Cloud-Based CRM Applications Driving Significantly Higher Propensity to Switch Vendors

More than half of CRM Customers Willing to Switch Cloud Applications Within First Six Months of Deployment, According to Nucleus Research

 
BOSTON – September 25, 2012 – Nucleus Research finds cloud CRM customer willingness to switch applications within the first six months of deployment is at an all time high of 52 percent. The implications for short-term sales strategies and valuation of the overall lifetime value of a customer have become more significant to quarterly business goals as application switching becomes more frequent.

Aggressive software-as-a-service (SaaS) startups continue to target new customers, by promising to deliver value from day one of the contract. Ease of switching cloud CRM promotes aggressive vendor sales strategies with customers often expecting the delivery of value more quickly, frequently eclipsing the vendors’ capabilities.

“Customer loyalty is won or lost every day, and the rise of cloud applications in the CRM space has quickly changed expectations in how applications should deliver value over time. With that said, no customer is truly loyal in the cloud, requiring vendors to step up their sales discipline and allocate additional focus of their attention to providing excellent service to new customers and those approaching the period of re-evaluation of their existing cloud CRM solutions” said Rebecca Wettemann, vice president, Nucleus Research.

Nucleus also finds if cloud CRM companies can keep customers past this six-month period, the percentage of customers with a propensity to switch drops significantly for an average of 30 months before rising again as customers seek out further ROI from competing cloud CRM solutions.

The retention of customers in cloud CRM deployments during certain periods has become key to successfully maintaining a consistent subscriber base with the caveat that with every CRM deal lost today is a potential CRM deal to be won back in the next six months, and then again beginning two and a half years from now. CRM vendors that do build a long-term strategy for satisfying both individual users and broader management will face less risk of customer switches over longer-term subscription periods.

The full report with data is available at CRM Propensity to Switch.

About Nucleus Research

Nucleus Research is a global provider of investigative, case-based technology research and advisory services that provide real-world insight into maximizing technology value. For more information, visit NucleusResearch.com or follow us on Twitter @NucleusResearch.