Experts including Paul Greenberg and Shaun Smith speak to MyCustomer.com about their CRM predictions for the coming year.
So, we’ve looked at the seven CRM lessons we’ve learned from 2009, and we’ve talked to some of the leading experts in customer relationship management for their assessment of this year’s developments. But what about the coming 12 months?
Following our in-depth discussion with a panel of experts who dissected 2009, we asked them to gaze into the crystal ball and forecast what lies ahead for the world of CRM.
And it will come as no surprise that despite talk of the 'green shoots of recovery', there is consensus that 2010 is still going to be no picnic for most businesses. "The big challenge for organisations over the next year is going to be growing that top line – because if they can’t improve profitability by cost reductions, they are going to have to do it through increased revenue and margins," suggests Shaun Smith, leading customer experience consultant and founder of Smith+co,
"Businesses have taken about as much cost out of their businesses as they can, so therefore next year will be all about top line growth. This means having a bigger share of customer spend and acquiring new customers, so it is going to be important to be the preferred brand and be top of mind. This of course takes you straight back to the experience, because if you get your brand experience, brand differentiation and brand promise right then you are more likely to get more customers and keep them for longer."
Luke McKeever, CEO of Portrait Software, believes that whilst acquisition will indeed become prioritised once again, it will also become increasingly connected to the overall customer strategy. "The big change in 2010 is that existing customer retention/cross-sell/upsell activities and new customer acquisition strategies will begin to merge," he says.
"Acquisition can be relatively straightforward – you send 100,000 units out by a chosen mechanism, and your model tells you you’ll get c.2% of responses – it’s not customer-centric but you know when and if you’ll make a profit on these programmes so that you can drive volume and drive a return and should be able to measure performance against targets. The existing customer programmes are less predictable because, in a customer-centric organisation, it often requires the customers themselves to initiate the engagement. That said, organisations that have invested time and effort with their multi-channel customer strategies, systems and models have proved that it can become a highly predictable and profitable revenue channel."
Customer service strategies
Jo Causon, CEO of the Institute of Customer Service, is hoping that despite cuts in customer service training in 2009, any focus on acquisition will not overshadow retention and customer service strategies. "Those organisations focused on customer delivery are the ones that are not cutting the training budgets, and I would reiterate that it is not a good idea to make these cuts," she says.
"In September 2009 the service sector in the UK grew at its fastest rate for two years, and we’re expecting employment to increase. It will continue to be an important sector and a growth sector over the next five years. Therefore it is absolutely critical for organisations to think about this at a strategic level and also at a delivery level."
She adds: "The perception of it is improving, but there is no room for complacency and those organisations that do put the customer at the heart of their business will be the ones that come out of the recession faster."
This message is certainly resonating in the auto industry. After tough trading conditions for the past couple of years, customer service and satisfaction will certainly be important for the sector in the coming year, according to Matt Gibson, head of customer at Honda UK. "The companies that can’t make investment in it will suffer," he predicts. "In the car business it is getting so competitive that businesses are having to really sharpen up their act, and they all have a sworn intention to improve customer satisfaction. You can’t be in the marketplace without it. Even in a time of recession, a lot of our competitors are saying that they’ll be investing in customer relations because they want to retain their customers."
Nonetheless, even if the global economy is in recovery as we move through 2010, this landscape won’t necessarily demand any drastic changes to customer strategies, according Paul Greenberg, author of ‘CRM at the Speed of Light’ and owner of The 56 Group, LLC. "During the recession they should have been figuring out strategies for customer engagement and if they have done that and then partnered with their customer, why should they change their strategy when it gets better?" he says.
"They could perhaps reduce the number of deals they are giving them, but the reality is that those strategies hold after the recession too. In a way, the ideas in a recession just created an urgency to do it now rather than later. But your competition is still as great as it ever was because you are competing against the direct competitors but you are also competing for attention and also competing against the expectations you have set. You can play a little bit more and figure out a few more things that you are able to do for improving customer engagement but the reality is that it shouldn’t change much at all."
A higher purpose
In terms of trends expected to emerge over the next 12 months, there are a handful that the experts forecast will come to the fore. Smith, for instance, suggests that the growing focus on social values will mean that organisations will have to increasingly connect with consumers’ craving for a higher purpose.
"Whether it is sustainability or environmental protection or serving other communities, whatever it might be, consumers are attracted to those brands which they feel share common values with them," he explain. "If you take luxury hotel brand Six Senses Hotels & Resorts as an example, it won’t import bottled water into the resort, it has its own desalination plant which creates its own water to bottle and sell. It is not flown in so there is no carbon impact and the income from its water sales is also donated to communities in countries like India where water is scarce. So there are two benefits, two ways in which you are connecting to a higher purpose, by helping the environment and also helping communities that can’t afford their own water. And consumers feel connected to organisations like Six Senses Resorts, and TNT Global Express and Virgin Galactic in a deeper personal level. And this is becoming very important."
The increasing emphasis on social values will also have implications for the marketing sector according to Chartered Institute of Marketing head of research, Mark Stuart. "We are going to see a lot more social marketing over the next year, particularly because of the way that the government has been investing in it, predominantly in the NHS," he says. "I think we’re also going to see social marketing as a big latent career area for marketers who want to use their skills in the public sector, or in an area where they feel they are not just selling biscuits but are giving something back to society."
But Stuart also predicts that there will be some potential discord in this area. "We are going to see social marketing, commercial marketing and corporate social responsibility (CSR) coming together as one unified discipline," he explains. "But I also think that claims on advertising and packaging are going to come under the spotlight in the coming year – particularly green claims and claims for food and drink. We may see more legislation in those areas, but we’ll certainly see more of a focus on the kinds of claims that marketers are making on packaging and advertising."
A healthy industry
In the technology sphere, McKeever foresees that analytics will have another stellar year after moving to the top of the agenda in 2009. "Analytics as a batch-based, back office function is slowly becoming outdated. Most customer-centric businesses are now beginning to deploy models and score in real-time to determine the best possible actions for their customers via all channels," he explains.
"The fascinating permutations of customer engagement analytics today, particularly on the web, can now determine which content and offer is most appropriate for a given customer. Using a broad array of real data – i.e. customer and demographic data, transaction data, offline campaign programme history, contact centre & branch conversations and complaints - coupled with their search behaviour prior to getting on to the site and activity during previous visits can drive a completely individual on-line customer experience. It is easy to look at where the customer has been in the last three months on the website and then present something that may be interesting, but to be able to combine that data with all these rich sources of offline data to determine the best content and offers to present, will become a realisation in 2010."
In the analytics area, it is text analytics that has caught the eye of Gibson. "There is a divided view of overseas call centres and UK call centres and there is interest in trying to make a more personalised service for the more upmarket products," he says. "We are going to look at these areas to see how we can have an advantage over our competition and text analytics is what I’m focusing on. We want to know how we can get as much engagement with the customer and get them into partnership as quick as we can."
Taking a view of the CRM industry as a whole, Greenberg is largely optimistic that 2010 could be a strong year for CRM. "CRM did well this year and did well during the recession – whether you believe it or not!" he states. "It has done well during the downturn and will continue to do well and the reason for this is simple – people really do see their priority as retaining customers. If software is part of the plan, then CRM software is what they’re buying. If you look at study after study, it is normally number one or number two priority for a business, especially now, and that’s going to continue.
"CRM is a solid industry. There may be naysayers who state that the CRM failure rate is 50-70% and so on, but the reality is that this isn’t even true anymore. That was from a Gartner report six or seven years ago when CRM was an immature industry and when the hype surrounding it was greater than what the reality could deliver. Now it has settled into reality and it is now a $13bn industry that has projected growth. Businesses are not so stupid that they would keep investing in something that has a great likelihood of failure. But not only are they not stopping, but they are increasing their investment in it. And furthermore, the projects continue to increase because there is enough success in CRM to indicate that it is worth the risk - and everything is a risk."
Greenberg concludes: "CRM has matured and consequently people realise that the seven cities of gold are not going to appear as a result of their CRM implementations. But what is going to happen is that you get better results with your customers. With expectations a little more realistic and legitimate, it provides enough value to be worth it, and when you combine that and the downturn, where businesses are looking to retain customers, overall you’re looking at a healthy industry."