Sunday, 20 December 2009

How can we prevent a Social CRM bubble? Lessons from the boom and bust of CRM

OK - let me say from the outset that rumours of the death of CRM have been much exaggerated! CRM undoubtedly went through an early wave of hype, crashed, but has now bounced slowly back to become a healthy buoyant market. Gartner describe this as a wave of hype. Talk of 60-70% project failure rates may have been true 10 years ago, but that figure is now more relevant when talking about success rates (and that's conservative). The market has matured. CRM buyers, vendors and consultants are, generally speaking, savvy about how to deliver value from CRM projects. That doesn't make the projects any easier, but in general they work and they deliver value both to companies and their customers.

The fact remains however, that there was a CRM bubble and it burst. For many years CRM was a dirty word. I worked with a number of customers 5-8 years ago who refused to use the term "CRM" and instead referred to it as "Loyalty", "Customer Management" etc. It has only been in the last couple of years that the term seems to have bounced back and removed it's negative connotations. CRM is now seen as a positive initiative, crucial to supporting customer retention and growth strategies and Social CRM is a natural extension to the topic, embracing the customer's new control of the conversation.

Reading a blog post the other day about Snakeoil Social CRM sales people got me thinking about whether we are in danger of repeating some of the errors of the CRM boom with Social CRM. Vendors, consultants and analysts are all starting to jump on the SCRM bandwagon. Every major CRM vendor seems to have recently announced integration with a Social Network provider in the hope that they will appear to have a "Social" product strategy, and some consultancies have already opened up Social CRM practices. So what can we learn from the early failures of CRM? And how can those learning be applied to Social CRM?

CRM went through boom and bust because:

1.    As an industry we applied a technology-centric solution to a business problem. Both vendors and consultants positioned technology as a silver bullet.
2.    Powerful technology was used and abused with little thought given to the customer experience (see my post on the shift from inside-out to outside-in).
3.    Nothing like enough attention was given to the people / change aspects of customer-centric transformation. I have personally seen call centre agents with a shiny new CRM system, hang up on customer's as they answer the call in order to try and get their AHT down! Incentives drive behaviour more than any technology.
4.    Front office technology was layered on top of fragile back-office foundations.CRM exposed toxic data and processes directly to customers.
5.    Projects bit off more than they could chew. CRM is an elephant. Eating an elephant requires bite-sized chunks.

Applying these lessons to Social CRM:

1.    Technology is not the answer to everything. I've seen lots of product demonstrations where vendors pitch an offering to listen to customer feedback, connect to the twitter fire hose etc. Few articulate the reality of how that insight can be used to improve products, processes and the customer experience as that involves far more than just technology.
2.    Social CRM technology is potentially even more powerful than CRM technology because of the network-effect of social customers. Both successes and failures can go viral in seconds. The viral effect may tempt marketers to view "Social" as simply another low-cost channel to bombard customers with Spam… if this sounds familiar then STOP and consider your usage of Social Media.
3.    Nothing will change the fact that people build relationships. Not technology. Technology can of course accelerate and provide a significant advantage to relationship building.
4.    Social CRM still relies on solid foundations. If you take orders but can't deliver products on time then of course your customers are going to be complain, tweet, post, blog! In some ways, embracing Social technologies places an even greater emphasis on the basics of CRM e.g. real time integrated information (cross-channel, cross-department).
5.    Social CRM probably lends itself much better to an agile / iterative approach to delivery. Most products are SaaS solutions that can be consumed quickly. The danger of this is that buyers behave like kids in a candy store. Buy what you need first, rather then everything you want.

Social CRM offers the CRM industry a huge opportunity to put the customer back at its rightful centre but as George Santayana once said "Those who cannot learn from history are doomed to repeat it".

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