For years, advocates have focused on getting CRM used in large organizations by making it useful in customer data capture. That effort will continue for years. However, in 2006, other trends will emerge from current technological, marketing and management shadows to put the spotlight on CRM as a strategic imperative. These trends include:
Always on and on demand.
“Always on” refers to a world where it’s possible to interconnect anywhere, any time. Cities as diverse as Taipei, Taiwan, and Philadelphia, the United States, are turning into large metropolitan hot spots. Additionally, many companies are tightly integrating small mobile data devices within CRM infrastructures. Such widespread connectivity will enable outbound sales forces, branches, suppliers and customers to easily communicate without the integration and cost issues that have long hobbled data exchange within supply chains. At the same time, the growing movement toward hosted CRM symbolizes the “on-demand” trend that will enable companies to use computing resources like a utility. This means they can access all the storage, processing power and bandwidth they need but only pay for resources used. Both trends will go a long way to enabling the ultimate goal of a real-time enterprise, where companies can respond almost instantly to changes in customer demand and the competitive environment.
Mid-market movers start shaking.
Yes, mid-market growth has been the obligatory item on every CRM trend list for almost a decade, and, yes, multiple CRM vendors are continuing major market penetration initiatives. But the mid-market will not be conquered by hosted CRM solutions unless they can be easily integrated with back-office operations for mid-size companies. Look for an especially strong effort to integrate EDI, the backbone of almost all supply chains, with hosted CRM.
Shift in focus from acquisition to retention.
Everybody knows that existing customers are more profitable than new ones. Yet many CRM systems are weighted toward turning suspects and prospects into customers instead of retaining existing customers. But companies are realizing that without profitable customers, there is no brand or corporate profitability. In addition to efforts to reduce churn, CRM systems will develop greater capabilities to analyze customer profitability and segment service levels.
Companies have outsourced help desks and other customer-facing activities offshore for years. However, Dell and other companies have been stung by a backlash of customer complaints. Additionally, companies are realizing that it’s not smart to place an intermediary between them and their customers, especially when customer feedback is so valuable in new product development and brand success. At the same time, however, companies are still strongly motivated to control contact center costs. As a result, look for a more sophisticated approach to outsourcing, involving a mix of low-cost off-shoring, mid-cost telecommuting agents and high-touch, high-involvement in-house call centers. Already, companies like JetBlue and Procter & Gamble are increasing their use of home-based agents.
Email marketing is, unfortunately, dying the same slow death as X-10 pop-unders, killed off by challenge-and-response systems, filters and other tools to defeat the deluge of mortgage and other come-ons. Although email will advance in personalization, moving from simple name and title personalization to offers dovetailed to recipient interests and behavior, the most radical development will come from enhancing subscriber communications with podcasts. This frontier is uncharted, yet ripe with potential. Expect podcasts that deliver the same storied detail using audio that iconoclastic, long-copy catalogs like J. Peterman’s once delivered. They will provide detailed instructions for just-ordered products. Or video capabilities of the newest iPods can bring the infomercial to the handheld world, with excited testimonials interspersed amid product pictures. Imagine the Home Shopping Network, mobile edition.
CDI—lots of smoke, little fire.
Look for a multitude of magazine covers, seminars and expensive reports on customer data integration, all accompanied by vendor promises about “future-proofing.” (As a rule, keep one hand on your wallet when you see the word, “future-proof.”) Granted, it is an addictive vision. Create an enterprise-wide, panoramic customer view that can manage all customer interactions at any touch-point while, at the same time, providing end-to-end, seamless business processes for call centers, sales forces and other business units. But the technological and organizational difficulties are so overwhelming that the vision risks becoming a hallucination. Companies today can’t even send out catalogs with customer names spelled correctly, much less integrate databases. Technical difficulties are immense, involving software oriented architectures, extensive data cleansing and consolidation and middleware to duct-tape disparate systems together. Human factors also represent an obstacle. How many companies have succeeded in even getting their sales forces to enter in all required data?
Managers have traditionally sought to justify CRM investments based on transactional metrics: leads, purchases, calls, complaints and the like. While such efficiency metrics are easily captured, they do not supply any insights into effectiveness, depth of relationships or relative customer profitability. Expect expanded adoption of metrics that reflect the quality of a customer and/or prospect, including profitability, share-of-wallet, account penetration and product penetration. Smart companies will also be using their CRM systems for sales and customer planning or allocating scarce sales and marketing resources to customers and prospects that represent the greatest potential for sales and/or profitability.
Processes, not prospects.
Many CRM systems do an excellent job of tracking who buys what, when and, often, where. That is fine for basic purchases. But for more complex offerings, it is also critical to know the “how.” That’s because corporate purchasing today is often a series of processes, with the active and passive involvement of multiple decision-makers. Rather than using “products” or even “customers/prospects” as transactional cornerstones, expect some systems—especially those targeted at aerospace, automotive or other industries where there are relatively few players—to offer expanded capabilities to manage the purchasing process within companies. Such process-tracking capabilities will be vital in getting the long-predicted advent of stakeholder relationship management (SRM) off the ground.