The future of CRM is in value networks

The future of CRM is in value networks

A few days ago @MarkTamis called me with a question: “Where do you think CRM heads to in future?” Uhhm, not that simple a question. It really forced me to think as all those thoughts, observations and discussions of the needed to be brought into a better structure.

To lay the foundation I need to start with a definition of CRM; as I like it I start off with the one that Wikipedia provides:

Customer relationship management (CRM) is a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.[1] Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments

This definition shows that the question has at least two layers: A technological one, and a strategic one. Of course, we should not forget about the customer.

Let me start with the (for me, being a technology guy) easiest one: The technology.

What I consider state-of-the-art right now is the availability of integrated software suites that cover marketing, sales, service, and analytics – this across a variety of channels, including mobile, web, interaction center. Surely, some software packages are stronger in one area or the other but essentially we have seen a tendency towards suites. The other thing that we have seen is a shift from on premise to on demand. In parallel we have seen the change from a horizontal CRM to industry specific solutions and the start of a change of mind on the vendors’ side, away from product to solution. This implies the advent of outside-in thinking. SaaS as a method of delivery is well established now and will likely become even stronger, albeit with the occasional backslash.

Then we have a raft of buzzwords: Social media, communities, and related to this social analytics (socialytics) and social CRM, customer experience management, mobility, location bases services, unified communication, gamification, to name but a few.

On the strategy level we see more and more companies applying holistic and business driven CRM strategies as opposed to the originally very technology driven CRM implementations. We see that the companies are starting to integrate different business functions and –processes. This is accompanied by the thought of establishing a 360 degree view on the customer. Further, companies started to not only ask for more internal efficiency but also to see increased top- and bottom lines coming out of their CRM initiatives. To support this companies implement loyalty programs and reach out into different channels, including social media. Companies also increasingly look into building their brands by providing consistent customer experiences across the various touch points that they offer.

On the service side we observe a number of support communities, product development partly gets input via idea marketplaces, and so on.

All this has the three goals of increasing customer retention, increasing the number of customers overall, and increasing the operational efficiency.

But where is this headed now?

Different people say different things: Graham Hill suggests value co-creation being the right path, although there are other possible routes; others are suggesting “a complete package, consisting of a thorough strategy and value added services” or are simply putting it as being “social and mobile”. Gartner looks at it from a more technical level by saying that the (big) vendors will concentrate more and more on providing a platform that then can get used and enhanced by more specialized vendors and customer companies.

So, let’s connect the dots.

The future of CRM, as a strategy and as a technology, will more and more be driven by two dimensions, the company internal and the company external dimension. I also think that CRM will more and more be driven by strategy as opposed to the technology. The technologies mentioned above and likely some more will converged to support the strategy.

Internally there still is a high need for user adoption, especially when it comes to CRM systems. This will be achieved on the short term by making internal systems more and more available via easy-to-use or even fun-to-use applications that do not require an explicit login into the CRM system itself. These applications are logging the user on to the CRM system implicitly or via settings. The CRM systems themselves will be more networked with other systems and include and provide more relevant information automatically, instead of requiring manual action. As a part of this mobile devices will become more and more important, also to be able to ubiquitously access the systems. In the longer run I think that gamification, or rather lessons learned from the success of game platforms, and behavioral theories will drive the evolution of systems. How this will look like is still evolving, but I think that Michael Wu is correct when he says that fun should be made a part of the design requirements of a business application, in order to gain user productivity.

Externally it is about the rationalization that (potential) customers, be they companies themselves or consumers, are now at eye’s height with the companies they buy from. With that companies will need to strive for

  • Convenient and easy experience for the customer, both during the preparation and execution of a transaction, but also afterwards.
  • Creating value for, if not together with the customer; this value is not only the product itself but also includes services around the product; these values are provided, pre- to post purchase. These services will appear to be individualized to the customer.
  • Shifting their concentration from transactional “value in exchange” thinking to process-orientated “value-in-use” thinking

How can this look like?

Earlier this year there have been a few blogs describing potential futures in a retail orientated environment; one by Mark Tamis around the scenario of preparing for a cocktail party, another one, by me using grocery shopping. Surely there are others, sorry for not mentioning them as well.

Both examples combine the convenient and easy experience with the idea of creating additional value for the customer in collaboration with other companies, and with the customers’ interactions, including their relationships to other people.

Let me briefly sketch another example using the automotive sector, again connecting different companies and customers, to create value.

BMW and Audi have thriving communities on Facebook. At least in Germany it is long possible to “custom build” one’s dream car using configurators. The goal and achievement of this is higher brand engagement and an improved customer experience, both important parts of a CRM strategy.

This experience goes on after the cars get picked up with subtleties like sound design and lots of helpers, including maintenance warnings.

Now let’s go on a little further and think of a “no worries” package: as part of their commitment to the client the dealership picks up my car if there is an appointment scheduled, e.g. from my workplace – and delivers it back in the afternoon, when the service is performed. Given my permission my car could even send its health data back to the service station, thus avoiding a good number of surprises; some will stay but the dealership can inform me early that something bigger is going to happen – that information could even be provided by the car itself. Going on the car systems could identify a pending failure somewhere on the road and warn me to either reduce load and/or to drive to a nearby service station. The GPS system could direct me there. The service station is already informed about what needs to be done, so that they can call me on my car phone to further explain the problem and discuss options. They probably can schedule the service immediately or alternatively provide me with an adequate loan car to continue my trip while caring for its pickup and the delivery of my car to where I am. The car, using the sensors that it already has built in can communicate with a hive of other cars that are on my route, identifying and notifying me of adverse traffic or weather conditions. It might re-plan my route for me – or tell me that any other route likely still needs more time.

Conclusion

The value chain as we know it converges towards a value network, that partly gets built dynamically to fulfill a customer’s need or, in other words, to get the customer’s job done.

Companies will organize themselves and network with other companies, transfer customers between them in a dynamic flow. This will happen based upon the explicitly or implicitly stated need of a customer, the ‘job’ she wants to get done. As a consequence we will see dynamic value networks of companies, customers, and their connections that are purpose-built and rebuilt to fit the need.

All this will be supported by a strong platform built from currently disparate but converging technologies.

In few words CRM will change from being a company strategy to an ecosystem strategy. The ecosystem consists of different companies, customers, and their networks, collaborating with the goal of putting together a value proposition that leads to customers choosing your company's over ones proposed by others.

Comments

An interesting article from a large companies point of view but for small businesses crm software systems (like this one) are all about the day to day functions of communicating with customers, prospecting for new customers and cross and up selling. The reason is survival in a difficult business environment and as usual in smaller businesses the need to get the biggest bang for your buck!

So for large companies a change from a company strategy to an ecosystem strategy is probably correct but for small businesses its more about back to basics and using small business software systems to make the company as efficient as possible. Large businesses can indulge themselves and invest in additional data capture and reporting but how many of these larger businesses will actually see a tangible benefit?

The issue is information overload - how many systems will actually deliver real benefits from all this additional data in a format that the right people in a business can understand?

Cheers,

James Brown

MD @ Click Innovation

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