Customer Focus Is Strong, But CRM Vendors' Sales SlipCustomer Focus Is Strong, But CRM Vendors' Sales Slip

Leading customer-relationship management vendors last week reported that sales slipped in their most recent quarters. But that doesn't mean companies aren't investing in IT projects that can help them realize more profits from improved relationships with customers. Some simply are reaching that goal using software that's already in place, rather than buying new CRM applications.

Take Harrah's Entertainment Inc., which earlier this month said it would beat earnings-per-share expectations for its fourth quarter, and attributed its 20% improvement in profits per room to a yield-management system it rolled out late last year.

The casino and hotel company considers its homegrown yield-management tool, which integrates with data collected from the company's customer-loyalty program, an essential part of its customer-oriented strategy. Harrah's uses the information to flag customers most likely to spend a lot of money gambling, and attract them with the best room rates.

"CRM is the backbone of everything we do," says Harrah's president and chief operating officer Gary Loveman. The company is now integrating its yield-management software with its Web site, so gamers will be able to view customized room rates, dinner coupons, and other incentives.

As companies begin to look more closely at other technologies that can help them improve relationships with customers, vendors of traditional CRM applications may experience more quarters like their most recent ones. A new study of 350 business-technology professionals conducted by information Research and Morgan Stanley shows that just 14% of respondents plan to significantly increase their CRM application deployments in the next year. Forty-five percent plan no increases or only minor ones.

That isn't the best news for Siebel Systems, Pivotal, or E.piphany, which just reported earnings. Siebel's fourth-quarter profits slid 17% over the previous year's, from $79.5 million to $65.9 million, on revenue that fell to $481.4 million from $581.6 million.

Pivotal's revenue slipped to $16.5 million, from $25.7 million in the year-ago quarter; net losses were up from $4.7 million to $63 million.

E.piphany's revenue dropped from $49.2 million to $28 million, quarter over quarter; net losses, including one-time charges, were $36.8 million.