Image by Mike Mozart, CC license

Customer relationship management (CRM) and sales management are two fast-growing areas for software, with new applications frequently coming on the market as companies seek to know everything about their customers — what selling strategies work, which promotions produce the most sales lift, and how profitable their customers are.

Companies have used CRM-ware in their call centers for years to instantly display a customer’s account information, credit limits, preferences and order history. CRM is becoming more sophisticated, producing order pattern analysis, identifying distribution voids, and quantifying the impacts from competitors. Sales teams call on customers armed with more sophisticated data to support selling in a new line of products, perhaps showing the customer the product line’s potential profits across the customer’s 500 stores.

Consumer goods companies such as Kraft Foods and Procter and Gamble sell a lot of volume via specials and promotions at thousands of retail outlets across the country. It’s just the nature of how demand is driven in the industry. Shoppers love bargains and retailers use deals to generate store traffic. A particular product, such as Kraft Macaroni & Cheese, might be on sale for a week or more, say, at Kroger stores in the eastern region of the U.S., at a price of three for $1.00. Companies such as Kraft might have thousands of promotions in effect for a given quarter of the year.

Think of the possible combinations of Campbell’s soup (300 or more SKUs, 11 different brand categories), sold through most of the country’s 36,000 supermarkets, on special at any given time, and the different possible deals, such as a temporary price reduction, a percentage off invoice, buy x get y, 2-fers, 3-fers, 5-fers, and so on. Who is going to keep track of all these deals?

Software firms such as Siebel (once independent, now owned by Oracle) sell applications not only to manage these deals, account for the proper expenses and send the correct pricing to the invoicing system, but also to provide analytics to determine promotion effectiveness.

Other offerings in the CRM category include: demand estimating applications such as i2 and DemandTec (owned by IBM), whose sophisticated models predict demand lift from a given set of promotional activities; JDA’s Vista, which manages the overall promotions budget and ensures promotion spending control; and, the leading CRM-in-the-cloud application.

Banks and other financial institutions need a more business-to-consumer type of CRM and sales management. The top firm in this category, by revenues, is FIS Global, described on its web site as “the world’s largest global provider dedicated to banking and payments technologies, providing software, services and outsourcing of the technology that drives financial institutions.”

Looking at several different vendors you will find noticeable differences: one or more may specialize in your industry, one may have a stronger focus on financial controls, another may have sophisticated models tied to disparate sources of data. These applications are not cheap; expect to pay $3 to $5 million or more for one of the leading application providers. The ROI here comes primarily from optimization of your marketing, promotion, and advertising dollars, where a small percentage of what is usually a very big annual budget — if saved or re-deployed — is plenty to achieve a successful ROI on the project.