• December 1, 2007
  • By Ian Jacobs, vice president and research director, Forrester Research

Playing at the Speed of the New

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We have had more than 10 years of reading -- seemingly endlessly -- about how the Internet will change the way we all do business. And business has clearly changed. The rise of the Internet-enabled business has also, however, begun to change customer relationship management, often in unexpected ways. Just look at one of my favorite Internet-era success stories: Netflix, a service that takes old-world conventions (physical DVDs, the U.S. Postal Service) and mixes them with Internet conventions, including a Web interface that all customers use to do business with the company. While the company has had ups and downs -- including intrusion into its market space by competitors as varied as brick-and-mortar video chain Blockbuster and online commerce leader Amazon.com -- what interests me here is how Netflix has taken to heart the message that CRM is not a software application or some external technology, but an attitude, one that is inherent in almost every business process in an enterprise. Users primarily interact with Netflix via its Web site (although customer service uses a more traditional phone-based contact center). A growing portion of that Web site is its community area: features that allow users to connect with each other and track each other's movie preferences and recommendations, as well as some entertainment-focused features such as quizzes. What caught my eye is that the Netflix team that builds the social elements of the site also maintains a very active and well-visited corporate-sponsored blog. At the Netflix Community Blog (http://blog.netflix.com), the team hosts vibrant discussions about proposed changes that might eventually affect the main Netflix site. The designers take users' input on the blog very seriously -- seriously enough so that the head of the Netflix design team recently posted a message detailing exactly how he was swayed by users' arguments about privacy and was utilizing the majority user opinion to guide his development of security features. Because those changes eventually will be rolled out to every Netflix user, users posting to the blog have had a huge impact on the overall user experience. This very active form of listening to the voice of the customer is CRM taken to an extreme: using customer input to guide product development. The Internet nature of Netflix's business means site changes can be rolled out in a matter of days. That's a fairly unique CRM situation. Imagine how long a similar change would take for a hardware manufacturer that needs to source all of its components, change assembly lines, and feed the distribution chain before customers see any changes. And yet, the approach to CRM taken by Netflix and its ilk will raise customer expectations across the spectrum of businesses; hardware manufacturers and other asset-intensive businesses are going to need to learn to emulate, as best they can, the type of responsiveness displayed by Internet-driven businesses. At the same time, the Netflix generation of companies is only halfway through the CRM transformation. The changes that Netflix users have directly impacted, for example, are not integral to the basic functions of the Netflix service. A customer can very easily ignore all the community features and still successfully and happily rent DVDs. And the information gathered via blog forums is unstructured data -- hard to capture, quantify, and reuse. One can easily envision a more organized version of this idea chain: an informal mechanism driving the development of rapidly delivered features, products, and services with data that can be analyzed to influence other decision-making processes. This model would truly serve the interests of a CRM-driven culture -- giving the customers what they want and making them feel as if they have control of their user experience. Ian Jacobs is a senior analyst in Frost & Sullivan's contact center practice. Contact him at ian.jacobs@frost.com.
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