CRM rethought part 4 - 40 points
- In this piece, we dive deep - and I mean really deep - into the elements of how CRM is evolving. There's a lot to digest.
In this fourth part of our 5 part series, Paul Greenberg dives into the detailed elements of CRM, updated for the social context. You'll likely need a coffee, tea or whatever. There's a lot to take in. Note by the way we've dropped the 'social' bit out of the title. You'll see why pretty quickly. (See 'Social CRM part 3 - the biggest picture). [divider] [/divider]Context set? Check. So what currently constitutes CRM as befitting its 21st century definition? Let’s take a crack at it.
Here’s how I’m going to do this. I’m going to take what I wrote in “A Stake in the Ground” and do a refresh. You’ll see some things that remain the same which are in black, some that are eliminated completely which are invisible and a significant number of new additions to bring this to its current state. Then, I’m going to give you a working definition (that means open to change) of CRM for 2013 and somewhat beyond. I hope.
1) As I wrote in my welcome letter to CRM Evolution 2013: “The CRM industry continues to mature, thanks largely to the recent revivification of one of CRM’s most time-honored principles—an improved customer experience. As a result, there are new ideas about customer engagement, more ways to get actionable insights about customers, and enhanced methods for gaining measurable business value from these interactions.” This is what the current evolution of CRM looks like in a nutshell. It isn’t being replaced by CEM/CXM. It is just evolving – again. But, Social CRM as a term (not as a concept) has run its course.
2) The transformation that's sparked the need for Social CRM seems to have occurred in 2004. That transformation has always been a revolution in how we communicate, not a revolution in how we do business per se. All institutions that humans interact with have been affected by mobile devices, social web tools and public social channels and the instant availability of information in an aggregated and organized way that can provide intelligence to the person on the street, not just the enterprise.
3) It also comprises intelligence from the person on the street, which leads to a volume and velocity of data that seems almost beyond human capacity to grasp and act on in a timely way. In reality, the world of big data (we think in zettabytes, 1021, now) is waiting to be conquered with small insights – insights that are gleaned from analyzing not only the data from the enterprise but in conjunction with the data from the street. Much of it is manageable now; the rest of it will be in the not terribly distant future.
4) Thus how we create, distribute and consume information has also undergone a dramatic transformation in the last decade. Witness the well-documented decline of print as a medium for the distribution of news. Witness the rise of the podcast as a form of communication or the sheer scope of YouTube. Or the discussions that take place daily on Facebook, LinkedIn or Twitter or….you get the idea.
5) This allows the more communicative customer to control the conversation, because they communicate in channels the business doesn’t control. But they don’t control the business a.k.a. the company a.k.a. the enterprise itself. What this means is that while customers, to some extent, have greater control over their destinies in how they interact with businesses, make no mistake about it, they don't run the business, nor does the business have to concede everything to the customer.
6) However, customers want and sometimes demand more control over their experience with and their level of engagement with the companies they do business with. This doesn’t mean constant intensity – it means sculpting the way they do business with the companies they choose to and at the level they choose to do that business. That means it could be intense – or casual – or both over time.
7) It also means that, often, they don’t want to do more than buy whatever it is they want to buy –and do it conveniently. This is still engagement – a utilitarian engagement, but engagement nonetheless. The customer decides their engagement with the company. It is simply the level of ongoing involvement they have with a company.
8) We've moved from the primacy of the transaction to the prominence of the interaction with customers, though we haven't eliminated the transaction - or the data associated with it. Nor would we ever. Nor should we.
9) Also, businesses still need to run their operations. Thus, the company still has to run and needs processes and rules to do that with systems to support it. But it isn’t enough to just do that. They have to set goals that are cognizant of what the customer wants and needs, but not entirely determined by that. They need to map their goals and objectives to the customers' goals and objectives to make it work for all concerned.
10) There are costs associated with that which businesses have to consider when they are planning for these kinds of things. Increased engagement can mean increased product offerings and service offerings (“can” mean, doesn’t always mean). It can mean tools that the customers are asking for that the business hasn’t provided but needs to. It may mean a better quality and wider variety of consumable experiences – and that all has to be weighed against what the company can actually afford to do.
11)Thus, it is in the interests of the company to encourage the customer to decide and to do what they can to increase the level of engagement – and then find out what that is. The more engaged the customer, the more likely they are to be loyal customers – repeat purchasers – and the better the chances they have to become advocates. But any ongoing involvement is better than none, unless it is entirely negative. J
12) The lesson for business, in terms of Social CRM is that we are now at a point that the customers' expectations are so great and their demands so emboldened that our CRM-related business strategy should be built around employee empowerment and customer engagement, not traditional operational customer management. That isn’t wrong, just insufficient. Though we can’t reduce the importance of keeping the operational aspects of CRM front and center.
13) When the discussion on Social CRM (SCRM) began, we IDed it as an extension of CRM, not a replacement for CRM and that has turned out to be exactly what it was. While it adds to the features, functions and characteristics of CRM but it is still based on the time honored principle that a business needs its customers and prefers them profitable and that same business needs to run itself effectively too. CRM or SCRM, it is still a business science.
14) What made it so different from its traditional roots was that the customer had changed and that the customers were expecting and even demanding different things than they had in the past from business and thus, businesses had to respond. Social CRM was the response to this transformed customer.
15) When I wrote, “Stake in the Ground,” I noted: “part of that transformation affects how we trust and thus who we trust. Since 2004, "someone like me" is the most trusted source, not businesses, NGOs, government agencies or corporate leaders. That means that peer trust is how influence and impact germinates and then propagates most effectively - at least as of now.” The most recent Edelman Trust Barometer has reinforced this, which has “a person like me” as most trusted by 61%.
16) In addition to trusting the company and being trusted by the company, customers also want to have a personalized (not personal per se) experience with the company.
17) They also want to get enough information from the company to make intelligent decisions on how they want to deal with the company.
18) That means that transparency and authenticity become more than buzzwords because in order for the customer to make intelligent decisions on how they are going to interact with the company and the level of that interaction, they need that visibility and honesty from the company. Getting that is likely to increase the level of trust.
19) That also means that the companies need to make the decision that it’s a good thing to allow the customer to have that increased level of knowledge, access and honesty - it can help the company immensely in their engagements with their customers. That's a cultural issue that has to be resolved for Social CRM to work.
20) If these aforementioned conditions are met, the customer is afforded the ability to co-create by the company. What that means is not all that pat. It can mean anything from customers and the company collaborating on product development, to customer suggestions on how to improve a company process, to customers helping other customers solve customer service issues, to even doing what gamers do and modifying game play using tools for scenario creation which adds value to the game. Co-creation is the ability of the company and customer to create additional value for each other - what form it takes is not always THE BIG THING. But co-creation, mutually derived value, is at the core of CRM in 2013 and beyond.
21) But keep in mind, the first step to co-creation is getting the customer engaged at any level – which is not so easy. Any one company doesn’t consume the customer’s entire life. Consequently, given all the things that are going on in the person’s a.k.a. customer’s life, the competition for the just getting the attention of that customer is a big deal; especially since each of us is bombarded with 3000 messages a day (that would be over 1 million a year). Getting that person’s attention means competing with all those messages, related or not. The game has changed.
22) On the other hand, the company, while trying to deal with that, is also trying to run in a changed world, which places a high value on rapid response. The clichéd term for it is “nimbleness.”
23) The company also has to do the time honored thing that they exist to do: deliver the goods and services that they sell in a satisfactory way. Which means timely for the most part.
24) The problem the company has is that it isn’t just the company alone that has to work in sync to provide that rapid response and successful delivery. It has an extended enterprise value chain that consists of itself, its employees, its suppliers/vendors, its channel partners, external agencies, etc.
25) While there is an extended enterprise value chain, the customer also has a separate "personal value chain" which incorporate the company in question, the family of the customer, the friends and acquaintances of the customer, other companies and non business institutions that the customer might be involved with any given moment.
26) This personal value chain impacts the customer’s decisions and affects the interactions of the customer with the company. Just imagine what you would think of six seconds of latency after hitting a purchase button in a shopping cart transaction if you were a. okay or b. highly irritated at someone or something that had nothing to do with the transaction. If it were a., six seconds would be mildly annoying but the transaction would go through; if it were b. you’d abandon the shopping cart. That’s what I mean when I say personal value chain affects the interaction with the company.
27) For the company to succeed, since they cannot control the personal value chain of the customer, nor should they want to, they can only provide what the customer needs to satisfy that part of the customer's personal agenda that is associated with their enterprise. On the biggest scale, that means products, services, tools and experiences that allow the customer a hopefully satisfying set of interactions. On the smallest scale, given the example in #26, it means fix the latency. Don’t worry about what personal reason caused the customer to abandon the shopping cart. You’ll never know.
28) The intersection of the extended enterprise value chain and the customer's use of part of his personal value chain to satisfy that personal agenda creates the possibility for a collaborative value chain that engages the customer in the activities of the business sufficiently to provide each (the company and the customer) with what they need from the other to derive individual and mutually beneficial value in a continuous way.
29) Once the limitations of how involved a customer is going to be are recognized (personal value chain/x time J), then what the customer expects has to be understood.
30) Despite popular belief and marketing b.s., customers aren’t looking to be delighted all the time. They are looking to accomplish whatever it is they expect to accomplish with the company – which could be as simple as getting an address – or a quick purchase online.
31) If that’s the case, then the most important thing you can do for the customer is keep the ordinary, ordinary. That means make sure that the 90% of all inquiries that are just inquiries that carry the expectation of completion, are taken care of via phone, email, web self-service, Twitter, Facebook, LinkedIn, etc. The other 10% is the resolution of complaints or the actions that lead to customer delight via the same channels.
32) In order to do all this, as always, we have to consider the strategies and the programs that increase an individualized customer engagement, and those processes, systems, and technologies that support it. Automating what we can of the ordinary (among other things) will actually enhance personalization because it gives the time to focus on giving customers what they need to support an experience that makes customers want to return at a minimum and even better; participate.
33) CRM applications, unlike four years ago, all incorporate social multiple components that extend the value of the applications beyond the operational and transactional. On the largest scale with the major technology companies that means the incorporation of social channels such as Twitter and Facebook for both communications interaction and data acquisition. It means the integration of traditional systems of record which supports the data with systems of engagement (e.g. gamification) which supports the interactions.
34) Under the newest evolution of CRM, rather than aiming at a satisfied customer (an increasingly useless metric) and even rather than thinking that a loyal customer is your best customer, your objective should be to create business advocates and settle for evangelists and loyal customers. A business advocate, unlike a brand evangelist, doesn’t just market, s/he helps you sell. See what Karmaloop does with its Rep Teams.
35) In order to get customers as business advocates, the customer needs to feel that they have a beneficial relationship with the company, one where several conditions are met:
a) The customer feels that the company is responsive to him/her. That means that the customer feels (and I do mean “feels”) that the company is “a company like me.”
b) There needs to be a “commonwealth of self-interest” in place. This means that given the identified (not guessed at) needs of the customers after the necessary research has been done and the feedback analyzed, there is a group of tools, products, services and consumable experiences that are meeting the perceived personalized needs of the individual customers. This is the base condition for the development of business advocates. The idea of a commonwealth of self-interest operates from the principal that all human beings are self interested (not selfish) and need to have that self-interest recognized by feeling valued as individuals. Businesses can’t provide individual products, services, tools or consumable experiences, but they can provide a set of each of those that satisfies much of the personal requirements needed to fulfill the self-interest of the individuals engaged wit them. Some customers will fall away, but the majority will perceive this as being valued if it’s done right. See the way that Dialog Axiata, the Sri Lankan telco does what they do every day around customer experience and you’ll get the idea.
c) The customer derives some tangible value from their advocacy but its premise is to not just provide tangible value, which is the secondary aspect, but to make the customer feel valued. Tangible value without context is no guarantee of creating or sustaining a customer business advocate.
d) The customer gets social reinforcement for their advocacy via communications with the company and other customers. The communications need to rise to the level of a “responsive dialog.” Not slow and serial.
36) Because there is accountability and some way is needed to identify successful or failed execution and to identify value, measurement is necessary. Many of the historic measures, like customer lifetime value (CLV) are still entirely appropriate. Many of the KPIs, for example, first call resolution are morphing (e.g. first contact resolution to allow for the multiple channels the customer might choose to start their efforts. Measurement, while still a work in progress, is beginning to show some results. Rather than just CLV - which reflects the direct financial value of a customer to a company over the life of his relationship to that company, start to think about Dr. V. Kumar’s Customer Referral Value (CRV) which measures how valuable influential customers are when they tell others about your company, not just promise to. Oracle has embedded CRV into some of their CRM focused applications.
37) The technology has been transformed as well. Besides the integration of social channels, these new wave technologies take advantage of that integration (e.g. social marketing; Twitter-based customer service applications that have the associated bidirectional communications and analytics on the back end; sales optimization applications that incorporate sales specific social intelligence). The larger software houses - salesforce.com, Microsoft, SAP and Oracle all have a wide array of “social tools” that are fully integrated into their offerings and in fact are increasingly providing the “experiential” tools such as customer feedback systems, ranking and ratings systems; customer analytics; etc. that are being asked for. There are community platforms that integrate with CRM primarily at the level of systems of record. We are seeing systems of engagement especially gamification becoming a regular part of the offerings of technology companies.
38) Coupled with that we are seeing emerging technology companies that are highly specialized that can provide either vertically specific applications or deeper capabilities e.g. meaning relationship extraction among many other things. (for a good look at those check out the CRM Idol contestant pages and you’ll see what I mean in two minutes of looking)
39) This is a complex, but relatively mature market that rapidly responds to the demands of the data out there, the communications necessary and the results looked for.
40) All of these things lead me to think that it’s time to drop the “S” from SCRM and just call it CRM again. Social is mainstream, CRM is a successful market and despite some contrary beliefs, works. The applications are mature and varied, meeting many to most needs, the systems are effective, the philosophies, strategies and programs are viable, with some best practices to pave the way, when appropriate. The professionals are there to do the jobs, even as the jobs morph. And human beings, with all their ingenuity, are able to meet the challenges that are posed as things rapidly change and as information becomes quickly available. So, don’t worry. It’s okay to drop that S. It really is.
Endnote: So you made it this far? Congratulations...tomorrow I wrap all this up in a bow and come to a fresh definition of CRM that I hope will stand the test of time.
Photo credit: Michael Krigsman
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