potential customers are most likely to convert, generate running email campaigns, record results and segment the market to fine-tune messaging. Sales teams and managers use AI to assess the quality of deals, allowing for better pipeline management and prioritization. Teams must understand the current pipeline, particularly the likelihood that a lead will result in a positive conclusion based on the progression of the sales process. AI tools have introduced more sophisticated ways to understand and manage sales pipelines utilizing predictive analytics and insights that help in forecasting.

Utilizing a CRM system offers numerous benefits. By having detailed and organized customer information, businesses can better understand and meet their customers' needs. Automation of routine tasks and centralization of customer information leads to improved operational efficiency. CRM ensures that all customer-facing teams have access to up-to-date information, facilitating consistent and informed customer interactions. CRM systems also provide valuable insights through analytics and reporting, helping businesses make informed decisions.

Despite these benefits, the effectiveness of CRM systems has come under scrutiny in recent years. One of the fundamental issues is that CRMs do not actually help individuals sell, which has led to the growth of a number of different technologies that sit on top of the CRM to improve both the management and sales capabilities. CRM providers and third-party "add-ons" have introduced new features to improve the ability of the system to provide relevant, actionable insights—especially in sales engagement. However, the efficacy of these advancements depends heavily on the quality of the original base data, including customer information and activity records.

 Many enterprises use CRM systems that have become outdated over time and that no longer align with current business processes. These systems often rely on manual entry of data as part of the sales process, and manual verification that account and customer data is current and up to date. When users find it challenging to locate information or do not perceive that they themselves will benefit, there is little motivation to keep the data updated. Consequently, some enterprises develop parallel processes outside the CRM system, relying on individual ingenuity to extract and report data. Although sales and customer service continue, these workarounds consume unnecessary resources and lack the benefits of data-informed analytics, relying instead on intuition and guesswork. These inefficiencies can limit revenue growth. By 2026, more than one-half of enterprises will recognize that modernizing processes and SFA systems will be needed to enable new data-driven features that aid in maximizing sales effectiveness to achieve revenue targets.

Enterprises face a critical decision: reimplement the existing system or shift to a new provider. New data-driven AI technology is necessary to gain market and competitive insights and enable sales professionals to adapt selling motions to engage effectively for optimal outcomes, but due to outdated CRM and SFA processes and system design, many enterprises will be unable to deploy the latest AI technology, thus limiting revenue growth. When faced with this roadblock, enterprises may default to maintaining the status quo, prioritizing immediate sales and revenue targets over long-term system improvements. Change requires top-down leadership and buy-in from both sales and IT teams to ensure CRM systems evolve with the business.

As new data-driven features continue to be developed by software providers, it is important that CRM implementations are reviewed at regular intervals, both by sales and revenue leadership and the CIO’s office. These reviews should ensure that the CRM system aligns with evolving business models and incorporates the latest functional improvements from providers. Failure to adapt can lead to increased reliance on unnecessary tools, manual workarounds and customizations, incurring additional costs and putting sales teams at a competitive disadvantage.

During challenging economic times, executives focus more on sustaining profitability than merely driving revenue growth. Understanding profitability at the point of sale has become crucial. Modern CRM systems should support integrated prospect and customer engagement, standardized processes and automated data collection. Features like configure, price, quote (CPQ) applications help manage prices and margins, providing the potential for dynamic and personalized pricing advantages based on the sales channel and model.

Change may be challenging, but enterprises slow to adapt risk not only falling behind competitors but also will likely struggle with internal inefficiencies. To stay competitive, continuous alignment of CRM systems with business needs is imperative.

The journey of CRM from being a simple data repository to a complex, AI-driven system underscores the technological advancements in this field. Today’s CRMs are not just about storing and retrieving data; they are intelligent systems that aid in ensuring that marketing sales and service teams are focused on the achieving overall company and individual objectives through optimizing customer interaction, and ultimately driving business growth. As we continue to advance technologically, the functionalities of CRM systems are expected to evolve, offering even more integrated and intelligent solutions for managing customer relationships effectively.

The ISG Buyers Guide™ for Customer Relationship Management Buyers Guide evaluates products based on applications covering sales, marketing and service, along with underlying platform. In addition, orchestration of processes that involve data from both within and without the CRM system puts a premium on integrations as well as workflow and process automation. CRM software providers who have a broad focus tend to perform better in the evaluation.

This research evaluates the following software providers that offer products that address key components of customer relationship management as we define it: HubSpot, Microsoft, NetSuite, Oracle, Salesforce, SugarCRM and Zoho.

This research-based index evaluates the full business and information technology value of customer relationship management software offerings. We encourage you to learn more about our Buyers Guide and its effectiveness as a provider selection and RFI/RFP tool.

We urge organizations to do a thorough job of evaluating customer relationship management offerings in this Buyers Guide as both the results of our in-depth analysis of these software providers and as an evaluation methodology. The Buyers Guide can be used to evaluate existing suppliers, plus provides evaluation criteria for new projects. Using it can shorten the cycle time for an RFP and the definition of an RFI.

The Buyers Guide for Customer Relationship Management in 2024 finds Salesforce first on the list, followed by Oracle and Zoho.

Software providers that rated in the top three of any category - including the product and customer experience dimensions - earn the designation of Leader.

The Leaders in Product Experience are:

• Oracle
• Salesforce
• Zoho

The Leaders in Customer Experience are:

• Salesforce
• Hubspot
• Oracle

The Leaders across any of the seven categories are:

• Salesforce, which has achieved this rating in seven of the seven categories.
• Oracle in six categories.
• HubSpot in five categories.
• Zoho in two categories.
• Microsoft in one category.

The overall performance chart provides a visual representation of how providers rate across product and customer experience. Software providers with products scoring higher in a weighted rating of the five product experience categories place farther to the right. The combination of ratings for the two customer experience categories determines their placement on the vertical axis. As a result, providers that place closer to the upper-right are “exemplary” and rated higher than those closer to the lower-left and identified as providers of “merit.” Software providers that excelled at customer experience over product experience have an “assurance” rating, and those excelling instead in product experience have an “innovative” rating.

Note that close provider scores should not be taken to imply that the packages evaluated are functionally identical or equally well-suited for use by every enterprise or process. Although there is a high degree of commonality in how organizations handle customer relationship management there are many idiosyncrasies and differences that can make one provider’s offering a better fit than another.

ISG Research has made every effort to encompass in this Buyers Guide the overall product and customer experience from our customer relationship management blueprint, which we believe reflects what a well-crafted RFP should contain. Even so, there may be additional areas that affect which software provider and products best fit an enterprise’s particular requirements. Therefore, while this research is complete as it stands, utilizing it in your own organizational context is critical to ensure that products deliver the highest level of support for your projects.

You can find more details on our community as well as on our expertise in the research for this Buyers Guide.