The CRM industry has always been in a unique position to contribute greatly to the future success of their customers. Yet, numerous studies have shown that the impact of CRM on an organization’s performance is simply not where one would expect given the enormous investments companies are making. The simple truth is that technology, by itself, cannot create business outcomes. It can help people get tasks done; but without a broader look at how an organization functions, what purpose it serves, and how the various parts and pieces inter-relate, more advanced implementations of CRM technology become problematic. As consumers of CRM we’re essentially betting that a functional one-size-fits-all experience is good enough to achieve our desired business outcomes, and propel us beyond our competitors (who are using the same technology). I believe CRM vendors should do more to take advantage of this position.
Incumbent vendors in the CRM industry don’t appear to be designing break-through business model innovations; the kind that redefine markets, or create entirely new ones. What we tend to see are improvements to an existing set of tools, or add-on tools that integrate with new technology (like social media); both of which focus on currently supported customer jobs-to-be-done, just differently. The new entrants to the CRM market seem to focus on paring down existing functionality to make it simpler; and they like to talk about failing fast (instead of targeting better).
What seems to be missing from the innovation focus is the fact that the organizations that use these tools have other related jobs to do as well (before, during and after the jobs we’ve been focusing on). I’m all for simpler, cheaper and more convenient, but if we can find a way to see and understand these other jobs, how they fit together and where they are not getting done satisfactorily for a specific group (or groups), there will be huge innovation opportunities in the CRM space. Generating sustained growth requires continual innovation to locate new ways to penetrate a market and/or breakthroughs that create completely new markets for growth. To accomplish this, the context must shift from products, tools and features to a framework using a customer’s job-to-be-done as its focal point.
The Obstacles to CRM Innovation
Innovation requires a true understanding of customers’ needs; which best manifest themselves as measures of how well a customer is able to get various jobs (and steps) done. Essentially, until customer needs become metrics within a customer feedback loop, the probability of impactful sustaining or breakthrough innovations will be low. To that end, I would suggest that there a number of additional barriers preventing CRM vendors from successfully innovating:
- CRM has historically been seen as a software tool, rather than a systematic approach to understanding and managing successful customer outcomes (as defined by the customer), and vendors perpetuate the myth.
- CRM is delivered through sets of features attractive to functional silos within organizations with no guaranteed integration, interdependencies and change management built in
- CRM product development is iterated around an existing product or platform, and thus is restricted from seeing opportunities that may require something different, or completely new
- CRM is designed through a process of what can we build and not what set of inter-related jobs can we help a customer do better
- CRM is seen by organizations as a technology to hire; and not as a customer strategy with complimentary capabilities enabled by select technology
The problem, as I see it, is that the organizational drivers for seeking and hiring CRM software have typically come from the teams that are trying to sell products or services; whether short term (sales) or down line (marketing). Essentially, they are looking for more efficient ways to sell more (assuming it’s the right approach to their ultimate purpose). Vendors have reinforced this process to the point where CRM product categories align perfectly with the traditional functional silos of a hierarchical organization. I suggest we should take a larger view of CRM and what our customers are truly trying to accomplish when they purchase our software; especially those companies that are moving to flatter, customer-centric structures.
Left solely in the hands of business line managers internally focused on sales, marketing or service, their selections will naturally tend to focus squarely on the enablement of tactical capabilities defined by the line of business. Specifically, they will tend to optimize capabilities that reflect positively on them with little regard for the impact on the company as a whole; let alone the customer. It’s all well intended, but these measures tend to focus on the short term; things that they need to happen now without taking sustainability into account. Even if an innovative company is able to repeatedly develop growth sustaining value propositions, have they also developed the complementary capability to grow top line revenue profitably? Is it blasphemy to ask these questions?
The $18 billion CRM industry (as it is defined today) continues to exhibit strong growth, suggesting that companies are clearly still searching for answers from CRM software; despite what research shows is an underwhelming customer success rate. As new vendors enter the market, with new technologies and business models, the same pressure faced by their customers (sustained growth and profitability) is felt by the incumbent vendors. It’s true that CRM vendors rise and fall just like every other kind of company; so why do other companies come to them for answers?
Sustaining an edge over the competition requires a new approach to innovation in the CRM space. Rather than designing new features around emerging technologies, I propose that it makes more sense to carefully design a set of offerings that help customers get their jobs done; and not just sales, marketing and service jobs. There is a larger system of interdependence in which these play a supporting role in customer relationship management. These offerings must then fit within a particular customer organization comprised of its unique system, processes, culture and customers. Therefore, an appropriate CRM offering must not consist solely of technology, but also services designed to assist in the integration between an organization’s capabilities and select supporting CRM technology (possibly even helping to identify and design the capabilities themselves).
Over time, these services should slowly become integrated as a part of the technology. Thus, relying on external partners, or unrelated 3rd parties, to design and deliver them may not be in your best interest in the long run as these services will likely dictate which technology is selected. The CRM problems that businesses face are not software problems; they happen earlier. It’s simply far more convenient, on both sides of the equation, to focus on shiny new tools we hope will make us more competitive. It requires far more work to identify gaps that exist between what we are trying to accomplish, and the solutions we are presented with; and the clever newcomer (or incumbent) who sees the larger set of customer jobs-to-be-done, and closes this gap, will be a colossal threat.
What do CRM Customers Really Need?
I like to think of customers and their needs in terms of the job(s) they are trying to get done. A famous quote attributed to Theodore Levitt (economist and Harvard professor) suggested that people don’t want to buy a quarter-inch drill; they actually want a quarter-inch hole. Using this thinking, we can translate that to…
“Companies don’t want CRM software, they want to sell more”
But, as many job-to-be-done practitioners will point out, people don’t actually want a quarter-inch hole, either. They are trying to accomplish something else: such as mount a shelf, or hang a painting (which may also serve an emotional job or need). With that in mind, I believe we need to include jobs that companies are trying to get done before they select, install or use CRM software; as well as after it’s in place and being consumed. Sure, they want to sell more; but they need to do so profitably as well – and sustain it. Since CRM software is not automatically building growth and profitability into the companies that acquire it, maybe we need to look at jobs being done before CRM software is acquired, or used, to find the answer. So, let’s explore a few areas we might find other related CRM jobs that companies struggle with. Could a different looking (and larger) CRM industry…
- Help companies identify and develop competitive capabilities and strategies to deliver value the customer truly needs and wants – even if they can’t articulate it?
- Help companies identify, analyze and manage the drivers required for effective customer value management?
- Help companies learn from the customer at each touchpoint and act to continuously improve then and there?
- Help companies identify target opportunities for innovation which guarantee a high probability of success?
- Help companies select, design and implement the necessary tools (and only those tools) which enable these capabilities?
Why wouldn’t the CRM industry be interested in helping their customers accomplish more than the successful consumption of technology? Companies are clearly struggling with the job of identifying what customers value, and how to deliver to that need profitably over time. I think deep down most people would agree…and then “this is how we’ve always done it” gets in the way.
So, if we are able to define the scores of new CRM jobs, and identify all of the job executors who play a role, how well will the current slate of CRM software options enable them? Does the current market of CRM, Social CRM, or Enterprise software help with issues like these, which are faced by many companies? (h/t to The Customer Framework for this list)
- You want customers at the center of your business but you’re not sure what that means, can’t communicate it and can’t find the tools to support it.
- You know there is financial value in your customer base but you’re not sure how to unlock it
- You want to become a leaner, more agile company, maintaining sales while cutting the right costs and optimizing flow as an ongoing part of daily work.
- You want to deliver exceptional customer experiences but you’re not certain what capabilities or behaviors are required, or what impact this will have on the bottom line
- You want to understand how you can make the most out of digital, social, mobile and near real-time approaches to support existing ways of working, but don’t know where to start.
Many companies are saying they want to be more customer-centric, yet even if they find the path to cultural and organizational transformation, what enabling tools are available to support this? Does CRM software need to support flatter organizations that don’t make decisions at the top, or should it continue to facilitate solution design at the top and push these solutions down for knowledge workers to execute? Does CRM become more than simply an execution mechanism or does it allow organizations to design themselves at the point of customer contact and adapt in real-time? I believe the answer is yes!
The challenge, of course, is taking product-centric vendor business models on a customer-centric journey so they can see what their customers are trying to accomplish, and what their products could do to support them. What’s good for their customer is good for them; and more and more companies are trying to figure out this customer-centricity thing; while few (if any) CRM or sCRM products support those efforts in a meaningful way.
The Road to Re-inventing CRM
I believe the best story you can tell is your own. In the case of CRM, companies that develop these solutions/applications/platforms have the same basic needs as any other company. This isn’t the case with all products and services, which makes the CRM industry fairly unique. So, the next generation(s) of CRM vendors will hopefully incorporate a different kind of thinking into their own organizations and leverage that experience into their portfolio of products and services. They will find ways to sustain profitable growth in their core market, successfully enter related markets, and possibly create new breakthrough platforms and markets as well. The following list outlines areas I hope to see change take place:
- The Artificial Barrier between front and back office – Customer management and support happens across the organization, not just in the front office. Applications and platforms supporting silos make it difficult to get jobs done when users must juggle multiple interfaces and cannot contextually collaborate across the organization and/or with customers. We also need to break down the barrier between our internal process (delivering CRM) and our customers process (consuming CRM) in order to better create value with them and not simply for them.
- The Job CRM is really hired to do – Companies want to sustain growth, and do it profitably but struggle to do so. The customer and environment has changed and old solutions, practices and experiences don’t fit (and will continually be under pressure). CRM will have to do much more than centralize opportunity data and automate one-size-fits-all marketing campaigns. CRM should strive to help its customers achieve their desired outcomes (including our customers’ customers). The Front-End-of-CRM offers many promises and a new, broader and disruptive definition of the CRM market. Maybe there’s a hidden back end as well. There are certainly many gaps in the middle.
- CRM À la Carte – An integrated customer experience does not have to mean an integrated software interface. Watch knowledge workers and you will see them juggling many disconnected tools just to get a simple job done. While maintaining integrated rules, data and workflow at its core, user interfaces will be designed to get specific jobs done, regardless of where the data resides, and do so within the proper context. A one-size-fits-all CRM application is no longer a proper context. Throwing one-size-fits-all accounting and communication systems into the mix just makes the problem worse. Basically, one-size-fits-none.
- Continuously monitor what CRM customers value – Customers do not value your product; regardless of whether they are purchasing agents, the C-Suite, end users, influencers, channel partners or your internal employees. They value solutions that help them get jobs done in specific situations and they will measure the success or failure to that end. Your job is to learn how they measure it in each customer group. Understanding these measures will be a key building block to your competitive advantage. An innovation framework such as this is also something you can share with your customers.
- Building stronger internal CRM capabilities and productizing them – While you may not use your own software tools, the capabilities you develop to compete should be reflected upon and productized where possible (this could be disruptive to related industries). If they cannot easily be productized today, services should be bundled with your products to ensure the desired outcomes of your customers are achieved. This could be the basis of a multi-sided platform (and not just an app store). Imagine bringing a good enough productized platform making niche management consulting services available to markets that can’t, or won’t invest in consulting; and also providing access to affordable consulting only where gaps exist (for consumers and consultants). Strategy design could one day be tied directly into execution, measurement and reflection if it were all part of an integral platform (a larger system made up of interdependent sub-systems, processes, methods and measures).
- All business models can be disrupted, even yours – Business models have always been under attack. However, in the experience economy, and with technology changing so rapidly, it has become a required capability to understand where future value will exist, even at the expense of slowly disrupting the business that got you here over the past 20 years. CRM vendors (existing or new) that embrace this will remain relevant; just look at how Toyota has handled this.
While many in the CRM industry are still betting that the cloud as the key disruptive force, this disruption actually started over 10 years ago; we just ignored it then as incumbents almost always do. It’s nothing new, now. The cloud doesn’t solve business problems, although it might solve some IT problems. For the vendors it provides a platform for designing and delivering new solutions to existing problems that are served unsatisfactorily. More importantly, it provides a platform for new business models; of which we have seen few. Unfortunately, what we tend to see from incumbents is more of the same, just on the cloud. So, what’s next?
The fundamental challenges to our customers (businesses) have not changed. A business still has the same job(s) to get done year after year; regardless of new technology. The forces impacting our businesses are what change over time, and our customers evaluate how well we help them get their jobs done through their desired business outcomes (their needs). Our customers don’t really value how many features they get for their money, they value their ability to get their larger system of jobs done better than their competitors. The challenge we face as an industry is learning how to measure their desired outcomes and use them to find competitive opportunities, and new ways to define our market. That would also be a nice capability to pass on to our customers, as well.
So, that’s the conversation I would like to have. How about you?
Hello Mike
I just want to say that I started off in CRM in the days when CRM was not even a strategy. It was a business philosophy: a way of up showing up, living, doing business for everyone in the organisation. Then CRM became software like ERP. And I walked away and dropped the label of CRM consultant. Since then I have read many pieces on CRM and found most of them wanting.
Despite my initial reservation I did read your piece. And I simply wish to say well done. I enjoyed reading it. You say what needs to be said.
Perhaps you do not go far enough. It occurs to me that in many cases the selection and implementation of CRM software as a proxy for genuine customer orientation makes thing worse. There is the illusion of progress with the progress. Worse than this, I have seen CRM systems make the employee and customer experience worse! I say that is more common than uncommon. CRM systems became powerful weapons to fire at the customer.
Maz
If I understand correctly, maybe CRM vendors should do a better job of practicing CRM. Assuming it means more than implementing a system.
Some are, especially those with SaaS models. Our research has found much higher level of satisfaction than with on-premise solutions. It’s built into the business model, because unhappy customers will leave more easily.
However, CRM vendors are rarely connected to the real problems that customers face. The definition of “success” is about adopting and using the software. It would be interesting to see if SFA vendors (or consultants, for that matter) would be willing to be paid on actually increasing sales productivity, for example. That would ensure a focus on “holes” and not “drill bits.”
One disruption I’ll cite is simply that customers are changing their buying habits, doing more and more on their own. This changes the game for sales organizations, who now need to collaborate better with marketing. And yet, the CRM industry still largely sells in silos — SFA vendors to the VP of sales, and marketing automation vendors to the CMO.
The job to be done is helping the customer buy, however they wish to do it. That’s an opportunity the CRM industry could help with!
Thanks for the kind words Maz. One can never go far enough. We must continual find new and better ways to create value.
Bob,
I put the idea out there a while back that maybe vendors and consultants should tie their prices to the outcomes achieved by their customers. Don’t remember which piece, but needless to say, it wasn’t a popular idea 🙂
Great article Mike!
Technology by itself is no good unless your people and processes are optimized to take advantage of it. CRM is no exception. Now that companies have seen the value in investing in CRM technology, the next challenge is “how” they integrate all that customer information into customer interactions so that they can indeed better engage and monetize these interactions.
We’ve seen success as measured by CSAT, NPS and CLTV when companies do 3 things – (1) unify multichannel customer interaction (i.e. across voice, chat, email, social media and SMS),(2) integrate CRM, (3) shared KPIs across Sales, Marketing and Support. One emerging trend that we are seeing is that Support is now the new Marketing and even Inside Sales.
The fun never ends in fine tuning the optimal mix between People, Process and Technology.
For years, CRM software has hijacked the very “CRM” name. It’s gone so far away from it’s original purpose, and become its own monster, that a refreshing perspective like this is exactly what the industry needs to wake them up.
“Therefore, an appropriate CRM offering must not consist solely of technology, but also services designed to assist in the integration between an organization
Hi Mike
A very thoughtful piece about CRM and the issues with getting value out of its implementation.
A few years ago I assisted the Microsoft Academy in launching Microsoft Dynamics into the CRM marketplace. My role was to talk to Systems Integrators in DACH countries about CRM, how to implement it and how their customers could get value out of using it. My words largely fell on deaf ears. Fast forward to last year and I worked with one of the largest CRM vendors to create a capability model to support their ‘Implement CRM in 90 days’ business. The model looked at the key capabilities required to select the right CRM solution, to get it implemented, to build the complementary business capabilities required to get the most out of the enablement provided by the CRM solution, and to manage the transformational change to the new business operating model. My words largely fell on deaf ears there too.
In both cases it was clear that vendors are only interested in one thing. CRM licences. Period. They are not interested in supporting SIs in implementing their CRM solutions. That’s the SI’s job. They are not interested in enabling their customers to be successful in using their CRM solutions. That’s the customer’s job. They are only interested in CRM licences. And SIs are no better. They are only interested in implementing the CRM solution. They are not interested in enabling their customers to be successful in using the implemented CRM solutions. That’s the customer’s job.
Saas vs on-premise is no different. It’s still all about licences, (extensions and upgrades) too.
My own research over the past 25 years implementing software solutions in large companies suggests there are five key drivers of success:
Until we start to pull all the levers associated with successful CRM implementation, not just the technology lever, we are going to see companies struggle to achieve even half of the benefits available to them. That’s the time to start thinking about outcome-based contracting. Alas, with the current business models of most vendors, we are still light years away from it making sense to start using an outcome-based contracting model.
Graham Hill
@grahamhill
Graham,
I really appreciate you taking time to respond. As you know, you (and others) have had a huge impact on my thinking here; even though I may not articulate things the way you would.
Left to their own devices, vendors will never change. It’s ironic that companies selling “CRM solutions” are some of the most inside-out, product-centric companies in the world. Trying to change those models and cultures is very unlikely. However, it only takes one strong leader to decide to spin-off a disruptive idea – one that may disrupt what you are describing; along with an adjacent industry (like management consulting). While it certainly wouldn’t work within the current models (and with the adapter-types executing them), that doesn’t mean a vendor can’t own a new idea executed separately by an innovator-type.
The more this is discussed and debated, the more customers will begin to ask the tough questions, and seek different results. It’s also possible that a key person can be influenced to explore a new set of ideas. There is no need to trash an existing business while pursuing this, just a recognition that while it appears to be growing, current CRM models are in decline with regard to the value they offer. Waiting until all the levers are pulled is too late in the adoption curve for me. The experiments need to begin now.
Graham, your points are right on. But as Mike says, it’s not the fault of the CRM software industry.
Software vendors, and their more modern SaaS providers, provide a product or solution. Just like going to store to buy vegetables and meat. It’s up to the user/customer to have a healthy diet. Would we have the grocery store be responsible for our health and well being?
The good news is that SaaS vendors are at least better aligned with customers in the adoption of the solution. Less shelfware is a good thing.
Of course, SaaS vendors are doing this mainly out of necessity, not customer enlightenment. No usage = terminated licenses = bad financial results. The importance of reducing churn, ironically enough, has help SaaS-based CRM vendors actually practice better CRM! The days of “sell it and run” software marketing is mostly over.
But that’s still a long way from solving the customers real problems. For lots of reasons (business model purity being one) I don’t think vendors can or should attempt to be accountable for the end goals of the customers. But it does leave the door wide open for service firms to do so. Perhaps IBM Global Services, or major firms that have the resources and clout to make this happen.
Until then, the customer needs to accept ownership and not blame vendors for not doing what vendors shouldn’t be doing anyway.
Hi Bob
I recognise that you are a former vendor salesman.
I think you are letting vendors off much too lightly. Vendors primary goals today would appear to be selling licences, selling maintenance contracts and selling ugrades. They largely abrogate responsibility for implementing their software to captive systems integrators. And both largely abrogate any responsibility for actually creating value from using the software to the customers themselves. As practically all the research in B2B relationship management shows this is NOT what customers want, nor what they expect.
In some cases it is much worse than that. Having brought (now IBM’s) Unica into Toyota Germany a few years ago to provide marketing campaign management services, their naked greed, rigid inflexibility and almost complete lack of relational skills resulted in Unica being unceremoniously thrown out by Toyota only a year later. After this debacle and their total lack of a customer-orientation I will NEVER hire Unica again.
Nobody is asking vendors or systems integrators to be accountable for the end results achieved by customers using their software. That is ultimately the customer’s responsibility. But it should not be too much to expect that vendors provide software that is easy to use, for their systems integrators to help the customer pull all the levers required to get the most out of the software, and for both of them to be willing to support the customer over a lifetime of their software-in-use.
If Rolls Royce aviation, BAe Systems, Volvo and countless other much larger suppliers of B2B product-service systems can do it – and they have systems integrators further down the supply chain too – why can’t software vendors?
Graham Hill
@grahamhill
Graham, I’m sorry you had a bad experience with IBM/Unica.
From my past employment at IBM, and people I knew at the former Unica (including the founder) before the IBM acquisition, I’m surprised to hear you describe them as having a “total lack of customer orientation.” That’s a real shame, because it’s not the culture I remember.
In any case, you seem to be shifting the goals posts in your argument, or missing my points.
You say I’m letting vendors off too easy. Not sure where where I said any of what you describe is “ok.” Quite the opposite. I think the SaaS trend has helped improve overall customer sat, but clearly there’s room for improvement.
You said, “Nobody is asking vendors or systems integrators to be accountable for the end results achieved by customers using their software.”
Well, that’s partly the point of Mike’s post, which is what I was commenting about. But we seem to be in agreement that it’s not a workable idea.
Customers should rightly hold vendors accountable for the products they build, promises the make and the experiences they deliver to their clients.
In software and virtually every other industry, products are still imperfect, and reps (and the companies they represent) over promise, under deliver, and make mistakes. Even Toyota, one of the best-run companies in the world, has let ambition override good sense. It’s not an indictment of Toyota or the entire auto industry when that happens, is it?