The CRM Commodity Crisis: Escaping the SFA Mold
Sep 20, 2013 5:00 AM PT
There's always been a dichotomy between the promise of CRM and the reality of CRM. The promise is something like this: CRM can become the nucleus of your business, unifying sales, marketing and support around a shared set of data about your customers. Not only will it make your relationships with your customers better; it will make relationships among people in your company who connect with customers better.
Here's the reality: CRM purchases are driven by people in sales, and they're made when businesses have difficulties in making their numbers, so CRM applications are strongly geared toward sales.
The promise and the reality both have merit. The problem is that many CRM vendors sell the promise but provide the reality; during the sales process, they paint a picture of CRM as a transformational tool, but their applications really are built around traditional sales force automation functionality.
There's always a worry in the CRM industry that CRM's becoming a commodity. That will become true if CRM vendors keep delivering SFA wrapped in a genuine CRM message.
How can vendors avoid that? By being sincere about the potential CRM has and taking steps to embrace the promise of CRM as a transformational technology. They can do that by building into their applications first-class functionality for marketing, customer support, social media, data management and other aspects of CRM that too often get short shrift.
What does that mean? Let's start with marketing. All CRM applications are billed as having marketing components. However, most of them are rudimentary (and "rudimentary" is a generous term, in this case). If they were up to snuff, we would not have seen the marketing automation software market explode in the last five years. People could have saved themselves a lot of money using the marketing components of their CRM.
How about customer service? Most CRM applications have some customer service functionality, but when companies get serious about service, they invariably look for other applications and then have to integrate them with their CRM systems.
Social media and social CRM is another area where CRM vendors claim to provide solutions -- but as yet, there is no real social CRM system from a CRM vendor. CRM users have to evaluate, pick and integrate social monitoring, community and collaboration tools themselves.
Why this happens is no great secret. As long as customers are paying separately for the parts that make up the promise of CRM as a transformational tool, there's no incentive for vendors to cannibalize a lucrative revenue stream.
When a vendor like Salesforce or Oracle offers these additional tools as separate products in its arsenal, they're seen as additional sells to their customer base. There's really nothing compelling from the vendor's point of view about integrating components of its other products for marketing, service, social media or anything else into the core product.
Except for this: Not doing so means you're not evolving with your customers' needs. You will allow CRM to become a commodity, and you'll fall back into competition with lower-cost vendors. The money saved on CRM will go into getting the functionality that customers decide they need.
Someone in the CRM space needs to realize that they've already primed the market for a truly transformational CRM application. Customers want to unite their customer-facing employees on a single system that addresses all their needs -- not just the sales department's needs, but the needs of everyone in the company.
It may represent a hit to the balance sheet this quarter, and it may mean issuing a mea culpa about the inherent failure of vision that CRM as SFA represents. On the other hand, it'll set some smart vendor apart from the competition, and it will mean that a CRM vendor will finally sell a product that truly reflects the promise of CRM -- the unfulfilled promise that all the major vendors have proven so skillful in selling.