Logo
BodyBGTop
It's All Coming 2.0gether
As 2007 ends, and 2008 looms ahead of us, patterns are beginning to emerge: The future of business may not be in the hands of the executives, but those of the customer instead. And yet, hasn't it always been that way?
For the rest of the December 2007 issue of CRM magazine please click here
Page 1



We face the start of a new year more than halfway through a decade of significant change. We've seen companies come and go; we've seen the Web mature; we've seen software-as-a-service grow from a niche to a major business model. Through it all, we've heard over and over that "the customer is king." That well-worn platitude is developing a life all its own, as part of a growing movement away from the traditional concepts of CRM. What has been seen as a means of managing customer data in order to understand them -- or to sell more to them -- is now viewed as a vital two-way link between customers and vendors centered on the overall customer experience. CRM, in other words, is incorporating customer experience management (CEM), or what many are calling CRM 2.0. For insight on this shift, there are few better starting points than Paul Greenberg. His CRM at the Speed of Light is one of the seminal books on customer strategy, and a fourth edition will arrive in 2008. "CRM must go 2.0," Greenberg says. Up 'til now, he adds, CRM "has been mostly a left-brain effort": collecting data and analyzing it, trying to comprehend the customer as a set of statistics. "It's beginning to move to the right brain now," he says. "It must be whole brain." Just what that brain will arrive at is still uncertain. Greenberg is one of the driving forces behind an effort to define and characterize CRM 2.0, and even give it a new name if necessary. Not surprisingly, the discussions about CRM 2.0 are taking place through one of its defining technologies -- a wiki (crm20.pbwiki.com). The introduction to the CRM 2.0 Wiki reads:
    "Classic" CRM is no longer viable -- a one-dimensional corporate interaction that provides processes, services, and technology to the customer-facing departments -- sales, marketing, and customer service. It is time to recognize that there is a customer ecosystem...that provides empowered customers who are increasingly interested in making their own choices in how they interact with companies that they do business with. That means that not only does the company need to provide the goods and services, but the tools and culture to make the experience of that customer one of paramount and unparalleled value to that customer and thus to the company in return.
In Greenberg's view, CRM is becoming something new, something independent of marketing campaigns or sales pitches. The customer now controls the business ecosystem, and that makes the situation different than anything we've seen before. "We are not dealing with a business initiative -- it's social evolution," he says. "In 2008, there will be a drive by multiple companies to get branding, feedback, and more" from customers. The irony is that social media grew naturally, without help from business.
Social Networking Greenberg isn't the only one to see the writing on the wall. "About three years ago, we started seeing high-tech customers with complex products talk about richer collaboration," says Mark Angel, senior vice president of corporate development and strategy for Kana Software. "Now we're starting to realize the effects. More business is being driven to online, or merged with it." Angel notes that some of the strongest uptake has been in banking and health insurance, where ready access to data helps end-user customers accomplish tasks on their own timetable. Customers are making it clear they want to define engagement on their own terms. "A lot [of Kana customers] are beginning to experiment, trying to roll out blog and wiki initiatives, figuring out how to use reputation, how to change the knowledge-creation process," Angel says. "Customers are asking, 'How can I use this wiki stuff? How can social networking be useful to drive loyalty? What does a collaborative Web site look like?' " That's as it should be, according to Brent Leary, cofounder and partner of small-enterprise CRM consulting and advisory firm CRM Essentials, and cohost of Technology for Business Sake, a radio show for small businesses. "Social networking will continue to be big. It is absolutely critical for CRM vendors to reach out and roll their own social network and trackbacks, or to work with Facebook, LinkedIn, and the rest," he says. Part of the CRM 2.0 shift involves embracing the customer as part of the company's voice -- and adapting to a more nimble environment. "Marketers must be willing and able to move with this, and make their message consumable for people who don't want to be marketed to," Leary says. The way to the consumer's heart, he adds, is through "live and unscripted content." Often, this takes the form of user-generated content -- something of a buzzword in the emerging realm of CRM 2.0. (See "Power to the People," for more on user-generated content.) Greenberg is on the same page. "The value of YouTube and other user-generated content is the ability to share, comment, rate, and embed it," he says. "It's transforming where CRM had to go -- customer experience." The typical YouTube entry isn't great video -- equivalent to family home movies, he says -- "but it's spontaneous and it's shareable. Without sharing, it's just rich media data hiding in a database." As Angel noted among his customers, so Greenberg does among vendors. "The leader in this is Salesforce.com, with its Salesforce Ideas and AppExchange," Greenberg says. As a company, Greenberg says, the people at Salesforce.com are all big Facebook users, and are harnessing social networking's power in many ways. "They're a very smart company at understanding social impact." Customer Experience The point behind all of this is to change the way people think about (and interact with) your company. "Vendors are starting to take customer experience seriously," Angel says. Where businesses used to define themselves in very concrete, serious, rational ways -- describing what they do, what they make, or what market they operate in -- this sort of point-solution identification has worn away. "Today, almost any company's product has gotten big enough and capable enough that you don't want to tie yourself to a simple definition of what your product does," he says. "Customers have been pushing us in terms of experience management," Angel continues. Strong trends have arisen, focusing on loyalty and satisfaction as key indicators of customer value. "They're realizing they must compete on service and overall experience -- it's become the most important ingredient of brand," he says. "The question has become how to create a process so good it not only stops churn, but also attracts new revenue." Greenberg cautions businesses new to the idea of customer experience to keep a cool head. "Don't deify the customer -- a relationship works both ways," he says. "You're expecting to get business value out of them, and that's just what they're expecting to get out of you. The companies who lead will be the ones who come forward with customer engagement tools -- providing businesses with the tools to engage us." Customer Intelligence and Intelligent Customers All this talk about customer experience is nice, but data is still what makes a business go; if you can't measure it, you can't manage it. One metric used to indicate positive customer experience is the Net Promoter Score (NPS), developed by Satmetrix and the consultancy Bain & Co. (See "The 2007 CRM Market Awards: Influential Leaders," September 2007.) It's not perfect for the task -- it infers customer experience without granularizing it -- but it's a start. Meanwhile, business intelligence providers have to step up with new ways of understanding the admittedly fuzzy interaction between customers and companies. "Old analytics aren't adequate anymore; customer satisfaction doesn't work," Greenberg says, noting that bad metrics are often worse than none at all. "One rating organization -- a dumb-ass company I won't name -- decided to measure Web pages by 'length of time viewed.' If that's the case, everybody should go to my blog, leave the computer on, and go on vacation." In other words, measuring the right things is crucial. But so is getting those measurements into the hands of line-of-business personnel. "Customer intelligence [and] analytics has emerged as a very common buying factor," says Joe Bergera, senior vice president and general manager of Sage Software Global CRM. "The primary focus is around marketing analytics; however, we see many customers with a general interest in analyzing data contained in their CRM systems. For example, who are my most profitable customers? What territories are performing best?" Today, ad hoc reporting and dashboards are standard requirements for any CRM system. Bergera notes that "a few, more-advanced customers" are beginning to request support for predictive analysis. In 2008, he says, "it will become more critical for vendors to have a multitiered business intelligence strategy to address the full range of BI requirements -- dashboards, ad hoc reporting, and predictive analysis." The cost and availability of business intelligence analysts can be prohibitive, especially for smaller businesses, so the quality and quantity of prebuilt analysis (or content) "will become increasingly important to customers [who] are evaluating customer intelligence solutions," Bergera says. As Bergera suggests, much of the analytic focus has been and will continue to be on marketing. This doesn't quite dovetail with the coming customer revolution. Customer segmentation is vital to current business practices, but effective customer engagement takes place at the individual level. "Some talk of microsegmentation as the answer, but that's just more filters," Greenberg says. The real answer, he says, is what some are calling "folksonomy" -- collaborative tagging or social classification to categorize content. What that amounts to, really, is self-segmentation. Greenberg admits that there are some issues to be ironed out regarding privacy and security when tying customers to the ratings they make, "but in the end, if you make something public, you have to expect it will be seen." SaaS'ing the Small Business So far, the vendor executives have been more or less in agreement. There's one area with notable differences of opinion, and oddly enough, it's one where it seems most of the news was happening in 2007: software-as-a-service (SaaS). "We are seeing some of the buzz around SaaS starting to top off," Bergera says. "While there is still interest in instant-on and instant-off, customers are increasingly concerned about how to integrate their CRM solutions with multiple internal applications." When they start to go down this path, he says, the current SaaS models present serious limitations. He praises Web-based CRM solutions for "relative ease of deployment and maintenance," adding that "in an increasingly connected world, we see this as a logical deployment model for many of our customers." However, Bergera says, organizations desire some level of integration between their front- and back-office solutions, and this will become a truly critical decision factor for many organizations. "We believe that successful CRM vendors will need to support excellent prebuilt integrations with leading back-office solutions, as well as enable rapid integration to various other applications that may be running in a customer's computing environment," he says. "This trend will really challenge SaaS vendors to adapt their current model." Not so, Leary argues. "The Web is heaven-sent for small businesses -- if they can figure out and understand how to use it," he says. His focus on small business has exposed him to several vendors -- he notes Infusion, Netbooks, and Zoho -- that, in his view, truly understand "that small businesses are totally interested in CRM, understand what they can do with it, and can afford it," he says. "The biggest challenge for [these small businesses] is using the Web to increase the pool of prospects and automate other activities so they can pursue business and not administrate," Leary continues. "On-demand is crucial for small businesses, and there's pent-up demand for quality." Greenberg is less restrained. "Look out for Zoho, because they will kick ass. They have a real sense of how to build native Web tools: with collaboration and business value," he says. "Zoho isn't a personal productivity competitor, it's a customer engagement competitor." By giving customers the means to communicate their wants and needs to the businesses they deal with, Greenberg believes vendors such as Zoho put into practice the oft-repeated theory that the customer is always right. "The customer is telling you what's right for them," Greenberg says.
Click here
to view full-size chart.
So What's Going to Happen? Enough talk -- time to close this predictions article with some actual predictions: Leary tells us to expect action in the midmarket during 2008. The October 2007 announcement of SAP Business ByDesign will make waves (see "SAP's Midmarket Design"), as will further developments from Microsoft. "Microsoft Dynamics Live CRM will be interesting," Leary says, noting that, despite delays and hiccups, it's hard to count Redmond out. "It will have an effect on the market. The pricing alone is compelling enough that it can't be ignored." (In October, Microsoft announced that it would be charging partners licensing fees of as little as $15 per user per month -- but whether those low costs trickle down to end users, and whether that drives uptake, remains to be seen.) Leary's a bit more guarded about the industry's German giant, though: "It's going to be tough for SAP," he says. "When you're used to big-game hunting, it's tough to sell salespeople on thousand-dollar deals instead of hundred-thousand-dollar ones." "We will see huge use of social networking and CRM in the public sector -- constituent relationship management," Greenberg says. Presidential hopefuls Barack Obama and Mitt Romney are two who are really getting it right, Greenberg says, reaching out to voters in a new, engaging way. "It's driven by the elections of 2008, though, so there's a time limit involved. They must make a passive campaign component active." Salesforce.com has been making waves with AppExchange and now Force.com; NetSuite, the company's competitor in the SaaS space, answered back with application-development capabilities of its own -- SuiteBundler, NetSuite's third-party customization-delivery ecosystem that builds on the company's SuiteFlex platform. The editors of CRM magazine believe it will be quite a competition to watch, pitting Salesforce.com's established community against NetSuite's well-integrated business suite and industry-standard data architecture. Last, a renewed prophesy: "I made a prediction last year that Google would buy a CRM company," Leary says. "When Salesforce.com and Google started working together I felt like Nostradamus, but it didn't work out that way." Several Salesforce.com initiatives have drawn upon Google applications, including Google Maps and Google AdWords, but the two companies remain distinct. "I still think this will happen. If [Google executives] buy anybody, it will be Salesforce.com. It would give them good footing in business, especially enterprise." SIDEBAR: Multiclient Mobility Not everything in 2008 will be tied to massaging the customer. CRM still has to serve the business user as well, and connectivity options are opening doors for CRM vendors. "This year, mobile capability became a need-to-have versus a nice-to-have in CRM," says Brent Leary, cofounder and partner of consultancy CRM Essentials. "People must have information when and where they need it." Many vendors are realizing the need for a solution that operates on desktops and wireless devices with equal facility: Salesforce.com bought Sendia, Sage bought Corum, and NetSuite entered into several mobile partnerships. "While Web-based deployments will be common in 2008, we see emerging interest in multiclient solutions where an organization can roll out a consistent CRM experience to Windows, Web, and mobile users," says Sage Software's Joe Bergera. The interest in multiclient solutions is a function of two key factors -- a recognition that despite the promise of expanded connectivity users still occasionally need a disconnected CRM solution, and the increasingly high level of computing capability that is supported by small-form-factor devices. These, he adds, will further mobile CRM deployment in 2008. SIDEBAR: Changing Channels For many customers, the manufacturer or developer of a product isn't the main contact. Integrators, resellers, partners, and the like -- collectively known as the indirect channel -- mean more to such customers, and should therefore mean more to the vendor. 2007 brought considerable movement in this direction, with a number of applications and new suite components dedicated to managing indirect sales and keeping partners happy. Additional progress late in the year added a more robust marketing component to channel management. Why? "Indirect selling partners are no longer captives to the direct vendor, as the market has gone from being product-centric to opportunity-centric," says Charles Watson, vice president of marketing and products at BlueRoads, a San Mateo, Calif.-based provider of "partner opportunity management" solutions. "When customers enter into a buying process, they ask, 'What are the alternatives to a PBX?' They don't think about who makes VoIP switches." The vendor isn't the center of the universe, Watson says, because the customer doesn't necessarily care about a brand. "The partner is the brand, the problem-solver that puts the solution together. The indirect channel has many competing agendas, and vendors are starting to realize that the partner is key. Partners are changing from market-takers to market-makers." SIDEBAR: 10 Tech Trends Source: Gartner We here at CRM magazine pride ourselves on our foresight as well as our insight, but we also value the views of the CRM analyst community. Gartner, for example, as part of its Symposium/ITxpo in October, took a stance on the 10 technologies likely to play a strategic role in 2008. (Gartner defines a strategic technology as one "with the potential for significant impact on the enterprise in the next three years." Significant may seem a fairly broad criterion, but Gartner looks for "high potential for disruption to IT or the business, the need for a major dollar investment, or the risk of being late to adopt.") Below, we've highlighted half of the research firm's top 10 -- the ones we think are most likely to impact the CRM community -- though Gartner itself acknowledges that no such list should be seen as all-encompassing. In fact, these innovations "should be considered in conjunction with many proven, fully-matured technologies, as well as others that did not make this list, but can provide value for many companies," Carl Claunch, vice president and distinguished analyst at Gartner, said in a statement. "For example, real-time enterprises providing advanced devices for a mobile workforce will consider next-generation smartphones to be a key technology, in addition to the value that this list might offer." We couldn't have said it better ourselves.
  • Mashup & Composite Applications. By 2010, 80 percent of composite enterprise applications will be built using Web mashups. They'll evolve significantly over the next five years, and application leaders must take this evolution into account when formulating an enterprise mashup strategy.
  • Web Platform. As software-as-a-service (SaaS) becomes an ever-more-viable option, emerging Web platforms are providing access to infrastructure services, information, applications, and business processes through Web-based "cloud-computing" environments. Companies should examine how Web platforms will impact their businesses in three to five years.
  • Real World Web. The informal term refers to places where information from the Web is applied to the particular location, activity, or context in the real world. Seek out new applications, new revenue streams, and improvements to business process that can come from real times, places, or situations.
  • Social Software. Through 2010, the enterprise Web 2.0 product space will see considerable flux with continued product innovation and new entrants, including start-ups, large vendors, and traditional collaboration vendors. Expect significant consolidation as competitors strive to deliver robust Web 2.0 offerings to the enterprise. Nevertheless social software technologies will increasingly be brought into the enterprise to augment traditional collaboration.
  • Metadata Management. This critical part of a company's information infrastructure will enable optimization, abstraction, and semantic reconciliation of metadata to support reuse, consistency, integrity, and shareability.
The rest of Gartner's Top 10: Green IT, Unified Communications, Business Process Modeling, Virtualization, and Computing Fabric. SIDEBAR: 2008 Predictions Source: Gartner
    CRM: Through year-end 2008, 25 percent of CRM projects will be postponed or canceled because of the CRM skill shortage in consultants and systems integrators. Marketing: Through year-end 2008, more than 80 percent of marketing professionals will fail to capitalize on the next wave of Web-based consumer interactivity for people 25 years old or younger. Sales: By 2009, more than 50 percent of new SFA deployments will be based on software-as-a-service (SaaS) delivery models. Customer Service: Re-architecting the major application-suite providers' platforms will delay the adoption of their next generation of customer service contact center products until the first half of 2008.
SIDEBAR: CRM Cool Vendors (2007) Source: Gartner
  • Eloqua
  • Enkata
  • Hitwise
  • InsideView
  • Landslide Technologies
  • Loyalty Lab
  • PowerReviews
  • TOA Technologies
  • Vistaar
  • XpertUniverse Contact Senior Editor Marshall Lager at mlager@destinationCRM.com.
    Page 1
    To contact the editors, please email editor@destinationCRM.com
    Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
Learn more about the companies mentioned in this article in the destinationCRM Buyer's Guide:
{0}
{0}
{0}
Related Articles
A new product from Bazaarvoice elevates the engagement of user-generated content through customer storytelling.
destinationCRM 2008: The customer module is based on the idea that united we stand, divided we fall -- and it's what CRM has been missing.
The Penny-Pincher: Sridhar Vembu -- chief executive officer, AdventNet, parent company of Zoho.
New research from Cone LLC finds 93 percent of Americans want companies to have a presence in social media.
Web 2.0, social media, customer feedback, conversations. Transparency is the new currency in CRM—but are you really ready to let your customer behind the curtain?
User-Generated Content Expo '09: Executives of iStockphoto explain how passion -- backed by user insight -- can be the foundation for a booming business.
As LinkedIn grows, what does the future hold for enterprise social networking?
A new Gartner study finds the state of CRM in 2000 can predict its look in 2020.
A global partnership between the two companies is indicative of a growing trend, according to one pundit.
 
Search
Popular Articles
 

BodyBGRight
Home | Get CRM Magazine | CRM eWeekly | CRM Topic Centers | CRM Industry Solutions | CRM News | Viewpoints | Web Events | Events Calendar
DestinationCRM.com RSS Feeds RSS Feeds | About destinationCRM | Advertise | Getting Covered | Report Problems | Contact Us