What CRM Products Will Need To Do Better

The only real disruptive change we’ve seen in CRM has occurred over the past 10 years and was thrust upon us by Salesforce.com. At first, it didn’t appear to be a threat. It required a certain comfort level with losing control of your data. It also failed to provide the extensive customization we urged our customers they needed to be competitive. Of course, what we didn’t see was the CRM dilemma and the fact that there were a lot more non-consumers of contact management, sales force automation, marketing automation, etc. than there were consumers. It really opened up the door to a broader market, defined differently based on a newly identified set of needs. It didn’t seem Earth shattering then, but look at Marc Benioff do his mad rush up market now. I think SFDC, as a platform, has a chance at disrupting the high end of the market like they did the middle market. But I think that chance has limits unless something dramatic changes in the way we define CRM as a product and a service. The product needs to incorporate new services to become a more accountable value proposition.

What CRM Basically Does Today

For the past 15 years, CRM really hasn’t changed all that much. There has been a consolidation of functional capabilities from many applications into a single application framework; such as SFA, Marketing, Service/Support, etc. Supposedly, that has provided a 360° view of a customer. Automation tools have become more robust; there are some interesting applications residing in the cloud providing integration to both cloud platforms/applications, and on-premise applications. That’s all cool stuff.

Some of the vendors, certainly not all, have listened to customers and have created UI experiences that bring traditional information to the surface with fewer clicks or forethought. However, this is still typically done within the confines of a comprehensive CRM application model which hasn’t really changed in 10 years. While the cloud vendors long ago moved to a quasi-value model of pricing, the total cost of ownership certainly hasn’t gone down. The business models that allowed them to compete along the dimension of low cost, low complexity and ease of access, has morphed into higher cost, more complexity and ease of access. One out of 3 may no longer be good enough.

Older vendors are now attempting to move their tired old ideas into the cloud, somehow, and adjust their pricing to match, or undercut the new (old) guys. This poses huge problems for their partner channels, who’s business models and investments have relied on up front expenditures and annual M&S cash flow; not to mention a hefty, and necessary, service dollar contribution. This is in stark contrast to less resource intensive business models that are designed to generate a broader, larger base of cash flow customers, and make sure they continue to make those rental payments; services are simply gravy.

The new entrants at the low end of the market today don’t appear to be offering anything new. They are just simpler and cheaper and far less capable. Nothing there is wowing me, but neither did SFDC 10 years ago. So, what we have is a set of options of varying complexities and prices, all looking pretty much like CRM has looked since it surfaced in the 90’s. Of course, I look at this from a mid-market perspective. It’s possible companies like SAP are doing much more. I’m not an analyst, so I don’t get briefings all day long from vendors.

Why It’s Not Enough

CRM needs new content. For instance, what does “view” mean to you in terms of 360° view? How does your average employee know what to do with this mountain of data? Has it been effectively culled into a functional dashboard, or set of next best activities, or “what should I say/do now?” interface for varying functional users within the customer facing portion of an Enterprise? Or, are we supposed to leave that up to the CRM consultants, who’s real expertise more typically revolves around technical implementation and not business drivers, capabilities, process, etc.

It’s time for the CRM vendors to step up to the plate, and learn how to create value themselves, or they will never be able to productize it for their customers. I think that’s fair to say. Until they can understand the jobs, outcomes and journey of their customers and partners, I don’t believe the content of their applications and platforms will see a breakthrough innovation any time soon. Here’s a brief example that demonstrates the sad state of affairs, and this just happened to me yesterday…

I called into a Vendor that has recently upgraded their customer support system. I was prompted for my new ID, but was told my old one would work (I’ve never received a new ID), which I gave and was routed to the appropriate support desk. The representative did not know my name even though I had entered my code (so there was no “Hi Mike, nice to hear from you”). In fact, it took what seemed like 10 minutes to get a new ticket created so I could be asked “So, how can I help you today?”. I can tell you first hand that this experience (and similar ones over time) have had a detrimental effect on both my functional and emotional ties to the vendor.

To be fair, I have the same experience with consumer service departments as well; who often use technology offered from the same vendors. We can’t even get the simple stuff right, how are we going to help customers get the hard work done that is necessary to be competitive? I’m not sure whether value is being destroyed, or if it’s merely shifting. Either way, I don’t see it being created in a breakthrough way.

The mid-market, in general, is not going to rush en masse to expensive consultants. They seem to rely on technology to solve their problems…and it often fails them in the most basic ways.

What Top Tier Companies Do To Sustain Growth

Let’s face it, we don’t know everything the top 5-10% of companies (based on sustained growth rates) do to continually innovate around products, services and experiences. But, we do know they must view the market differently than the competition, and work hard to take advantage of the insights that come from it. The other thing we can conclude is that they are more likely to hire really smart employees and consultants, and provide the environment that helps get them on this track. These are agile companies that consolidate around an understanding of what value is to their customers, and build dynamic and evolving capabilities to ensure that creating value is always a main driver. They help their customers be more capable as well. Things change. Static structures and ideas get disrupted when things change.

Growing companies have innovated at least once (whether they know how they did it, or can repeat it, aside). Sustained growth requires a culture of innovation, or more importantly a tried and tested framework for identifying highly probably targets of opportunity. If the job of an organization is to grow, continual innovation is a job requirement. The top Enterprises (in terms of growth) understand this. So, shouldn’t the tools (and services) that are hired to help organizations accomplish this align with this requirement? I struggle to see where CRM fits into this picture today. I’m not sure it is a true enabler (out of the box or reasonably customized) of sustained growth of a business. It’s become somewhat of a commodity and CRM consumers are seeing less and less value in it. The top CRM practitioners and consultants are likely stitching together an array of technology designed to enable a company’s strategy and capabilities. It’s not coming out of the box; that’s for sure.

The CRM market (as naively defined as seats by industry analysts) may be growing as CRM becomes more accessible to the masses, but is it really helping each company gain a competitive advantage? If every baseball player has the same bat, do they all hit home runs?

What CRM Might Do To Help

This is where it gets interesting and squishy, because innovative ideas don’t always have that immediate appeal. They can seem bizarre or require too much hard work to embrace. By the time the threat is realized, it’s almost always too late to respond. The ideas below are not necessarily practical with the technology and consulting resources currently available in the CRM vendor space. Many of the high-end consultants and practitioners could very well poo poo them, because they don’t see how their capabilities could possibly be productized. Certainly, the results wouldn’t be nearly as good. But, would they be good enough? It’s time to dream a bit…

1. Help companies focus on customer value and how it changes over time. Help them understand customer portfolio value, and how actions you take relative to a single customer impacts the value of the overall portfolio. Can a CRM platform provide the minimum framework for determining value based on emerging definitions; such as this one by Wim Rampen (see slide 25).
   Lifetime Value + Referral Value + Network Value + Knowledge Gained Value = Total Customer Engagement Value

   What capabilities would a CRM platform need in order to access, collect, store and process such information? Answer: way more than they have today.

2. A mature and useful Voice of the Customer interface would be a dramatic step in helping companies achieve a competitive advantage. A CRM platform doesn’t need to provide a company with a set of best practices. It needs to facilitate the capturing of needs in such a way that they become metrics used for greater competitive purposes. What jobs are they trying to get done? What outcomes do they use to measure the successful completion of these jobs? At what touch points are these outcomes used? What resources does each party bring to the touch points to create value?What do all of the customers need, not just the ones swimming in social big data? How can users see deeper and with a more targeted focus on where the value is hidden? How can companies achieve less variability in their outcomes?
3. How can CRM products be designed to help companies identify new markets, or penetrate mature markets more deeply.How can CRM help companies get beyond the simplistic view of customer segments based on attributes convenient to the company (such as demographics) and realign the focus to attributes that are valued by customers?
4. How can CRM products be designed to help companies identify the junctions in these markets where influence occurs and decisions are made? I don’t see that jumping out at me today, although it has certainly been written about in marketing lore.
5. How can CRM products be designed to build and execute campaigns using the knowledge captured above?
   
6. How can CRM products be designed to identify where value is createdat each touch point in a customer journey, and not simply where the purchase transaction occurred? How can we tie these touch points back to the outcomes customer use to measure success? How can they then help companies incorporate that understanding into value-creating actions and activities?
7. How can CRM products be designed to facilitate the ongoing learning from customersand not just take the easy path to social networks where the minority of touch points occur (there is an entire consumption chain being ignored)? How can it then help teach organizations where future opportunities to create value exist?
8. How can CRM products be designed to work in ways that best facilitate the jobs we are trying to get done? Does CRM, the tool, need to embed itself more deeply in the devicewe choose to enable us? Or does the one-size fits all, integrated CRM application do the best job?
9. How can CRM vendors price their products around value created, versus incremental usage? For instance, to set themselves apart, maybe they could price their product by new customers acquired, retention rate improvements or incremental additional sales to existing customers. If CRM products began incorporating actual framework enablers for actually growing a business, they should share in the gains, and losses, of their customers’ efforts. Perhaps complimentary services would need to be bundled, but you get my drift. If Rolls Royce can charge by the hour for their jet engines and Johnson Control’s York Source can charge by units of chilled air, I think productivity is certainly a revenue model that can be made to work in CRM. Whoever figures this one out could change the industry for the better, in a very disruptive way.

Does CRM, as it exists today, help their customers do important jobs better? Does it help us do more important jobs than we could do before? Does CRM help companies make more money, or become more profitable? If so, and I’ve heard a lot of claims that it does over the years, then it may be time for the CRM vendors and consultants to share in the accountability of these outcomes. Will they do that? How will they do that? These are questions that may never be answered, and maybe this is the wrong direction to look. But I think it’s safe to suggest that something beyond the next best feature (see Social Media) needs to happen in this market, and the sooner the better.