Trends

INSIGHTS

New CRM Research Shows Awareness Gap

CRM guru Esteban Kolsky and I did some primary research earlier this year, paid for by Zoho. We wanted to improve our understanding of what buyers of CRM systems were most interested in, and to discover their highest priorities.

Our survey population was comprised of more than 200 highly qualified executives and managers (47 percent C-level) in companies with workforces that ranged from at least 500 to several thousand. All respondents indicated a need to make a CRM purchase decision in the months (not years) ahead. So, we felt our data represented a good measure of current need.

Our main findings were what you might expect from such a group, but some data points puzzled us. For example, few executives seemed to understand the need for platform technology to support their ambitions. Those aims included taking on the digital disruption and leading their organizations to be more agile — things that platform-based CRM is ideally positioned to address. So that seemed like a big disconnect.

CRM All In

After most of two decades, during which CRM was seen in some circles as a technology suite to keep an eye on but not necessarily purchase, our data clearly showed that most people surveyed saw a CRM solution as a necessary additive to business strategy.

Most said they wanted greater technology flexibility (80 percent), increased ability to take on new opportunities (63 percent), and better information sharing among the groups in the front office (60 percent).

Since all of the participants in our study had purchased CRM before, the great yearning for technology flexibility speaks to some of the limitations of earlier CRM systems. It also suggests to us pent-up demand that could result in a new adoption wave.

These findings are in line with other research that points to a majority of CRM purchasers seeking opportunities for greater differentiation in their markets. You can’t blame them. With CRM well distributed in many markets, the dividend from installing first- or even second-generation CRM systems has evaporated.

Today, users with systems that only capture and store customer data (systems of record) are being out-competed by businesses that can perform some amount of data analysis and make relevant recommendations about what to do next, integrate other systems easily, and offer support for social media.

The latter systems often are referred to as “systems of engagement.” In other research I’ve documented an important chain of cause and effect this way: Engagement drives loyalty, which drives profits. No wonder there’s so much interest in modernizing CRM. A note of caution though — your notion of engagement might not be the thing that motivates customers to engage.

Best of Breed?

Over time I’ve seen the number of disparate best-of-breed applications in organizations steadily climb from a low of several dozen when I started tracking to many hundreds now. This finding in part simply reflects the success of cloud computing. As the number of cloud vendors steadily has increased, so has the number of apps available. The cloud technology and business models make it easy to add a new app.

However, at some point — which I am confident we’ve passed — the sheer number of different apps capturing and trying to share data produces its own limitations. With hundreds of apps needing to integrate to a CRM suite, it becomes more than a full-time job to keep all of the apps synched and the integrations in good repair, even with modern cloud technology.

There are two keys to success in this scenario: 1) Limit the number of apps the organization will take in; or 2) Invent better ways to integrate systems. Good luck with the first idea. Departments are now fully capable of bringing cloud-based IT solutions into their workflows without seeking permission. Too often IT only discovers a new app when it is asked to fix something.

The second approach calls for platform technology from a CRM vendor. With platforms, a third party builds to the specifications of the platform, and the user has a much easier time bringing apps on board. So it was a great surprise to us that fewer than 10 percent of the executives surveyed had an inkling of the centrality of platform technology to their search.

Another Surprise

When I started in this business, implementing a CRM system in an enterprise easily could take a year, given the complexity of deploying CRM for the very first time. The rule of thumb for a full CRM deployment was that the cost of the effort easily would be two or three times the cost of the software, thanks to the need for an army of software integration specialists.

Software costs have been reduced considerably thanks to competition and cloud computing, but the time involved has barely budged, though it has been refactored.

In our study 63 percent expected to complete the selection process in four to six months, though a smaller cohort expected it to take upwards of a year. With selection complete, 43 percent thought purchase to rollout should take two to four months, while an additional 33 percent expected the process to take four to six months. With everything laid out and accounted for, the executives still thought the process would take a year from purchase to first proof of return on investment.

Perhaps this can be explained partly by the additional need for setting up artificial intelligence rules and algorithms, and training machine learning systems. Also, some explanation may rest in the need to customize by adding vertical market expertise.

My Two Bits

We might be in the early stage of a new CRM deployment wave. The situation in the industry and among vendors has changed a lot since cloud computing came to dominate, and AI and machine learning made appearances.

To a degree, platform orientation within a CRM product set could alleviate significantly the need for substantial rip-and-replace efforts. With a good platform, it’s far more likely that a vendor could update customers with new technology in-line with the maintenance process. Yet another reason to pay attention to platforms.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

Denis Pombriant

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.

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