I’ve been reading a simple, yet really really cool book this week. It’s called Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers
I used to read business plans for a living in my banking days, but they were really such crap. They were nothing more than marketing tools to attract capital or financing. None of the people I was dealing with (on either side) were really that savvy. If the extent of the thought process was to fill in the blanks in Business Plan Pro, then we’ve really dumbed down the entire process of weighing risk against reward. I’m sorry to report that our economic woes show me things haven’t changed much, or if so, they’ve even gotten dumber.
But I’m Here To Talk About a CRM Business Model
So, I was reading through this book and a lot of things were going through my head. First thing was, “Let’s design a business!” The next thing was “What can I apply to existing businesses to make them better!” Both are pretty exciting and with a simple, easy to follow framework, the task is not as daunting, and it actually looks like fun.
I only mention this book because it had a few examples of long tail business models. In some cases, this is a supplement to a more traditional business model. In other cases it’s a business in itself, catering to a multi-sided set of niche players. The idea is to build a platform that allows a broad set of niche products to be created and purchased. While no single product would be superstar, if you can deliver 1000’s of niche products, things start looking pretty good. In fact, this business may outperform the traditional model in some cases.
What I’m about to suggest is not something I believe could be delivered on premise (not sure). The packaging has to be something that is user configurable and on demand. That puts this model squarely in the cloud – albeit on a platform that may not have been designed yet (I hope I’m mostly wrong here).
The a la carte Crowd
Many of you may consider CRM vendors who offer a number of base systems, or a mix and match set of core components to be a long tail business model. That’s probably fair – to a degree. App stores filled with widgetized or plugged-in solutions are certainly a large set of niche extensions to a core solution. Selecting a variety of apps to extend your CRM platform does give you the power to create your own custom solution from pre-built parts – a solution you have decided solves your specific set of business challenges. It’s like installing apps on your iPhone. You have to go tell your friends go install this app, and this app and that app and, oh, don’t forget this cool app!
Think WordPress Themes
Any of you who have a WordPress blog, or website, understand that the platform is powered by plugins. Anyone can create a plugin that contains one or more widgets or invisible functionality. The plugins are typically created to empower the site with a specific feature. For instance, there’s a widget to list all of the authors for a site, and it can be plugged into the sidebar, or possibly other places. Then there is a plugin that will expose the ability to display your widgets in specific contexts – such as on a post vs a page, or maybe it lets you only display a google adsense ad after the post is more than 2 weeks old. So, these are very powerful, but aligned with a specific task or function.
WordPress is also built upon themes. Most of you have selected a theme that you find pleasing to the eye – or possibly more often than not, a theme was selected because it was free. These are great because you don’t have to sit down with an HTML editor and graphic tool and start from scratch. Let’s face it, most of us don’t have the skills to create something that provides a great visitor experience. But, one thing that may not surface when you think of themes is there ability to provide functionality…
The Really Long Tail of WordPress
I purchased a theme called Semiologic Pro (I highly recommend it – free or paid) a while back after doing a ton of research. It fit my particular set of needs for a variety of projects I was contemplating. I’m also using it on my CRM blog. It is a single theme that actually has dozens of themes and dozens more layouts. This gives me the flexibility to change my look and feel on the fly. It’s also written in an SEO friendly way. More importantly, however are the nearly 100 plugins that came with it –many of which are not available elsewhere!
Some of these plugins, once activated, just work. They were designed as part of the overall vision of the theme author. Others need to be configured. All of them are optional, but the point of the theme is that I was buying a package based on WordPress that saved me the time and expense of tracking all of these down, as well as designing a customer look and feel for my blog.
Many people want WordPress – not nearly as many people have my specific set of wants and needs with regard to what they’ll do with WordPress
My implementation of WordPress is through a template incorporating the look, feel and functionality that I specifically wanted for my website and blog. And the cool part is that I didn’t have to build it – or piece it together – myself. WordPress provides the platform (and a central showcase) for all of the available themes and plugins. It costs them little, yet provides a great benefit to me. If WordPress were only a closed framework, and had only a limited set of proprietary themes and plugins, it would not be the wildly popular platform that it is today. The long tail business model has worked well for them from a popularity standpoint.
The Long Tail Future of CRM
We all know the basic components of a CRM solution. We’re all starting to understand how social media can integrate into the jobs we are doing to maintain or strengthen customer relationships. But in the end, we have to get all of this implemented to support the strategies and process we design for our businesses. And guess what? We’re all different – maybe there’s a magic formula, but you’ll never get everyone to agree on it
Over the years, I have spent so much time building the wild dreams of my clients. I’ve always started with a CRM application (obviously they are not solutions). Then I’ve built out fields and screens, business rules, process automation, etc. etc. I will say this unequivocally – most of these highly engineered, front-loaded customizations were 80% unutilized a year later – and that after spending an un-godly amount of money on – not a platform – but what was sold as a solution to begin with. I’m not kidding. Especially in the world of Sales, the turnover of the head Sales dude or dudette is extremely high. And with that comes a completely new vision. So, extend that problem across an entire front office and you’ve got what I consider to be a failed CRM initiative. Don’t forget to add that to the fail equation because more often than not, it was successful from an IT perspective.
Imagine a CRM platform. Not an application. Certainly not a solution. A CRM framework built from the ground up to allow customers and consultants to add to the core elements via plugins. The plugins would be written through an extensive, and open, API to achieve specific functional needs. They could reside within the presentation of the solution, or outside (see The Widgetization of CRM).
Now, imagine the ability to easily create themes so your CRM implementation not only looks the way you want, but outside of the core elements (in WordPress that’s posts and pages), it’s also structured the way you want (layout, etc). Then slap in all of the plugins and widgets that help you perform the tasks you need to do (proprietary or freely available). The CRM theme is born. Yes, it runs on the CRMpress engine (just kidding) but can look and function almost anyway you see fit. And then you publish that theme in the CRMpress store so it can be downloaded (or purchased) by like-minded companies. Could this possibly become viral? Not only could individuals construct simple relationship solutions for themselves, enterprises could inexpensively choose themes that get them further down the road on day one.
And if it isn’t working for you, just swap out your theme!
I’m not proposing an open source CRM platform. What I’m suggesting is that CRM vendors need to begin thinking this way. We are all becoming accustomed to the ability to take more control over how we interact with vendors. We either want a seat at the design table, or we want access to other people’s designs. Maybe the theme I create is only downloaded by a few hundred people. But what if there were thousands of these themes available to run on the platform? What about tens of thousands? And all of this content is being co-created. All you need to do is provide the platform.
Vendors can still publish their own theme with all the goodness they bring to the table – and they can still charge for it. But extending the viability of the core platform through a long tail architecture could actually be far more profitable for them in the long run. Start grasping open innovation.
Can CRM become more like WordPress? I think it’s a model that is just waiting to be exploited. What do you think?
I see where you’re coming from, Mike; it’s very much in keeping with the sCRM philosophy of pro-collaboration and client customization. Thinking through your proposal led me to evaluate a number of potential consequences, which are not only related to this scenario, but to the wider issues raised by business 2.0.
I was imagining the practical implications of a customer’s co-authorship of their CRM solution. I support, in essence, the idea of a mix and match solution, hosted on a CRM platform: after all, the needs of individual companies and users are disparate and a one-size-fits-all approach won’t cater for every one of them. However, I’m wondering where you see the role of traditional CRM vendors (I’ve a vested interest here!) fitting around this model. Would they be redundant? My concern is governed by my curiosity as much as it is by my own self-interest.
While there are clear benefits to high customization, piecemeal solutions could be a recipe for disaster. With the current setup, when you purchase CRM software, you also purchase the expertise (in terms of strategy) of the CRM vendors/consultants. They can help to provide a holistic vision of how it can/should be used and help to reduce the chances of failure. I don’t wish to patronize of underestimate the customer here, but we know from experience how easily CRM can fail when not implemented correctly. And that doesn’t just affect the individual company; we also need to consider to what extent may relinquishing control of the sCRM product (well, the software) effect the reputation of the industry.
The danger of handing over authorship of the tools of sCRM is that you lose the ownership of the definition of sCRM with them. While that’s exciting (and is very much in keeping with the spirit of business 2.0), it could have an extremely negative impact on the already battered reputation of CRM.
In my opinion, for this to work it would still require the presence of a guiding hand, to ensure that the strategic element of CRM (and sCRM) is given due attention. Would you see traditional CRM vendors moving away from products and re-positioning themselves as consultants?
Hi Matt,
The problem we’ve had in the CRM software space is that vendors provide an application. They also like to call it a solution because they feel they’ve built best practices into it – which in the front office service and process world is ridiculous.
What I’m think is that we need a platform, not an application/program/solution. The vendor can build out whatever they like on the platform, but consultants, partners and customers can throw it away and start from scratch, pickup where the left off, or purchase the work someone else has already done.
The key, to me, is that the platform provide basic things like a powerful API, which everything is built with, and the difficult things like unified communications across channels, traditional and social. Those are the things that can’t be afterthoughts.
I’ve found over the years I’ve been asked to make out of the box more complicated – in an effort to align to a business. This resulted in a mess. Other times, I’ve been asked to shut everything off and start from scratch. The bottom line is that with a well designed platform, we can build almost anything, simply. Who really knows what it must look like?
Mike Boysen
Effective CRM
Fair point, Mike.
I know that there are a number of CRM solution vendors who only sell the software and call it a holistic solution – and I know that’s exactly what your own consultancy is battling against. But the flipside of that coin is that there are people who, despite coming from a software background, are decent CRM consultants in the true sense of the word. Not every CRM solution provider aims to blind the customer with science, burden them with unnecessary software and extract as large a bill as possible. There are those who recognize that strategy is key in the successful adoption and development of (s)CRM. To overlook it is to doom sCRM before you’ve started.
Crucially, at Intelestream we keep in mind our responsibility for the success of the integration, not just for our customers’ sakes, but because a failed CRM (or more recently sCRM) initiative reflects badly upon us and the industry as a whole. We have a vested interest to maintain or improve it’s reputation – even if some vendors are too short-sighted to acknowledge their own.
In the vision you’ve presented there’s no such gatekeeper of the software – companies can purchase bits of software directly. There’s nobody through which the buyer passes with an interest in upholding key principles of ‘good CRM’. It’s just arbitrary software. For this reason, there’s a greater risk in companies bypassing strategy and offline procedure and taking a piecemeal, rather than holistic, approach to the solution. There needs to be some kind of guiding hand present at some point within the sales process; someone with the insight and experience to connect the capability of the software with the offline procedural architecture of sCRM.
I’m aware that I’m pretty much selling your own company to you! It’s telling that if all CRM vendors were already doing what I say they should, there would be no reason for you to provide such a service. But, of course, they aren’t. Where would you see your own consultancy sitting in the purchasing process? Would you foresee yourself as a go-to after the damage has been done? Because I’m not sure that there’s the incentive within the software-purchasing process beforehand.