CRM guru, Esteban Kolsky, and I did some primary research paid for by Zoho earlier this year. We wanted to better understand what buyers of CRM systems today were most interested in and to discover their highest priorities. Our survey population comprised more than 200 highly qualified executives and managers (47 percent C-level) in companies with at least 500 employees and ranging to several thousand. All respondents indicated a need to make a CRM purchase decision in the months (not years) ahead. So, we felt our data represented a good measure of current need.
Our findings were what you might expect from such a group though some data points puzzled us. For example, few executives seemed to understand the need for platform technology to support their ambitions. Those aims included taking on the digital disruption and leading their organizations to be more agile, things that platform-based CRM is ideally positioned for. So that seemed like a big disconnect.
CRM all in
After most of two decades where CRM was seen in some circles as a technology suite to keep an eye on but not necessarily purchase, our data clearly showed that most people surveyed see a CRM solution as a necessary additive to business strategy. Most, said they wanted greater technology flexibility (80 percent), increased ability to take on new opportunities (63 percent), and better information sharing among the groups in the front office (60 percent).
Since all of the members of our study had purchased CRM before, the great yearning for technology flexibility speaks to some of the limitations of earlier CRM systems. It also suggests to us pent up demand that could result in a new adoption wave.
These findings are also in line with other research that points to majority CRM purchasers today seeking opportunities for greater differentiation in their markets. You can’t blame them. With CRM well distributed in many markets, the dividend from installing first or even second-generation CRM systems has evaporated. Today, users with systems that only capture and store customer data (systems of record) are being out-competed by businesses that can perform some amount of data analysis and make relevant recommendations about what to do next, integrate other systems easily, and offer support for social media.
The latter systems are often referred to as systems of engagement. In other research I’ve documented an important chain of cause and effect this way. Engagement drives loyalty which drives profits. No wonder there’s so much interest in modernizing CRM. A note of caution though, your notion of engagement might not be the thing that motivates customers to engage.
Best of breed?
Over time I’ve seen the number of disparate best of breed applications in organizations steadily climb from a low of several dozen when I started tracking to many hundreds now. Part of this finding simply reflects the success of cloud computing. As the number of cloud vendors has steadily increased so has the number of apps available. And the cloud technology and business models make it easy to add a new app.
But at some point, which I am confident we’ve passed, the sheer number of different apps capturing and trying to share data produces its own limitations. With hundreds of apps needing to integrate to a CRM suite it becomes more than a full-time job to keep all of the apps synched and the integrations in good repair, even with modern cloud technology.
There are two keys to success in this scenario: 1) limit the number of apps the organization will take in or 2) invent better ways to integrate systems. Good luck with the first idea, departments are now fully capable of bringing cloud-based IT solutions into their workflows without seeking permission. Too often IT only discovers a new app when it is asked to fix something.
The second approach calls for platform technology from a CRM vendor. With platforms a third party builds to the specifications of the platform and the user has a much easier time bringing apps onboard. So it was a great surprise to us that less than ten percent of the executives surveyed had an inkling of the centrality of platform technology to their search.
When I started in this business implementing a CRM system in an enterprise could easily take a year given the complexity of deploying CRM for the very first time. The rule of thumb for a full CRM deployment was that the cost of the effort would easily be two or three times the cost of software thanks to the need for an army of SI specialists. Software costs have been reduced considerably thanks to competition and cloud computing, but the time involved has barely budged though it has been refactored.
In our study 63 percent expected to complete the selection process in 4 to 6 months though a smaller cohort expected it to take upwards of a year. With selection complete 43 percent think purchase to rollout should take 2 to 4 months while an additional 33 percent expect the process to take 4 to 6 months. When everything is laid out and accounted for, the executives still think the process will last a year between purchase and first ROI proof.
Perhaps this can be partly explained by the additional need for setting up AI rules and algorithms and training machine learning systems. Also, some explanation may rest in the need to customize by adding vertical market expertise.
My two bits
We might be in the early stage of a new CRM deployment wave. The situation in the industry and between vendors has changed a lot since cloud computing came to dominate and AI and machine learning made appearances. To a degree platform orientation within a CRM product set could significantly alleviate the need for substantial rip and replace efforts. With a good platform it’s far more likely that a vendor could update customers with new technology in-line with the maintenance process. Yet another reason to pay attention to platforms.
Researchers at MIT have concluded from a research study that the spread of Twitter occurred through traditional social channels. That might not seem earth shaking because, well, how else would a new social technology spread? As the report notes, “MIT researchers who studied the growth of the newly hatched Twitter from 2006 to 2009 say the site’s growth in the United States actually relied primarily on media attention and traditional social networks based on geographic proximity and socioeconomic similarity. In other words, at least during those early years, birds of a feather flocked — and tweeted — together.
But the significance of the study and its results is better summarized by lead researcher Marta González, assistant professor of civil and environmental engineering and engineering systems at MIT, who is co-author of a paper on this subject appearing this month in the journal PLoS ONE. “The big question for people in industry is ‘How do we find the right person or hub to adopt our new app so that it will go viral?’ But we found that the lone tech-savvy person can’t do it; this also requires word of mouth. The social network needs geographical proximity. … In the U.S. anyway, space and similarity matter.”
While the diffusion of innovation has been studied exhaustively for durable goods, little research into how free things like a website go viral. “Nobody has ever really looked at the diffusion among innovators of a no-risk, free or low-cost product that’s only useful if other people join you. It’s a new paradigm in economics: what to do with all these new things that are free and easy to share,” says MIT graduate student Jameson Toole, a co-author of the paper.
So maybe we can finally get a definitive answer to whether the freemium model is a good idea?