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CRM: PrimeResponse (A)About the CompanySales ChannelWhat is CRM?However, implementing eCRM solutions is a multi-step process. It is more than just purchasing and installing eCRM software! For example, the company must first have information about its customer base or the ability to collect this information in a timely and cost effective manner. Secondly, the company should have a comprehensive customer development plan to decide how and which segments to target. Finally, the company must have a campaign planning and execution process to follow through once the data has been collected and the marketing “rules” have been established.Why CRM?The IndustryE.piphanyE.piphany is also based in San Mateo, California. The company’s E.4 system is tailored towards marketing CRM functionality. Recently, E.piphany acquired RightPoint Software, and has agreed to purchase Octane Software. RightPoint is a provider of marketing software, while Octane serves the sales, service, and support markets. Revenues for 2000 are estimated to be around $120 million. The company has a strategic alliance with Sun Microsystems and Deloitte Consulting to jointly promote E.piphany’s products.Exchange ApplicationsExchange Applications is based in Boston, Massachusetts. The company’s is the most direct competitor to PrimeResponse. The company’s core product is its Xchange 4.0 eCRM software package. Exchange Applications has more than 100 customers, with revenues for 2000 estimated to be around $60 million. With the carnage of the public markets, the company has recently closed a private round of financing estimated to be between $10-$20 million.QuestionsYou are Joel Book, Director of Relationship Marketing Strategy and Consulting for PrimeResponse. With the current carnage in the stock market for Internet stocks, raising additional capital through a secondary offering has become unrealistic. With the limited financial resources, your goal is to increase revenue growth against competitors such as Siebel (in your opinion you have a superior product in the marketing eCRM segment). In addition to Siebel’s much larger installed base, it also has a much bigger advertising expenditure, bigger sales force, and much stronger financial position. For instance, Siebel has a market cap of over $20 billion and a cash position of $29 million, while PrimeResponse is only $37 million in market cap with a cash position of $32 million.You specifically face two major problems. First, for the large corporations market, how does your strategy of best of breed marketing focused software compete against the comprehensive software suites of your competitors? This is especially important because even if the marketing divisions of companies prefer your software, IT divisions are reluctant to recommend piecemeal solutions for various CRM functions. Furthermore, companies such as Siebel already have a large base of installed customers.For your small company segment, you are beginning to see a proliferation of ASPs that offer complete solutions. These ASPs license software from PrimeResponse and other competitors. They offer complete end-to-end solutions (from data hosting to implementation), usually for smaller companies who do not have the infrastructure to carry out a complete marketing campaign.Two main questions that you will need to consider:Additional ResourceCompany homepageGuest LecturerAcquisition by Chordiant SoftwareQuestionMIT Sloan School of Management15.823 Spring 2001CRM: PrimeResponse (A)About the CompanyNovember 2000, PrimeResponse is a leading CRM solutions provider, specializing incampaign management technology and consulting services for multi-channel relationshipmarketing. The company’s Prime@Vantage software suite enables companies tointegrate their marketing operations across Internet (website, email) and traditionalchannels (direct mail, direct sales, advertisements) within a single software-basedplatform.PrimeResponse was founded in 1987, starting as a database service bureau. Thecompany’s first office was located in London, England. PrimeResponse released its firstcommercial campaign management software solution in 1994. By 1998, they hadintroduced a Windows compatible version of their core eCRM software suite. Theircurrent product, Prime@Vantage is available in 6 languages.The company earned revenues in excess of $20.5 million in 1999, which represents a25% increase from 1998. Slightly more than half of this revenue is from software licenses(each site license starts at approximately $250,000). The cost of the site license isdependent on the number of unique customer records in the clients’ database. In additionto the one time licensing fee, an additional 20% of the base license fee is charged on anannual basis for services and support. Services and support, and application hostingcontributed approximately 32% and 18% respectively. Consulting services currentlyaccount for less than 5% of total revenues. The geographic breakdown of revenues are:40% North America, 55% International (predominantly Europe), and 5% Asia Pacific.The percentage derived from North America has increased from 0 to 40% in a span ofless than two years. The company currently has more than 90 customers.PrimeResponse is focused in three sectors – communications & media, financial services,and consumer markets. The majority of its customers are large corporations, includingTelstra, Chase, Deutsche Bank, CVS, British Airways, UPS, and Fiat. The companytraditionally targets more established companies and has very little exposure to start-ups. ______________________________________________________________________________________This case was written by Shyan Lim with the assistance of Joel Book under the supervision of Professor Glen Urban. Copyright  2000 MIT Sloan School of Management.Page 1 of 1115.823: Prime ResponsePrimeResponse’s corporate headquarters is currently in Cambridge, MA, while itsinternational headquarters is in London, England. It has a global presence with offices inAntwerp, Chicago, Denver, Frankfurt, Melbourne, Minneapolis, Munich, New York,Paris, San Francisco, Singapore and Sidney. The company has started expanding to SouthAmerica, with the first office tentatively scheduled for Brazil in 2001.


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MIT 15 823 - Prime Response

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