No doubt about it-the sales and marketing landscape is changing before our eyes. And CRM technology-sales, marketing and service automation-is playing a big role. But where are sales and marketing really headed? What's CRM technology got to do with it? And should CRM systems be leading sales and marketing or the other way around?
Brain teasers. It's too bad a few CRM software sellers think they're no-brainers. The sermon from the software pulpit goes something like this: "Technology's gonna take over sales and marketing. Marketing's moving to the Internet. Salespeople? Who needs 'em? Before long the Internet and e-commerce (of course guided by CRM software) will rule." It's that simple.
Not simple, simplistic. The "technology rules" line is a software industry sales pitch-with a choir of IT-first folks singing harmony. But nothing about CRM is simple. Making CRM work is a four-step process; or you could look at it as a ripple effect. When new relationship marketing strategies are put into play, they trigger new functional activities (sales, marketing, service and back office work), which trigger new work processes, steps and tasks, which trigger the need for technology support. It's just like dropping a stone in the water and sending out concentric circles of waves.
But have you ever seen the "reverse ripple" effect-reversing the wave action so that the stone pops back out? Of course not. So why do so many CRM initiatives start with technology; which is then supposed to change processes, which are somehow supposed to drive functional activities, which are ultimately supposed to coalesce into coherent strategies? It's no wonder so many technology-driven CRM projects seem to crash and burn. No matter how hard you try, that stone never seems to pop back out of the water.
So let's skip "simple" and get serious.
Say You Want a Revolution?
Effective CRM development follows a concentric pattern
starting with relationship strategies and working outward.
- Relationship marketing strategy
- Implementation (sales, service, marketing communication)
- Underlying work processes
- Supporting technology
Sales and marketing are indeed in the midst of some heavy changes. And it's easy to misunderstand what's going on. In fact, some changes are almost the opposite of what they appear to be at first glance. For example, what's commonly mistaken for a technology "revolution" driving sales and marketing changes is really an evolutionary response to unmet sales and marketing needs-needs that some in sales and marketing have been waiting 20 years to see met.
Let's remember that. CRM technology is an evolutionary response. If we ignore how CRM as a whole came about, and ignore how sales and marketing and CRM technology got where they are, we won't understand where they're going. And CRM will go right on disappointing lots of folks who try to use it without understanding what it is.
So let's rewind a bit-actually, all the way back to the 1950s-and see what was going on with marketing and sales.
We're going that far back because that's when the whole concept of customer relationships went into the tank, and our merchant- and sales-driven economy ended. Contrary to popular perception, television didn't end it. Customers did. Customers had money; they had confidence, and they had enough of doing without because of the war. So they started spending their brains out-business and consumer customers alike. The demand curve kept shooting higher and the supply curve couldn't keep up.
What did customers want from marketing and sales back then? Pizzazz. Sizzle. Excitement over the prospect of owning this product or that. And that's what marketing delivered-on television, radio, billboards, in a whole new category of advertising-driven business publications. It was amazing what you could get printed back then by placing a full-page, four-color ad. And products and marketing messages were "one-size-fits-all."
What about sales? Mass marketing swiped a big chunk of sales' role. Nobody loves a loser, so respect for the sales profession went down like a sky diver without a parachute. Cooperation between sales and marketing was nonexistent. If Einstein had been a nerd instead of a physicist, and CRM was possible back then, would there have been any need for it? Not a chance.
The key point here is that CRM is dependent on the market environment-in other words, dependent on customers. This is not the way we usually think of CRM. Isn't CRM supposed to manage customers, not the other way around?
That's the way things stayed for some 30 years. So let's fast forward to the early 1980s. That's when customers started wising up to what they'd let happen-mass production, mass marketing, whatever sellers wanted.
What changed customers? The economy, again. After three decades of demand curve over supply curve, the two started reversing positions, especially for expensive products which computers helped us design better and make faster. Customers started seeing more options and more opportunity to have things their way. So they started demanding more-more individual attention, more responsiveness, more customization, all the things that CRM technology helps us provide.
So what did marketing do? Nothing. Marketing just kept right on mass advertising. Why quit when you're on a roll? Besides, individual customer contact was sales' job. It was beneath marketing. But as a sop to the whiners complaining about wasting bucks on broad media coverage, marketers invented target marketing-which was nothing more than shriveled-up mass marketing. It did the trick, though-it got everyone off marketing's back. Everyone except for a few newfangled, relationship marketers who wanted to customize marketing, pay attention to individual customers and customize products and services to suit the smallest possible universe, even the universe of one.
Some really good strategies emerged from this fledgling relationship marketing movement, back in the 1980s. A few even got put into play. But most died in the thinking stage because of a lack of CRM-type technology to pull it off-no tools, no technology, no dice.
But early relationship marketers did make enough headway to start splitting marketing into two bodies, each going in different directions. One body was Jesse Ventura-size and the other was of hangnail proportions-but the whole body would soon feel this nail tearing away.
"As a sop to the whiners complaining about wasting bucks on broad media coverage, marketers invented target marketing-which was nothing more than shriveled-up mass marketing."
Sales Grows Up
And sales? Sales started a comeback. Salespeople got more professional and took more responsibility for understanding technical products.
Sales really benefited from the supply/demand switch. The core sales/marketing issue for many companies changed from "getting the word out" to "getting the product in"-into more crowded distribution, onto more crowded store shelves, in through more selective business and industrial buyers. Getting the word out is a job for marketing. Getting the product in is a job for sales. So the sales force got more important and got paid more. But respect? still in Willy Loman-land, except in a select few companies-like 3M, IBM and Xerox.
What about cooperation between sales and marketing? The idea actually crept into a few heads. We couldn't afford expensive salespeople wasting valuable time cold calling. So companies started getting marketing to drum up some sales leads. Of course, marketing didn't want to muck up their ads with unseemly coupons and big, bold 800 numbers. But inconspicuous reader service numbers that readers could circle on "bingo cards" to request more information were okay. So marketing generated millions of bingo card inquiries-raw inquiries, mostly from tire kickers-and then piped them to sales. Sales flushed them down the toilet.
But a few forward thinkers actually tried stepping between the two. They set up third-party inquiry management systems that tele-qualified sales inquiries, distributed only qualified sales leads, promptly fulfilled serious requests for product and company information, monitored follow-up to make sure sales showed up, measured both sales and media outcomes and established some surprisingly sophisticated work process controls-and computer-managed the whole shebang. But it was pretty manual and pretty hard, not exactly automation.
Would CRM fly in this environment? You could see it trying. And if enough tools and technology had been available, it might have gotten off the ground-back in the early 1980s.
Now let's fast forward to the mid 1990s-but with a finger on the pause button-'85, '86, '87, '88, PAUSE. What happened now? Database marketing technology started making its way to the desktop. And some folks started managing databases instead of shoveling direct mail down the chute. They produced targeted direct mail. So mass mailings became shriveled-up mass mailings. Did that bring CRM any closer? If anything, it pushed CRM further away.
These database denizens proclaimed their craft the future of all marketing. They said, "We're going to do away with mass advertising." By sending mass mailings. Yeah, right. What no one but the relationship marketers seemed to realize was that database marketing is promotional talking. Relationship marketing-and CRM-are about listening and about customer communication that doesn't have to be promotional because it responds to customer interests and issues.
One to One
Let's fast forward again-'89, '90, '91, '92, '93, PAUSE. In 1993, Don Peppers' and Martha Rogers' book, The One to One Future: Building Relationships One Customer at a Time, came out swinging at mass marketing. It cleared up some of the confusion caused by database marketing too. And it started a tug of war with the database crowd over which was really the "new marketing"-database or one-to-one (relationship marketing). It stimulated lots of relationship marketing thinking. But the outcome was the same as 15 years ago when relationship marketing emerged: no tools, no technology, no dice. However, the frustration from trying to go "one to one" did hasten the by now very belated emergence of CRM technology. That's our next stop.
Fast forward one more time-'94, '95, '96, PAUSE. Finally, a little help from technology. Sales force automation (SFA) stumbled out of the shadows and into the limelight. Actually, SFA first made more than a token appearance in the late 1980s, but most of the early software was contact management for individual sales people. It helped some. But it left individual sales people isolated, islands unto themselves. Then connectivity through synchronizing data within user groups appeared. Then came client-server networking. Then synchronization and networking got reliable enough for prime time-which produced an explosion of user interest that hit in 1996 and 1997.
Unfortunately, SFA was pretty much a dud. It generated more software sales than anything else. Why? Because it isolated sales departments, rather than integrating sales with marketing or customer service. SFA also lacked the open architecture required to access back-office data-although in fairness, integrating data from different systems was still pretty dicey. But SFA's big failing was that it was a tactical tool trying to fill a strategic need. Rather than help us implement new relationship marketing strategies, SFA helped us do things the old way faster. You could think of it as "automating cow paths." Sure it helped us tinker with work processes, and it might have satisfied customer needs back in the early 1980s, but it was way too little, way too late.
So let's end this history tour and fast forward to the present-and see what's up today, in year 2000. The economy is booming. But no matter how hard it booms, we've got more supply capacity than demand. Sure we have spot shortages-computer chips, drywall, caviar-but we've gotten too good at making most products to run out, and customers know it. And then we have the Internet-which doesn't change everything, but does change a lot. It's a new communication channel where we can leave information for customers to come and get-when they want. It's a distribution channel where customers can come and buy things-when they want. And it's an alternative for customers tired of wading through glitzy advertising to find out about products-and an alternative to putting up with "insistent and persistent" salespeople who can't answer a question without giving a sales pitch.
What are customers thinking? Take all the changes that started in the early 1980s and ratchet them up ten points. Customers want even more individual attention, even more responsiveness and much more customization. These are things that CRM technology is meant to provide. Customers are also insisting that we approach them as one company-rather than piling up six sales reps in the lobby, one from each division, all seeing the same buyer. And they want everyone dealing with them to know what's going on. They don't want to hear, "I'll have to check with your sales rep." They're also building long-term supplier relationships based on trust and mutual respect. CRM can help deliver a lot of what they want. And they're on the Internet. It lets them do what they want, when they want, without anyone harassing them to buy something. (Except for those who record everyone who visits their site, then bug the you-know-what out of them, just like the old days.)
"Relationship marketing-and CRM-are about listening and about customer communication that doesn't have to be promotional because it responds to customer interests and issues."
So what is marketing doing about dealing with the new customer? Mass marketing, as always. Mainstream marketing is trying to turn the Internet into another television channel. But mainstream marketing is only half the equation now (well, maybe two-thirds). That "hangnail" regenerated itself into a living, breathing body that's grown strong enough to tear away and live independently. Relationship marketing is coming of age-and now has some of the tools and technology it needs.
But what about database marketing? Well, these folks tried to keep one foot in each camp. When the split widened-well, you get the picture. A few finally scurried back to mainstream marketing, but the majority tried to crowd onto the new territory that CRM-the new combination of relationship marketing strategies and CRM systems-started staking out in the late 1990s. They invented something called "marketing automation" so they wouldn't be left out. Some of it is new technology that helps initiate and build customer relationships through information management and analysis. But a lot of it is old, promotional database marketing in a new wrapper-straight out of the 1980s when marketing was all talk and little listening. Hard to disguise those "drek" mail packages-even if you dress them up as e-mail.
What about cooperation between sales and marketing? There is still no cooperation between mainstream marketers and sales. But the relationship side of marketing, get this, likes sales-and respects salespeople. They're learning to work together, despite still being different departments.
And what about CRM technology? Where does that fit in? By melding sales, marketing and service information systems, CRM technology is the jackhammer breaking down the silos separating customer-facing functions. By providing information exchange with back-office functions, it's even penetrating the "Berlin Wall" separating front office from back office. Sales and accounting can sit in the same room without doing bodily harm to each other-occasionally, anyway. But most importantly, by linking disparate functions, CRM technology is finally evolving toward what relationship marketing needed a long time ago.
So Now What?
So now we're back where we started-asking "where are sales and marketing headed?" And "What's CRM technology really got to do with it?" And "Should CRM systems be leading sales and marketing or the other way around?" But we've already answered the questions. Just follow the trend lines. Sales and marketing started heading where they're headed 20 years ago. They'd be further along if CRM-type technology had arrived sooner, but they've been progressing nonetheless. And now that technology has started catching up, sales and marketing, at least the relationship part, are about to start high-stepping into their future-together, arm in arm. Sales and relationship marketing, following the trend lines, are melding into one integrated discipline. Hence, Smarketing!
In response to customer demands, we're about ready to start treating customer relationships as a continuum-not a linear series of interactions with one functional department after another. And that will change everything, especially sales and marketing. "Smarketing," the natural result of the continuous customer relationship, will realign corporate org charts, create new jobs, abolish old ones and change the profile of customer-facing personnel. Sure, traditional marketing will live on-for packaged goods and commodity marketing. So will good ol' "foot-in-the-back" selling-on car lots and carnival midways. But where buyers want genuine relationships with sellers-relationships will happen. Even if that requires abolishing entire distribution channels, as in the retail car biz. What customers want, customers get. And they want a relationship.
And what about CRM technology's future role? We can see that also, from the past. CRM technology is the enabler-the indispensable tool for forming and maintaining the new genre of customer relationships. But it won't determine the nature of customer relationships. Customers will. CRM technology can make it all possible-as our window to customers, and as the continuous information flow to support continuous relationships. But it can also make it all impossible, or at least very difficult, by failing to follow our customers' lead-and by failing to continue evolving to meet sales and marketing needs. CRM technology, or lack thereof, has held back sales and marketing before. It could do it again.