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Is CRM Technology Getting Ahead of Itself?
CRM solutions providers are caught in a potentially deadly game wherein gaining recognition for innovative technologies has become more important than providing a solid product.
Posted Oct 10, 2001
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Remember when marketers and business analysts tracked the gradual evolution of product categories through their product life cycles? And we measured evolutionary progress along a gently rounded bell curve divided into market phases named "innovator," "early adapters," "early majority," for example--with theoretical market potential represented by the distance between the curve and the horizontal axis? Boy, life was simple back then.

Now, remember the '80s and early '90s, when that gentle curve started getting lifted up higher and higher at the center point. Products had to reach maximum market potential quickly 'cause newer and better stuff inevitably followed hot on their heels. No time to dally dealing with innovators or early adopters. Had to get straight to the top of the buying curve.

Think this more compressed evolutionary cycle applies to CRM technology? Partly so. But partly not--because this movement through the life cycle is still measured by how many customers buy and use the product category, and that's not the measure of success in today's CRM technology market. Instead, CRM technology companies are trying so hard to look revolutionary that they're moving on to the next wave of product technology before customers have had time to buy and deploy the last wave.

In five years we've gone through:

• standalone, laptop-based sales force automation technology

• nascent field service systems requiring remote users to carry brick-like "hand-held" devices that could only export data through a serial cable connection at the office

• fancier marketing automation stuff that not only sliced loaves of data but broke them down into individual specs of grain with genetic code showing where the farmer bought the seed

• field service systems that synchronized data with central servers and used handhelds that only required one hand to lift (all of this still client-server based)

• market analysis systems that could communicate "appropriately" with customers based on microscopic bits of information

• field service systems remote users could (theoretically) operate through a cell-phone

• and finally from there to 100 percent Web-based architecture and nearly 100 percent wireless connectivity by remote users, all of which supposedly makes CRM technology easier to use, less expensive to buy and less costly to maintain while solving everyone's problems.

That is, everyone except customer service reps who can't work as fast because their new Web technology is slower than the old client-server stuff. And field sales people who can't work or access data without a live Internet connection. And field service people working out of wireless range. But who cares about these lowly folks?

Guess we don't need those nice old bell curves to measure progress. Not anymore. Not even the spiked versions. Because they're too old-fashioned. They measured category development according to sales. Real dollars and sense. Arcane measures like what percentage of customers are buying the new category instead of the old. Nope. What we need is a new "ding-dong" bell curve.

What is a "ding-dong" bell curve?

Well, a "ding-dong" bell curve measures promotional penetration rather than product penetration. It measures how well customers are buying "the line". On the "ding-dong" curve, a product concept is successful when the market of would-be buyers accepts the premise that it is the latest and greatest, even if they bought technology a couple of waves before and can't afford to switch. And when enough buy "the line," it's time to move on to the next wave of technology. Never mind that exceptionally few customers have invested in the wave before. Don't have to deal with messy stuff like money and profits and especially not making technologies work before basing new technologies on them.

Scratching your head wondering how companies can stay in business this way? So are they, many of them. Truth is, CRM technology companies are cutting their own throats with this game of technology leapfrog--and by measuring business success on the "ding-dong" bell curve. By pushing each other to abandon "old" technologies before recouping associated investments, CRM technology companies are creating market conditions that make it difficult for most to maintain even a modicum of financial health. Seriously, some of the big names in the business have never turned a profit. And all but a few are going to have difficulty emerging whole from the technology-purchase slowdown--which is significantly affecting the CRM market.

But that's their problem, eh?

Wish it were. However, CRM implementers are paying the ultimate price: over-investment in R&D at the expense of supporting the installed base; half-finished technology built on top of half-finished technology; and disparate technologies flimsily held together, covered with a shiny wrapper and declared "integrated." Just the other month I asked a client IT manager what he thought after looking under the hood of one of the most popular and supposedly most buttoned down systems on the market. He said not a word, but his facial expression made a loud retching noise. And he did elaborate later, lest you think I misunderstood him. Nope. Buyers of CRM technologies are paying a mighty high price.

Any hope on the horizon?

Wish I could be more positive. Giving customers what they want--sound and stable systems adaptable to their needs rather than tons of bells and whistles--would help a ton. As will customer IT departments no longer lapping up vendors' "latest is greatest" lines. But it just seems like giving customers what they want is no fun. Gotta stay one step ahead of the pack--even if that's ten steps ahead of the customer. Gotta maintain the hype--at the expense of maintaining the product. Gotta keep jumping over profit opportunities to get to bigger opportunities. Ding-dong.

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