New Research Shows CRM’s Promise

Over the last few weeks, I have been busy putting the finishing touches on a new report scheduled for delivery to market later this month. My premise was that there might be a lot of enterprising companies in CRM or closely associated markets that are either new or that have new ideas that we should pay attention to.

As it turns out, I was right in the general case, but I could never have guessed at the particulars. In most cases the applications or solutions of these companies fit in well with conventional CRM — but with a twist. In a couple of weeks Beagle Research will release a report full of case studies about solutions many of us could not have imagined even a year ago. Some of the vendors are companies with little or no funding that quietly have been convincing major early adopters and accumulating customers. And they are about to burst onto the market.

Hosting: More Important Than Ever

Interestingly, there is almost unanimity among these companies in their selection of the hosted delivery model. Nearly all of them go to market with their software as a service and charge on a periodic basis for the value they deliver. As a result, this class of 2005 is one of the most passionate groups of service providers I have met. A trend? I think so, but keep in mind that this is far from a statistically valid accumulation of vendors. Maybe I got lucky and just found all of the emerging on-demand vendors — doubtful, but possible.

Who are these guys, and what do they do that we ought to care about? No names, just yet, because we’re still gathering final permissions, but let me give you some ideas. Most of these companies figured out a way to reduce the cost of delivering on some part of the customer relationship, and that frequently means losing jobs. That’s a potential macroeconomic problem, but many of the jobs these solutions are replacing were heading off shore anyway. More to the point, these technologies really represent the “creative destruction” that economists always talk about.

Real Examples

One company I like takes human labor out of the customer interface for airlines, with great positive effect. “What’s that?!” you say. But it works. Rather than having a bank of call center reps ready to take your call when you discover your flight has been changed, delayed or canceled, this company provides the technology to enable the airline to call you or e-mail your PDA with all kinds of information about what you can do next. If you need to speak with an agent, that’s still possible, but the agent won’t be quite so overworked when you call. No doubt about it, that’s better.

Another solution enables a company to analyze its Web site traffic in real time and automatically insert sales or service agents into the process when it makes sense for the customer. The result? Greater information flow, better service and more sales because customers get what they need when they need it. That’s a long way from the vendor attitude of, “If we build it, they will come,” and about time too.

A third company has figured out customer loyalty — how to analyze it and how to engender it in everything a company does.

There are lots more examples, and if we were simply talking about things on the drawing board, it would be time for a group yawn. But the customer list this group of young companies has amassed is enough to make anyone take notice. Some big household names — some of the biggest in their fields, including companies like Microsoft, US Airways and StorageTek — are playing early adopter to these new ideas

What It Means

I indicated in an earlier column that this was going to be a fun year, and all indications are that the prediction was on track. A while ago I was at a conference where the conventional wisdom was that all the cool stuff in the software industry has already been done. As you can see, the experts were right.

Instead, it looks to me as if we might be living through a transition as important as the migration from mainframes to client-server. This time the transition is toward the utility model. In the last transition as in this one, vendors are in a process of wholesale reinvention, and nothing — no application and no business process — is immune from this trend. There is little doubt that one of the important driving forces of this reinvention is economic — creating the ability to do the same thing as before but in ways that are orders of magnitude less expensive.

But there is another driver, equally important and even more interesting. Advances in technology are opening up new niches that did not exist under older paradigms. These niches offer the potential to change business and possibly society, and in the process to create a lot of wealth.

Denis Pombriant is founder and managing principal of Beagle Research Group. An influential thought leader in the CRM industry for more than five years, Pombriant researches emerging trends in CRM and publishes research reports that can be found on the company’s Web site and on other influential Web sites in the CRM market. In 2003 CRM Magazine named Pombriant one of the most influential executives in the CRM industry. He is also quoted extensively in Paul Greenberg’s CRM at the Speed of Light, third edition. His latest report is titled “KeyFindings: CRM Market Events, Observations, and Analysis 2004.”

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