• June 1, 2008
  • By Denis Pombriant, founder and managing principal, Beagle Research Group

The Customer Module

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Is it time to add a customer module to CRM? The concept would provide companies with something they don't yet have: a single place within the CRM system to capture and analyze relevant customer data.

We seem to be iterating in that direction. CRM 2.0 has attempted to find creative ways to embed social networking and media into CRM systems. It is the leading edge of a movement to shift the focus from the transaction to the customer, but you have to wonder how successful any such movement can be without a full complement of data.

One of the loudest refrains in CRM has always been, "Who is the customer?" -- a question we've only answered with snapshot analytics that lack real depth. The fact that CRM has been rather successful despite this deficiency says more about the market lifecycle than it does about our ability to know the customer. The marketplace has been dominated by early-lifecycle companies -- vendors working hard to establish themselves and whose only concern was market share. For these vendors a transaction orientation was appropriate. But as markets continue to consolidate and competition becomes savvier, customer intimacy becomes essential to continued success.

Vendors now thrive by selling additional products and services to established customers; but those customers are now wiser and thus less likely to settle for the undifferentiated capabilities of a first-generation software offering.

It takes a higher level and greater depth of customer knowledge to understand needs, biases, and desires -- and to be successful in the process. Any customer module providing that level of knowledge would have to include:

  • A database for tracking customer demographic information that can be maintained by the customer as well as the vendor -- much like a social networking site.
  • A community interface through which the company could ask its customer base about product innovation, messaging, and anything else relevant to how the customer consumes its products and services. This interface, a kind of customer laboratory, would support typical bidirectional interactions with customers as well as one-to-many interactions. For example, a company could collect data while individuals interact to trade information about their use of that company's products and services.
  • Analytics to slice and dice the data generated by the community.
  • A mechanism for rewarding good customer behavior (repeat purchases or contributions in the community).

All of this is being done piecemeal right now. That may work for a while, but at some point the duplicative efforts stop producing substantive results. A customer module changes all that. There is obviously a cost associated with setting one up, and the finance people might not see a direct way to monetize the data collected. "What do we get out of it?" they might say.

My response is, "Consider the alternative." A few years ago I ran into a staggering statistic: In 2005, 36,000 new products hit the market and, by early 2006, 80 percent of them were projected to fail. I doubt it's much different today. In baseball, that would mean batting .200 -- and that's not good even in a game where failure is the norm.

What's very good about a customer module--assuming it leverages on-demand computing -- is that it can be almost frictionless and, if incorporated into normal marketing activity, it can pay big dividends. It's all about the utility of the information gleaned from listening to customers and incorporating it back into products, services, promotions, and messaging.

In a world with a customer module, we will have to think differently about how we market and sell -- but I doubt that will be very difficult. Companies are now facing twin whammies: marketing programs with single-digit response rates, and a social milieu that has nearly taken over control of marketing messaging. In other words, it's not what your marketing messaging says; it's what the social network says it says.

The social customer is already here. The customer module -- a place for the social customer to hang a hat -- makes all the sense in the world.

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.

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