• July 1, 2016
  • By Denis Pombriant, founder and managing principal, Beagle Research Group

The CRM Technology Sandwich

Article Featured Image

The point of the modern CRM suite is to engage customers, but as you might expect from a vantage point early in the hype cycle, its use is concentrated in older, siloed approaches to closing deals. Let’s be clear—closing deals is what we all live for, and CRM makes the process kinder and ­gentler. But a fixation on the end of the sales funnel prevents greater achievements.

As I have visited too many conferences to count this year, it’s been a source of fascination that no one really has a handle on what else the modern CRM suite might be good for—such as catering to the installed customer base to drive loyalty.

Existing customers make up a healthy percentage of any business’s annual revenue, though the numbers are all over the map. At one end of the spectrum, automakers and their dealers might expect to see customers every three years if they lease, or later if they purchase. On the other end of the sliding scale, subscription vendors crave renewals, and the best score at least 90 percent on that metric.

Subscription vendors may have an advantage over their more traditional peers because they understand the loyalty dynamic better and have to live with it permanently. But there is a tremendous opportunity for conventional vendors to mine their existing customer bases for additional revenue. To do that, you need to drive loyalty, which—I happily point out in a new book—derives from how much customers want to engage with you, but not necessarily from how much you try to engage them.

That’s why I say that the modern CRM suite—extended by things like analytics, mobility, social media, collaboration, and who knows what else—is an engagement tool. Real customer engagement, and the loyalty that follows, is the result of customers occasionally accepting an invitation from a vendor. Asking customers to “tell us how you feel” about a brand, product, or situation or enabling them to speak freely with others in communities are examples of engagement done well.

The enablers of customer loyalty are not hard to discern, and they are not all technology related: They involve smart ways of approaching customers, summarized by proactive personalization, contextual innovation, and journey mapping. We’ve been beating the personalization drum for a while, but innovating around the customer’s context is at least half the battle of personalization. Given slightly different contexts, you can expect your personalization efforts to bear widely different results.

To deal with the vagaries of context, we need to model all of the likely contexts in one place so that we can observe how they overlap, and build solutions appropriate for all of them. For this kind of modeling, you need journey mapping.

As you look at this stack, you can see layers of people and process sandwiched by technology. That’s the direction we’re all heading in, though many of the experiences I’ve had at conferences this spring have been like an air sandwich—heavy on the technology, and light on everything else.

But there are great examples of companies that get it. Starbucks’ now famous loyalty program is based on a sophisticated mobile app that lets people order and pay from beyond the brick-and-mortar store. The only thing customers need to do is pick up and enjoy. In this simple example, Starbucks has demonstrated a keen sense of personalization and contextual innovation, and its profits reflect customer approval.

Hilton Worldwide also developed a mobile app that empowers customers by letting them register remotely, pick rooms, order things, and even use their phones as room keys. Other hoteliers are following suit.

But you don’t need a mobile app to engage customers; there are many old-school vendors getting engagement done with more conventional approaches. SOL Republic, a maker of high-performance, low-cost audio headphones, engages through a lifestyle approach, inviting customers to join their community of music lovers and proving that any business can use new techniques to drive loyalty. All of these examples show that modern CRM is still about people and process as well as technology, and that’s an important reminder.

Denis Pombriant is the founder and managing principal of Beagle Research Group and the Bullpen Group. He is a widely published CRM analyst in the United States and Europe, and his latest research spans all areas of social CRM, cloud, and mobile computing. His latest book, Solve for the Customer, is available at Amazon.com.

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues