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The Future of CRM


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The Future of CRM

  1. 1. SocialmeetsCRM, July 2011    SocialmeetsCRM The  Future  of  Customer  Relationship   Management  lies  in  Value  Networks  and   Collaboration   A SocialmeetsCRM White Paper Thomas Wieberneit July 2011
  2. 2. SocialmeetsCRM, July 2011Summary  With the rise of mobile technologies, communities, social networks and generalsocial media Customer Relationship Management as we know it is undergoingdrastic changes. These technologies dramatically changed the playground as weknow it, and we still need to fully understand the new rules of the game in orderto be able to successfully compete in the marketplace.Figure 1: The rules of CRM have changed (with kind permission of Mark Tamis, under creativecommons 3)Although only depicting a part of CRM the above Figure , which got crafted byMark Tamis portrays a very important aspect of this change.A  deceivingly  simple  question  Recently a valued colleague asked me a deceivingly simple question: “Wheredoes CRM heads to in future?”Although it appears to be it is not that simple a question. There are manycomplexities involved, on technical, organizational, and strategic level. It reallyforced me to think as a great number of ideas, observations and discussionsneed to be brought into a structure in order to answer this question.To lay out a foundation it is important to start off with a definition of CRM.Wikipedia provides a good and widely accepted one that I will use as thisfoundation:Customer relationship management (CRM) is a widely-implemented strategy formanaging a company’s interactions with customers, clients and sales prospects.It involves using technology to organize, automate, and synchronize businessprocesses—principally sales activities, but also those for marketing, customerservice, and technical support. The overall goals are to find, attract, and win newclients, nurture and retain those the company already has, entice former clientsback into the fold, and reduce the costs of marketing and client service.[1]Customer relationship management describes a company-wide business strategyincluding customer-interface departments as well as other departmentsThis definition shows that the question has at least two layers: A technologicalone, and a strategic one.
  3. 3. SocialmeetsCRM, July 2011It covers business processes and with that also implicitly the need of changemanagement and corporate culture.Of course, we should not forget about the customer.The  situation  Let us start to discuss the easiest one: The technology. Technology is thesimplest because it “merely” is a toolkit – and then I have some roots intechnology …What I consider state-of-the-art right now is the availability of integratedsoftware suites that cover marketing, sales, service, and analytics – this across avariety of channels, including mobile, web, interaction center. Surely, somesoftware packages are stronger in one area or the other but essentially we haveseen a tendency towards suites. The other thing that we have seen is a shiftfrom on premise to on demand. In parallel we have seen the change from ahorizontal CRM to industry specific solutions and the start of a change of mind onthe vendors’ side, away from product to solution. This implies the advent ofoutside-in thinking. SaaS as a method of delivery is well established now and willlikely become even stronger, albeit with the occasional backslash.Then we have a raft of buzzwords: Social media, communities, and related tothis social analytics (“socialytics”) and social CRM, customer experiencemanagement, mobility, location based services, unified communication,gamification, to name but a few.On the strategy level we see more and more companies applying holistic andbusiness driven CRM strategies as opposed to the originally very technologydriven CRM implementations. We see that the companies are starting tointegrate different business functions and –processes. This is accompanied bythe thought of establishing a 360-degree view on the customer. Further,companies started to not only ask for more internal efficiency but also to seeincreased top- and bottom lines coming out of their CRM initiatives. To supportthis companies implement loyalty programs and reach out into differentchannels, including social media. Companies also increasingly look into buildingtheir brands by providing consistent customer experiences across the varioustouch points that they offer.On the service side we observe a number of support communities leveragingcrowd sourcing; product development partly gets input via idea marketplaces,which is another crowd sourcing example, and so on.All this has the three goals of increasing customer retention, increasing thenumber of customers overall, and increasing the operational efficiency.
  4. 4. SocialmeetsCRM, July 2011Figure 2: Traditional CRM landscape; businesses have relationships with their customersBut  where  is  this  headed  now?  Different people say different things: Graham Hill suggests value co-creation1being the right path, although there are other possible routes; others aresuggesting “a complete package, consisting of a thorough strategy and valueadded services”2 or are simply putting it as being “social and mobile3”. Gartnerlooks at it from a more technical level by saying that the (big) vendors willconcentrate more and more on providing a platform that can then get used andenhanced by more specialized vendors and customer companies.What one can say is that social CRM, as we experience it now, is only a step onthe journey. This is mainly because it covers only parts of the customers’ needsand demands and because CRM is inherently social. Few years from now we willhave ceased speaking of social CRM because this stream has been merged backinto an (enhanced) idea of CRM.1
  5. 5. SocialmeetsCRM, July 2011Figure 3: The Social CRM Landscape as it can be seen todaySo,  let’s  connect  the  dots  The future of CRM, as a strategy and as a technology, will more and more bedriven by two dimensions, the company internal and the company externaldimension. I also think that CRM will more and more be driven by strategy asopposed to the technology. The technologies mentioned above and likely somemore will converged to support the strategy.Internally there still is a high need for user adoption, especially when it comes toCRM systems. This will be achieved on the short term by making internalsystems more and more available via easy-to-use or even fun-to-use applicationsthat do not require an explicit login into the CRM system itself. Theseapplications are logging the user on to the CRM system implicitly or via settings.The CRM systems themselves will be more networked with other systems andinclude and provide more relevant information automatically, instead of requiringmanual action. As a part of this mobile devices will become more and moreimportant, also to be able to ubiquitously access the systems. In the longer run Ithink that gamification, or rather lessons learned from the success of gameplatforms, and behavioral theories will drive the evolution of systems. How thiswill look like is still evolving, but I think that Michael Wu is correct when he says
  6. 6. SocialmeetsCRM, July 2011that fun should be made a part of the design requirements4 of a businessapplication, in order to gain user productivity.Externally it is about the rationalization that (potential) customers, be theycompanies themselves or consumers, are now at eye’s height with thecompanies 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” thinkingFigure 4: Future CRM landscape with collaborating businesses and customers4
  7. 7. SocialmeetsCRM, July 2011How  can  this  look  like?  Earlier this year there have been a few blogs describing potential futures in aretail orientated environment; one by Mark Tamis5 around the scenario ofpreparing for a cocktail party, another one, by me using grocery shopping6, or amore recent one by Vanessa DiMauro on the future of social shopping7. Surelythere are others, sorry for not mentioning them as well.Both examples combine the convenient and easy experience with the idea ofcreating additional value for the customer in collaboration with other companies,and with the customers’ interactions, including their relationships to otherpeople.Let me briefly sketch another example using the automotive sector, againconnecting different companies and customers, to create value.BMW and Audi have thriving communities on Facebook. At least in Germany it islong possible to “custom build” one’s dream car using configurators. The goaland achievement of this is higher brand engagement and an improved customerexperience, both important parts of a CRM strategy.This experience goes on after the cars get picked up with subtleties like sounddesign and lots of helpers, including maintenance warnings.Now let’s go on a little further and think of a “no worries” package: as part oftheir commitment to the client the dealership picks up my car if there is anappointment scheduled, e.g. from my workplace – and delivers it back in theafternoon, when the service is performed. Given my permission my car couldeven send its health data back to the service station, thus avoiding a goodnumber of surprises; some will stay but the dealership can inform me early thatsomething bigger is going to happen – that information could even be providedby the car itself. Going on the car systems could identify a pending failuresomewhere on the road and warn me to either reduce load and/or to drive to anearby service station. The GPS system could direct me there. The servicestation is already informed about what needs to be done, so that they can callme on my car phone to further explain the problem and discuss options. Theyprobably can schedule the service immediately or alternatively provide me withan adequate loan car to continue my trip while caring for its pickup and thedelivery of my car to where I am. The car, using the sensors that it already hasbuilt 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 moretime.5
  8. 8. SocialmeetsCRM, July 2011Conclusion  The value chain as we know it converges towards a value network, that partlygets built dynamically to fulfill a customer’s need or, in other words, to get thecustomer’s job done.Companies will organize themselves and network with other companies, transfercustomers between them in a dynamic flow. This will happen based upon theexplicitly 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 butconverging technologies.In few words CRM will change from being a company strategy to an ecosystemstrategy. The ecosystem consists of different companies, customers, and theirnetworks, collaborating with the goal of putting together a value proposition thatleads to customers choosing your companys over ones proposed by others.  
  9. 9. SocialmeetsCRM, July 2011About  the  Author   Thomas Wieberneit, Owner SocialmeetsCRMThomas is an executive with more than 15 years of leadership experience inconsulting, the software industry and in the armed forces. For more than 10years Thomas held various leadership positions in SAP’s CRM developmentorganization, where he contributed to shaping and developing SAP’s CRMsolution. Before starting SocialmeetsCRM he was responsible for establishing anddriving the CRM consulting practice for CIBER in New Zealand and Australia andCIBERs innovation in the area of social CRM. Thomas is an expert in CRM, indistributed software development and the introduction and application of agiledevelopment methods in enterprise scale projects.If you would like to learn more about how SocialmeetsCRM can help youfacilitating and implementing a social CRM strategy in your company, please getin touch with him via phone: +64-21-241-7701, by e-mail, or via twitter @twieberneit. Please also visit ourweb site for more information.