AMR Research has estimated that even with the less-than-robust economy, the market for customer relationship management (CRM) software and services will grow to $10.8 billion in 2004, an increase of more than $1 billion over 2003. With money tight, most organizations willing to spend on CRM are being particularly careful about how and where those dollars are spent. AMR researcher Laura Preslan offers these four key areas where organizational spending will reap the greatest rewards:

* Customer analytics. So far, it’s been relatively easy to collect customer and sales data, but actually making sense out of it has proven to be more difficult, Preslan said. Customers should invest in customer analytics tools that look to the past, via reporting, as well as perform predictive modeling for the future in order to improve marketing effectiveness and identify service issues before they affect the bottom line. The key here, she says, is to learn to use the data you have to make decisions, “rather than manipulating reports to validate decisions that have already been made.”

* Identifying high-value customers. Although segmenting the customer base to identify low- and high-value customers is a given in the marketing department, it is seldom rolled out across an organization, where the overall rewards of the strategy can really pay dividends, Preslan said. “Until companies understand their customer base and value, profits will continue to be wasted on over-servicing low-value customers while high-value customers wait,” she said.

* Implementing better pricing practices. With the proliferation of pricing information available today via the Web, companies need to be far more savvy in their pricing policies. By leveraging improved supply chain efficiencies with more accurate CRM data on customer demand, organizations can increase revenue and manage profitability as price pressure increases, Preslan said in the report.

* Streamlining sales processes. Rather than simply implementing sales management tools, organizations now need to focus on tools that actually help salespeople do their jobs better. This means focusing investments on configuration tools, guided selling, sales methodologies, and new tools such as social networking to reduce the cost of sales.

And don’t just focus on one of these areas, the report said. A balanced approach – combining elements of all four -- is bound to reap the greatest reward.

For more information, visit AMR here.