Inspired by a blog post by Dr. Harish Kotadia I started to rethink about what the real key success factors for a social CRM strategy are. Harish used Walmart as an example, based upon their introduction of the “local” Walmart on Facebook. Walmart, being a retailer with more than 3,500 stores is surely a company for which the concept of (physical) proximity is important. From the outset I contradicted him (how dare I ;-) ). My point was, and is, that companies like Amazon, Dell, even Apple, arguably have a social CRM strategy but are not exactly local (there is not even a single Apple Retail Store in NZ …). They all manage without being physically local. Some brick and mortar retailers are even able and willing to bring their store to their customers by various technical means (e.g. Tesco but also others). So, I argue that proximity is more defined by ease of access, availability, interaction, rather than physical distance. This, in turn, means that physical proximity is not necessarily a key concept. This is especially true as being close, physically or otherwise, but irrelevant doesn’t bring a company anywhere, except into bankruptcy. So, relevance seems to be key.

What is relevance?

Relevance is the ability and willingness of companies to create value together with their customers. This goes beyond the mere transaction – giving money in exchange for a product or a service. Value for the company is not created by a single transaction, nor does the product itself create value for a customer. Value for the company is created by sustainable business. Sustainable business is not achieved by hitting a customer but by placing and keeping the customer’s interest at the core of the business i.e., by creating value together with the customer. The customer participates in the creation of value by using the products/services to fulfill her needs. The value comes out of the usage, not the product itself.

Now, what is correct?

To get to a result we need to be clear about what social CRM is. For this I will use Paul Greenberg’s definition as it is the most widely accepted one. Social “CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.” Personally, I currently define social CRM as an extension to CRM that leverages the power of social media to continually engage in a mutually beneficial conversation with customers and prospects. I am aware that this is a little short but I also do not want to stretch the current limits of companies as well. What is ultimately behind this definition is an ability to create value for customers with customers, using an environment in which they are willing to invest limited efforts to get better value from companies. Wikipedia describes the term “social” as referring “to a characteristic of living organisms that always refers to their interaction and to their collective coexistence, irrespective of whether they are aware of it or not, and irrespective of whether the interaction is voluntary or involuntary. It refers to attitudes, orientations, or behaviors, which take the interests, intentions, or needs of other people into account. Combining these two definitions we are not anywhere close to a concept of “being local”. But, on the other hand, making an offer to us Christchurch people that is available in Auckland doesn’t make much sense either. But then: This is not exactly social CRM but plain ole segmentation with - non-deniably - an aspect of locality.

So, where does this leave us?

As I have stated before, implementing a CRM – and a social CRM - is predominantly about people and strategy. Repeat: (Social) CRM is a strategy, not a technology! It is key to have the right people and the right (business) strategy. Technology (and channel) comes at the very end of implementation; and is often also depending on an IT strategy (I mean, there is no point in implementing an SAP system if the corporate strategy relies on Oracle – or vice versa. SFDC is of course an interesting phenomenon rewarding an own blog as they are trying to disrupt corporate strategies). Well, back to the topic: Technology and channel are consequences of the chosen strategy. I actually would consider both as being tactics rather than strategies. These consequences (technology, channel) are of increasing importance but still not sufficient if they are not used with an end in mind. And this end is serving customer interests. So, the key is centering all activities of the company around customer interests. Proximity then comes as a necessary conclusion. Am I off the mark here? What do you think?

I have spent the last week talking about CRM and SCRM to three retail companies. They cover different, although overlapping ranges and are of very different organizational maturity states. They are also on different positions on both, the CRM and SCRM scales. What they have in common are a desire to have a 360 degree on their customers and the opinion that it is important to excel on the service side. They also are looking for or running tier one enterprise systems with Oracle/Siebel and SAP. None of the three companies is looking at their main software vendors when it comes to “social software”. The first company, a retailer in startup mode with a wide range, will actively pursue Social Media, for listening but also using it as a sales channel as part of their omni-channel strategy. They want to get the proverbial 360 degree view on the customer, who is “owned” in the marketing department, with PR, not marketing, owning their upcoming Social Media platform, an e-commerce group building the web shop, mobile applications, and sales apps to be embedded into several platforms – yes, there is something else beyond Facebook, if you leave the US. IT organizes and owns the ERP and CRM systems and implementations. Overall they are striving to implement a superior experience when interacting with their brand, which includes a branded community and listening/engagement abilities in the social web. The second one, an electronics retailer, wants to become the “best brand in the industry” and looks into a systems implementation from next year on, after some higher priorities are dealt with. These priorities include getting a zoo of technologies migrated into a more manageable architecture and to gain a complete 360-degree on the customer leveraging the existing data and touch points. The third company is the retail daughter of a mobile phone carrier; their people were listening with some interest when we talked about SCRM. It, however, was clear from the outset that Social Media, to not even thinking of SCRM, is not on their agenda at this time (which is a shame as telcos regularly find themselves at the bottom of customer satisfaction rankings, have e.g. a look at the recent Temkin Group study). This gives a number of insights on the state of adoption of SCRM, also in the wake of the current discussion about the recently published Gartner Magic Quadrant on Social CRM.

• Companies are still at very different states of maturity when it comes to leveraging the power of the social web
• Even young companies in a build-up phase still look into the topic of creating value for their customers from a traditional company centric point of view; or the other way round: very few companies start to think about co-creating value with their customers yet
• The notion of a 360-degree view on the customer regularly does not yet include the information that consumers leave on the social web. Far from wanting to create a new buzzword we might want to talk about a spherical view on the customer when including social data.
• Companies still have pressing needs resulting from previous implementations that are more important/urgent and are reluctant to start too many parallel initiatives
• The tier one enterprise software vendors are not providing the functionality retailers need for interacting with the social web (shameless plug here: This is one reason why I am building SocialmeetsCRM)

Why is this? I think that the brief analysis that Wim Rampen recently published is right, at least a very good starter. Then it seems that companies currently are looking deeper into their operational efficiencies again, instead of pursuing growth strategies. On top of this the majority of vendors is not yet there, which makes up for an immature and highly segmented market, with no vendor showing the ability to cover all or at least most of their customers’ requirements. As a proof in point one just needs to have a look into the Gartner MQ, which shows a very fragmented market.

A few days ago @MarkTamis called me with a question: “Where do you think CRM heads to in future?” Uhhm, not that simple a question. It really forced me to think as all those thoughts, observations and discussions of the needed to be brought into a better structure. To lay the foundation I need to start with a definition of CRM; as I like it I start off with the one that Wikipedia provides: Customer relationship management (CRM) is a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments This definition shows that the question has at least two layers: A technological one, and a strategic one. Of course, we should not forget about the customer. Let me start with the (for me, being a technology guy) easiest one: The technology. What I consider state-of-the-art right now is the availability of integrated software suites that cover marketing, sales, service, and analytics – this across a variety of channels, including mobile, web, interaction center. Surely, some software packages are stronger in one area or the other but essentially we have seen a tendency towards suites. The other thing that we have seen is a shift from on premise to on demand. In parallel we have seen the change from a horizontal CRM to industry specific solutions and the start of a change of mind on the vendors’ side, away from product to solution. This implies the advent of outside-in thinking. SaaS as a method of delivery is well established now and will likely become even stronger, albeit with the occasional backslash. Then we have a raft of buzzwords: Social media, communities, and related to this social analytics (socialytics) and social CRM, customer experience management, mobility, location bases services, unified communication, gamification, to name but a few. On the strategy level we see more and more companies applying holistic and business driven CRM strategies as opposed to the originally very technology driven CRM implementations. We see that the companies are starting to integrate different business functions and –processes. This is accompanied by the thought of establishing a 360 degree view on the customer. Further, companies started to not only ask for more internal efficiency but also to see increased top- and bottom lines coming out of their CRM initiatives. To support this companies implement loyalty programs and reach out into different channels, including social media. Companies also increasingly look into building their brands by providing consistent customer experiences across the various touch points that they offer. On the service side we observe a number of support communities, product development partly gets input via idea marketplaces, and so on. All this has the three goals of increasing customer retention, increasing the number of customers overall, and increasing the operational efficiency. But where is this headed now? Different people say different things: Graham Hill suggests value co-creation being the right path, although there are other possible routes; others are suggesting “a complete package, consisting of a thorough strategy and value added services” or are simply putting it as being “social and mobile”. Gartner looks at it from a more technical level by saying that the (big) vendors will concentrate more and more on providing a platform that then can get used and enhanced by more specialized vendors and customer companies. So, let’s connect the dots. The future of CRM, as a strategy and as a technology, will more and more be driven by two dimensions, the company internal and the company external dimension. I also think that CRM will more and more be driven by strategy as opposed to the technology. The technologies mentioned above and likely some more will converged to support the strategy. Internally there still is a high need for user adoption, especially when it comes to CRM systems. This will be achieved on the short term by making internal systems more and more available via easy-to-use or even fun-to-use applications that do not require an explicit login into the CRM system itself. These applications are logging the user on to the CRM system implicitly or via settings. The CRM systems themselves will be more networked with other systems and include and provide more relevant information automatically, instead of requiring manual action. As a part of this mobile devices will become more and more important, also to be able to ubiquitously access the systems. In the longer run I think that gamification, or rather lessons learned from the success of game platforms, and behavioral theories will drive the evolution of systems. How this will look like is still evolving, but I think that Michael Wu is correct when he says that fun should be made a part of the design requirements of a business application, in order to gain user productivity. Externally it is about the rationalization that (potential) customers, be they companies themselves or consumers, are now at eye’s height with the companies they buy from. With that companies will need to strive for

• Convenient and easy experience for the customer, both during the preparation and execution of a transaction, but also afterwards.
• Creating value for, if not together with the customer; this value is not only the product itself but also includes services around the product; these values are provided, pre- to post purchase. These services will appear to be individualized to the customer.
• Shifting their concentration from transactional “value in exchange” thinking to process-orientated “value-in-use” thinking

How can this look like? Earlier this year there have been a few blogs describing potential futures in a retail orientated environment; one by Mark Tamis around the scenario of preparing for a cocktail party, another one, by me using grocery shopping. Surely there are others, sorry for not mentioning them as well. Both examples combine the convenient and easy experience with the idea of creating additional value for the customer in collaboration with other companies, and with the customers’ interactions, including their relationships to other people. Let me briefly sketch another example using the automotive sector, again connecting different companies and customers, to create value. BMW and Audi have thriving communities on Facebook. At least in Germany it is long possible to “custom build” one’s dream car using configurators. The goal and achievement of this is higher brand engagement and an improved customer experience, both important parts of a CRM strategy. This experience goes on after the cars get picked up with subtleties like sound design and lots of helpers, including maintenance warnings. Now let’s go on a little further and think of a “no worries” package: as part of their commitment to the client the dealership picks up my car if there is an appointment scheduled, e.g. from my workplace – and delivers it back in the afternoon, when the service is performed. Given my permission my car could even send its health data back to the service station, thus avoiding a good number of surprises; some will stay but the dealership can inform me early that something bigger is going to happen – that information could even be provided by the car itself. Going on the car systems could identify a pending failure somewhere on the road and warn me to either reduce load and/or to drive to a nearby service station. The GPS system could direct me there. The service station is already informed about what needs to be done, so that they can call me on my car phone to further explain the problem and discuss options. They probably can schedule the service immediately or alternatively provide me with an adequate loan car to continue my trip while caring for its pickup and the delivery of my car to where I am. The car, using the sensors that it already has built in can communicate with a hive of other cars that are on my route, identifying and notifying me of adverse traffic or weather conditions. It might re-plan my route for me – or tell me that any other route likely still needs more time. Conclusion The value chain as we know it converges towards a value network, that partly gets built dynamically to fulfill a customer’s need or, in other words, to get the customer’s job done. Companies will organize themselves and network with other companies, transfer customers between them in a dynamic flow. This will happen based upon the explicitly or implicitly stated need of a customer, the ‘job’ she wants to get done. As a consequence we will see dynamic value networks of companies, customers, and their connections that are purpose-built and rebuilt to fit the need. All this will be supported by a strong platform built from currently disparate but converging technologies. In few words CRM will change from being a company strategy to an ecosystem strategy. The ecosystem consists of different companies, customers, and their networks, collaborating with the goal of putting together a value proposition that leads to customers choosing your company's over ones proposed by others.