The Top Eight Customer Management Trends For 2010

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As 2009 draws to a close, what are the key trends that customer management professionals need to pay attention to as they finalize their plans for next year?

Trend 1: Companies Return To Investing In Their Most Important Asset—Customers

Even in a recession, the fundamental business needs that drive the need for effective and efficient customer-facing business processes have not changed. Beginning in mid-2009, I have seen a strong up-tick in investment dollars being released by organizations intent on improving their customer management capabilities to capitalize on the economic up-turn.

What are their key priorities? My most recent research shows that both BtoB and BtoC enterprises spotlight improved customer loyalty as their top goal. But, BtoB companies are also intent on capturing new customers, while BtoC companies obsess about improving the customer experience.

Trend 2: Social CRM Hype Reaches A Crescendo

Social technology adoption has increased tremendously during the past 12 months. Three in four US online adults now use social tools to connect with each other compared with just 56 percent in 2007. As a consequence, technology vendors and self-styled experts have jumped on to this bandwagon promising an easy path to the promised-land of more deeply engaged customers using Social Computing solutions. Expect another 12 months overheated rhetoric.

Yes, business process professionals should be advocating and launching experiments to prove-out Social CRM strategies and learn about best practices. But, if you don’t have sound customer management process fundamentals in place—don’t expect social media to compensate for this deficiency.

Trend 3: CRM Evolves To Become The Customer Management Ecosystem

Mature organizations understand that optimizing end-to-end customer-facing business processes means integrating solutions that extend beyond “traditional CRM.” In addition to marketing, sales, and service functionalities you need to incorporate closely-related capabilities like billing, order management, or contract management.

I call this the Customer Management Extended Application Ecosystem. This solution ecosystem spans the key technologies that support the business processes for: targeting, acquiring, retaining, understanding, and collaborating with customers. My TechRadar report for CRM solutions profiles 19 customer management technology domains around which business process professionals should design their future plans.

Trend 4: Price/Value Trumps Functionality In Purchase Decisions

Battered by two years of recession, buyers of customer management solutions have become extremely value conscious. CRM software-as-a-service solutions (SaaS) software solutions continue to gain market share as even large enterprises balk at investing more in the traditional complex and costly on-premises solutions. Sales of new licenses were down for the major CRM vendors during 2009.

In 2010, first-time buyers will be in strong position to push vendors to demonstrate value through pilot demonstrations and more flexible contract arrangements than in the past. And, price wars are breaking out in the SaaS CRM segment. All major CRM vendors now offer this deployment option and are targeting to penetrate the buyer segment pioneered by salesforce.com.

Trend 5: Customer Service Moves Back Into The Spotlight

We see a rising number of inquiries from clients about how to improve their customer service capabilities. How does customer service affects the bottom line? Forrester asked customers to rate their interaction experiences (the Customer Experience Index) based on whether they were: 1) useful — could they get what they needed to do done; 2) easy — or did they run into all kinds of hassles in the interaction process; or 3) enjoyable — or did they feel frustrated and disappointed in the interaction.

The results show that the higher the customer experience index, regardless of the industry, the more customers buy and the more loyal they are. Contact center customer support needs to evolve to better serve customers who no longer rely on one venue for receiving information but instead engage multiple sources. In addition to checking a company’s Web site and its brochures, many customers research information on products and services from social networking sources, such as blogs, and online user ratings. With customers now requiring more real-time support, it’s essential to keep pace with their expectations and to respond to them in new ways.

Trend 6: The Struggle To Integrate Customer Data Continues

The volume of inquires that Forrester receives about customer data integration (CDI) continues to increase. Customer management professionals tell us that poor data management is one of the biggest barriers to getting value from their CRM systems.

But, the right approach to customer data management is elusive. Building data warehouses often fails to deliver the “real-time” access, and end users compensate by deploying myriad purpose-built data marts. Customer relationship management (CRM) applications themselves, due to multiple instances, disparate enterprise resource planning (ERP) systems, and poor data integration can leave enterprises with a fragmented view of the customer.

Business intelligence (BI) applications offer the promise to be the focal point to customer intelligence across multiple data sources. But, BI efforts often highlight how poor customer data quality really is — leaving users scrambling to fight a losing battle to keep customer data clean and updated.

Trend 7: Scrutiny Of Business Cases Remains Intense

The need to build a sound business case to prove value before investing in CRM process and technology changes—what Forrester calls Total Economic Impact (TEI)—is a perennial topic of inquires from our clients. They tell us that during tough economic times they need bullet-proof financial arguments to get funding for their projects. They want to know how to pinpoint the best opportunities for creating business value, and how to put in place the right metrics to track their success.

In 2010, every business case must answer four critical questions: What are the business benefits? What is the impact on IT or project costs? Is future flexibility increased or decreased? How will risks be mitigated? CRM vendors will be challenged to provide clear and specific data about the business value their solutions can deliver.

Trend 8: Following Best Practices Separates Winners From Losers

Business process professionals cannot afford failed customer management projects, particularly in tough economic times when business survival may be at stake. You need to pin-point the opportunities for quick wins and execute flawlessly. Improving your customer-facing business capabilities requires a sophisticated orchestration of four elements: customer management strategy, process re-design, technology adoption, and supporting employees in changing their work activities.

There are plenty of risks to worry about. In my survey of technology business and IT leaders at 133 organizations, they reported over 200 individual problems with their customer management projects. Thirty-three percent of the problems related to technology, 27 percent to business processes, 22 percent to people, and 18 percent to CRM strategy.

In total, I identified twenty-seven risk areas to be mindful of. Successful companies focus on five CRM fundamentals: promoting user adoption, focusing on business processes, establishing executive sponsorship, practicing sound customer data management, and defining the right metrics. Attention to discipline in execution is what sets winners apart from the well-publicized failures.

10 COMMENTS

  1. Hi Bill, this is a really great read. I like how you’re seeing and sensing that the tides are turning. Social Media really has been a key driver in creating this shift, and I hope that continues. My only concern remains, that the net remains as it began, with equal access. Recent developments in Canada have suddenly permitted an opportunity that leads to throttling by ISP’s which doesn’t bode well for many.

    I have observed the same issue about the cost of old-school development solutions, versus the use of CMS systems, and am so grateful to have been involved in such a project that not only does the CMS, but the CRM functions you mention as well – not to mention a plethora of other features built-in and behind the scenes to market the online pages and information, as well as create socially engaging sites.

    I love the “customerthink” domain. Great article!

    Cheers, Lee

  2. I really like the article I think you are spot on with your insights. I’m not sure I 100% agree with the saas is cheap/easy, and on premise is expensive/complex line, in my experience it’s a lot more nuanced than that, and for some companies at least on premise is more cost effective, but it depends what you are comparing. Anyway that’s a minor quibble, and I think your final point is absolutely key – following best practice seperates winners from losers – there’s still too much focus on technology, and strategy, people, and process often gets overlooked.

    Richard Boardman
    http://www.mareeba.co.uk

  3. Hi Bill:

    As the focus has shifted towards CRM and CEM, companies sometimes forgot that sound transactional customer service excellence based on the good old ServQual needs to be achieved at all times. This is the foundation on which everything else rests. If this foundation is weak many well designed experiences go to waste because the customer is irritated that normal expectations are not being met.

    Indeed, going back to, or sticking to basics never hurts.

    Eric Fraterman
    http://www.customerfocusconsult.com

  4. I agree. Customer analytics/customer intelligence is a critical competency that organizations struggle to acquire. And, the flood of customer data (particularly new social data)is making this even harder.

  5. Enjoyed the read of this article. So glad to see that Customer Service is moving back to the forefront, where it belongs. It has been truly apparent that businesses locked on fear and the doom and gloom reports of the economy, forgot to focus on their most treasured commodity the past 18 months. I have seen the heightened awareness for re-educating customers as to ‘why buy’ moved to a top priority, especially for old fashioned, brick and mortar type businesses.

    Looking forward to sharing this article as a resource for clients.

    Make it a great day!

  6. I missed this first time round, but thanks, and I think you are being proven correct. I am particularly noticing how important Customer Service is becoming again, something that makes me very happy indeed.

    Robin Dally
    eLink UK

  7. Dear William

    Good insigts and well articulated.

    Customers are using predominantly social media like Facebook/Twitter to express their experience and this creates an information/ foresee the experience to the potential buyers.

    Organizations need to vary of these and should be able to clarify or rectify the experience

  8. Mr. Jangam,

    How do you foresee tapping into these social insights by tapping what consumers articulate in social networking websites? Can you actually map the findings and more importantly how will you validate them? how will you distinguish between dogma and individuality?

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