Three long-term CRM trends to watch

How the new customer ecosystem is changing the customer intelligence industry

By Paul Greenberg

Customer relationship management (CRM) is transforming into something different and more complex than it has been – and in a far more significant way than the new pricing and delivery models that the on-demand disruption established just a few years ago.

The big reason for this major morph in CRM is that the customer now owns the business ecosystem – not the company. Rather than an elaborate explanation that would be too long for a short column, just listen to the foresighted CEO of Procter & Gamble, A.G. Lafley, and you’ll begin to get an idea of what this means to businesses (and CRM):

“We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion. We try to make a customer’s experience better, but better in her terms.”

Or read this quote from Beth Comstock, President of NBC Universal Interactive Media: 

“… If consumers are in control, they’re going to figure out how they want to watch. We have to find the right solution.”

The key words there are, “If consumers are in control.”

In other words, the customers are now the dominant center of the business universe, and they control their own experiences and relationships with companies. This development, of course, has a profound effect on CRM.

With that in mind, I’d like to offer my predictions (and odds, if you’re the betting type) on three emerging trends in CRM to look out for.

Trust my forecast at your own risk. After all, I vowed publicly never to write another edition of CRM at the Speed of Light after the third edition was complete – and apparently, I lied, because I’m writing another edition now. So if I couldn’t even foresee that …

No. 1: CRM 1.0 moves to “social CRM”
Traditionally, CRM has been oriented to the operational: the automation of processes through technologies and programs that are designed to make the employees of a business more effective and efficient in the management of relationships with customers. Typically customer “insight” was used as data, rather than the other way around (data being used to ascertain customer insight). In this context, the Holy Grail of CRM was a 360-degree view of the customer.

This concept is now undergoing dramatic transformation as we move toward a more social model of CRM where customers increasingly expect access, transparency, honesty and collaboration with the companies that they choose to do business with.

They expect it because they can. The commodities that they purchase are available in dozens of other locations, and they have a level playing field when it comes to choosing where they buy – thanks to the Web and shipping services like FedEx and UPS. Customers often have anytime, anywhere access to companies via cellphone or laptop. They also have access to their peers to find the information – the honest information – about the products and services provided by the companies they are considering – and that gives them game, set and match.

Thus, what they expect of every institution – be it business, political or social – is that it will have the products, services, tools and experiences they need to sculpt an individualized relationship with the company – personalized (and personal) in the way that they want it.

As a result, CRM vendors are beginning to incorporate social tools such as wikis, blogs, social networks and enterprise mashups – the so-called Web 2.0 applications – into the CRM suites they offer. Companies like IBM, Intel and even Cisco are offering pure collaborative suites so that practitioners – the vendors’ customers – can offer the level of interaction that customers demand.

Likewise, many Web 2.0 companies like Neighborhood America, an enterprise social networking platform developer, or AdventNet, which offers the Zoho collaboration suite, are moving into CRM – because they are recognizing that customer engagement is the new model for CRM, not just managing customer relationships. And CRM is a key tool at a time when holding onto customers has become a prime objective.

This move toward social CRM is a trend that is unstoppable and already in progress, though it will achieve its true maturation in 2010.

ODDS OF SUCCESS: 1-2

No. 2: Customer analytics will embrace and draw data from social sources
We’ve established that businesses require an increasingly personalized (and humanized) relationship with their customers, and customers are demanding highly individualized experiences with the companies they deal with.

To be successful at this, businesses must have granular knowledge of their customers, not just some random demographic data. The realm of “right-brained” customer knowledge – behaviors, emotional states, connections and social matrices – is increasingly more germane to what it takes to retain customer loyalty and, certainly, to make a customer an advocate.

Customer analytics have barely begun to identify behavioral data effectively. While “microtargeting” is the buzzword du jour, it is really just another term used to describe granular demographic information.

Some companies will complain that granular customer data is impossible to gather, but the behavioral data sources are out there. Think about social networks like Facebook or LinkedIn and the depth of the information provided by profiles. Or consider sites like Slideshare.net or Flickr and the breadth of social tags that are available and specifically identifiable when it comes to the individual who created them. What about the customer feedback on review sites ranging from the “traditional” like Amazon.com to the more contemporary like Yelp? What about customer feedback in public and privately facilitated communities that are aimed at garnering consumer knowledge? Consider, for example, medical communities devoted to a specific condition or a specific treatment that are monitored by pharmaceutical companies.

What is currently lacking is the actual analytics on this data. In the last few months though, the first signs of companies developing both the data mining and analytic algorithms for social and behavioral data are showing up. How to integrate the social data with the demographic information is something that is now on the agendas of several major CRM providers, including SAS.

Over the next several years, companies will begin to develop the algorithms to mine and analyze social data. But the quality of semantic tools that interpret the social data’s nuances (since a good deal of it is “conversational”) and the significant privacy and trust issues that are raised by the mining of the data will make this a slow adoption. By 2010, look for the integration of granular behavioral/contextual data into the historic left-brained analytic applications on a mass scale.

ODDS OF SUCCESS: pre-2011, 7-1;  2011 and beyond, 3-1

No. 3: CRM goes thoroughly mobile
In 2008, there have been quite a few vendors and others that have attempted to bring CRM to mobile devices. Other than a few that are BlackBerry-enabled, however, the failures have been more notable than the true successes. Part of the problem is the need to provide fairly complex functionality on devices with small screens and thumb-operated keyboards. Another major problem is to provide a rich Internet experience on slow networks. It’s why the CRM iPhone applications are better left unused. Not because they can’t reproduce their functionality or exhibit a complete Internet experience, but because they are so slow. 

But CRM vendors have been soldiering on with mobile applications for field service, salesforce automation and even business intelligence – for the most part on the ever-amenable BlackBerry platform. There are dozens of CRM-related BlackBerry-compliant applications on the market today.

With the expected upgrade to 3G carrier networks as standard for mobile devices, the latency issues will be gone. The CRM vendors are working on the unique features necessary to provide a good mobile experience on a small screen – as well as platform interoperability – so that CRM applications on the iPhone, BlackBerry and Windows Mobile devices will work in tandem regardless of which platform you have. While this effort is in its nascence, a few vendors have begun the application development necessary to make mobile technologies work for CRM. By 2009, we should be seeing the first fruits of interoperable, fast CRM applications that are designed for mobile devices and work with their on-premises or on-demand parents.

ODDS OF SUCCESS: 3-2

There you have it – my predictions for the future of CRM.

I’ve written three editions of CRM at the Speed of Light, and the fourth edition is in the works for the end of 2008. I do a forecast in the last chapter of each book.

I’ve never been wrong. But that’s not to say there isn’t going to be a first time. It could be now. But then again … maybe not.

Bio: Paul Greenberg is President of The 56 Group LLC, an enterprise applications consulting services firm focused on CRM strategic services.