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

Is Government CRM’s Next Big Market?

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I'm always asking what’s next in CRM for obvious reasons—you snooze, you lose. That sums up today’s market. CRM appears to be reaching a zenith—numerous modules have been added over the past few years that have given users the ability to capture and analyze customer data in enough ways that it’s actually possible to predict next actions and offers. CRM is so far ahead of itself that most businesses I speak with don’t ask whether they need CRM but instead which step they ought to take first.

At the same time, CRM has been commoditizing for some time. It’s much less expensive than it was at the turn of the century, when it was largely an on-premises solution, and while the absolute cost of cloud computing doesn’t come down very rapidly, vendors have been busy adding value in the form of modules that provide favorable cost versus functionality ratios.

At this point, a smart vendor will say it’s high time to seek out new markets, not to abandon what’s in front of them but to understand that soon they’ll need greener pastures. Over the summer I wrote a white paper about CRM in government. The idea might seem odd, but so did CRM back in the 1990s (I was there). But if you think about it, government still communicates with constituents the same way it did before the fax machine was invented, which is to say not much or through the media.

There are two problems with those approaches. First, constituents have moved on. They increasingly use the Internet and mobile technology to get what they want, and they’ve been trained by repeat use not to wait around if a vendor is being unresponsive.

The second problem might be the media itself. Using broadcast media presents the same limitations vendors faced when they used it for advertising or marketing. There was no real feedback loop. As soon as feedback became possible, through the Internet in the form of blogs, social media, and sentiment sites, vendors began to get an earful, and much of it was unpleasant.

“United Breaks Guitars” might have been a high water mark in a customer revolt because it exposed to the harsh light of day how insensitive some vendors had become to their customers. In its wake came an uptick of social media–inspired, analytics-driven, customer-focused tools and processes, and businesses began a reformation process that is likely to continue for a long time.

Now, if you look at government’s approach to constituents today, it is like visiting Havana and seeing all those old cars and rotting buildings. Very little has changed in a long time. The media have their own problems, primarily in generating revenue to support the newsgathering operation. Lucrative advertising streams have been displaced to Internet outposts, and conventional media tries to attract eyeballs by covering the controversy surrounding issues rather than the issues themselves. Ironically, this leaves its consumers misinformed and prone to revolt.

No one gave all this a second thought until populist uprisings in the United Kingdom and America told government unambiguously that it was not paying attention to constituents. Over the summer Brexit happened and one of the most unusual presidential campaigns in history unfolded. How does it end? There are two ways.

First, as in “United Breaks Guitars,” the oligopoly digs in, and then you can have really big problems. More likely, the oligopoly shows some flexibility and adapts. That’s what most businesses did in the face of United’s self-inflicted wound.

Government seems to be the next big market for CRM because government has issues that CRM is especially adept at addressing. But we should all take note that trying to relate to customers is not pixie dust for a broken system; it won’t show results in 15 minutes. CRM has become more than technology—it’s a way of life if you’re smart. It’s how you deal with thousands or millions of people at once so that you know what’s on their minds and so that you can formulate solutions to their problems. Judging by the long hot summer just ended, I’d say that’s just what we need.

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 www.amazon.com.

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