Winds of Change and CRM
The upheaval in the Middle East is roiling the energy markets and that will affect CRM. Year over year, the price of a gallon of regular is up over half a buck nationally and the average price for said gallon is $3.18. As gas goes so does jet fuel. The confluence of rising prices, political unrest and a recovering economy all contribute to the price rise.
The important point for business is that it takes energy to do business and as the cost of energy for vital things like transportation rises it has a dampening effect on business and the nascent recovery.
Frequent readers of this space may recall a favorite statistic — that during the year that saw the last energy spike Americans drove a combined 122 billion miles less than the year before. That almost never happens. To see a comparable event you need to go back three or more decades to the oil embargoes.
Three decades is a time span we are hearing a lot about these days as the news outlets report that dictators who are now falling, or in danger of falling, from power have been on the job for similar time spans. Mubarak in Egypt, 29 years, Zine el-Abidine Ben Alin Tunisia 24 years, Khadafy in Libya has been the colonel-issimo for over four decades. New names and time spans are added frequently
Change rarely happens smoothly in our world. Precipitating events are dramatic and they seem to change the world overnight. That’s important because the turmoil in the Middle East has the potential to be one such precipitating event. There are over 300 million people in the Middle East and North Africa and there are another 240 million in sub-Saharan North Africa (both according to Pew Research). By comparison there are a bit over 300 million Americans.
What’s the connection? The middle class lifestyle complete with cars, houses and washing machines — Americans have it and, make no mistake, others want it. Having the lifestyle is not a zero sum game, if you want it you can attain it, just overthrow your local dictator and build an economy that supports middle class jobs.
But there’s a rub. The middle class economy requires energy and the revolution on the southern rim of the Mediterranean has the potential to dump hundreds of millions of middle class aspirants into the world economy at once. Adding that demand to the world’s energy markets will, in a supply and demand scenario, cause another price spike.
Get used to it.
According to the Brookings Institution the planet will add 1.8 billion people to the roles of the middle class by 2020. Brookings says that world middle class population will rise from a base of 30% in 2008 to 52% by then. By comparison, also according to Brookings, total global population will only rise by one billion people in that time.
What’s this have to do with CRM? Plenty.
Since the last oil price spike we’ve seen many new technologies rise that we will need to become familiar with to cope with rising transportation costs. Applications like unified communications servers, more powerful mobile devices and networks, even 3D displays will all play a role in helping us maintain contact while reducing our need to jump on a jet or motor on down the highway. And solutions and tools that have nothing to do with CRM — I am thinking about in-house developed video — will also play an important role in keeping your revenue motor running.
To all of this we must add increasingly necessary and powerful analytics. We need analytics to help us understand customers everywhere but especially in emerging markets and in cultures different from ours.
In a recent interview, Diane Hessan, CEO of Communispace put it to me this way, “…you don’t even understand consumers in Massachusetts and you live here. You certainly don’t understand consumers in Kansas City. So, now, let me ask you about consumers in China. At that point you’re banging your head against the wall, you’re clueless.” She was right, we need to understand — to diagnose before we prescribe.
It would be a mistake to think that social media will do all the heavy lifting here. Good as it is at broadcasting a message it is a dual edged sword. In these emerging markets credibility is all important and you don’t want to learn by throwing things against the wall to see what sticks, so analytics paired with social will be (already is) mandatory.
But closer to Massachusetts and Kansas City, analytics will be important but so will the other technologies mentioned above. There’s no doubt that we need to begin thinking about and implementing solutions that keep us in front of customers and off the road simultaneously.
In another recent interview Anneke Seley, co-author of “Sales 2.0” told me that organizations are just beginning to embrace the idea of hybrid sales models that leverage more inside selling coupled with traditional field selling and even marketing.
If you’d told me a year ago that a revolt in North Africa would get us all thinking about the future of CRM, I might have understood but more likely I would have said those incidents were too disparate. But they aren’t. They are the precipitating events of the next big things in our world.
Revving up Revenue
The long recession and the rise of social CRM were not simply co-incidental. I believe they happened together. That’s not to say that social CRM happened for some cosmic reason, I neither subscribe to the belief that all things happen for a reason nor do I believe I am qualified to hold forth beyond what I’ve just written. I think social CRM — whose roots precede the recession — became important during the recession because it represents a good and inexpensive way to keep tabs on existing customers and possibly capture some new ones at low cost.
That’s recession 101 in my book. Manage the installed base, capture the business that’s available, keep the maintenance stream coming in and, whatever you do, don’t give a customer a reason to leave you. In the process you can promote your thought leadership and that’s valuable too. Social is perfect for that and a good deal more. But now that the recession is giving way and job growth — a frustratingly lagging indicator — is making tentative gains, many companies that I speak with are turning their attention to revenue and how to accelerate it.
Just as managing the customer base is recession 101, accelerating revenue is recovery 101. Some of us may not have made the psychic switch yet but that’s coming. Lots of people I speak with, especially vendors and VC’s, have the revenue idea firmly in place and, just as social predates the recession, revenue performance management (RPM) predates the recovery.
VC’s like Bruce Cleveland, a former high-ranking executive at Siebel, have been writing about RPM for a couple of years and today I can speak with him and people like Phil Fernandez, Founder and CEO of Marketo, or Swayne Hill, CEO of Cloud9 Analytics and many others about RPM and have good discussions. The talks aren’t simply about revenue and how nice it is but more substantively, they’re about accurately identifying opportunities and bringing them to fruition not just in a reasonable time but like clockwork.
Unlike other trends that we’ve seen over the years, RPM is unique in that it focuses on end-to-end business processes and quite possibly the overlap of responsibilities and systems to manage those processes. One of my favorite examples of a sales manager and a company that “gets it” is Dave Fitzgerald an EVP at Brainshark who has a constellation of SaaS applications covering the end-to-end spectrum. From lead nurturing to forecasting to compensation, Fitzgerald has RPM covered and he could be its poster child.
Every recession has an end and there’s always an idea or technology that leads us out. Often, what leads us is a tacit agreement to do things better and at less cost than we did prior to the meltdown. The idea makes sense and it spreads virally and no one wants to be left behind with a business practice that is outdated and relatively expensive. On-demand computing was one of those drivers from the last recession, so was the on-line meeting. Companies like Salesforce.com and WebEx became big players in the process.
You might say that those companies were too small to have a concrete effect on the economy at large. But keep in mind that they weren’t alone and in any case, no trend has to carry the economy on its back, the trend need only be leveragable and contribute to the growth rate, which is a more doable thing.
Revenue performance management fits the current need. It is a blanket term that can easily apply to managing anything in your SG&A line as it can apply to revenue generation. Its orientation is growth, not simply maintaining a hunkered down pose waiting for things to get better. The economy is shifting; everywhere I look experts are showing us how to do more with a little less.
Anneke Seley of Sales 2.0 fame is telling us to look at hybrid Web-phone-and field selling. Analytics vendors are showing us how to mine our social data to find the customers and prospects and customers who really need our attention. And experts like Thor Johnson are telling marketers to get more quantitative in discussions with the C-level both to justify their budgets and to have greater impact on a company’s direction.
When you boil that ocean down one of the surprising things you are left with is that the distance between sales and marketing is shrinking and that might be the biggest thing to come out of this recession. Sales and marketing each have their jobs to do and each is different from the other. But what’s clear is that if there was ever an either/or discussion about sales vs. marketing, the conjunction is changing from “or” to “and”.
As that change takes place we are already seeing the emergence of a new job title, the Chief Revenue Officer or CRO. I’ll admit CRO doesn’t exactly roll off the tongue but I am old enough to remember when CIO didn’t roll off the tongue either. I am also seasoned enough to recall other gems like vice president of first impressions, proof that some trends are fads. But CRO looks to have some staying power, most importantly because of that “R” word. Who doesn’t love “R”?
The CRO is the person who will need to understand both sales and marketing and most importantly also know that the two need to be mutually reinforcing. It does no good for one to be the servant of the other. CRO is a status to which both the VPs of sales and marketing can aspire. Does this mean that CMO and CSO go away? I don’t know. Does the CFO report to the CEO? The Board? Or work with the CEO? It matters.
What’s certain, as I look at the landscape is that marketing and sales are a lot different today. Customers are in control and many people recognize that the sales process is rapidly giving way to the buying process and that sets the stage for some interesting realignments.
Happy Groundhog Day!
