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Transition State

By Denis Pombriant
Feb 20, 2014 9:23 PM PT

The CRM market appears to be experiencing a transition state-- something betwixt and between, a time of high energy and great possibility, above all a time of change.

Transition State

A ball bouncing around a spinning roulette wheel is in a transition state; chemical reactions go through transition states as reactants become products. The key concept is indeterminacy. We know the ball will land -- just not where. We know the reaction will end, but the mix of products is subject to the vagaries of time and temperature.

By analogy, life is a transition state, but defining it that way is useless for understanding its meaning because if everything is a transition state, then nothing is. Instead of getting too philosophical, though, I'll aim the analysis at CRM and its transition. I think CRM is moving from a data management application to a process management one.

The ERP Story

For many years, capturing customer data for accurate storage and eventual rapid recall has been the function of CRM. The data simply informed manual processes. Indeed, this adequately reflects the entire database era, and the recent hoo-hah over Big Data is simply a manifestation -- but perhaps it is a manifestation with a difference. For an analogy, you have to look at ERP and the back office.

The ERP story starts with data and progresses to process, where many wonderful things happened. Data capture enabled statistical analysis, which led to insights that then enabled manufacturers to more precisely manage supply chains, and to design and make products with fewer defects and greater quality.

Better manufacturing processes led directly to less waste and rework, and then to sustainable cost savings. Decades later, you can see the same shapes emerging from the fog of the front office.

CRM has been a data capture and storage tool for a long time, and for many years, data capture, storage and retrieval have been sufficient for most front-office business purposes. Today we live in an era when customers expect more than the core products vendors sell.

The subscription economy has educated the market to demand full products complete with better vendor policies and procedures for solving customer problems -- i.e., better full-blown customer experiences. You can't enable experiences with data, but you can with informed processes -- and that's the transition we're in right now.

If you examine the technological advances that have been integrated with CRM in the last decade, you can see a steady march to supporting customer-centered processes -- and this goes far beyond the social media craze of the last half-decade.

Workflow set down the capability of building processes, and analytics gave us the statistical underpinnings to know where the important branches in workflows existed.

When social data emerged, analytics again gave us the possibility of understanding customer intent and attitudes to a statistical certainty. Mobility simply adds an accelerant.

Shiny Things

This is not to say that we've arrived in a process-centric world, and it goes back to my point that we're in a transition state. In too many cases, the promise of analytics and workflow goes unfulfilled -- in part, because their benefits require hard work and deep thought to implement properly. Instead, we go after the shiny new object of social outreach bombarding the marketplace with conventional broadcast marketing messages.

Signs of change are everywhere. In marketing, vendors have instituted multiple approaches to capturing customer data, analyzing it, and feeding the resulting information back into other marketing processes -- nurturing processes, for instance.

The nurturing process now is driving customer lead scoring and resulting in more qualified leads, which in turn accelerate sales processes because sales people spend less time qualifying and more discussing needs and solutions.

In customer service, input from multiple channels is being dissected for signals that indicate potential churn, sentiment, uptake and more. Like marketing, customer service processes are becoming more automated, delivering content and information directly to customers without long waiting times.

Adopt a Process

The outlier in the process revolution might be sales. There manual processes rule -- both because of necessity and also some intransigence. Historically, selling has involved people dealing directly with people to come up with solutions. Increasingly, customers control the process, however, which more resembles a buying process than a traditional sales process.

There are many things sales departments can do to automate their manual processes and improve results. Only half of sales organizations have recognizable and repeatable sales processes, and a fraction of them use technology effectively, according to research compiled by CSO Insights.

Almost two-thirds of companies studied already use CRM systems, though, which means the CRM systems are underused. Businesses are not taking advantage of the workflow, analytics, social media and collaboration now embedded there.

The other half of the sales universe have random or informal sales processes -- and for them, capturing customer and deal data in a CRM system can seem like a waste of time. They are right, of course, but not because CRM doesn't work. CRM may be a waste of time for these companies, because they haven't identified and implemented a repeatable sales process. By implication, their sales results are random as well.

If you consider the fact that only 57 percent of quota-carrying sales people made or exceeded quota last year, and that half of the sales universe doesn't use a process, you might logically conclude that it's time to investigate adopting one. That's why I think we're in a transition.

Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and website. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at You can also connect with him on Google+.

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