The New World of CRM

In 2002, when my book The CRM Handbook was published, it was the first CRM-related title to hit the shelves. Its popularity was proof that customer relationship management was a can't-ignore topic. Although the CRM industry experienced frenzied acquisitions in the year following the book release, developments in sales force automation, campaign management, call center automation and customer analytics had stayed relatively static. Companies grappled with the same problems and the same predictable toolsets.

But things are different now. In the past 18 months, a new world of customer management concepts and practices has broken open. Three main forces are at work that didn't exist during CRM's initial foray, and each of them is a game-changer.

1. The Rise of Social Media

A 2008 report by Forrester Research predicted that spending on Web 2.0 technologies would grow to $4.6 billion by 2013. Although much of that spending is allocated to internal projects, companies are eyeing the use of blogs, microblogs, wikis and instant messages to engage customers in new conversations.

Indeed, companies like McDonald's, Pepsi and Pepperidge Farm are all pulling customers to new community-focused Web sites, complete with contests, games and prizes galore. Executives from ING Direct, Best Buy and Cisco are conversing with the masses using microblogging powerhouse Twitter (and a new tool called ExecTweet will even help you find them). These executives and their companies understand the promise of using social media tools to strengthen brand images, share company news and connect with customers and prospects.

But what does this mean for customers? Simply put, the use of social media aids outreach. Many use blogs and RSS feeds as a way of pushing news and soliciting honest feedback from their customers, driving an ongoing dialog. Starbucks used Twitter to unveil VIA, its new line of instant coffee. This type of insider communication is a breakthrough to consumers who crave exclusivity, and a way to start new conversations in an environment that's less stale than the email questionnaire or paper coupon offer.

The most customer-focused companies want to encourage conversations not only with their customers and prospects, but between them. Companies are using social media to encourage and cultivate customer communities. One goal is to lower customer support costs by encouraging peer-to-peer support, with customers sharing product tips and fixes with each other. But brand management is also a key goal: Coca-Cola's Facebook fan page is second in popularity only to Barack Obama's. You can't buy that kind of PR, nor can you cultivate that level of goodwill through traditional campaigns.

2. New Industries, New Strategies

Another recent change to the CRM landscape is the type of company embracing CRM. No longer exclusive to the Global 2000, CRM has hit the midmarket. It's transcended industries, broadening beyond the big spenders: financial services companies wrestling multichannel issues or retailers struggling to manage nascent reward programs. Nowadays, every company needs some level of customer management.

Companies that previously dipped their toes in the CRM waters are now jumping in headfirst. Many, like the auto and health care industries, saw CRM as a purely functional effort, delivering rudimentary sales reports or generating smart mailing lists for marketing campaigns. They're now confronting the reality that companies need to recognize customers as individuals across lines of business and also need to communicate with them in more proactive and consistent ways.

3. The Demise of the Behemoth

In the early days of CRM, Siebel Systems was the 800-pound gorilla. "We just spent $10 million on Siebel!" one government agency proudly informed me in 2004. "Can your firm come in and help us define our requirements?"

The days of "ready, shoot, aim" - complete with bloated budgets, single-vendor solutions and inevitable dashed expectations - are long gone. Today, there is no longer an acknowledged leader across the CRM spectrum. Sales, marketing, call center and strategy organizations all have their premier vendors and many niche vendors are going strong.

Moreover, the emergence of master data management and service-oriented architecture solutions means that these systems can share customer data more easily than ever before. Yesterday's strategic CRM systems are today's legacy systems, complete with inaccurate data and their own versions of customer. Unlike in the early days, the star of the show isn't the CRM system managing the sales pipeline or tracking campaigns. Instead, it's the ability to share and link common, sanctioned customer data across business applications that can improve customer data and, by extension, the customer's experience.

Daring to Be Different

Even as companies renew their customer focus and adopt social media tools to aid in more regular and relevant dialog with customers, the end game for most is not only differentiating themselves from their competitors, but differentiating their customers and prospects from one another. In 1997, Brian Pitman became CEO of Lloyds TSB and made the pioneering decision to develop customers that had been neglected by Lloyds' competitors. Under Pitman's leadership, Lloyds went from one of the world's smallest banks (in terms of market cap) to one of the world's largest.

It all comes back to knowing your customers, prospects and partners, differentiating them, and engaging them in targeted conversations based on that differentiation. How you do that, whether it's by phone, by email or by tweeting up a storm, is secondary to the fact that you're doing it, and doing it well. And that's where the information matters most.

Jill Dyché is a partner and co-founder of Baseline Consulting (www.baseline-consulting.com), a data integration and business analytics delivery firm. Her first book, e-Data (Addison Wesley, 2000) introduced managers to the concept of enterprise data integration and has been published in eight languages. Her second book, The CRM Handbook (Addison Wesley, 2002) is the CRM bestseller. Jill's work has been featured in major publications, and she is a frequent speaker at industry events. Her latest book, Customer Data Integration: Reaching a Single Version of the Truth was co-authored with Evan Levy. You can reach her at jilldyche@baseline-consulting.com.

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Enterprise Software/ERP/CRM