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Gartner outlines CRM's past, present and future

The renamed Customer 360 Summit, Gartner revealed its analysis of CRM's past and how that history is affecting the present CRM market, plus its predictions of CRM’s future.

LOS ANGELES -- In a one-hour keynote address that spanned the nearly 30-year history of CRM, Gartner analyst Ed Thompson yesterday laid out an expansive view of CRM's past, present and future with a clear message: Change is happening fast.

"Looking back over that long, long period, see how much things have ramped up in the last four-or five-year period," Thompson said at Gartner’s annual CRM conference.

From the coining of the term relationship marketing by Leonard Berry at Texas A&M in 1982 to the founding of Siebel Systems, and RightNow, from Oracle's acquisitions of Scopus and Siebel to the 15 acquisitions (by Gartner's count) in the CRM market so far this year, some things have remained the same. For example, metrics -- specifically process metrics -- remain a hurdle, Thompson said.

Corporate metrics such as earnings and revenue, and operational metrics such as how many calls a contact center takes per hour or how many visitors hit a website are easy to track by comparison. "The problem is process," Thompson said. "Companies that excel at CRM excel at process metrics."

Thompson also tried to deflect criticism that Gartner was responsible for labeling CRM a failure. "In 2001, the reputation was that CRM projects fail," he noted. "No, what we said was some particular projects fail. What failed was sales force automation."

Those projects failed, he added, because of errors such as enabling too many functions, using dirty data and a lack of executive buy-in.

Yet companies continue to spend on CRM. According to Gartner research, the cheapest CRM project last year was $50,000 and the most costly was $300 million. On average, companies continue to spend more on consultants than on the CRM software itself.

Technologies of the moment include mobile CRM, social CRM

Currently, when it comes to CRM projects, Gartner clients are interested in mobile capabilities, social CRM for customer service (though spending lags that interest), multichannel service and business process management – and, more recently, social CRM for sales.

Upper management continues to take an interest in CRM as well. A Gartner survey of CEOs this year found that retaining existing customers has become a top strategic priority, a significant shift from 2009's priorities of cutting costs, preserving cash and liquidating assets. And the top technology that CEOs see as adding strategic value is more advanced CRM capabilities, according to the survey.

CIOs, however, have shown a declining interest in customer-focused initiatives recently. That’s primarily due to the economic recession, which decimated many IT budgets -- leading to a cut of about 8% in IT spending last year, according to Gartner. "You look back over time [and] you see the CIO lags the CEO by about 12 months," Thompson said.

What's emerged in the wake of the changes in the CRM market is that customers now drive the relationship. In another session on Monday, Gartner analyst Scott Nelson said that CRM is no longer about B2C, B2B or even B2B2C. "I think CRM is becoming all about C2B," he added. In fact, the conference, previously the Gartner CRM Summit, has been rebranded the Customer 360 Summit.

"It's driven by the customer," Thompson said of CRM. "This is what's stirring things up. This is why this event is called Customer 360. Customers want things 'in my world, in my way.'"

Social media is on the rise, privacy is dead and companies have no control over the customer, Thompson said. And it's no longer just the customer that's important. Someone who isn’t a customer can tell the world about a company's lousy service or bad product as easily as anyone else, he noted.

"The collective has enormous influence," Thompson said. "So if you can't control the collective, don't underestimate the collective."

All of the changes in market dynamics and technology can be daunting for CRM buyers -- or an opportunity.

"It's exciting -- that's why I'm here," said David Jones, COO of Projectline Services Inc. and an attendee at the show. "We're still in the infancy of our internal CRM. There's so much to learn."

Projectline, a Seattle-based marketing and consulting firm, provides services and technology to help IT vendors manage reference customers, customer advisory boards and their beta programs, in which users get an early look at new technologies.

"If a customer is doing a review and has access [to a beta product] and starts tweeting about it, we need to look at every touch-point," Jones said.

BestBuy has also taken advantage of the customer's greater control over the relationship between buyers and sellers.

Three years ago, within its contact center operation, the electronics retailer set out to establish a social CRM practice that has now grown to four different communities, 13 separate Facebook accounts and agents tweeting in English, Spanish and French. Last year, 2.5 million customers went to get help on the BestBuy community page, creating a total of 79,000 posts and viewing 81 million messages. About 95% of the conversations are peer to peer, according to Gina Debogovich, BestBuy's community manager and both an attendee and speaker at the Gartner conference.

"I remember early on trying to get key buy-in from stakeholders," she said. "I had someone tell me, 'I love what you're trying, but we won't do it.' For those of you out there trying to build support, you're going to hear ‘no’ -- but you're going to hear ‘yes’ from more people."

BestBuy's next initiative is to allow users to embed product descriptions and ordering capabilities within the community messages, because so many questions are related to presales activities.

"We've already proven out peer-to-peer support," Debogovich said. "We're going to see if we can prove out peer-to-peer sales."

CRM's present: Customers share more info, grow more skeptical

As customers take control, they've also become more willing to share information, Thompson said. Height, weight, resting heart rates and exact locations at a given time are all data that some consumers are sharing openly with companies. However, that has left them more skeptical. For example, in 2001, according to the Edelman Trust Barometer, the No. 1 barometer for whether an individual trusted a company was its financial returns. In 2010, the top indicator is now whether a company is transparent and honest.

"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."

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.

Thompson also predicts radical changes in CRM approaches. For example, a mobile phone company in Germany plans to launch a low-cost mobile phone that has no formal customer support, just a user community, he said. Customers who want access to an online help desk will pay extra, and customers who want live agent support will pay even more.

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.

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