Think of 2005 as Rocket Fuel for 2006 Resolutions

With 2005 nearly done, it’s interesting to look at the lessons learned and insights gained in customer relationships overall and CRM’s response to them specifically. I didn’t do any predictions at the close of 2004 which would have been 50 percent right if I was lucky, but my predictions for 2006 are coming next week.

For now let’s focus on a few of the key lessons learned this year when it comes to customer relationships, the technologies used to support them, and most importantly, what mindsets made a difference:

  • CRM’s best kept secret is that you get what you give. Consider the fact that the most successful selling companies don’t go for transactions first, they strive to create trust. 2005 taught many companies, even those in CRM, that pushing only for a sale or transaction didn’t deliver anything, but delivering knowledge and insightful assistance generated trust. If any company’s sales pipeline is dry, it may not be a lead, marketing or product problem — it could be a trust problem. Putting transactions first and trust last is like putting a car’s engine in the truck and trying to drive. You don’t get anywhere without trust.
  • China gets a taste of freedom via the Internet and loves it. It’s clear when one considers the meteoric growth of the Internet in China and the transformation of Internet access from being a want to a perceived need in many Chinese households, even those in rural cities, that the efficiency of global supply chains are a natural byproduct of this country’s growing wired status in both B2C and B2B markets.
  • Google’s Analytics sent a clear message of what enterprise customers are thinking. What made Google give Analytics away for free was the fact that enterprise software companies had a healthy demand for analytics applications through 2005, and that included the performance of their Web sites, online selling and service strategies, and excellent campaign analysis tools. Siebel started the year with analytics being their strongest line of business and the entire sector just accelerated from that point.
  • Blogs and consumer-generated media can’t be ignored anymore. The power of blogs to change a company’s communication strategies was laid bare for the world to see when Dell changed its policy regarding the legitimacy of blogs as valid customer feedback. There are several software companies who provide tools for mining the unstructured content in blogs, and one that has continually refined its application is Cymfony. I asked Cymfony President and CEO Andrew Bernstein for his key lessons learned in 2005, and he listed the following: companies are now budgeting for applications to analyze all consumer-generated media including blogs; second, marketers, public relations, product management, and executive management are getting over their fear of blogs and see the strategic value of listening; and third, the meteoric rise of all forms of consumer-generated media is making advertising more tactical and PR more strategic.
  • There were too many software companies chasing too few deals. This is happening throughout enterprise software, but it is particularly true in the more niche-oriented areas of CRM including lead management and escalation, partner relationship management and channel management.
  • Enterprise software gets pricing and maintenance religion. From the astronomical rates of 20 percent+ or more for maintenance fees every year from ERP vendors for their applications, to 16 — 18 percent now being charged, and a marked approach to greater simplicity in pricing schemes, it appears vendors have found pricing and maintenance religion.
  • Direct marketing and prospecting need analytics more than ever. In earlier columns, I reported how my dog Juneau received an offer through the mail for a free portal as he had mistakenly ended up on a list as a C-level executive. Well this month he received free tickets to an analyst event. If snacks are served he’s in. The convergence of direct marketing and analytics needs to happen, and I’ve since taken his name off the lists, but the mail just keeps coming. His name has been sold a half-dozen times at last count.
  • Compliance pain was outsourcers’ big gain. Infosys specifically reported this year that a significant jump in both revenue and profits happened due to the pressure on publicly held companies to get in compliance with the Sarbanes-Oxley legislation. That’s just one of many compliance initiatives industries have to deal with and in turn rely on outsourcers to assist in handling. Hopefully the extra time these companies gained from outsourcing compliance was spent on further strengthening channel, customer, and prospect relationships.
  • Oracle buys Siebel to stay competitive in CRM. Let’s be honest, Oracle needed Siebel to compete with SAP, specifically on CRM. Oracle was somewhat competitive before the acquisition, but playing catch-up to SAP is incredibly difficult. SAP on the other hand executed flawlessly with NetWeaver and has more momentum in that area than Terrell Owens’ next career stop being in Oakland as a Raider.
  • Wal-Mart forces more Web product launches and CRM vendors reap the rewards. More and more manufacturers turned to the Web first for product introductions to forestall the price and margin pressures from Wal-Mart on their latest generation of products. Nike did this with, by far one of the most sophisticated sites for customizing shoes ever introduced.
  • didn’t get mad, they got even. Going after their own weaknesses with Sforce and broadening their application footprint with Appforce and ApplicationExchange shows doesn’t get mad at enterprise vendors who have tried unsuccessfully to compete, they get even by attacking their own weaknesses. Kudos to Denis Pombriant for his great coverage of this area of the market as well.

Take a step back from these and many other lessons learned from the year and it becomes apparent that a seismic shift is happening in CRM today. Foremost of these is the shift from transactions to trust — and if your pipeline has been low to non-existent — it’s not because of a lack of transactions, it’s because you need to generate greater trust with prospects and customers alike. Have a happy, healthy and safe holiday season and thanks for reading my column.

Louis Columbus, a CRM Buyer columnist, is a former senior analyst with AMR Research. He is the author of several books on making the most of analyst relationships, including Best Practices in Analyst Relations, which can be downloaded for free.

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