After Transactional Systems

There's been a lot of talk for a long time about the shortcomings of transactional systems. Some of that talk you simply had to chalk up to growing pains, and for some of it you had to consider the source--believe it or not, there really are people out there who would walk into McDonald's and ask to weigh a Quarter Pounder. Regardless, no technology is an infinite resource and at some point you need to consider the next logical move. Transactional systems have done many good and useful things and I do not believe they are going away but it is becoming clear that something fits on top of them in the technology pyramid. When money flowed and demand hovered higher than Everest, companies needed help processing transactions and that's what transactional systems were supremely good at. But in a more mellow world where demand is slack, we need tools that will help more with demand generation and customer insight before we ever get to the transaction. It's in the fertile area between sales, marketing, and service that I see new solutions starting up that bring the vendor and the customer together just to trade ideas. You might ask, why trade ideas? Well, according to published reports, of the 36,000-plus new products that hit the shelves in the U.S. in 2005, 80 percent will fail. That's a good indication that someone isn't listening, and the best transactional systems in the world aren't going to accelerate the sales process for the 28,800 products projected to bite the dust. As you might expect, leading business thinkers (people who have nothing to do with transactional systems, by the way) are talking about what the present lacks and what the future might bring. A couple of MIT professors have written books recently that give pause and excite the imagination to the possibilities that lay beyond transactional systems. One, for example, is Glen Urban. His latest book, Don't Just Relate--Advocate, hints at a future where vendors spend a lot more time and effort getting into a customer's head than simply trying to sell fries if the customer selects a burger. Urban says that showing the customer that you actively advocate for his or her position is a strong bonding idea. He uses Progressive Insurance's Web site as an example of advocacy. Progressive will get you quotes for auto insurance from its competition as well as presenting its quote and, no, Progressive doesn't always win. But how much would you like to work with a company that does that? Then there's Democratizing Innovation, by Eric von Hippel, also of MIT. Von Hippel shows how customers today are freely sharing ideas as well as tips and techniques that ultimately find their way back into better products and services. It's called coinnovation and the numbers quoted earlier strongly suggest we need a bunch of it. There is no data yet but I am willing to bet that products that incorporate customer feedback will routinely be in the 20 percent that succeed. Internet commerce has leveled the playing field in favor of the customer. What is interesting is that vendors have done such a poor job of leveraging the Internet to get closer to their customers. All we've seen so far has been a lot of click stream capture and analysis--am I the only one to see a bit of misplaced hope, hype, and voodoo in this? The Internet is a great tool for vendors to rapidly and cost effectively trade information and ideas with their customers. So, why don't they? The short answer is that in the previous vendor-centric era vendors didn't need to. However, we're now in an era when paying attention to the customer is the best route to increasing margins and for that we need software that minds things other than the sales or service transaction. New companies with new ideas about customer interaction are now making themselves known. The next couple of years ought to be a lot of fun. Denis Pombriant is the founder and managing principal of Beagle Research Group, a CRM market research firm and consultancy. He can be reached at denis.pombriant@beagleresearch.com