Despite continuing economic uncertainty, customer relationship management (CRM) budgets remain strong, according to a recent survey of European organisations by Gartner.

The research found that 50% of the 102 respondents planned to increase spending on CRM initiatives in 2014, with an average increase of 2.5% over 2013 budgets.

The survey, conducted in the fourth quarter of 2013, included organisations representing more than 20 industries and 30 countries. B2B and B2C organisations were represented and participants were evenly split between those with a business and those with an IT focus in their roles.

More than one-third of the participants identified themselves as being “advanced” and having more than five years of CRM project experience.

CRM Budgets (2011 to 2014)

“The survey findings highlight the continuing trend for organisations to commit to improving the management of their customer relationships,” said Jim Davies, research director at Gartner.

“We are observing an increasing number of large, transformational projects being undertaken as organisations look to embrace social and mobile interactions for sales, marketing and customer support.”

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Gartner has forecast that the CRM software market in Western Europe will grow at over 9%, reaching $5.5 billion in total revenue by the end of 2014. Cloud adoption is also steadily increasing, with more than 49% of CRM applications in the CRM software market being delivered on SaaS infrastructure in 2014 compared with just 1% in 1999.

Total revenue for cloud CRM applications in Western Europe is forecast to grow 24% in 2014, reaching a total of $2.3 billion.

Survey participants were also asked to highlight their top three primary objectives for 2014 and for the fourth consecutive year, the primary objective for CRM programmes was to increase customer satisfaction.

“Organisational commitment to the customer experience continues to rise, as business leaders appreciate the benefits of providing differentiated and consistent cross-channel experiences,” said Davies.

“A new objective added to the list of options this year was ‘increase customer engagement’, which jumped into the number-two position and further demonstrates the growing desire of European organisations to get closer to their customers and have a more mutually beneficial relationship.”

Creating a single view of the customer leapfrogged the main revenue/growth-oriented objective to secure third place.

This single view, obtained via investment in master data management technologies and governance, helps to provide a more consistent, appropriate and joined-up customer experience across multiple channels, products and functional areas. It enables organisations to achieve a more comprehensive and accurate understanding of their customers’ wants and needs, as well as providing relevant opportunities for them to pursue closer customer relationships.

Objectives linked to cutting costs associated with sales, marketing and customer service did not appear in the top half of participants’ objectives, reinforcing the positive emphasis that will be placed on customer strategy during 2014.

Cost cutting might be unavoidable in some circumstances, but any action that has a negative impact on the customer experience can have serious long-term implications on corporate performance and should be carefully considered.

When asked to name the biggest obstacles threatening the success of their customer initiatives, participants overwhelmingly cited the lack of a clearly defined CRM strategy as their number one concern.

This is a dramatic switch from 2013, when gaining a single view was the most significant issue.

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All organisations in the private and public sectors interact with customers, most often through the work of marketing, sales and customer service departments. However, in most cases, these organisations are not truly engaging with their customers – they have been disengaged for the past decade to reduce their costs.

Furthermore, relatively few have taken an enterprise-wide approach to engaging with customers.

“During the past 10 years, customers’ trust in big business has declined rapidly. Customers have become more willing to complain, more willing to switch suppliers after a poor experience and more likely to tell others about it,” said Davies.

“Social media and mobile adoption have caused fundamental shifts in how, when and why customers engage with each other and how they expect to be able to engage with organisations. These two overlapping factors are forcing organisations to rethink their approaches to CRM, and are creating a need for new customer strategies.”