eCommerce meets VRM - will it blend to become something useful in B2C?

Profile picture for user denis_pombriant By Denis Pombriant May 24, 2017
Recent advances in CRM are closing the gap between so-so customer experiences in eCommerce and experiences that match expectations in the real world. It's a whole slew of things coming together at the right time.

Digital retail, e-commerce

The big assumption or hidden fact about CRM has been it’s orientation to B2B business processes. It makes perfect sense since CRM was invented by the tech industry for the tech industry though naturally, others were encouraged to use it too. Often non-tech companies found they needed a lot of customization to make everything work, but that’s history.

If you were a business to consumer (B2C) vendor of big ticket items, CRM could work for you too but, again, customization made kerrching! noises every time you wanted something that bit different. If you were in retail, forgetaboutit, yet that was precisely where both businesses and customers needed help.

Often customers couldn’t find what they wanted and retailers couldn’t afford to staff up to serve everyone. Self service was so-so. Failed retail interactions used to fuel the grievances on sentiment sites inspiring customers to drag vendors’ names through the mud, which helped exactly no one.

In CRM’s shadow VRM, or vendor relationship management, arose but it never got traction. VRM innovators tended to come from academia and their idea of proving the concept involved writing grant proposals rather than raising venture capital. So VRM hasn’t progressed much but surprisingly, CRM for the B2C sector, what we can now safely call eCommerce, has done surprisingly well in supporting customers, especially in the most recent past.

In the course of a month, both Oracle and Salesforce have held conferences in Las Vegas and in Oracle’s case, part of the meeting dealt with eCommerce while Salesforce just dedicated its whole show to the topic. The solutions I’ve seen are miles ahead of where they were a few years ago and for the same reasons, the introduction of analytics and machine learning both of which provide some of the support for customers that VRM proponents called for.

Something tells me that both vendors would not appreciate being considered as similar because that messes with their differentiation. But differentiation aside, what I’m actually describing is convergence or what happens when diverse vendors in similar markets iterate toward similar solutions because that developmental pathway makes the most sense.

So the analogous convergence in eCommerce systems stems from adding a large dose of AI and machine learning to the solution set. Oracle’s solution is oriented around its Adaptive Intelligent Apps that leverage AI and ML in multiple sectors to help users understand context and come up with rankings of next best offers or solutions in a variety of fields including service as well as retail.

Salesforce’s approach leverages its Einstein intelligence tool tuned to retail to do similar things. The Salesforce’s Commerce Cloud, resulted from acquiring Demandware about two years ago. As a free-standing company Demandware was over ten years old at the acquisition with over 2,000 customers.

Both vendors benefit from converging technologies that McKinsey points out are driving breakthroughs due to Machine learning, greater computing capacity and all of that big data we’ve been pushing around. According to their new report, What’s now and next in analytics, AI, and automation:

Machine-learning algorithms have progressed in recent years, especially through the development of deep learning and reinforcement-learning techniques based on neural networks.

With this development, Tara Kelly, CEO Splice Software, told me commerce systems have learned to be

Situationally appropriate, graduating from creepy to helpful,

in the process. Granted there’s a slippery slope between creepy and helpful and even today’s systems won’t get it right all the time but by analyzing data from prior interactions, some known data from third parties, and behavioral characteristics, eCommerce systems have taken a leap from search and order systems to something akin to bots.

In the process they’re providing the attentiveness of a sales associate (within parameters) without costing so much that they’re worthless.

Salesforce had more ground to make up because Oracle bought ATG a few years ago and it had the base covered. Nonetheless, Salesforce decided to push the envelope by announcing in Vegas predictive sorting (coming shortly) and my favorite, what it’s calling a Mobile Site Reference Architecture (MSRA.)

As succinctly as possible the MSRA is a proto application for the small screen that a vendor can edit rather than compose thus shortening time to market. In short, it's not quite vaporware but it ain't polished product either.

The other thing I liked about the MSRA is that it’s focused on the mobile screen and here you see the real power of smart apps. With limited real estate on the screen, if you’re going to convert a shopper to a buyer, you really have to be laser focused on having the correct next offer in queue so the two—reference architecture and machine learning/AI—are mutually supportive.

My take

What a great time to be in retail or to be a customer. After nearly 20 years in the wilderness we have a strategy for brick and mortar as well as online operations. Things like order online and pick up at store or vice versa, are what retailers have been missing and now have with these vendors’ solutions. Provided of course that the attendant real world processes are properly established.

A huge amount of R&D has gone into these solutions and undoubtedly we’re not done yet. Analytics and machine learning are only scratching the surface. But we’re finally at the point where someone can go online to buy something and feel helped while emerging from the process thinking it was a pretty good experience.

All this leads to the conclusion that real CRM for B2C has arrived. It looks a bit different from both conventional CRM and from the VRM envisioned several years ago.

Today’s eCommerce evolved as solutions to market demands that took their time forming. Still in the queue, methinks, is the same treatment for B2B. Certainly B2B will be more complicated and might require more extensive process handling.

But the big winner in B2B eCommerce will undoubtedly be the IoT and that might make things easier. A device can hand you a set of unambiguous signals most of the time making it easier to understand and meet needs. Most CRM vendors have things going on in R&D already, which means we’ll be talking about it in the next 12 months.