Customer relationship management has historically failed to deliver on the 'relationship' piece. But 'Neo CRM' could be about to rectify this.
If there’s a fundamental flaw in customer relationship management (CRM), it’s that historically there has been little – if any – focus on relationships. Even the emergence of CRM 2.0 (social CRM), some eight years ago, failed to resolve this serious shortcoming.
However, a new take on the discipline is being hailed as the solution – ‘Neo CRM’.
“The concept of building a relationship with the customer is an old one,” says Steven Walden, managing director UK at Strativity. “CRM itself had this intent but has been reduced to more of a customer acquisition model, even with the application of AI. Most of CRM is about the sales module and the acquisition of more and more data (customer as a resource to mine).
“This is all hogwash. A relationship is about give and take, it is about asking the question ‘where can we go to together?’ (SiR Meta Intelligence, Dr Olaf Hermans). This is why, in the new Relationship Economy - where we move from systems of record through engagement to systems of intelligence and use sense-making, dialogue and co-creation platforms - we are in a unique position to get closer to the customer and rebuild the R in CRM.”
Traditional product- and marketing-oriented business models are becoming outmoded, as digitization, cloud-based API technology and mobility herald a new environment. This is the Relationship Economy, something described by David Rattray, David Pinder and Steven Walden as “a multi-stakeholder environment in which businesses, their employees, suppliers and partners, and – crucially – the customers, all have direct contact.”
Rattray, Pinder and Walden insist that this concept is not just “pouring old wine into new bottles” but is radically different from previous models. The trio point to several trends as evidence of the new environment emerging.
What is driving the Relationship Economy?
Just as CRM became a commoditised database in the hands of IT vendors and management consultants, so customer experience management is also now becoming commoditised, suggest the authors. They propose that organisations are actually less concerned for their customers’ experience than they are for managing the rising levels of digital interconnectedness across the customer journey, assuming the customer is only concerned with the frictionless acquisition of their product.
However, Rattray, Pinder and Walden argue that customer experience management was supposed to be a subjective concern, “where value accrued to a customer is returned to the supplying enterprise through increased lifetime spend, loyalty, innovation and market differentiation”.
This divergence in the interpretation of the nature of customer experience management has, however, led to the search for new sources of value.
This search has been supported by the emergence of cloud-API technology which has driven interconnectedness between businesses and stakeholders. Rattray, Pinder and Walden provide the following examples of new opportunities for customer value creation that are emerging:
- The identification of Opex reduction opportunities through the connected supply chain (stakeholder experience).
- The enablement of ‘the working customer’, where operations and customer services are opened up to customer control.
- Concierge services such as Alexa which require the enablement of a connected data lake.
They note: “In all of these cases, the uni-directionality of the Experience Economy is being replaced by the bi-directionality of the Relationship Economy. The Experience Economy focused on one-to-one engagement with the customer who was viewed as a resource; the Relationship Economy focuses on many-to-one engagement where the customer is potentially an asset (value in relationship).”
How can you achieve an advantage in the Relationship Economy?
This raises the question of how to achieve an advantage within the emerging Relationship Economy. Rattray, Pinder and Walden believe that the starting points are:
- Moving from voice of the customer (VoC) to voice of the relationship (VoR). This means enabling dialogue at the right moments, rather than just blasting out customer surveys. Organisations should examine customer journeys to establish and develop points of interaction that turn touchpoints into service encounters.
- Embedding and building out co-creation platforms that engage all stakeholders. Hitachi, for instance, is already bringing multiple stakeholders into its Smart City ecosystem.
- Engaging in sense-making. As part of VoR, enterprises need to enable the natural dialogue of customers in their data analytics models. The authors suggest using leading edge ‘narrative methods’ and frameworks to understand ‘the ongoingness’ of the customer, employee and other stakeholder relationships with the firm. They recommend the Cynefin Framework, a sense-making model developed by Dave Snowden that allows sense to be made of any given situation.
“All of this points to the fact that a fundamental basis of Relationship Economy best practice is a co-creation platform to orchestrate the many players involved,” they argue.
And this, Walden suggests, is the platform for Neo CRM – a move to infusion CRM systems with dialogue content and connect systems to co-creation platforms, enabling and releasing the power of networks.
Walden concludes: “There are a lot of strands coming together now, whether it's omnichannel engagement or VoC becoming passé. The ‘customer as a resource to mine’ has run its course. The way forward is customer as an asset to work ‘with’. CRM needs to reflect this by linking into co-creative activity.”
About Neil Davey
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.