I have been having a fascinating dialogue over the past few months with Chris Kenton, the founder of SocialRep and former BusinessWeek journalist, about the strategic significance of social media.
One issue we have debated at length is the relationship of social media to CRM (customer relationship management), especially as a number of companies (including Oracle) are now actively describing their social media technologies as “Social CRM.”
I observed to Chris that CRM is a misnomer. Only a Vulcan would refer to a system that only captures information on the commercial interactions between two parties as a “relationship” management system. It should be called CTM (customer transaction management) because what the technology enables is a “transactionship.” A relationship requires understanding who a person is, not just what a person does.
This struck a chord with Chris – he shared the results of some research he led while at the CMO Council that suggested that marketers believed that CRM has contributed to a decline in their “customer intimacy”. They were spending more time analyzing customer behavior than actually speaking with them!
Both Chris and I are huge fans of CRM. We believe that CRM technology has enabled companies’ ability to serve their customers better (through improved information) and more efficiently (through reduced cost). Personally, I thank the CRM Gods every time that a company “recognizes” me when I call their call center or access their website because I know that I will not have to waste my time reminding them of my preferences and recent purchases.
We also value the impact that CRM has had on marketing – Chris is eloquent on the subject of how CRM has enabled “scientific marketing” to replace the “just go with your gut” approach so celebrated in “Mad Men.”
But, as a customer and an Earthling, I want to deal with companies that offer a relationship, not just a transactionship.
{ 2 comments… read them below or add one }
Jonathan–
Thanks for the reference on this topic. I’m endlessly fascinated by the delta between what CRM was originally positioned to achieve, and what it has achieved in practice. The concept of managing customer relationships with technology was closely related to the imperative to improve customer intimacy. I remember when CRM was promoted as a virtual return to Mayberry, where every customer experience would be like walking into the local grocer where the friendly guy at the counter would know your name and exactly which products you preferred. The idea was that businesses would know their customers better, serve them better, and in the process achieve both maximum returns and customer satisfaction.
A funny thing happened on the way back to the future. Once businesses started collecting all that data, understanding customers became less about serving them better, and more about selling them ever more efficiently. Only one side of the equation seemed to matter once the data started rolling in, and the concept of intimacy was quickly shifted from anything resembling a relationship to a mechanical knowledge of the precise point at which could you hit them with another pitch to maximize an upsell.
The study we did at the CMO Council (Select to Connect) was quite stunning. We surveyed hundreds of marketing executives and found that marketers had come to rely overwhelmingly on CRM data to understand their customers, even while admitting in the same survey they had little faith in the integrity of the data they were collecting! They reported that marketing technology promised the ability to do more with less–a critical requirement in a world of shrinking budgets–but that the demands of keeping up with the pace of technology prevented them from doing much more than jockeying applications.
To me, the pace of adoption of social media over the past 10 years is no surprise. Consumers are fed up with being treated as a fungible commodity by businesses that will say anything to get a quick buck out of your wallet. Consumers know that businesses aren’t interested in a relationship–it’s only a one-way street based on optimizing transactions. Now consumers can level the playing field by taking a few minutes online to connect with their peers and find out what businesses are really selling. If businesses want to call what they’re managing “Relationships”, then social media is one big gossip site where consumers dish about their dates. Who wouldn’t tune in to that?
What CRM has achieved, however, is truly monumental. It’s provided a platform for marketers to start quantifying their contribution to the bottom line. That’s a feat thats hard to overstate, even if it isn’t yet a complete transformation to a marketing discipline that truly understands finance. CRM has also been at the heart of the transformation of marketing technology from data center to the web, where non-technical marketing end users can manage their own data instead of being babysat by the IT department. It’s hard to credit CRM with driving this change on its own, but Salesforce.com was one of the first to successfully move a large market of users from an enterprise application to an on-demand model that allowed ordinary people to play with real data and achieve business objectives.
So I’m a big fan of CRM. I just wish we could all be more honest about what it really represents, and what it’s failed to do. Because that Relationship bit? It’s still a big problem that businesses need to address.
Thanks for sparking the conversation.
Chris – thank you for the articulate expression of “what happened on the way back to the future.” This seems like a classic case of the law of unintended consequences. CRM delivered a host of unexpected commercial benefits (upselling, targeting, cost reduction) but failed to deliver on the “customer intimacy” that was its original raison d’etre. I agree with your hypothesis that this is one of the factors that has super-charged the appeal of peer-to-peer communication