CRM Strategy interview transcript

Below is a rough transcript of an interview I gave to Chuck Schaeffer, CEO of Vantive Media, for CRMsearch.com You can download the interview as a podcast from iTunes here.

 

CS - Before we talk about designing and implementing CRM strategy, let’s start with a clear understanding of what we mean by CRM strategy. Can you define or explain what you mean when you reference CRM strategy?

LB - Let's start with defining CRM. For me the oldest and simplest definitions of CRM are still the best. There are 2 that I like: one is "treat different customers differently" and the second is "CRM is a business approach that aims to build long term, mutually beneficial relationships with customers" 

So CRM strategy for me is about forming a vision of where you want to get to with CRM, evaluating your current state and the strengths and weaknesses of your capabilities and then defining the path to achieve your goals. Typically a CRM strategy would look at improving a range of capabilities required to enable your vision (from technology to people to process) and then forming a prioritized roadmap for implementation.

CS - Has it been your experience that CRM strategy is changing or evolving?

  

That's an interesting question - on one hand, if you go back to the definitions of CRM that I previously gave then CRM as a topic has changed very little.

 

The problem is that for the first 15 or so years of the CRM market people approached CRM in a technology-centric way and an extremely inside out way. So a typical CRM strategy was about defining a future state that was a static destination 5 years in the future, enabled by a monolithic technology program. The over-riding ethos was one of command and control - CRM initiatives tried to control all customer facing data, processes and customer facing employees e.g. forcing them through a script or forcing them to enter their contacts into a database. CRM initiatives even tried to control customers (defining when customers bought e.g. end of quarter, and what service channels they used).

 

As understanding in the market has improved, the original definitions of CRM have really come back into fashion and so CRM strategy has evolved. I think people are going back to basics and are thinking if we really want to build “mutually beneficial customer relationships" then we need to focus on more the customer, rather than the technology and understand what the customer values from a relationship, what jobs the customer is trying to do when they interact with us and how we can help the customer do those jobs better than the competition. So I think what's changed in CRM strategy is an increasing importance of customer experience.

 

The second thing I think has changed is technology - both the technology that enables CRM systems (cloud-based services, flexible, modular) but also the technology that customers use to interact with organizations (over the last 10 years we've seen the rise of social media, mobile devices, apps). This trend makes it increasingly difficult to try and define a static destination as a CRM vision - the reality is that both consumer and enterprise technology is constantly changing so a CRM strategy needs to reflect that and really design for change from the outset

 

CS - How do you recommend business leaders go about designing and implementing their CRM strategy?

 

LB - 1. Create a compelling need for change - people have got to want the change. This could be a competitive threat, customer numbers on the decline, or an opportunity that excites people, but we need something that galvanizes people.

 

2. Get customer-centric, outside-in thinking into the definition of your vision. A good way of doing this is through customer journey mapping - looking through the lens of the customer at the jobs they are trying to do and the moments of truth they face in their journeys.

 

3.Clearly articulate that vision (which again, may not be a static destination) it may be a set of principles, but key is that people understand and buy into them.

 

4. Evaluate your existing capabilities (tech, people, process)

 

5. Form a prioritized delivery plan of which capabilities you need to improve (of course acknowledging that many are interlinked)

 

6. Start small, iterate and iterate and iterate!

 

CS - Is it necessary to first build a business case to support implementing a new or revised CRM strategy – and if so, what should that business case include?

 

LB - For me, CRM should be linked to an organizations corporate strategy. If the corporate strategy is to compete in the market with a differentiated service experience then CRM should be about enabling that and the business case should in turn be directly linked to those corporate objectives.

 

The types of benefits you would look for in CRM usually related to improved revenue and profitability from doing more business with existing customers for longer. But of course some CRM projects are justified with cost savings derived from channel shift or process efficiencies.

 

Ideally, when you think about benefits you should also think about value to everyone in the chain e.g. employees, customers, suppliers etc

 

CS - Do you find that implementing a CRM strategy often entails a cultural change in the business?

 

LB - Without question and that's the hardest challenge.

 

If you look at the rise of social media and big data - everyone is obsessed by the technology challenge of filtering through vast quantities of data, but to me the biggest challenge is an operating model challenge. I've seen countless organizations struggle with social media because it challenges their silos, their speed, their command and control mindset

 

CS - Do you find that there’s often a mismatch between what businesses think they do well and what they really do well - or between how businesses believe there customer relationships are as opposed to how customers would rate those relationships?

 

LB - yes - frequently.

 

One Pharma client I worked with was shocked to discover that their sales people were spending over 50% of their time on activities that their clients valued as low or insignificant. The top things that clients valued accounted for less than 10% of total sales activities

 

CS - if so, why the mismatch? And what do about it?  

 

LB - It's a difficult challenge.

 

First – you need to make people aware - in the example I've just given the CEO and sales director were shocked and that created a need for change.

 

But realistically many of these behaviors are ingrained in an organization - most sales people are still taught that the most important customers are the ones who are going to place an order this quarter and are measured ruthlessly in closing the deal before quarter end. It's a big shift in culture to prioritize long-term relationships and to do the right thing by the customer - both senior management and front line employees have to believe that it's the right thing to do

 

CS - When developing a CRM strategy, how and when does CRM software fit into the process?

 

LB - Quite simply technology is one enabling capability within a CRM strategy. It's unfortunate that the terms has become so synonymous with technology because the reality is that most organizations buy far more technology than they actually use and they cannibalize on the complimentary capabilities required to release the value from their investments 

 

CS - Do you find that its still a common scenario whereby companies implement CRM software before they’ve articulated a CRM strategy or defined their customer-facing business processes? Why?

I hope we're through that phase in the market but reality is I think it's still the case that people buy technology first and than 6 weeks / 6 months into a program they start to question why are we doing this? What's in it for customers? How can we prioritize our delivery sprints if don't have a clear picture of what's important.

 

CS - How is developing a CRM strategy influenced by disruptive technologies such as SaaS or the cloud, or social media or social CRM?  

 

LB - To some extend SaaS has made things worse - because it's so much easier for a line of business manager to purchase (outside IT) and get up and running with a siloed technology solution, SaaS can be seen as a silver bullet (which of course it is not!).

 

However, at the same time, SaaS  of course presents a fantastic opportunity to deliver some of the technology capabilities required to enable a vision much faster and in a more flexible way. Let’s be clear though - you still need a vision and strategy – there are no shortcuts here.

 

Social CRM has reinvigorated CRM because it has created a compelling event for most organizations to change. It demands the acknowledgement of customer power and control which in turn demands outside-in, customer experience thinking.

 

CS - When CRM strategies fail, what are the most common reasons they fail?

 

LB - In my experience most tend to blame the technology but technology is rarely to blame. I wrote this piece on “6 ways CRM projects go wrong” which covers reasons for failure like the inside out mindset, “analysis paralysis”, “once bitten twice shy”.

 

CS - If we look ahead a little bit, what changes do you suspect we’ll see in terms of creating, implementing or refining CRM strategies?

 

Actually I think we will see a theme of back to basics thinking on relationships. It’s easy to get caught up in the hype of a new technology but the reality is that people not technology build relationships and healthy relationships are never one sided.

 

The second theme I see is the pressure to try and design for change. It’s clear that product life cycles are getting shorter and shorter and consumers are constantly swarming to the latest device, social network or app. We have unparalleled ability to interact with consumers in new ways and learn vast amounts about them – they challenge is how we apply that insight to the business and how fast we are able to respond.

Fixing Sales Force Automation

For the past 15 years one of the most common causes of Sales Force Automation project failures has been that they have added approximately zero value to users. Most projects prioritized sales management first and sales people a distant second. SFA projects aimed to imprison sales people; tracking their daily activities, forcing them to give up the knowledge, scripting them through a sales process and creating admin for them. Is it any wonder that the majority of users treated these systems with utter contempt? I have spoken to countless sales people who looked upon their SFA systems as 2-3 hours of admin time per week, usually on a Friday afternoon.

Sales people who find themselves the victims of bad SFA implementations typically enter the bare minimum amount of information required to cheat their managers into thinking they were using the system effectively, paying particular attention to working out how best to game and not commit the ultimate sin of over-forecasting a deal. Despite the millions invested in SFA applications rogue pipelines in Microsoft Excel complimented by to-do lists on scraps of paper arguably remain the most widely used SFA platform today. Unfortunately this creates a vicious circle of failure. As soon as management start to mistrust the forecast coming from their SFA reports, they too start finding other ways of improving forecast accuracy. They arrange daily or weekly calls with sales people, drilling down on every aspect of a deal, mentally adjusting their forecast figures up or down.

 

So how do we fix this issue? Most successful CRM projects now adopt an approach of trying to help customers fulfill their needs or wants – in other words the jobs they are trying to do. If we can help customers create value and be successful then we stand a much greater chance of building a mutually beneficial relationship. Exactly the same principle needs to be applied to employee sales people. When embarking on an SFA project we must understand how to create value for a sales person and one of the easiest ways of creating value is through information.

 

Several years ago I worked on an SFA project for a pharmaceutical company in Australia. Their typical profile of a sales rep was a 50-60 year old who travelled vast distances around country Australia, visiting pharmacy customers, whom they had known for many years, selling them over the counter medications. Most of the reps were superb sales people – they had amazing relationships with their customers, knowing every detail about the lives and businesses of the people they were dealing with. Two major problems existed. Firstly the reps had to do quite staggering amounts of admin (mainly faxing orders to wholesalers and chasing orders from wholesalers). Many reps stopped productive sales work at lunchtime and spent each afternoon doing admin. Secondly, the reps had no information about their customers other than that in their head. They had no idea which customers were the most profitable, which had the highest share of wallet, which switched suppliers frequently based on price promotions or what other dealings their customers had with the company e.g. with Finance. Finally, for additional context a significant proportion of the reps (say 20%) had very little IT experience. My advice to them was that they badly needed SFA but that SFA would kill their sales force. Instead of blindly rushing to roll out a laptop based SFA solution that at least 20% of the reps would not have been able to use, we took some time to understand the needs of the reps and how they worked. Of course when we spoke to them (and also their clients) they all wanted to reduce their admin time, they all wanted to be alerted when one of their major clients failed to pay on time, they all wanted to spot new opportunities to upsell additional products to their clients or find new opportunities, they all wanted to manage their time better and spend time on the things the activities that would increase their commission stream. In the end we implemented an SFA solution. But it was a very different SFA solution than you probably have in mind. Sure, it had many of the same features and functions but they were embedded within a simplified solution that added value to the rep and that the rep would actually want to use. For the 20% of reps who had literally never switched on a PC in their lives we set up a sales support desk. They carried on taking orders with pen and paper but before they visited a customer they phoned the sales support desk to get an update on any missing orders or payments. After the visit they phoned back and the sales support clerk typed in the orders as fast as they could speak – no faxes, no re-keying, no admin.

 

Now of course the example above is rather crude. The project won an award for the best CRM implementation in Australia (I think in 2003), but frankly we had a fairly easy opportunity to generate huge benefits given the lack of effectiveness within the sales force. Most sales forces today are far more sophisticated but similar problems still exist around admin time, lack of science in how reps treat different customers and lack of intelligence. Fundamentally reps in more sophisticated sales organizations still want the same things – “make it easier for me to sell”, “reduce my admin burden and help me make my commission targets”. In today’s “big data” world information and insight is key but we cannot expect our sales people to turn into data analysts. We must find ways of blending insight into SFA applications in ways that genuinely add value to sales people. For example our SFA systems should hide complexity of front / back office integration but:

 

• Supplement account knowledge, for example with information gleaned from social networking sites e.g. Fred used to work with Joe at ACME, he writes a blog about financial fraud etc.  Information from social networking sites can be valuable in helping a sales person find and qualify a new opportunity or understand the relationship networks around a target account. Take a look at this whitepaper from InsideView for more information: “Sales 2.0: Tap into Social Media to drive Enterprise Sales Results”.
• Alert sales people to potential new opportunities based on patterns of what other customers are buying or what other successful reps are selling.
• Show sales people how they are doing against targets and model commissions and how these will change based on different levels of quota achievement.
• Predict the revenue and profitability impact of changing focus to a different account or set of activities.
• Show how different competitors are impacting discounting, credits & losses and show how this impacts commission.
• Model the impact of complex pricing changes to help structure deals better for customers, provider and of course sales rep.
•  Alert the sales rep to back office information that could be crucial in structuring a deal e.g. supply chain information that might prevent an order being shipped on time. This ensures that sales people make promises that they can deliver on, which in turn makes them more successful and saves them time and effort in re-visiting bad deals.
• Connect the sales person to internal social networks and knowledge bases to find knowledge experts, peers or content easily. This can be extremely valuable for competitive information or sharing case studies of wins and losses.

 

SFA implementations are tough. Sales people are notoriously protective of their account information and insight and bitterly resistant to admin and control, but information can be a key to unlocking value for both organization and rep.

 

This article was originally written to support SAP’s 21^st Century Sales Warrior Guide. See http://saleswarriorguide.com/

Fixing Sales Force Automation

For the past 15 years one of the most common causes of Sales Force Automation project failures has been that they have added approximately zero value to users. Most projects prioritized sales management first and sales people a distant second. SFA projects aimed to imprison sales people; tracking their daily activities, forcing them to give up the knowledge, scripting them through a sales process and creating admin for them. Is it any wonder that the majority of users treated these systems with utter contempt? I have spoken to countless sales people who looked upon their SFA systems as 2-3 hours of admin time per week, usually on a Friday afternoon.

Sales people who find themselves the victims of bad SFA implementations typically enter the bare minimum amount of information required to cheat their managers into thinking they were using the system effectively, paying particular attention to working out how best to game and not commit the ultimate sin of over-forecasting a deal. Despite the millions invested in SFA applications rogue pipelines in Microsoft Excel complimented by to-do lists on scraps of paper arguably remain the most widely used SFA platform today. Unfortunately this creates a vicious circle of failure. As soon as management start to mistrust the forecast coming from their SFA reports, they too start finding other ways of improving forecast accuracy. They arrange daily or weekly calls with sales people, drilling down on every aspect of a deal, mentally adjusting their forecast figures up or down.

 

So how do we fix this issue? Most successful CRM projects now adopt an approach of trying to help customers fulfill their needs or wants – in other words the jobs they are trying to do. If we can help customers create value and be successful then we stand a much greater chance of building a mutually beneficial relationship. Exactly the same principle needs to be applied to employee sales people. When embarking on an SFA project we must understand how to create value for a sales person and one of the easiest ways of creating value is through information.

 

Several years ago I worked on an SFA project for a pharmaceutical company in Australia. Their typical profile of a sales rep was a 50-60 year old who travelled vast distances around country Australia, visiting pharmacy customers, whom they had known for many years, selling them over the counter medications. Most of the reps were superb sales people – they had amazing relationships with their customers, knowing every detail about the lives and businesses of the people they were dealing with. Two major problems existed. Firstly the reps had to do quite staggering amounts of admin (mainly faxing orders to wholesalers and chasing orders from wholesalers). Many reps stopped productive sales work at lunchtime and spent each afternoon doing admin. Secondly, the reps had no information about their customers other than that in their head. They had no idea which customers were the most profitable, which had the highest share of wallet, which switched suppliers frequently based on price promotions or what other dealings their customers had with the company e.g. with Finance. Finally, for additional context a significant proportion of the reps (say 20%) had very little IT experience. My advice to them was that they badly needed SFA but that SFA would kill their sales force. Instead of blindly rushing to roll out a laptop based SFA solution that at least 20% of the reps would not have been able to use, we took some time to understand the needs of the reps and how they worked. Of course when we spoke to them (and also their clients) they all wanted to reduce their admin time, they all wanted to be alerted when one of their major clients failed to pay on time, they all wanted to spot new opportunities to upsell additional products to their clients or find new opportunities, they all wanted to manage their time better and spend time on the things the activities that would increase their commission stream. In the end we implemented an SFA solution. But it was a very different SFA solution than you probably have in mind. Sure, it had many of the same features and functions but they were embedded within a simplified solution that added value to the rep and that the rep would actually want to use. For the 20% of reps who had literally never switched on a PC in their lives we set up a sales support desk. They carried on taking orders with pen and paper but before they visited a customer they phoned the sales support desk to get an update on any missing orders or payments. After the visit they phoned back and the sales support clerk typed in the orders as fast as they could speak – no faxes, no re-keying, no admin.

 

Now of course the example above is rather crude. The project won an award for the best CRM implementation in Australia (I think in 2003), but frankly we had a fairly easy opportunity to generate huge benefits given the lack of effectiveness within the sales force. Most sales forces today are far more sophisticated but similar problems still exist around admin time, lack of science in how reps treat different customers and lack of intelligence. Fundamentally reps in more sophisticated sales organizations still want the same things – “make it easier for me to sell”, “reduce my admin burden and help me make my commission targets”. In today’s “big data” world information and insight is key but we cannot expect our sales people to turn into data analysts. We must find ways of blending insight into SFA applications in ways that genuinely add value to sales people. For example our SFA systems should hide complexity of front / back office integration but:

 

• Supplement account knowledge, for example with information gleaned from social networking sites e.g. Fred used to work with Joe at ACME, he writes a blog about financial fraud etc.  Information from social networking sites can be valuable in helping a sales person find and qualify a new opportunity or understand the relationship networks around a target account. Take a look at this whitepaper from InsideView for more information: “Sales 2.0: Tap into Social Media to drive Enterprise Sales Results”.
• Alert sales people to potential new opportunities based on patterns of what other customers are buying or what other successful reps are selling.
• Show sales people how they are doing against targets and model commissions and how these will change based on different levels of quota achievement.
• Predict the revenue and profitability impact of changing focus to a different account or set of activities.
• Show how different competitors are impacting discounting, credits & losses and show how this impacts commission.
• Model the impact of complex pricing changes to help structure deals better for customers, provider and of course sales rep.
•  Alert the sales rep to back office information that could be crucial in structuring a deal e.g. supply chain information that might prevent an order being shipped on time. This ensures that sales people make promises that they can deliver on, which in turn makes them more successful and saves them time and effort in re-visiting bad deals.
• Connect the sales person to internal social networks and knowledge bases to find knowledge experts, peers or content easily. This can be extremely valuable for competitive information or sharing case studies of wins and losses.

 

SFA implementations are tough. Sales people are notoriously protective of their account information and insight and bitterly resistant to admin and control, but information can be a key to unlocking value for both organization and rep.

 

This article was originally written to support SAP’s 21^st Century Sales Warrior Guide. See http://saleswarriorguide.com/

Moving from tactical social media experiments to social business transformation

The elephant in the social media room at the moment is that most corporate social media initiatives to date have been tactical experiments. Of those, few have generated meaningful business results. Sure, people have built up Facebook Fans and Twitter followers or they have launched the odd viral video on YouTube. They have claimed these as a success, but in reality these metrics should never be the end goal.  The age of tactical experimentation has been characterized by:

• A focus on so-called “engagement metrics” i.e. likes, followers, re-tweets etc. over real business outcomes.
• An obsession with vanity buzz monitoring, with far too little attention given to data accuracy, data integration, insights and, most importantly,  action.
• An explosion of rogue corporate social media accounts, created to support any promotion, product, department or individual employee who wants to add a social element to their portfolio (a recent client had at least 114 disconnected Facebook , Twitter and YouTube accounts a recent Forbes article suggested that organisations with over 1000 employees likely have over 170 social media accounts http://tinyurl.com/6peo9ox
• Silos between corporate social media accounts, silos between social media accounts and enterprise systems and silos between customers, employees, departments and partners.

A relatively small number of companies have pushed things further and achieved real, transformational results. Start-ups like Giffgaff, who have pushed the concept of customer community in control further than anyone else in the Telco industry with tangible results (their customer service costs are an estimated 4 times below industry average and word of mouth acquisitions are around 5-7k per month). Zappos (now owned by Amazon), whose focus on service and experience pioneered an entire movement called Delivering Happiness.  Or large organisations like Proctor & Gamble whose Connect-and-Develop program allows idea co-creation with third parties and enables them to crowd-source solutions to fix some of its most complex R&D issues. Similarly, the Dutch airline KLM, who have embraced social with great success. Their KLM Clubs China & Africa have allowed them to build communities for entrepreneurs travelling to emerging markets with KLM, creating additional value for club members way outside what you would usually expect.  Their campaigns, like “Surprise” and “Meet and Seat” are both innovative and differentiate the airline’s brand in a crowded market place. They are not simply one-off social campaigns, “social” is more widely embedded within KLM’s DNA. 

What ties these companies together is that:

• They are an over-used collection of examples – it’s sad but true; social business success is still not the norm.
• Their success has moved beyond a single social media campaign or departmental initiative – P&G’s success for example relies on connecting Marketing with Product Development, GiffGaff ties together Marketing, Sales & Service - all are led by their community. Zappos pioneered the concept of “everyone is in service”.
• They have not just adopted “social” technologies, but they have embraced a social mindset. One of outside-in, customer-centric thinking 
• Often they have not referred to the things they are doing as “social” – after all, we have always been “social” - rather, they talk about higher-principles like “customer in control” or “delivering happiness”.

Most large enterprise clients I meet acknowledge that the age of social media experimentation is now coming to an end. They want practical advice as to how to move from social media experimentation to social business transformation. Having worked for the last few months with a FTSE 100 client on just such a challenge, I can say with certainty that this is not an easy task. Social can be in direct conflict to many ingrained aspects of a firm, including:

• Business model – the ability to digitize products and distribute them at mass scale or to a micro niche (both enabled by social networks) can radically challenge an existing business model.
• Culture & mindset – one thing that is clear from the failure of many social media experience is that applying an inside-out mindset to social can backfire spectacularly. Think of the way in which some companies have tried to control everything that is being said about them online – deleting negative comments or worse still posting fake reviews. Inevitable this mindset of command and control has not worked in the digital world.
• Technology – The pace of change within social technology is so fast that it places huge pressure on the traditional IT operating model. See my post on “What comes next after Facebook and Twitter. The challenge of keeping up in a constantly changing digital world.”
• Business Operating Model – perhaps the toughest and most under-appreciated challenge of social is to the business-operating model. They way people are incentivized, reporting lines, business objectives, ways of working can be placed under intense pressure by social. I have seen countless scraps between departments trying to “own” social media as well as finger pointing between silos each blaming the other for a failed campaign.

So how do you progress? Of course every company will be in a slightly different situation, but typically it’s probably worth at least getting a handle on all the tactical experiments you currently have in progress; at the very least understanding who is doing what, what’s working and where the dangers are. Secondly, any transformation requires a compelling need for change; one that is clear, visible and supported at both exec and employee levels. Often the compelling event may be external, for example from customers demanding change, from a new market opportunity that galvanizes action or from the threat of a disruptive competitor. Thirdly, start with people, mindset and culture before tools (most people have over-invested in tools and under-invested in the complimentary capabilities required to obtain value from the tools – I know of a firm with 6 internal collaboration tools who still struggles to collaborate internally). In particular focus on the challenging mindset shift from inside-out to outside-in, starting with the customer. Fourthly test, learn and iterate. – another concept that is much easier said than done in most organizations where short term success is celebrated and failure punished.

The path to social business success is certainly not an easy one, as demonstrated by the lack of end-to-end examples that exist today, but as we move through the social wave of hype I have no doubt we will see more successes and less throw-away experiments.

This post was written to support the Social Business Strategy Summit 31^st May 2012

Why CRM Idol matters to EMEA software companies

Earlier this week Paul Greenberg announced the second season of CRM Idol. This year the competition has gone global with categories in the US, EMEA and Asia / Australasia. I’m delighted to be one of the 4 primary judges in EMEA. Last year was an eye-opening experience both for contestants and judges alike in EMEA. BPMonline, a SaaS vendor combining CRM and BPM, blew the panel of extended judges away with their final presentation and won the competition. To be frank, I’d never heard of BPMonline before CRM Idol 2011, but in my mind that’s the point – I’d been missing out.

Paul Greenberg introduced CRM Idol, in his words, to “give something back to the CRM industry” and to “give up and coming CRM vendors a chance to shine” that they wouldn’t normally get. Paul has given more to the CRM industry than anyone I know, so he really doesn’t need to worry about the first point, but his second point hits the nail on the head. Having spent nearly 15 years working both for and with enterprise CRM software vendors I know full well that much of the innovation that happens in the CRM market happens outside the development labs of the big few. That’s not to say that they don’t innovate, but many have major development challenges to integrate newly acquired products, re-platform their on-premise solutions to SaaS, migrate customers from old versions of their product to the latest release – these initiatives quite rightly suck up vast amounts of development resource and ensure they stay competitive in the market.

By their very nature, start-up software vendors simply don’t have these challenges. They start from a clean sheet of paper, using the latest technology and standards. They are agile in every sense of the word responding to customer and market trends in near real time and often releasing new iterations to their products on a weekly basis. They tap into the latest thinking in open-source communities, launch-pads and co-working facilities. In short, the start-ups have an opportunity to do things that large enterprise software vendors can only dream of. Many create new categories of software and go on to great things, others compliment the eco-systems of the big few providing niche, value-added solutions. But each face a challenge 12 months or so into development – that of getting noticed in a crowded market.

Although the CRM software market has historically be centered around Silicon Valley (Siebel, Salesforce.com, SAP Labs Paolo Alto), Europe is blessed with some real hot-beds of technology innovation. From web developers in Tallinn to semantic scientists in Tel Aviv, to IP Telephony pioneers in Helsinki, EMEA is a great place to be. EMEA also has a thriving Digital heart in London’s Shoreditch around the so-called Silicon Roundabout that has given birth to hundreds of tech start-ups like Tweetdeck, Dopplr and Last.fm. CRM Idol gives those vendors connected with the CRM industry a chance to show their wares to 70 or so of the most influential independents in the CRM / SCRM market – people like Denis Pombriant, Esteban Kolsky, Ray Wang, Michael Fauscette & William Band have been driving thought-leadership in the CRM industry for the best part of 20 years. In addition, there are some valuable prizes to be won like free consulting days, pitches to venture capital firms and free lead-gen webinars.

So if you are a small, innovative vendor in EMEA connected with the CRM market I would encourage you to take a look at the entry criteria for CRM Idol 2012 and register online. What have you got to lose?

Re-intermediation on steroids?

There was a popular myth in the late 1990’s that the e-commerce revolution would lead to the death of the intermediary. Why buy a holiday through a travel agent, insurance through a broker or a property through an estate agent when you can go direct? Or so the logic went.  Michael Hammer writing for Information Week back in July 2000 called this out in his article “The myth of disintrmediation” he wrote:

“Today, disintermediation is supposedly dooming distributors, retailers, wholesalers, and all other intermediaries between manufacturers (or service providers) and the ultimate customer… A more reasoned view of the impact of the Internet on distribution channels is that it will transform but not eliminate them. The reality is that customers need a significant amount of value to be added to most products before they can buy and use them. Think about an air-conditioning system: A customer needs help to determine how much air conditioning he or she requires, which system to buy, and what related products--duct work, for instance--are needed. The customer also will likely need help installing and maintaining the system. Who is going to provide all this value? Certainly not the manufacturer, which has no local presence and may not have all the needed skills. This value needs to be provided by the distribution channel, which is here to stay, but not in its current form.”

12 years later, those intermediaries that failed to adapt have indeed vanished from the high street, but by in large those intermediaries that have survived (and often thrived) have re-invented themselves and focused on the simple question of how they can add value to the end customer. See my post on Flightcentre from last year as an example of an intermediary going the extra mile to add value to the end consumer.

Moreover, since the disintermediation myth. we have seen the rise of giant mega-intermediaries; think of Amazon, Google, eBay –all have grown to multi-billion dollar companies since 2000. In addition we have seen online price comparison sites like MoneySupermarket, uswitch and Pricerunner and online review sites like Tripadvisor and Yelp grow at pace and significantly disrupt industries like banking, insurance and travel. In a very short time frame we have experienced re-intermediation on steroids.

So where is re-intermediation heading? I still think we have much further to go. Re-intermediation will be driven further by big data and real time access. Take the mobile phone industry for example – huge amounts of data exist on both call patterns and on tariff structures, yet most intermediary activity focuses only on the point of contract renewal i.e. it’s very easy for consumers to get a better deal when they switch tariffs once a year but that’s about it. Taking better advantage of data and real time access would see a intermediary analyzing my calls at the point that I make them and finding me the best tariff to make that call – imagine a price comparison SIM card?! Even better (to pick a particular pet peeve of mine) one that works overseas and avoids excessive roaming charges… ok – perhaps that’s going too far!

Alternatively take the Television industry. Over the next few years I suspect we will see an increased battle for content rights as both cable TV companies and OTT players battle for exclusive content. This could mean a bidding war between the cable TV companies and the likes of Netflix, Amazon (LoveFilm), Sony, Apple, Tesco (Blinkbox) and others for movie or sports rights. In the short term this could make for a frustrating customer experience – do I really want to subscribe to 5 different streaming providers? Enter the intermediary. The promise of Google TV (or other services like it) is to help consumers find content across multiple providers to learn about their tastes (and maybe their friends tastes) to help them watch what they want. Again there is potential for a powerful intermediary to grow and disrupt an industry.

This “re-intermediation on stedoids” will place huge pressure on those at the beginning of the supply chain. To thrive and take advantage of intermediaries will require:

1. Strong insight into the end consumer – see my post on the opportunities presented by the combination of broadband, hardware device explosion, cloud computing, apps & social networks. Together these provide new ways to connect to consumers on their terms, collect huge amounts of data (ideally with their permission and also on their terms!) and better meet customer needs.
2. A unique product offering (e.g. innovative media content that people want to consume or an artisan product). Esteban Kolsky recently pointed me at this great story on “A revival in American Manufacturing, Led by Brooklyn foodies”; a superb reminder of Chris Anderson’s long tail in action.
3. Flexible pricing – the airline industry seems to lead the way in constantly changing ticket prices based on demand, fuel costs and market conditions yet other industries lag far behind and are unable to change their pricing in months. In a world of big data and intermediaries Customers will want to pay for what they use, when they use it and get the best deal at that time rather than being locked into long contracts. Pricing therefore needs to be dynamic enough to be changed and adapted at speed.

Re-intermediation is nothing new but I suspect it has much further to travel. How well prepared are you?

Don’t let a millennial determine your strategy

Mark Tamis wrote a hype-busting piece this week entitled “go with the customer flow”. He pointed out that currently only 1% of company / customer interactions take place on social media in France (Les Echos). Yet many businesses are getting caught up with “shiny object symptom”, focusing on the 1% channel and “ignoring the rest of the engagement platform”. Spot on.

Building on Mark’s logic, I’m often concerned by companies who try and re-invent themselves by focusing on or piloting an new initiative with Gen Y / Millennials. These are the digital natives, the logic goes… the ones who have created a connected, always-on world. What better place to pilot our shiny new social engagement strategy?

Time for a reality-check. To be clear, I have no problem at all with Millennials, they represent a vibrant, innovative segment and one that can reap huge rewards if you are able to engage with them successfully and on an ongoing basis. But they are also the most over-targeted segment of our time. It seems that suddenly everyone wants to create Millennial super-fans who blog, tweet, answer support questions in a forum and create viral YouTube videos on the company’s behalf. As a category Millennials are swamped with offers and are notoriously fickle in swarming from one offer / device / network to the next (Groupon coupon anyone???). Their loyalty is extremely difficult to attain and on average their disposable incomes are relatively low, compared to other segments of the market.

Graham Hill pointed me to research from David Demery and Nigel W. Duc on Demographic change in the UK. The research is few years old now but it states that by 2025 the largest age groups (at least in the UK) will be aged 45-65 (27%) followed by those aged 65 and over (20%). In addition, the fastest growing age groups will be aged 65 or over followed by those aged 45-65. The smallest and fastest shrinking age group are those aged up to 30 (only 16%). On that basis the 45s and over are where the growth is and where the money is. As Graham Hill says “it's time to move beyond the Millenial hype and focus on demographic and monetary reality of an aging, cash-rich and increasingly time-rich population".

Tom Peters adds another dimension in his book ”The Little Big Things”. He points out that the two most powerful markets that most companies ignore are women and boomers/geezers. “The boomer-geezer market is exploding around the world – and is ridiculously under-served: “What an opportunity for the next 25 years – in fact, market opportunity #1”. The sweetest market, he says, is baby boomer women, quoting the brilliant article in the Economist “The importance of sex” which leads with the provocative opening line “Forget China, India and the internet: economic growth is driven by women”.

Moreover, digital is not exclusively the domain of Millennials. In their 2009 research “The Broad Reach of Social Networks”, Forrester state that seventy per cent of online adults aged 55 and older tap social tools at least once a month. People over 34 have become the largest segment using Facebook and much of te growth in social networking usage is being driven by people over 34.

Before you rush to create target personas who live and breath digital, start with the basics of customer strategy by analyzing your total target market, defining your unique customer value proposition and thinking outside-in about how you can help your customers segments create value. Millennials may seem like an attractive starting point but they are not the only game in town and they certainly aren’t the only segment that has embraced digital.