How can we prevent a Social CRM bubble? Lessons from the boom and bust of CRM


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OK – let me say from the outset that rumours of the death of CRM have been much exaggerated! CRM undoubtedly went through an early wave of hype, crashed, but has now bounced slowly back to become a healthy buoyant market. Gartner describe this as a wave of hype. Talk of 60-70% project failure rates may have been true 10 years ago, but that figure is now more relevant when talking about success rates (and that’s conservative). The market has matured. CRM buyers, vendors and consultants are, generally speaking, savvy about how to deliver value from CRM projects. That doesn’t make the projects any easier, but in general they work and they deliver value both to companies and their customers.

The fact remains however, that there was a CRM bubble and it burst. For many years CRM was a dirty word. I worked with a number of customers 5-8 years ago who refused to use the term “CRM” and instead referred to it as “Loyalty”, “Customer Management” etc. It has only been in the last couple of years that the term seems to have bounced back and removed it’s negative connotations. CRM is now seen as a positive initiative, crucial to supporting customer retention and growth strategies and Social CRM is a natural extension to the topic, embracing the customer’s new control of the conversation.
Reading a blog post the other day about Snakeoil Social CRM sales people got me thinking about whether we are in danger of repeating some of the errors of the CRM boom with Social CRM. Vendors, consultants and analysts are all starting to jump on the SCRM bandwagon. Every major CRM vendor seems to have recently announced integration with a Social Network provider in the hope that they will appear to have a “Social” product strategy, and some consultancies have already opened up Social CRM practices. So what can we learn from the early failures of CRM? And how can those learning be applied to Social CRM?
CRM went through boom and bust because:
1.    As an industry we applied a technology-centric solution to a business problem. Both vendors and consultants positioned technology as a silver bullet.
2.    Powerful technology was used and abused with little thought given to the customer experience (see my post on the shift from inside-out to outside-in).
3.    Nothing like enough attention was given to the people / change aspects of customer-centric transformation. I have personally seen call centre agents with a shiny new CRM system, hang up on customer’s as they answer the call in order to try and get their AHT down! Incentives drive behaviour more than any technology.
4.    Front office technology was layered on top of fragile back-office foundations.CRM exposed toxic data and processes directly to customers.
5.    Projects bit off more than they could chew. CRM is an elephant. Eating an elephant requires bite-sized chunks.
Applying these lessons to Social CRM:
1.    Technology is not the answer to everything. I’ve seen lots of product demonstrations where vendors pitch an offering to listen to customer feedback, connect to the twitter fire hose etc. Few articulate the reality of how that insight can be used to improve products, processes and the customer experience as that involves far more than just technology.
2.    Social CRM technology is potentially even more powerful than CRM technology because of the network-effect of social customers. Both successes and failures can go viral in seconds. The viral effect may tempt marketers to view “Social” as simply another low-cost channel to bombard customers with Spam… if this sounds familiar then STOP and consider your usage of Social Media.
3.    Nothing will change the fact that people build relationships. Not technology. Technology can of course accelerate and provide a significant advantage to relationship building.
4.    Social CRM still relies on solid foundations. If you take orders but can’t deliver products on time then of course your customers are going to be complain, tweet, post, blog! In some ways, embracing Social technologies places an even greater emphasis on the basics of CRM e.g. real time integrated information (cross-channel, cross-department).
5.    Social CRM probably lends itself much better to an agile / iterative approach to delivery. Most products are SaaS solutions that can be consumed quickly. The danger of this is that buyers behave like kids in a candy store. Buy what you need first, rather then everything you want.

Social CRM offers the CRM industry a huge opportunity to put the customer back at its rightful centre but as George Santayana once said “Those who cannot learn from history are doomed to repeat it”.

Laurence Buchanan
Laurence is CEO of EY Seren and leads EY’s global Customer & Growth practice. He works with clients to help them re-imagine growth through human-centered design, innovation and the transformation of Marketing, Sales & Customer Service functions. He is a recognized authority on digital transformation, customer experience and CRM, he has worked across a wide range of sectors, including telco, media, life sciences, retail and sports. He received an MA in Modern History from the University of Oxford.


  1. Excellent post Laurence – I’ve long been frustrated how the CRM industry continues to harm itself – not to mention customers – by driving these hype-crash waves.

    There’s certainly real value to be uncovered at the place where CRM and ‘social’ come together but we’re most definitely not ‘there’ yet, and it’s going to take a lot more than simply bolting the two technology sets together.

    Nice to see such a reasoned and thoughtful approach to uncovering where the real value lies. Good work.

  2. *+-Chris – Many thanks for your comments. It’s easy to get caught up with the hype of any new technology. Most technology buyers end up buying far more functionality than they really need to solve the business problem that prompted them to begin evaluating technology in the first place.

    Whilst I am very bullish and excited about the potential of Social CRM and constantly enthused by good examples of Social CRM in action, I think there’s always value in learning from the mistakes of the past. One thing that we should learn from the CRM boom and bust is that technology alone cannot build relationships.

    Thanks again


  3. Laurence,

    Very cogent observations I like how you’ve framed the boom/bust points, and at the heart of all the discussion is how firms will transform from uni-directional to bi-directional in terms of interacting with customers/prospects and the outside world as a whole. Then how these touches materially advance the trusted adviser relationship between the company and the rest of the world? I’m trying to rapidly digest all the disparate points-of-view about what Social CRM is/is not and how business will successfully implement/deploy/utilize these new applications or technologies.

    Jeff Lionz

  4. Jeff – many thanks for the comment. You’re not alone – I think he whole industry is trying to rapidly digest and understand what SCRM is all about and how we can make it work. The core challenge for me is not a technology one (although clearly technology has a role to play), it’s the wider shift from “inside-out” to “outside-in”. This post is a good follow up to read

    Thanks for your thoughts


  5. Laurence,

    An excellent post – could be the basis of a book. Your thinking reminds me of what Nicholas G Carr said in ‘IT Doesn’t Matter’.

    Along with your thoughts about ‘the shift from inside-out to outside-in’, CRM doesn’t do anything by itself, because like Web 2.0 tools, it’s entirely dependent on how people use technology and that, of course, depends on business culture.

    I would argue that there’s something really wrong out there in business land when it comes to ‘being social’. Social networks aren’t social at all – they are another way for people to hide away from human conversation.

    In the CRM world, the people who should be gaining most from technology are buyers and sellers – at the interface between (a) supplier and customer – and (b) customer-to-customer. In reality, sales people (especially in B2B environments) are making less calls – therefore reducing real social interaction with customers.

    Bolting-on S to CRM isn’t going to change the buyer-customer interaction – it has to be a culture change. Facebook and Twitter are consumer tools. They do not deliver any measurable value in high value B2B or B2C sales environments – yet. Chatter with Salesforce CRM could see some new value created, if innovators figure out how to drive culture change, by providing tools that deliver a better experience at the point of human buyer-seller conversations – online AND in-person.

    My obsession has been to try and create what I’ve called Interactive Decisioning Tools to create a better buyer-seller conversation and ‘guide’ the buyer and seller on a purposeful journey – for example, exploring and validating an explicit ROI in a B2B opportunity cycle.

    You can measure the deterioration of social interaction in B2B sales, simply by analysing the sellside phone bills and electronic calendars. You’ll see this significant reduction in human conversation taking place. We are becoming less – not more social in business.

    To get ISVs and IT solutions providers to execute on increasing the social interaction and conversation between buyer and seller, we need to place design at the centre of app design. The cloud is simply an infrastructure change. We need more right-sided brain applied to both app design – e.g. CRM – and more generally, in the CXO leadership positions that set the tone and culture in both sellside and buyside firms – large, medium and small.

  6. Ian – many thanks. Lots of excellent comments there. I’m particularly interested in your thoughts on applying design thinking to the social conversation and not allowing these new social tools to allow organisations to simply hide from real client interaction and engagement. Done correctly (and I’d suspect with lots of iteration) this could be extremely powerful.

    Your point on cloud as an infrastructure change also resonates with me. You could probably have re-written this post about Cloud Computing… I’m equally bullish about cloud computing and the benefits it can bring to an organisation, but like Social CRM tools, it’s not an end in itself. Simply consuming a service from the cloud rather than from on-premise doesn’t in itself change the surrounding success-enablers like culture, customer strategy, user or customer experience…

    Many thanks for sharing your thoughts


  7. I like the point of remembering the past to prevent the future, but am curious as to what you consider to be the failure of SCRM if it were to repeat as CRM did.

    Is SCRM doomed to fail in 60& of the cases if we don’t remember the past? 30%? how would you justify whatever number you come up with?

    This may seem like nitpicking, but risk management is based on looking at those percentages and making the decisions of whether it is worth it or not to proceed. if the risk is 20% for failure, for example, and we have always been below potential for failures then it make make sense to spend the money and hope we come up ahead. Or not.

    interesting post — sorry for taking so long, it was one of those weeks.

  8. Esteban – thanks for your comments.

    To be clear, my point is not that I believe 60% of SCRM projects will fail. My point is that there are useful learnings from previous CRM project failures that can be applied to SCRM in order to mitigate risk and avoid repeating the mistakes of the past.

    If, as an industry, we had truly learnt nothing from the early CRM failures, then the failure rate of SCRM would likely be the same or higher than the early CRM failure rate of 60%. In fact, I would argue that it would be higher as, by definition there would be fewer organisations with solid CRM foundations in place and I view CRM as a pre-requisite for SCRM success.

    Clearly, we have learnt from previous failures however and I would guess (although I have no statistical evidence to back this up) that CRM failure rates have probably dropped to 30% or so. I think that’s probably a conservative figure.

    To answer your question (what % of risk should an organisation anticipate?), I would say that the % of risk is within the organisation’s control. If we start with a potential to fail of 60% (taken as a benchmark from early CRM failures), the key question organisations should be asking is how do we reduce that figure to something acceptable? Ignoring for the moment all the basic project set-up and governance pre-requisites (clear articulation of the business problem or opportunity, exec sponsorship, cross-functional team empowered to make a difference etc) what are the factors specific to SCRM that will reduce risk?. Here are 5 ground rules that I think will see success rates soar:

    1. Start with a solid CRM foundation in place (to some extent I view this as the most important as SCRM and CRM and inextricably linked. Also, if an organisation has a solid CRM foundation then by definition that must have a lot of stored project learnings that can be applied to SCRM)
    2. Embrace the “inside-out” to “outside-in” change of mindset (this one is probably the toughest… see my post on Social CRM the shift from Inside-Out to Outside-In
    3. Start by listening
    4. Don’t apply technology to solve a business problem; lead with the business problem or opportunity and then enable with technology
    5. Start small and grow incrementally, constantly testing and improving (from a technology point of view this factor will be helped greatly by the fact that many SCRM solutions are SaaS based and lend themselves far better to an agile delivery approach, as opposed to a traditional centralised, command and control, highly customised CRM solution)

    If the above 5 are in place, complimenting the basic project set up and governance pre-requisites, then I see no reason why we shouldn’t be talking about success rates of 80%.

    The second part of your question is how can you justify these figures? In short, I can’t. The best I can do in this early stage of the SCRM market evolution is point to history – CRM failed early on but is now a healthy, booming industry. We have an opportunity to short-cut SCRM to the same point, however, I do believe that we should be constantly looking at the lessons of both SCRM successes and failures and applying those to our frameworks, program methodologies and risk mitigation approaches for SCRM in order to make this a reality.

    Thanks for your comments – a really interesting question that I’d love to talk to you about in more detail!


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