Welcome to the new demographic reality:
The purse strings of the future are controlled by the digital client.
I've written about that digital client quite a bit in these pages lately ("The Rise of the Digital Client," August 2007, and "Web 2.0 and the Digital Client,") -- the "always-on, always-connected" generation that considers it a God-given right to be continuously plugged into the Internet and to each other. The under-23 set spends, on average, 8.5 hours per day digitally connected. Ninety percent of them conduct presale research on the Web and half of them purchase there.
In short, this is the generation that produces user-generated content, connects through social networking, and lives and breathes Web 2.0 technologies -- and they're changing the very nature of commerce. In fact, no less an industry maven than John Chambers, the vibrant chief executive officer of Cisco Systems, recently concluded that "what our children started...will be the business models of the future."
And the newest mantra of this clamoring class?
Business in an instant.
For the always-on, always-connected digital client, multichannel is an integral part of the idea of business in an instant, a natural outcome of achieving CRM in real time: By linking together all players involved in the supply/demand chain, and utilizing CRM applications that help manage the relationships between these players, information flows in real time in both directions. (See "Multiplicity Means More," for a closer look at the multichannel experience.)
Tim Bajarin of Creative Strategies (see sidebar "Anytime, Anywhere," below) takes it a step further by noting that the digital client's social movement goes way beyond technology, drawing on normal human impulses and adopting only goal-oriented technologies. Most important, the members of this generation increasingly are the buyers/influencers of your organization's products and services -- not to mention your own employees.
Consider the experience of BT Group, one of the world's leading providers of communications solutions and services, operating in 170 countries. In November 2007's Employee Engagement Today magazine, Richard Dennison -- who works on intranet, social media, and knowledge management strategy for BT -- described his company's Web "liberalization" project, an attempt to ensure that all its employees had access to social media. BT recognized social media tools as a huge opportunity to transform the way its employees interact not just with each other, but with BT itself as well as its customers, partners, and suppliers. Perhaps more important, as Dennison pointed out, "when over 4,000 of your employees voluntarily join a Facebook group called 'BT,' it's time to take note."
For digital clients, Dennison said, Web 2.0 technology "is second nature and an important part of how they interact and manage their time. The extent to which a company adopts user-generated tools is bound to become a barometer of company culture for those looking for suitable employment in the future."
Putting Web 2.0 to Work For You
It all starts with the new technology tools that Web 2.0 has to offer: blogs, wikis, videos, RSS feeds, widgets, podcasts, and others--each of which supports the social movement around interpersonal communications. These technologies share three basic tenets that will impact the future of CRM: user-generated content, social networking, and disintermediation.
According to Pew Research, nearly half (44 percent) of U.S. adults online are "content creators" -- posting messages, running blogs, hosting personal sites, etc. More than half of 12-to-17-year-olds use online social networking sites. There are already more than 70 million blogs, and a new one is launched every second. User-generated videos account for 47 percent of total online videos streamed in the U.S. (See "Power to the People," December 2007, for more about user-generated content.)
You cannot disconnect the digital client's personal reliance on Web 2.0 from her desire to conduct business with your organization in a similar way. She and others like her are your current and future customers, and their Web 2.0 experiences have set expectations for transacting business. This makes it critical to leverage new and developing technologies to successfully drive the next generation of CRM 2.0 applications. Several CRM vendors have already begun down this path (see sidebar "CRM Vendors + Web 2.0," below) -- and the laggards are now scrambling to catch up.
CRM users that wish to survive long term need to master these new technologies and apply them in ways that attract and retain the digital client. Some companies have acknowledged the shift and have already begun to change not just the products and services they offer, but the way they interact with their customers. Apple and eBay would be at the top of that list, but I've already discussed them in my August 2007 column. So let's turn to two new examples:Pfizer, the pharmaceutical giant, announced in September 2007 that it had partnered with Sermo.com, the fastest-growing social networking site for doctors. Sermo.com, endorsed by the American Medical Association, offers doctors the ability to network with colleagues to discuss medical cases and/or problems. At the time of the announcement, 30,000 doctors in the U.S. frequented Sermo.com and an additional 2,000 doctors were joining each week. (Sermo.com expects to open its site to non-U.S. doctors this year.)
Sermo.com prohibits any advertisements on its site, but Pfizer management sees collaboration with Sermo.com as a way of lowering costs and reducing inefficiencies in its relationships with doctors. Everyone benefits: Members of the site get to partake in an interactive online social community, within which they have the opportunity to publish and receive feedback on numerous medical issues. For Pfizer, the site serves as an efficient way of letting doctors obtain information on its drugs, improving relations with the medical community, and getting assessments from physicians on its clinical trials. Pfizer furthermore sees Sermo.com as a stimulus to reignite growth within the company and prepare itself for changes in the drug market.
Other major pharmaceutical companies have taken note of Sermo.com's success and many are expected to create their own physician social networking sites. It's likely that Sermo.com will provide a model for other industries to deal successfully with critical distribution channels (in this case, doctors) within a social networking environment.AAA, the American Automobile Association, celebrates its 105th birthday in 2008. Unfortunately, the average AAA member is nearly as old -- well, 53 years old, anyway -- and unless AAA intends to go into the retirement-home business, the time has come to reach out to a younger generation. While most of us know AAA as "the tow-truck company" -- which is still the principal reason members join--times have changed: The company has acknowledged the need to move away from traditional marketing techniques to begin experimenting with new and innovative ones -- including social networking and user-driven content (known as "member communities" in AAA parlance).
In 2005, AAA Southern New England, a regional AAA unit based out of Rhode Island, launched the INsider program, a marketing promotion targeted at 13-to-16-year-olds, and designed to increase teenagers' awareness of the benefits of AAA membership. The program is marketed through various channels, and communicates information on a regular basis through direct mail, Web pages, email messages, a quarterly newsletter -- and on a soon-to-be-announced AAA-member community where members can share their user-driven content with other members and non-members.
Participants receive a membership card providing numerous benefits, such as discounted admission to amusement parks, movies, and sporting events. Additional benefits include automatic entry for sweepstakes and raffle prizes, along with free driver-education information.
AAA Southern New England has committed to spending five times as much of its marketing budget on the teenage population as it did 20 years ago. The executive team feels confident that the increase will be more than offset by additional AAA memberships and long-term revenues. And so far the results look bright: Spending by INsiders at AAA Southern New England branches is up tenfold over the past two years and annual spending by INsider parents rose more than 15 percent in each of the past two years.
Always On, Always Connected -- and Always Marketing
Over the next decade, as the always-on, always-connected digital clients join the workforce, individual interconnectivity will blossom, and self-publishing will explode both inside and outside the workplace. The impact of social networking on business, particularly marketing, will be tremendous, offering entirely new branding opportunities. Marketers will see an increase in niche aggregation, the sophisticated filtering of social networking Web sites to separate relevant buyers from irrelevant ones. Organizations will also be forced to move from producer-driven to consumer-driven thinking in order to penetrate identified market segments with increasingly relevant products and services.
Getting it right in the age of the digital client is no cakewalk -- just look at the backlash that Facebook encountered from its Beacon data-sharing initiative. (See "Facebook's About-Face," January 2008.) Nevertheless, it's foolish to deny the digital client's growing influence on companies and how they'll conduct business in the future. Consider the latest figures, as presented by Nielsen/NetRatings at a recent industry conference in New York:
Web 2.0 sites -- those allowing users to talk to each other via email, messaging, blogs, and other social media tools -- make up the fastest-growing category on the Web, doubling their traffic over the last year. That puts Web 2.0 ahead of categories such as news and information, video and movies, and family resources. The average Web 2.0 user conducts 63.8 online searches per month, compared to the 44.7 online searches per month conducted by all Web surfers. Aggressive Web 2.0 users -- people who make social sites part of their daily life, believed to account for between 15 percent and 20 percent of the population -- are more voracious but less loyal news consumers because of information-retrieval tools such as RSS feeds.
Simply said, there is not even a remote chance that Web 2.0, business in an instant, or the digital client is going away. So learn to mitigate risk around brand protection. Concerned that Web 2.0 is the new Wild West? Learn how to thrive within the unregulated and unmonitored environment. Think social networking is primarily a U.S.-based phenomenon? Accept that the world truly is flat, and it's only a matter of time until Web 2.0 takes off globally. Hoping things will slow down to give you time to catch up? Get used to this level and speed of change -- forget complacency and jump on board now.
SIDEBAR: Anytime, Anywhere
By Tim Bajarin
About 10 years ago, I had an interesting discussion with Bill Gates while on a visit to Microsoft's headquarters in Redmond. At the time, he was touting some new mobile software that Microsoft was about to release, and reiterating that this was part of his vision for "information at your fingertips, anytime and anywhere you happen to be."
In fact, if you've been following Microsoft for any length of time, you already know that this mobile mantra has been one of the company's major drivers.
This is why it has made such an investment in Windows Mobile software, and why today the idea of delivering a more robust mobile operating system for laptops, tablets, and smartphones has become part of the company's DNA.
As of last year, laptops outsold desktops; by decade's end, some analysts believe that laptops will account for 65 percent of all computers sold. Today, smartphones represent only about 7 percent of the 1.1 billion cell phones sold annually, but by 2010, analysts believe they'll account for up to 22 percent.
The fact is that we're becoming, more and more, a mobile society.
Businesses and consumers want their information, email, applications -- even entertainment -- on demand, no matter where they happen to be.
That trend is clearly in the sight of all of the personal computer, consumer electronics, and mobile handset makers, as they and the telephony carriers rush to deliver high-speed wireless networks and mobile devices of all kinds, capable of delivering business in an instant.
New third-generation (3G) and fourth-generation (4G) wireless networks will soon deliver wireless connections with speeds well over 4 MBPS. In the future, WiMAX networks will become the wireless workhorse, delivering connections up to 70 MBPS. And WiFi hotspots are popping up everywhere, making it easier to get connected even if you don't have a cellular modem in your laptop.
As more and more applications get delivered via the Internet cloud, the need for high-speed, smart, wireless devices will only increase. It's time we prepared businesses and consumers alike for a world where business applications, information, and even consumer-driven entertainment are delivered -- as Bill Gates suggested a decade ago -- "anytime and anywhere you happen to be."
Tim Bajarin, president of Creative Strategies, is a leading authority within the CRM industry. He will also be a presenter at the destinationCRM 2008 conference, taking place August 18-21 in New York. He can be reached at email@example.com.
SIDEBAR: CRM Vendors + Web 2.0
By John Chan
Several vendors currently offer substantial Web 2.0 type functionality in their CRM application with the aim of increasing online collaboration between users, content providers, and organizations. Here are some examples:
John Chan, director of ISM's Software Testing Lab, has been testing CRM software since 1999. He can be reached at firstname.lastname@example.org.
- Customer Feedback: RightNow Technologies' Feedback feature enables organizations to set up Web or email surveys to capture real-time customer feedback. Afterward, feedback can be routed by topic to the appropriate department for an appropriate response.
- eCommerce: NetSuite can be integrated with eBay's online marketplace, allowing users to list and sell items, monitor auctions, and automatically create customer records and sales orders from completed auctions.
- Open-Source Software: Salesforce.com has played a leading role in the open-source movement, which makes source code available online for users to configure their own software applications. With Salesforce.com's Apex programming language and development platform, customers are able to customize any component in their existing implementation or replace existing features with ones more suitable to their needs.
- Online Collaboration: Several CRM vendors now offer direct online collaboration tools for a sales community. Oracle's new Sales Library allows sales reps to access and share and vote on the usefulness of materials such as PowerPoint slide presentations. Salesforce.com's Salesforce-to-Salesforce service allows customers to share data, sources, and leads in a Facebook-like social network.
- Real-Time CRM: A number of CRM vendors have really advanced in the area of real-time CRM functionality. Infor CRM Epiphany's Interaction Advisor drives intelligent interactions throughout the enterprise by delivering the most appropriate message to each customer touch point in real time. eGain continues to raise the bar regarding real-time customer service and contact center management functionality based on impressive cross-channel capabilities.
- Additional Web 2.0 Features: Other CRM vendors have jumped on the bandwagon as well. SAP and Oracle both claim to have added robust Web 2.0 functionality to their latest CRM applications: SAP CRM 2007 includes widgets for sales reps' home pages, a drag-and-drop module for local weather forecasts, Google search bars, and favorite reports. Oracle offers an application that can "mash up" information about customers and prospects from internal systems to predict sales opportunities.
SIDEBAR: The Dos and Don'ts of Web 2.0
With the understanding that mastering Web 2.0 capabilities is no easy task, we've put together 10 steps that will help you create your business-in-an-instant, digital-client roadmap. (This is an expanded version of the list that appeared in "Web 2.0 and the Digital Client," November 2007.)
- Immerse yourself in the Web 2.0 culture to understand it. Learn about search-engine marketing and optimization, investigate blogging and other social networking techniques, or hire a professional to ensure that your blog/social network site is compliant, catchy, and fun.
- Ramp up your knowledge of social networking through participation. Join a few social networks, create a blog, start downloading podcasts, or have fun producing your own online videos.
- Track developments outside of your industry. Study new Web 2.0 companies such as Yellowikis, a Wikipedia-like site for open business listings. This new site has the potential to shake up the $22 billion Yellow Pages industry.
- Conduct research regarding clients' Web 2.0 desires. Are they digital clients? What Web 2.0 applications are they interested in? What is their profile? What do you need to do to keep them as customers?
- Understand executive tolerance. Each company's executive tolerance for Web 2.0 technologies will differ. Figure out the best way to secure approval for potentially disruptive behavior brought on by Web 2.0 technologies. The BT Group case study mentioned in this feature is a good read: Securing Web 2.0 acceptance within BT's executive ranks was not easy.
- Consider partnering with or purchasing a Web 2.0 company in your industry. This may make better sense to jump-start your efforts and secure executive approval.
- Ensure that all information is accessible via mobile devices. Mobile devices are central to the digital client's lifestyle.
- Hire Generation Y employees (and put at least one on your Board of Directors). This will help propel digital-client, business-in-an-instant thinking.
- Don't neglect security. Many of the technologies are new and not necessarily proven. Be sure to have a well-thought-out Web 2.0 security plan.
- Carefully protect the brand. Good information travels fast on the Internet; bad information travels faster. So you've got to be careful and protect the brand as you expand your Web 2.0 efforts. If, for example, a social networking experiment does not work out for your organization, you must know when and how best to pull the plug so as to minimize any damage to the long-term value of your brand.
Barton Goldenberg is president and founder of ISM Inc., a CRM real-time enterprise consulting firm in Bethesda, Md. Barton expands on the concepts presented here in his forthcoming book, CRM in Real Time: Empowering Customer Relationships (Spring 2008, Information Today). He can be reached at email@example.com.