Wednesday, July 21, 2010

The Evolution Of CRM

Customer relationship management is about 30 years old now, since Leonard Berry in 1982 speaked about relationship marketing. Hence Gartner has decided to span the history of CRM since its debutes. CRM has been a trendy concept for quite a while, but its evolution has been fast.

Of course, CRM is still considered by the majority as a growth source for a company, and foremost the best tool to retain customers, but also some people have doubt about its efficiency, as CRM projects are most of the time big and costly.

CRM has been based since its early age, and remains based on metrics. The capacity of analyzing customer data to find cost optimization or commercial offers which will boost sales is obviously the main goal of CRM in a company. But as technology is moving fast, so does CRM.

Many business trends have affected the way people design customer relationship management projects:
  • Multi channel retailing, which implies to have specific metrics set. It also implies it is more difficult to track customers relationship with the brand, depending on the retail he purchases. But what is sure is that the Internet channel drives in store business and in store visits leads some Internet purchases.
  • Multi channel communication: Marketing one to one has become a huge advertising budget for brands. But new media have come up, especially on the web with social networks like Facebook, or micro blogging places like Twitter.
  • CRM Know How: 30 years ago, CRM was brand new, and everything was to be designed. Now CRM managers have got experience and knowledge which helps.
  • CRM competition: It is rare now that companies haven't set yet their customer relationship management program. Therefore, CRM programs is not a source of differenciation on the market by itself anymore. Innovation must be supported, and you need to take care of potential improvements you may get.

The Present of CRM: The Non Customer

According to this study, customers has become more and more skepticals about brands.

"Consumers are more skeptical, more willing to complain, more willing to leave you for a bad experience," Thompson said. "And 89% will tell their friends about their bad experience. Twenty-five percent do that on social media."

They are more eager to complain than they used to be. They have taken the power and knows it. I have read the book in French "le non consommateur", which explains it. It shows out how the relationship between customers and brands have evolved in a bad way, and why customers are expecting more of brands.

That is going to shift rapidly, he predicts. By 2015, 75% will tell other people about a bad experience with a company via social media, he said.

The future of CRM: C2B

Now the future of customer relationship management is that customers, due to all this factors and the fact that markets become more and more mature has got the power. Loosing one customer could be pretty expensive to a company, and customers know that as a matter of fact.

Now customers thanks to the Internet and social media are able to create groups which will empower them even more.

Now CRM is based on conversation, thanks to community managers which animates community of customers. This social part of CRM is very important because it is very difficult to apprehend with a traditionnal CRM prospective. Hence, CRM was based on pre definite data feeds, but now Twitter and Facebook feeds are hard to apprehend that way. This is the reason why CRM is becoming more "human", as community management can't be automatized at least for now. And I believe that after the failure of many sales force automation projects, the human side needs to be considered.

Finally, the three fundamental blocks of CRM will undergo more rapid change as well, according to Thompson. Currently, 90% of CRM spending is for operational processes, a little more than 9% is for analytics, and roughly 1% is for social CRM. Gartner predicts that will shift over the next five years to a mix of about 70% operational, 20% analytics and 10% social.