Thinking about CRM
I used to be an executive for a customer relationship management (CRM) software company. For what it’s worth, I had a great time while I was there and am completely convinced that over the next five years, pretty much everyone will need this type of software.
As a category, CRM software can include a lot of different bits and pieces, but in general it is software that intelligently manages the flow of customer information to and from wherever it’s needed inside or outside the walls of your firm. The other day someone asked me what I thought was important to know about CRM software. In no particular order, here’s what I think.
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The market for the broad category of CRM software has moved into the early majority phase. We can debate this, but the market sizing data and the accumulated market caps of the public companies in the category appear to support this point. This is more than an idle observation as it has significant implications for everyone in the space. Among other things, it means that vendors need to pay more attention to providing well conceived implementations that are well supported and deliver real business benefit.
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There are a number of vendors with offers that don’t fall squarely into the CRM category as it is presently defined that nevertheless have offers that can contribute mightily to your CRM strategy. Collaboration software, like what Interact sells, would be an example (it’s awesome stuff by the way). Business analytics and business intelligence is another. Value maximization software like what Outcome Software sells is another. Don’t restrict your thinking about CRM to the capabilities offered by the packaged software vendors.
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CRM may wind up as a subset of a broader category of front office, enterprise management applications that will include activity based accounting, balanced scorecards, interactive budgeting and reporting, real-time financial reporting and analysis (the SEC wants this), human performance management, predictive modeling, value modeling, and other categories I haven’t thought of. I’m sure if Siebel has its way, it will become the dominant front office brand, just like SAP and Oracle are in the back office. It’s also possible that a firm like SAS with its huge client base and gold-plated reputation for analytics and business intelligence could get there as well, leading executives to ask someone to “SAS it”, just like they now “Xerox it” or “FedEx it.” This game is already on.
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For buyers of CRM, there are three big buckets of issues: buying, deploying and implementing, and using the stuff to generate business advantage. The right answer for all organizations is to think through the big go-to-market issues first, use those insights to develop a CRM strategy and framework, and then go buy, deploy, and use technology, training, and whatever else it is you decide you need.
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In general, there are four possible go-to-market strategies an organization can follow. There are many dimensions that describe these choices, but the simplest way to think about it is: do transactions, sell solutions, sell strategies, and sell partnerships. You can do one or multiple strategies. You can do any of the first three directly, or indirectly. The differences are profound and have a significant implication on what you need your CRM software to do.
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Although there are overlaps, CRM implementations look different in small organizations, mid-size organizations (including departmental solutions), and large integrated enterprises with multiple business units.
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Lately there has been a lot of buzz about partner relationship management or PRM. I have a slightly different wrinkle on the topic which is doing business in what I call the “inter-network.” From a technology standpoint, this involves web-services and portal architecture that allows a firm to leverage infrastructure, content, and relationships to create a rich, branded customer experience out there in physical and cyberspace without having to own all the pieces. From a provider standpoint, this means vertical solution providers like Metavante that build CRM functionality into their core technology offers (in this case, back-end services for banks). It could also usher in an era of true web-services where enterprises will be able to subscribe to and publish all kinds of cool bits of code. From the customers’ standpoint, they see a portal with all kinds of richness and don’t know and don’t care whose server it sits on. In an even zoomier future, Microsoft is right and the customer has even more control and portability, with their own personal web-based experience showing up wherever they go.
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With all that is written and said about CRM, there is surprisingly little focus on the soft issues of the people who actually interface with the stuff. In a very narrow sense, you could call this usability. If the customers and employees hate the interfaces, they will rebel against using them. More broadly, there’s a lot of technology implemented without any real thought to “what customer problems are we really solving?” or “what problems do the customers have that they don’t know about that we can solve with our CRM initiative?” Even more broadly, at what point do we ask “What is our brand promise; what is it that differentiates us; and how do we translate that into a sparkling customer experience?” In other words, let’s not lose sight of the customer in customer relationship management.
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Good operational CRM is a must. It is increasingly obvious that good analytic CRM is also a must. Integrating operational CRM and analytical CRM is the next frontier. What will physically allow them to come together is good architecture. It’s a daunting looking list, but here’s what you need:
Customer-centric database design
Internet-native application architecture
Component web services capable
Interoperability—XML communication and integration architecture
Personalization capable portal access (device independent)
Flexibility—Metadata-driven configuration and customization
Industry standard development tools
Modal access rather than departmental module access
Multi-tenancy (needed for internetworking)
Rapid configuration and customization capable
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The last point should be the first. Almost everyone that writes about CRM says that CRM is more than technology; it is a strategy if not a firm-wide commitment to a way of doing business. You can receive business benefit from buying CRM technology, but you can’t truly become a customer-centered organization without an integrated customer-centered strategy. What does that mean? In practice, it means you need to integrate branding, human performance, and technology in support of a single vision and promise that you execute across all customer touch points.
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Kevin Hoffberg
Last modified:
05/03/06