The Trouble with CRM: Tomorrow’s forecast – Sunny with some early fog.

April 23, 2001 Marketing, Technology Comments (0) 145

When CRM began to evolve in the mid-90’s every software vendor who had an application that had anything to do with managing customer or prospect data began pitching itself as a “CRM System.” Many of these systems were built to address one particular aspect of CRM, such as Sales Force Automation (contact management, Campaign Management, or Customer Analytics, and could not possibly deliver the value promised as “CRM System”. It was a case of “over-promise and under-deliver.”

Unfortunately, there were no end-to-end technology solutions for CRM at the time, and today, there still aren’t (although we’re getting closer). As much as vendors collaborate with one-another to provide an “integrated solution,” the results have been less than stellar. One only needs to read the Wall Street Journal or any number of business and trade
publications to learn about the failures of CRM System implementation where multi-system integration is involved. It’s no wonder that Pragmatists don’t believe that CRM Systems are worth the investment. However, this may be about to change.

While there are undoubtedly a few CRM System vendors who are trying to monopolize the market with an end-to-end solution, there is a somewhat conscious move by most CRM System vendors to segment themselves into specific vertical segments. At this writing, these vertical segments seem to be:

  • Sales(Sales Force Automation, Contact Management, and Telemarketing)
  • Marketing(Campaign Management, Online/E-mail Interaction Management and Marketing Management)
  • Data Management and Analysis( Business Intelligence, Customer Segmentation and Data Transformation)
  • Customer Service(Order Management, Supply Chain Management, Call Center Management and Interactive Customer Contact

By self-segmenting into these categories, CRM System vendors will ultimately force segment standards, against which all vendors within the segment will be measured. This is the first step to vertical segment consolidation, which will force the smaller, less well-funded players into merging, or failure. In the end, there will likely be 5-7 major players in each of these segments.

So, what does this mean for marketers and how can we benefit from coming change? Here are my Top 3 predictions, with a few thoughts on how we, as marketers, will benefit:

  • CRM System vendors will concentrate on delivering value within a vertical segment using their core technology, rather than through integration of their offerings with other CRM Systems. This will lead to an increased success rate with CRM system projects and give the Pragmatists the comfort level they need to accept CRM technologies. This will be a blessing for both the CRM System vendors and organizations that are struggling to make an internal case for their Pragmatists.

Marketers will benefit from this segment concentration by having the flexibility to select a system that specifically addresses a specific business goal, rather than a system that tries to solve all of the organization’s CRM ills at once. For example, if the organization primarily derives revenue through direct mail or database marketing efforts select a campaign management, rather than a system that is focused more on sales-automation, but offers campaign management capability. A vertical segment system will provide the fastest ROI for the organization, and will likely allow for a more compelling business case for additional CRM technology in the future.

  • CRM System vendors will encourage more firms to address “people and process issues” before application installation. CRM System vendors have learned the hard way that implementing technology before dealing with resource skills and abilities, as well as supporting processes often negatively impacts installation success.

This helps create an opportunity for marketers to drive CRM as a business strategy, rather than the technology initiative for which it is often mistaken. Marketers should use this occasion to gain visibility for the strategies, tactics, and processes that the technology enables.

  • There will be increased market consolidation between CRM front-office and back-office applications in an attempt to gain market domination in the CRM space. This consolidation will provide more seamless data integration between customer service, supply chains, and marketing, providing a wealth of data to use in improving the value offered to the customer. We are beginning to see this with acquisitions such as Vantive by PeopleSoft (www.peoplesoft.com), and Octane by E.piphany (www.epiphany.com). Of course, Siebel (www.siebel.com), Oracle (www.oracle.com) and SAP (www.sap.com) are also players in this space.

Increased data access will be the biggest benefit for marketers in using these enterprise-wide CRM Solutions. The wealth of data from nearly all customer interaction points can provide marketers with a more complete picture of the customer, and provide the potential to increase corporate value through improved message, product, and service delivery. As this occurs, the challenge for marketers will be how to become “information rich”, rather than “data poor”.

The evolution of CRM Systems space is taking place. Vendors are beginning to focus their offerings to differentiate themselves from competitors better, and there is a deliberate attempt for market domination (in both each segment, as well as those attempting an enterprise-wide solution). While these key factors are necessary for CRM System vendors to gain wider acceptance of their systems, how long this evolution ultimately takes is dependent on how firmly marketers push their needs, values and expectation, and the proven, documented success of the vendors in meeting those defined goals and objectives.

David Harkins is a serial entrepreneur, which is a more professional way of saying he is still trying to figure out what he wants to be when he grows up.
When not working for himself, he has had a fulfilling career in marketing, advising both large and small companies including several in the Fortune 500 and many of America’s largest nonprofit organizations. In his spare time, he consults, speaks, writes, hikes, explores, and creates art. Although, not necessarily in that order. Connect with him on social media below:

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The Trouble with CRM: Tomorrow’s forecast – Sunny with some early fog.

by David Harkins time to read: 4 min
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