Opinion: Predicting The Future

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"There is no market for CRM," according to Tom Siebel, chairman of Siebel Systems*. That was the stark prognosis from one of the
industry's leading figures back in August of this year. But was this
really true, or is there an alternative future ahead for CRM in 2003?

In terms of summing up 2002, Tom Siebel might well have caught the mood of a large section of disgruntled enterprises. If the analysts such as Gartner are to be believed, more than 50 per cent of users found that their CRM projects failed to live up to expectations, particularly in relation to customer retention.

There was an overriding feeling that current CRM systems had simply failed to deliver on the promise of improved customer communications and better targeting of services. Systems have proved to be neither flexible or intelligent enough to produce the type of decision-support data that users have been led to believe they should expect from CRM.

In many cases, such systems have already been branded expensive flops and on the point of being written off. But while it has become 'de rigueur' to openly bash CRM, it's worth remembering that most systems will have actually carried out the job they were designed to do perfectly well ie. collating disparate information from a myriad of channels and telling you how many people purchased product x or previously used service y. However, the problem was often not with the technology, but with the way it had been over-sold by vendors claiming it was capable of doing far more than 'just what it says on the tin'.

The financial sector in particular has suffered from over-investment in under-used systems, precisely because at the grass roots level, users have quickly discovered that CRM systems only tell you what you already know. In other words, they act merely as glorified rolodexes, and don't actually function as the decision-aiding tools they've been sold as.

This is despite the fact that, according to the Meta Group, 71 per cent of CRM projects in 2002 had board-level sponsorship. Or maybe it's because of this - clearly somebody high up in these organisations thought that CRM was a good idea, but it's a moot point as to whether the people who would actually be using the systems were consulted. Meta additionally points out that while business plans and ROI projections are actively used during the pitching stage of a project, they tend to go out of the
window once budget has been secured. It almost goes without saying how short-sighted such an attitude is - ROI should always be at the heart of any major IT project.

So how are IT directors in 2003 going to get their staff to use these
systems and start to see proper ROI in the year ahead? There's little doubt that the majority of current CRM implementations have the potential to be very useful to end users - it's just a question of
finding the missing technology piece of the CRM puzzle that will unlock this potential. Meta again concurs with this view, stating that 2003 don't see any noticeable reduction in CRM spend, but that the projects that will secure budget will be modular in nature ie. projects that squeeze the maximun value out of existing implementations or solves specific pain points.

One CRM 'add-on' that looks likely to become increasingly popular
through 2003 is the predictive analytics module. In a nutshell,
predictive analytics provides the intuitive, 'sense-making' element that CRM systems have lacked in the past. By intelligently analysing the data held on the existing systems, such technology can automatically track and understand customer behaviour as opposed to just raw transactions - in other words, predictive analytics technology doesn't just number-crunch existing records, but can cross-reference customers' previous decision making criteria to suggest the products, services or investments that individuals are most likely to want.

For example, by using predictive analytics, it is possible to track movements that indicate a customer may move their business elsewhere and alert the company to prioritise the service given to that individual, or suggest a better offering.

While the big players continue to bemoan the current climate, there are a number of specialist vendors that are performing well as providers of modular CRM products, and looking forward to 2003, I believe that demand will continue to increase for such specifically tailored CRM solutions. In the future, current systems will act merely as the foundation on which complementary intelligent analysis software will sit.

So what else in 2003 will help give the CRM industry vendors the kiss of life? With sophisticated next generation mobile data services set to launch properly in the next year, mCRM is almost certain to become another growth area. Content providers such as retailers and bookmakers will soon have both another customer channel to deal with and more technical obstacles to overcome. The overall challenge of mCRM must be to integrate this new channel with existing CRM systems while making the most of the specific opportunities that rich mobile marketing presents.

Mobile opens a new avenue for marketeers who see the benefit of
targeting customers on what are regarded as truly personal devices. Up until now, current levels of so-called 'personalisation' have been restricted to basic demographic groups. But just as fixed line/online CRM has had to become a whole lot more sophisticated to be effective, the need for 'true personalisation' is even more acute when applied to the mobile user. For instance, not only are users more personally attached to their mobile phones, but there's also the problem of delivering precisely targeted content and services to a screen that's only a fraction of the size of a computer monitor's.

Again, it seems likely that modular add-ons to existing CRM systems to enable such 'true personalisation' will also be a growth area in 2003. In the mobile world, where screen sizes are limited and charges may be incurred for each byte of data downloaded, delivering accurately personalised mCRM may well prove to be the difference between 3G services being regularly used, and above all, profitable to the mobile service provider, or being a hugely expensive and very big missed opportunity.

Clearly, there are technologies available to both resolve some of the basic issues such as poor workflow and under-performing databases, and perform more complex functionality such as sophisticated online marketing and mobile personalisation. Companies need to start planning for the future and not be afraid in making one or two further investments to tidy up their existing CRM systems in the coming year.

*DCI's Customer Relationship Management Conference, New York, August 28,
2002

Nick Bidmead is CEO of Cambridge-based NCorp, an expert and pioneer in applying pattern recognition technology in enterprise and consumer environments. Its predictive analytics software has been deployed by a number of major corporations including Deutsche Bank. www.ncorp.com

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03rd Jan 2003 10:32

Nick makes a smart case for something that we have known all along. That many organisations' CRM initiatives have created mountains of unmined customer, competitor and market data that they don't know what to do with. And the expansion of mCommerce will only add to the glut.

It seems likely that we are going to need some new organisational skills before we can turn this useless data into valuable customer insight.

Firstly as Tom Peters identified in a prescient article about 'Future Jobs' a couple of years ago. We are going to have to develop more quantitative analysts to analyse the data and find behavioural patterns. You can't just install an analytics package and just turn it over to statistically illiterate staff. And they need to understand something about how business works to be really effective. Just finding enough of these people was by far the biggest problem faced by one credit card client on a recent consulting assignment.

Secondly, having develop customer insight, we are going to have to develop all the people in the organisation so that they can work collaboratively. Currently, most organisations can't due to power struggles, organisational politics, meetingitiss, and other well known corporate ailments. This is an ever bigger problem than the find the quants one.

So much for the inside-out viewpoint.

It will also be interesting to see what role customers themselves play in tomorrow's CRM. They are already heavily involved in co-delivering many touchpoints. As organisations use customer insights to develop business rules to drive more and more of their business, perhaps customers themselves will be better placed to take on more of the relationship management role. This certainly seems to be the trend in mobile telcos, a number of who have implemented MyNetonomy's Customer Managed Relationships solution.

Information-based customer management is real-time business. If you can't use customer insights, and work collaboratively with colleagues (and increasingly with customers) to go to market in real-time, then someone else surely will.

Thanks (0)
avatar
23rd Dec 2002 12:06

I would hazard a guess that many commercial organisations should look to the non-profit sector to learn a lot more about predicting customer behaviour. Most sizable charities invest heavily in segmenting and analysing their donor database to construct predictive models of future behaviour. Perhaps there could be some interesting partnerships develop from such acorns?

Thanks (0)
avatar
23rd Dec 2002 12:06

I would hazard a guess that many commercial organisations should look to the non-profit sector to learn a lot more about predicting customer behaviour. Most sizable charities invest heavily in segmenting and analysing their donor database to construct predictive models of future behaviour. Perhaps there could be some interesting partnerships develop from such acorns?

Thanks (0)
avatar
03rd Jan 2003 10:32

Nick makes a smart case for something that we have known all along. That many organisations' CRM initiatives have created mountains of unmined customer, competitor and market data that they don't know what to do with. And the expansion of mCommerce will only add to the glut.

It seems likely that we are going to need some new organisational skills before we can turn this useless data into valuable customer insight.

Firstly as Tom Peters identified in a prescient article about 'Future Jobs' a couple of years ago. We are going to have to develop more quantitative analysts to analyse the data and find behavioural patterns. You can't just install an analytics package and just turn it over to statistically illiterate staff. And they need to understand something about how business works to be really effective. Just finding enough of these people was by far the biggest problem faced by one credit card client on a recent consulting assignment.

Secondly, having develop customer insight, we are going to have to develop all the people in the organisation so that they can work collaboratively. Currently, most organisations can't due to power struggles, organisational politics, meetingitiss, and other well known corporate ailments. This is an ever bigger problem than the find the quants one.

So much for the inside-out viewpoint.

It will also be interesting to see what role customers themselves play in tomorrow's CRM. They are already heavily involved in co-delivering many touchpoints. As organisations use customer insights to develop business rules to drive more and more of their business, perhaps customers themselves will be better placed to take on more of the relationship management role. This certainly seems to be the trend in mobile telcos, a number of who have implemented MyNetonomy's Customer Managed Relationships solution.

Information-based customer management is real-time business. If you can't use customer insights, and work collaboratively with colleagues (and increasingly with customers) to go to market in real-time, then someone else surely will.

Thanks (0)