How to Define the CRM Market for Better Opportunity
I’ve been around the CRM space since the days of the P.I.M. Can anyone remember what that stands for? I rest my case. As a result, I sometimes get frustrated at the slow pace of change. I don’t mean features, I mean real change. So, allow me to explain to you what I mean by change.
Here’s how we define the CRM market today
When we talk about the CRM market, there is little argument that we are discussing the revenue generated from CRM software and services related to software. In fact, Gartner and other analyst firms put out data each year to describe the market in those terms, and will often break it down by vendor so we see a market share perspective. Here are some examples.
These numbers represent the dollars businesses actually spent on CRM software. How they make these spend decisions I’m not certain. It’s likely a combination of value, discounting, gamification and arm twisting (this is all conjecture based on actual experience). However it happens, these are the dollars spent. It’s simple math.
And it’s also a certainty that the market will be projected to grow by x% each year
What’s interesting in the CRM market share graph is that the group representing other than the Big 4 is actually growing marketing share more quickly than the Big 4. Chuck Schaeffer did an interesting analysis last year that you can find here. His analysis reveals that the market dimensions aren’t necessarily shifting the way the pundits will have you believe.
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Why does this matter? Because we can only assume that value breaks down along theses dimensions…we have nothing else to go with.
Should we define markets differently to business growth?
I came upon a theory called Jobs-to-be-Done when studying an innovation framework called Outcome-driven Innovation (ODI). The entire premise is that people have jobs they need to get done and they hire solutions to help them. I will only touch on a portion of this framework — in this post — in order to explain how markets could be defined to offer a definitive roadmap for future value creation.
To explain this in terms we can all relate to, I’m going to deviate from CRM for a moment and discuss the job of Listening to Music. The goal of this exercise is to understand where value was hidden, and how it was realized over time using a different unit of analysis — the customer job. I am leveraging an example used by the firm Strategyn, who invented ODI (a forward-looking framework).
To proceed, our new working definition of a market must be a group of people who are trying to get a job done. We call the group of people job executors. So, given this definition we should agree that there has always been a group of people who wanted to listen to music. Yet, we have traditionally defined markets associated with these people based on the solutions they hire(d) to get the job done at a point in time.
The people who listened to music — or customers — didn’t want iPods any more than they wanted CDs or vinyl records. They just wanted to listen to music. Their Job-to-be-Done. The traditional view of markets is tied to a product, or a product category, that is not stable over time.
Assumption: Jobs are stable over time, solutions are not. This means that customers are always loyal to the job even if they switch to a new solution
We can deduce that when it comes to innovation, market incumbents and market hopefuls should analyze the job, not the current solution(s). This is because core jobs don’t really change; but the solutions offered change fairly frequently. As we all know, it’s very difficult to hit a moving target. So select a target that doesn’t move. The Job-to-be-Done.
Customers will switch to a new solution when it gets the job done better. I’ll discuss how much better in another post; but that’s important as well, and it can be measured. To illustrate this simply, using the same job of listening to music, I’ll use what is called job map.
A job map is designed to decompose a job into the steps that must be accomplished in order to complete the job successfully. Job maps are based on a universal structure that you can read more about in the recommended links at the end.
Assumption: Customers do look for solutions that get a step done better; but more importantly, they want solutions that get more steps done in a job (better). These solutions offer more value than one focused on a single step
The Universal Job Map structure was devised to bring consistency to the evaluation of customer jobs. It is used as a guide when interviewing customers to understand a specific job-to-be-done. Each step has a set of questions that can be asked to elicit more precise step language; keeping in mind that each of these categories could be represented by more than a single step.
The following illustrative job map for listening to music was created based on Universal Job Map above. Please note that real-world maps will be a more comprehensive than this. An appropriate level of granularity is a prime component in delivering the precision we are seeking in our innovation work: identifying winning market concepts.
Also, I should take a moment here to point out that there are a number of types of jobs. I’m discussing core jobs here. These are completely solution agnostic. There are also consumption jobs that relate to the life stages of product ownership that are also important. We’ll get into those more in the following post about customer needs (especially as they relate to customer experience).
As with anything we do in our lives, there are a number of things that must be accomplished before doing it, then there is the act of actually doing it, and of course, there are things we must accomplish after doing it. A job is no different.
The only real difference is that a job is solution agnostic. You will note that there is nothing solution oriented — other than the picture I selected to represent listen to the music — which is representing the execute step.
As we move through time, it’s clear why the iPod was selected over CD’s and CD players. You could store more music for listening to music on the go, it was far easier to organize your music because it was a purely digital exercise using your thumb, and you could quickly change the order, or the songs selected without a lot of hassle.
Bottom line: Customers chose MP3 players and iPods because they got more steps done, and did them better than the competing alternatives.
As we continue to move through time, we can see that new solutions emerge that allow customers to get the job of listening to music done better. While the job has remained the same, the new solutions get more steps done better. This (and the underlying performance metrics for each step) is what drive customers to switch solutions.
Side note: You’re probably asking yourself what better means. We’ll get to that in a subsequent post when we discuss what customer needs REALLY are — and you’ll find that we can do a much better job there as well
A suggestion on how the CRM market could be defined
I’m going to work with the same premise, that to innovate in the CRM space we need to view markets differently. Or rather, we’re going to relegate the term CRM to one of many industries that could potentially help a group of customers get a job done. If we continue to focus our innovation efforts on CRM software itself, we’ll never break free of its grasp.
Caveat: I realize that I’m this lone wolf out here trying to tell a mature industry that it needs to change dramatically. However, I have history and disruption theory on my side. If my analysis is lacking, that doesn’t mean the premise is wrong!
So, who are these customers and what are they trying to get done? Well, I must admit that this is where it gets far more challenging. The CRM-space is large and complex. Jobs here are not only hierarchical, there are many contexts. In fact, I often tell my clients that CRM is everything. I think Peter Drucker might agree with me:
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
So, to get us started, I’m going to avoid the path of complexity in order to demonstrate my case. If we start at the top of the hierarchy, we could ask a CEO “what is the most important thing you are trying to accomplish in running this business” and they might answer “My ideal goal is to achieve sustained, profitable growth.”
Side Note: I’ll share a cheat sheet I use that provides a framework of questions designed to help uncover jobs. The above is merely a simple example
Achieving profitable growth is a logical primary goal for anyone leading a for-profit organization. However, the scope of such a job is so large that it’s particularly useless as a focal point for our analysis. We already know that there are four fairly well accepted drivers for growth which we could easily convert to jobs a set of strategic jobs-to-be-done.
- Acquire New Customers — this job covers a lot of ground as well. How do we define and select a market of interest, how do we understand customer needs, how do we target winning concepts, how do we create acceptable concept designs, how do we figure out pricing, how do we generate demand, how do we convert demand to revenue?
- Grow Existing Customers — how can we help customers get more steps done in their core job, or how can we help them get more, related jobs done? This requires a roadmap that we’ll be creating as a part of this series. Remember, it’s stable but we won’t be able to get all of the steps done better on day one.
- Keep Existing Customers — how do we ensure that we are continually the best solution, and how do we design and measure experiences that take place during the “consumption” of our solution; e.g. purchasing, learning, using, maintaining, troubleshooting, etc.
- Leverage Existing Customers — how do we encourage customers to talk about us and suggest our solutions to their friends and colleagues? How do we locate brand ambassadors?
Acquiring new customers is fundamentally what a business is about. This is actually much more complex than you think. It consists of both company jobs (e.g. market strategy, demand generation and conversion, etc.) and customer jobs (deciding whether to purchase a product, deciding where to purchase a product, etc.).
We’ll avoid that complexity for now by simplifying things to an almost painful degree!
There are a few things I’ve learned about investigating the jobs-to-be-done in the CRM space…
- The jobs are numerous and complex and involve many actors
- There is a robust hierarchy of jobs within organizations which relate directly to jobs their customers are trying to get done. This interrelationship understanding is critical
The key is to focus at the right level of abstraction, and in the real world, we would need to tackle this lower down the tree, and work our way back up as we make progress.
As we move forward in this discussion, I will bring more focus into specific jobs that we can address today that will add value to the CRM products and services of tomorrow.
Take a look at the job map above. It is too high-level to be of much value today. Each step has an array of jobs attached to it, each with it’s own job executor.
But ask yourself, what solutions help us get these jobs done today? How well do these solutions, or the job executors that use them, work together in the pursuit of a new customer?
We’ll go down the rabbit hole a little deeper next time. Don’t forget to share if you like this topic
Suggested Additional Reading
How to Define the CRM Market for Opportunity was originally published in Effective CRM/CEX through JTBD on Medium, where people are continuing the conversation by highlighting and responding to this story.