Transaction or Process?

After many years, I think I can boil down CRM to this: Vendors prepare for transactions but customers expect process. Of course, this demands elaboration and neither of these ideas is stationary. The desire for better processes evolves as customers and markets do, and transactions become more sophisticated as vendors play catch-up with their markets.

You can also say that a transaction is simply the logical endpoint of a process, at least most of the time — and yes, transactions don’t always involve money. At any rate, CRM is an interesting study in transactions and processes.

To be sure, transactions are implied in almost any business process. A sales process is supposed to result in a sale, a service process is supposed to resolve customer issues, and the marketing process is intended to fill the top of the sales funnel. They are transactions with specific results, but there is an important difference between a transaction and a process. For me that difference is this: A transaction is a frame from a movie but a process is the movie.

This analogy immediately falls apart when you try to piece together a bunch of transactions into a business process, because it is as if you were reconstructing the original movie. A process requires a foundation — something that takes you from point to point to point — but a transaction is designed to be complete unto itself.

Customer-Sentiment Math

I’ve spent a lot of time investigating customer sentiment recently and discovered that very often when customers are disappointed, it is because of a process failure and not a transaction per se. Interestingly, though, the processes that fail are viewed as transactions by vendors — and very often, the individual transactions are seen as successful. How can this be?

A business has many customer-facing processes for sales, service, customer care, renewals, whatever. Let’s assume, for the sake of simple math, that a typical process is made up of five steps — so there are five potential failure points. Let’s also say that the average step has a 90 percent success rate, meaning that a high percentage of the time, a desired outcome happens — someone gets something appropriate to a situation.

A vendor might see these five steps as individual instances or transactions, but a customer might view all five together as a single thing, because success is not ensured until the last step is complete. If something messes up in the middle, it’s not viewed as a simple transaction failure by the customer — it is a process failure. Who cares if you logged on successfully if you couldn’t place an order?

If you are the vendor, you see 90 percent and think that’s good — and maybe you want to raise it to 95 percent to be even better. However, if you are the customer in need of successful completion of all steps, you might see mediocrity due to what I’ll call “the tyranny of small numbers.” Roughly speaking, that’s because a number less than one multiplied by another like it results in a smaller number.

For the customer, the probability of successfully completing all steps of this process is not 90 percent; instead, it’s .9 x .9 x .9 x .9 x .9, or 59 percent. That’s a big difference and it’s a contributing cause of the dissatisfaction you see on customer sentiment sites.

A Strong Foundation

In my experience, the complaints voiced at these sites are about processes gone bad and not transactions. So here’s the interesting point: If your approach is transaction-oriented rather than a true process, your cobbled-together process most likely lacks the things that real processes offer — namely, the ability to bail out and deal with a higher authority, frequently a human being.

CRM was born in transactions, but it is moving inexorably toward process — though I find it comical how often vendors avoid using the “process” word for fear of needing to do a lot of development.

This might be the biggest hidden reason for the high interest in analytics and platforms more generally. The idea of transaction-based processes can work for a while as we layer on functionality like workflow, analytics and collaboration — but at some point, the amalgamation of all these systems is not as powerful or as easy to manage as a system built on a foundation that assumes a process orientation.

Analytics identifies customer moments of truth, and workflow addresses the need to opt out of the automated pathway when needed.

So, as I survey the CRM landscape, it strikes me that in a short time we’ll begin merging all of the point-solution technologies we have heard so much about lately — social, mobile, analytics and more — into a more comprehensive and strategic vision. I think it’s time.

Denis Pombriant

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 [email protected]. You can also connect with him on Google+.


  • You are correct in looking at process vs. transaction but the integration of CRM, ERP, shipping, order management, inventory and other systems can also provide subtle and blatant patterns and trends to get inside the problems of abandoned purchases on a site or browsing but not buying and other classic lost customers issues.

    At ElegantJ BI, we find that the best use of business intelligence tools is to create and use objective metrics that will help the business to make more confident decisions about the things they need to change on their site(s) or in their customer interaction in order to attract and retain most customers and improve revenue. The more we know about our clients, the better we can serve them. But there is one more component to this and that is to use sensitivity and impact analysis to look, not only at what the customer wants but also at the price points or other factors that will affect our success when we make a change. A customer may really want a blue shirt in a particular style but we need to understand how a subtle change in price or display location in the store or on a site may affect a sale. Creating or changing a process, workflow or site navigation based on this kind of detailed understanding can make a real difference to a business.

  • An interesting article. I think the lack of realisation around what is process and what is transaction is firmly rooted in a lack of appreciation of solid marketing and sales analytics.

    Closed loop reporting and CRM integration with online systems, such as marketing automation, is wholly designed around process insight and performance enhancement, making it highly affordable to report on and automate the steps taken by a prospect in their sales journey.

    Matt Ranger

    Maximizer CRM

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

CRM Buyer Channels