Does Anyone Really Need CRM 2.0? A BIG NO!

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I have just read Paul Greenberg’s challenging article Do We Really Need CRM 2.0 over at his excellent ZDNet blog. I tried to leave a comment but ZDNet insisted that I fill in a registration form with 18 fields and then look at a further 23 checkboxes. I had to fill in less details about myself last time I renewed my passport!

So I have decide to answer Paul’s question in this blog post instead.

Start:
Hi Paul

Challenging as ever. Do we really NEED CRM 2.0?

My answer is a BIG NO, not if it is led by the software industry that is loath to let go of CRM 1.0. Witness Oracle’s recent mauling for its weedy Social CRM offering.

There is so much hot air about CRM 2.0, Social CRM, VRM and what not. Yet nobody really knows what customers need, let alone what solutions would work best for them? Why does nobody know this? Because nobody has bothered to ask customers in a meaningful way. They’ve just gone ahead and developed CRM 2.0 software in the same bad old way. The CRM industry knows best so just buy. Caveat emptor.

Until the CRM industry and its symbiotic CRM analysts sit down with customers to find out what they really need, CRM 2.0 is just going to be a lot of hot air and a better CRM 1.0 mousetrap. Nobody needs a better mousetrap, least of all customers.

Keep up the great work.

Best regards from Köln, Graham
End

I am sick and tired of the hot air, broken promises and disfunctional products produced by so many of the CRM vendors. Maybe one day a CRM vendor will emerge who really does understand what customers need, who really has developed an innovative new CRM solution that enables customers to do business better and who really won’t overhype the solution as the best thing since sliced bread. But then again. What’s that I see in the distance? Looks like a flying pig! Surely not.

What do you think? Is talk of CRM 2.0 just so much hot air? Or do you know of a REAL CRM 2.0 solution already on the market?

Post a comment and get the conversation going.

Graham Hill
Customer-driven Innovator
Follow me on Twitter

Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

10 COMMENTS

  1. Paul Greenberg
    Author: CRM at the Speed of Light, 4th Edition

    Graham, you know I think you’re amazing and brilliant. But I think that you kind of missed my point. My point isn’t that the software vendors are doing the right thing. My much more fundamental point is that while there is a significantly evolving CRM 2.0 strategy, there isn’t a CRM 2.0 applications suite. The vendors haven’t achieved that despite any marketing they are doing. But, ultimately I truly don’t care whether or not they have some fully realized CRM 2.0/Social CRM suite as long as they provide what customers need to execute on strategies built around customer engagement. Marketing claims have never been that big a deal unless they are believed on faith. Then they can be damaging. So the customer needs to not take anything on faith.

    But that doesn’t mean that a CRM 2.0 strategy isn’t evolving.

    The voice of the customer, meaning actual customer involvement is at the core of CRM 2.0 strategy and that’s what is beginning to show its face to some degree. To some degree only though. But the vendors aren’t there yet. They need to realign their marketing with the reality of their software, but that is hardly the biggest deal in the universe. Companies that are considering what they THINK is Social CRM or CRM 2.0 need to do their own due diligence and not believe marketing claims. That’s one time honored tradition that doesn’t change with the first decade of the 21st century. Do your own due diligence and find out what claims are true and which aren’t. The CRM industry doesn’t know best for a customer obviously. They know best for themselves. The customers need to make it clear what they want and what they need and then see if they can get it – for real – not because the vendor claims they can provide it.

  2. Note: I’m reposting the comment I made on the ZDNet blog. I agree with Graham, they ask for an unbelievable amount of information, just to get an account so you can post a comment.
    Bob


    Paul, great post. Well balanced and thoughtful.

    As you know, I started CRMGuru.com in 2000 with the premise that CRM is a business strategy that balanced creating value for the enterprise by creating value for customers.

    Or, said more simply: win/win.

    You, me and many other CRM “gurus” have preached this for years, and to be sure there are some shining CRM success stories of customer-centric businesses that lead their industries.

    And yet, like or not (I don’t), CRM has settled in as a brand in people’s minds that means “internal automation designed to extract more value from customers.” Yes, that’s important, but it’s not really about the customer, is it? For most companies (not all) CRM is about marketing, selling and managing what the customer will spend, not about delivering a great experience, creating value or really engaging. You know, having a real relationship.

    That’s why we changed our site name to CustomerThink in 2007. What the market thinks CRM means falls far short of what it could/should mean.

    Despite your evangelism of CRM 2.0 as the socialization of CRM, I’m afraid that it really is just “lipstick on a pig.” Because you can’t put a thin veneer of “social” on a CRM app or market it that way and change much of anything. Although it may sell a few more CRM seats for Oracle and others. (See my take on Oracle’s social CRM efforts.)

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  3. Hi Paul

    This is the other part of the mutual appreciation society.

    I like what you are doing about CRM 2.0 in principle. We are gradually moving from a push CRM 1.0 model, where CRM was all about extracting value from customers, towards a balanced push-pull CRM 1.5 model where CRM is about offering more value to customers as part of the quid pro quo of extracting value. But that is as far as most companies have come. CRM 1.0 (which is still highly successful for companies) and CRM 1.5 (which could be even more successful) peacefully co-exist.

    But are many companies really experimenting with, let alone practicing the CRM 2.0 model, where CRM is about co-creating mutual value with customers. You could argue that a company like P&G with its Vocalpoint, Tremors and Living It programmes, is about as advanced as any company. But even these programmes are more CRM 1.5 than CRM 2.0. And forget most of the corporate blogging, Facebook and communities. They are CRM 1.5 activities too. They are first and foremost about harvesting customer insights for the benefit of companies, not about co-creating mutual value for customers. Maybe we are going to have to look to multi-sided market enabled P2P companies like Zopa for true CRM 2.0 models.

    Don’t get me wong. I am not one of these namby-pamby types who hates companies and wants to free customers to decide their own destiny as part of some bigger revolution. I am a businessman, brought upon on free markets where only the fittest survive and interested primarily in creating value for shareholders. But as the English economist John Kay pointed out in a seminal article on Obliquity, I recognise that the best way to do this is to concentrate on understanding what customers really value, on delivering value to them, and doing so at the lowest possible cost. It is this that provides shareholders with the best possible returns over the longer-term.

    But all of this is in vain if we don’t understand what customers value. And that goes for CRM 1.0, CRM 1.5 and CRM 2.0. It is long time that we did.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  4. Paul Greenberg
    Author: CRM at the Speed of Light, 4th Edition

    Graham,
    I couldn’t agree with you more. Most companies are not there or even that close despite the fact there are now some (and I emphasis some)cases of co-creation that can be drawn from. What I’m trying to get away from in CRM 2.0 is all the constant chatter about the vendors rather than the strategy. The 4th edition of CRM at the Speed of Light is less technology focused and more collaboration and experience focused and rightfully could have another title entirely, its so different. If we live in a customer ecosystem, then we need to take into account the customers required return in conjunction with the company’s required return when it comes to creating a collaborative value proposition. The technology is merely the tools. But they are important tools. We need to re-center the discussion away from the technology and onto to the strategies – same problem we’ve had with CRM 1.0, CRM 1.5, CRM 1.78 and CRM 2.0. Time to get off the dime so that companies and customers can do something about their partnership – and we can provide them with some strategic talking points.

    Paul

  5. Paul, how do you plan to stop “all the constant chatter about the vendors rather than the strategy” when it is the vendors that are creating that chatter?

    Maybe you should focus your attention on them, some of them your clients, because it is their marketing that made CRM what is today. Vendor marketing is also what will make CRM 2.0 into what it will be, regardless of what you say it should be.

    But, I have my doubts. How successful were we (you, me, Graham and many others) in getting CRM to mean a customer-centric business strategy?

    Here’s the latest definition from the all-knowing Wikipedia:

    Customer relationship management (CRM) consists of the processes a company uses to track and organize its contacts with its current and prospective customers. CRM software is used to support these processes; information about customers and customer interactions can be entered, stored and accessed by employees in different company departments. Typical CRM goals are to improve services provided to customers, and to use customer contact information for targeted marketing.

    You say that CRM 2.0 is not just about technology, but that technology can provide some of the tools to help companies “create a collaborative value proposition.” Couldn’t agree more, but maybe you could offer up some examples that show how strategy and tools help create that win/win for company and customers. I don’t see how Oracle’s so-called “social CRM” (Sales Prospector etc.) has anything to do with customers, other than treating them as targets to be acquired. That’s just CRM 1.0 with a fresh coat of paint.

    But surely there are good examples. Please share them and help enlighten us about what CRM 2.0 really can be.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  6. Bob, I’ve written a blog for the last 4 years that is peppered throughout with CRM 2.0-like examples from companies like Procter & Gamble. I’m writing the 4th edition of CRM at the Speed of Light (in a full court press to finish it now actually) and its 600 plus likely final pages are loaded with CRM 2.0 strategy and tools success stories. And failures too.

    This isn’t about defense of a term which is what this seems to be. I truly couldn’t care less whether its called CRM 2.0, Social CRM, CRM or whatever. I also don’t care about what Oracle labels Social CRM – client or not is irrelevant frankly – or SAP calls CRM 2.0. Lots of companies are calling things CRM 2.0 right now or Social CRM. There are 247,000 google results for “CRM 2.0” and 154,000 “Social CRM” references, so there is some traction – this is up quite a bit from last year. The terms are catching on and I don’t doubt as it has been for CRM there are 402,000 different definitions for the term. What matters is that customers need to be engaged because they control the business ecosystem now, companies need to develop strategies to engage them and the tools, experiences, processes and systems to support that customer engagement (not customer management only)need to be there for its success. I have a definition of CRM 2.0 that anyone who wants to can go to the CRM 2.0 wiki which has been up for nearly 3 years and has some traction and is increasingly being used by Forrester and others as the major source for CRM. That would be at this location. Check it out. I’m heading out of town now and will pick this up at some point soon on my ZDNET blog. See you around.

  7. I seem to be entering into this discussion a little late….but it is time the CRM2.0 got it’s due.Even google is turning to behavioral targeting now to work up revenues by allowing companies to target consumers on the basis of previous sites surfed by the consumer…a way of linking his interest to the ad.
    Google turns to behavioral targeting
    In times like these, it will be definitely useful to be able to structure and derive meaning out of the volumes of consumer generated data on the internet…specially an organizational blog or online community.
    Analysis of consumer sentiment from the consumer comments can allow companies to create a targeting strategy by segmenting consumers on the basis of their individual sentiment.Consumer email ids are available anyways…
    Isn’t it all about trying to find ways to analyse what the consumer wants and then probably match delivery to his expectations? CRM 2.0 simply implies using the consumer generated content on Web 2.0, deriving meaning out of the same and doing what CRM always did-build a relationship with the consumer by trying to find ways to aquire, satisfy and retain him……

  8. I hope that CRM 2.0 will bring it closer to customers. But I’m not optimistic.

    Unfortunately, CRM is about what enterprises do to customers. Market to customers. Sell to customers. Provide support to customers.

    Web 2.0 technologies and “social information mining” can help improve all this, and that’s fine. But it doesn’t change the orientation of most CRM practitioners that the point of CRM is to extract more value from customers by optimizing marketing/sales/service processes.

    The limitations of CRM’s inside-out and tech-obsessed orientation led to the rise of Customer Experience Management (CEM), which is about designing and delivering loyalty building experiences for customers. These experiences can happen in marketing, sales and services processes, too, but point is to deliver value and differentiate the company. And CEM is not just about using technology. Think about the retail shopping experience, for example.

    And now we have the social movement, which is part of what I call Customer Collaboration Management (CCM). This is about joining the conversation with customers. Again, you can have a real dialog in marketing, sales or service processes.

    The vision that Paul Greenberg has for CRM 2.0 is really CCM. I agree wholeheartedly with that vision, and applaud everything that Paul has tried to do to provide some leadership in this area. But in the end, CRM is still CRM. Vendors marketing “social CRM” will dumb down CRM 2.0 to just adding Web 2.0 features, without really engaging customers. It will take different vendors to provide real “social business” applications. (See my post about Jive Software for one such vendor.)

    I’m not negative about CRM, it serves a critical place in the enterprise ecosystem of managing customer information. But we can’t make CRM social by tacking 2.0 on the end of it any more than ERP can be made into CRM by calling it “ERP 2.0.”

    “CRM 2.0” is fine so long as people understand that it just means CRM with Web 2.0 features, and is not about being social with customers to any meaningful degree. With all due respect to Paul, the fate of CRM 2.0 is not in his hands anymore, it rests with the same vendors that made CRM into what it is today with their marketing messages and solutions.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  9. I think we are in danger of throwing out the healthy CRM 1.0 baby with the frothy CRM 2.0 bathwater. Let me explain.

    Despite our lament about how CRM 1.0 (traditional marketing, sales & service) is not particularly customer friendly, it does work very well indeed. It is the basis for much of the benefits we enjoy through free and open markets. Companies market products to customers through the market (and its associated price mechanism). Customers are free to buy, or not. Companies learn from those that do and use the insights to improve products and target marketing at particular customers who they think will buy the products. Free markets may not be perfect, but they are generally a whole lot better than the alternatives on offer.

    So why has CEM evolved?

    CEM or CRM 1.5 has evolved because markets never stand still for long. Customers have new needs and adaptive companies respond with new products. As Darwin famously said, “It is not the strongest of the species that survives, nor the most intelligent, but the one most adapted to change“. In the case of CEM, companies have adapted to a combination of customers demanding a more joined-up consumption experience and the power of technology to provide companies with a temporary advantage by providing customers with a better experience. CEM has the potential to deliver more value for companies and customers than CRM. But it doesn’t always deliver that potential.

    Both CRM and CEM co-exist happily side-by-side. In fact, you might even say that Customer Lifecycle Management is where CRM meets CEM. That has certainly been my experience working with data rich companies such as airlines, banks, automobile manufacturers and telcos.

    Customer Co-creation or CRM 2.0 is just the extension of the same evolutionary process. Many of today’s customers want to have a more direct say in the consumption experience. They want to have a say in innovation, in creating marketing, in selling to their network and they want to manage their own relationships. This has spawned a plethora of CRM 2.0-ish initiatives: from lead-user communities for Land Cruiser drivers sponsored by Toyota, through Customer Generated Marketing for Mastercard, all the way to the mass-customised Swiss watches by 121 Time. All are collaborative ventures with customers, even if they currently operate more in the companies’ favour than customers. And they all span a mixture of off-line and online activities. Nobody said that CRM 2.0 should only be online. Indeed, as the vast majority of business is still done off-line, CRM 2.0 must bridge both worlds. All Customer Co-creation needs now is a robust business model. It has the potential to deliver even more value than CEM, but nobody really knows how yet. Such is the nature of business evolution.

    CRM, CEM and Customer Co-creation are all steps along an evolutionary pathway for business. CRM is well established and works. CEM is gaining traction and is starting to create mutual value for companies and customers. And Customer Co-creation is still in the experimental stage. Companies would be well advised to stick with CRM as the foundation of their business, to develop CEM further and to experiment with Customer Co-creation. All at the same time.

    “And what about technology?”, you ask?

    Technology is an enabler for better business. And more that that, business co-evolves with the opportunities that new technology makes possible. The challenge for vendors is to understand their corporate customers’ needs (the jobs they are trying to do and the outcomes they desire, where technology is part of the solution) and to develop their technologies to match. I have no doubt that established players like Oracle and SAP, and disruptive new entrants like Salesforce and Agillic will eventually rise to this challenge. The challenge for companies is to understand their end-customers’ needs, to set out their stall to deliver them profitably and to select technologies that enables them to do just that (and nothing more). Paradoxically, this is the bit that worries me the most. And it has nothing to do with the recession!

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  10. This is a perfect example of how NOT to treat customers. Don’t create barriers in the customer process. It’s not customer service, it’s customer dis-service.

    You said it best:

    “I tried to leave a comment but ZDNet insisted that I fill in a registration form with 18 fields and then look at a further 23 checkboxes. I had to fill in less details about myself last time I renewed my passport!”

    The more barriers to the end-point, the worst the customer experience.

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