CRM Paradigm Shift

Having watched the CRM (R)evolution for over a decade, I am very excited about the developments that have taken place over the last few years. Four important technological trends have the potential to fundamentally change the way organizations “manage” relationship with their customers and revolutionize CRM. These tech trends are:

All these four independent trends are now converging to bring about a Paradigm Shift in CRM.

“Managing” customer relationships till now involved recording “transactions” between company and the customer over phone, email and web-site besides “snail” mail and face-to-face exchanges and using the “historical” or “past” information to better serve the customers. Company was in total control of this conversation with customer at every stage. Information was recorded using pre-determined fields in the database, by company employees (or by contractors trained by the company) using script in CRM application controlled by the company. Thanks to the convergence of cloud computing, social media, predictive analytics and smart phones, this comfortable existence of marketers (and CIOs, CTOs as well) is about to come to an end. [pullquote] Thanks to the convergence of cloud computing, social media, predictive analytics and smart phones, this comfortable existence of marketers (and CIOs, CTOs as well) is about to come to an end. [/pullquote]

Social Media has empowered customers like never before and they can discuss about brands/products on Social Media channels. This discussion is visible to all including other customers, potential customers and competitors.

Smart Phones/Portable devices with high speed internet access, geo-location tools and camera have ensured that customers can use information gained from Social Networks and Internet to maximum advantage. For example, scanning product bar codes to ascertain the lowest price of a product in geographical vicinity.

Software as a Service (SaaS) has made “on-demand” full functionality CRM application possible, with no large scale investments requirement upfront. CRM system’s integration with multiple other systems was one of the biggest challenges, requiring substantial investment in terms of time and cost. No more, thanks to Cloud computing/SaaS model. It is possible to integrate SaaS and cloud applications with enterprise apps in days, what used to take weeks or even months earlier. This has further lowered entry barriers and made available complex, full featured CRM applications to small and medium sized firms – what so far was available to only companies with large IT/Marketing budgets, empowering smaller firms to compete with their larger rivals on equal footing.

And last but not least, predictive analytics has made it possible not only to analyse past customer behavior, but predict future behavior too based on statistical models. When combined with real-time Social Network data feed, it is THE killer app for next gen CRM system. Predictive analytics can help in identifying minor issues and help in taking corrective action before they become a crisis. For example, if a customer (or a group of customers) tweet about their dissatisfaction with a product or service, predictive analytics can help in identifying who among them are most likely to defect so that company can take corrective action before it is too late. Better still, if they happen to be customer(s) of a competitor, company can make an attractive offer and win them over. And thanks to SaaS model, this level of analytics functionality is available to small and medium sized companies with no large scale investments requirement upfront. [pullquote] And last but not least, predictive analytics has made it possible not only to analyse past customer behavior, but predict future behavior too based on statistical models. When combined with real-time Social Network data feed, it is THE killer app for next gen CRM system. [/pullquote]

Given this CRM Paradigm Shift, how well your organization is prepared? Will it effectively engage “empowered” Social Customer? Will it compete against competitors who use low-cost “SaaS” model? Is your CRM system smart enough to predict customer behavior and help in taking corrective action before minor issues become crisis? Would love to hear from you on this Paradigm Shift.

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12 responses to “CRM Paradigm Shift

  1. Hi Harish,I think you summed it up nicely. And I agree, with the Social Customer in the driving seat of the paradigm shift, the 4 tech-trends you describe here, will drive the company's ability to answer to the Social Customer..A little warning though: One could invest in building the capabilities of any of the above tech-trends, without investing in a culture, framework and approach to Customer centricity the investment will not provide the return expected. In short: Having the technical capabilities doesn't mean one has made the (paradigm) shift..Thx,Wim

  2. Good piece of info that you’ve obtained on this web site submit. Hope I might get some a lot more of the stuff on your own we blog. I will arrive againRegardsMark | CEO Write Networks

  3. Pingback: Read this #CRM Paradigm Shift by Dr. Harish Kotadia « Fredzimny's Blog

  4. Thanks @wimrampen for sharing your thoughts and kind words, much appreciated!I couldn't agree with you more in that one could invest in building the capabilities, but if it is without investing in a culture and customer centricity, the investment will not provide the return expected. In fact, it could prove counter-productive!Organizations should first invest in creating customer focused culture before investing in powerful tools. Given the reach and effectiveness of Social Media tools for example, if enough care is not taken – they could do more harm than good. Nestle's recent Facebook fiasco is a great example. It emphasizes the need for not only creating the right culture/environment, but also providing enough training/skills to people who are going to use these sophisticated tools. Investing in tools is the easy part, it is more difficult to create a customer focused culture. Those organizations who succeed in creating such a culture and use tools effectively will come out as winners, others will lose their position.Thanks again for your comment, much appreciated.Harish Kotadia, Ph.D.

  5. Contesting the Death of Traditional CRM: Social CRM is a Process andnot a Technology. http://creativestride.com/blog/2010/06/01/conte

  6. Harish,I can see one other trend that is emerging – “platformization” of the CRM.On our test landing page (it'll be live in a few days) http://testfoo.smartupz.com you can see the description of the “next gen” (shameless self promotion warning!) CRM system that acts not as an internal system but is a communication platform for the company, partners and customers.Please check this link as well – http://testfoo.smartupz.com/press-kit/ – it describes our philosophy.

  7. Thanks @smartupz for visiting my blog and for your comment. Yes, “platformization” of CRM is a fact, but it is not limited to only communication, but extends to all types of collaboration among customers and with employees and partners. This is what customer communities all about. And Social CRM can help with this.Thanks again for your comment, much appreciated!Harish Kotadia, Ph.D.

  8. Harish, great post. It's important to fix the baseline for a good interpretation of SCRM. I'd like to give my contribution considering into the Predictive Analytics the IMHO terrific importance of realtime event-driven marketing / alerts which give the opportunity to be always “on-air” when specific critical events occur in order to react properly.

  9. Thanks @aincalza for visiting my blog and for your kind words!

    Yes, predictive analytics can help in real-time event driven marketing (or should we call engagement, as this is Social Media).

    For higher ROI on Social CRM investments, it is a must that PA is leveraged, else no point in monitoring SM in real-time, but not responding or engaging customers.

    Thanks again for your comment, much appreciated.

    Harish Kotadia, Ph.D.

  10. Thanks @aincalza for visiting my blog and for your kind words!Yes, predictive analytics can help in real-time event driven marketing (or should we call engagement, as this is Social Media). For higher ROI on Social CRM investments, it is a must that PA is leveraged, else no point in monitoring SM in real-time, but not responding or engaging customers.Thanks again for your comment, much appreciated.Harish Kotadia, Ph.D.

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