Social networking and CRM
Social networking is another one of those technologies I have been watching with interest for a long time as the technology has slowly but steadily approached the front office. The idea of using social networking technology to find a needle in a haystack was a kind of panacea. Imagine being able to find a mutual contact you never knew existed who might be able to introduce you to a sales prospect.
I think there’s a comparison between social networking and business intelligence. About a decade ago the same use was made of business intelligence software — it was supposed to be the stuff that could help you zero in on market segments to find the right potential customers. In both cases — business intelligence and social networking — early promoters of the technology were right but I wouldn’t say they were far sighted enough.
Social networking was supposed to be the next thing that would transform the way we sell but in the last couple of years, social networking seems to have stalled in no small part because no body likes or wants to be the target of introductory emails from virtual strangers looking for a favor. That doesn’t mean social networking has no place in CRM, instead, I suspect we haven’t figured out how to use it properly.
The same kind of thing happened with business intelligence, it worked well enough but the audience of senior marketing technical people was too small to support large market ambitions of the vendors.
Business intelligence worked out well enough for marketers but I think the technology found its voice and its market when vendors and users turned its focus inward and began examining a business’s data to find trends and what worked best.
So far, it seems to me that with few exceptions, companies have looked at social networking as if it was just another sales tool designed to help cram product into the market to help the sales team to once again make quota. Unfortunately, larger and longer lasting marketplace trends give that approach decreasing likelihood of success.
Customers are savvier about products today in part because the products on the market now are evolutions on original concepts. People are buying their second, third or umpteenth cell phone, mp3 player, computer, PDA or whatever and are not as likely to buy the first thing they see. Selling has risen to a new level of sophistication because customers have gone there first therefore technologies that simply aim to turbo-charge old selling habits will show diminishing results. Using social networking for sales falls into this category.
Social networking — the methodology, not the technology — has been used effectively for a long time by companies interested in engaging customers in conversations aimed in part or in whole at improving products and services and people have been using social networking techniques much longer than they’ve been using computers. My favorite example comes from Eric von Hippel’s book “Democratizing Innovation” in which he describes the rapid evolution of the steam engine from something that was barely useful at pumping water out of a coal mine to something that transformed mining.
According to von Hippel mine operators, who should have been natural antagonists and averse to helping each other, traded information about steam powered water pumps thus helping each other and the steam engine manufacturers to build better products. These people used industry associations to transmit information, much as we use these associations today.
Where social networking techniques can help best, I think, is in bringing together virtual communities of interest, people who will share their ideas about products and especially about their needs and attitudes. Using social networking this way has several advantages over using it to simply get a deal. By using social networking within a community you have the opportunity to test ideas with users and see how they react. The information you collect can then go into better product designs or whole new products. Social networking can also be used to test and validate marketing ideas, Web site design and the like. I call this “deep marketing” and it has an analog to older more labor intensive techniques such as the phone survey and the focus group.
This application of social networking comes in the nick of time if you ask me. Vendors need ways to better understand customers — not simply better ways to identify them — for the simple reason that customers often don’t know what they want or need until there is a solution. At that point customers wonder how they ever got along without a product like a better steam engine or that little thing that slips into your pocket and carries your music.
The fact that technologies like social networking or business intelligence should morph a bit between the time that they are introduced and the time when they can be said to be mature should surprise no one. Early adopters frequently adjust a technology’s focus until it optimally suits some purpose and I suspect that’s happening in social networking even as I write this. You could say that I am a believer in the power of social networking and I can’t wait to see what happens next.
VRM anyone?
The last few pieces have been focused on new technologies that are making their way into the broader CRM suite. Expanding the CRM suite has never been easier as platform vendors like Salesforce.com provide all the capabilities necessary for innovative developers to add something to the ensemble. Today I thought it might be fun to explore the flip side.
What flip side? That’s a good question. There’s been no real flip side of CRM and that’s too bad. The name CRM leads you to believe that there might be something for the customer in all this technology but like a lot of things the names can be misleading. I am not saying anyone in CRM is a bad guy, but CRM really is all about the vendor and managing the vendor’s business — and it should be too given who’s paying the freight.
That leads us pretty directly to ask who is minding the store for the customer. It’s not an idle question given the arsenal of stuff vendors use to find business in what can sometimes seem like over crowded markets. The idea of CRM 2.0 as the front office analog to Web 2.0 seems to me to be an idea going no where. By itself, the idea is good but so is an ice cream cone, it’s the ‘2’ that I think might be problematic — more is sometimes just more, not better.
Many years ago companies developed purchasing departments to centralize and coordinate the purchasing process. A purchasing department could negotiate all kinds of things with vendors, most importantly terms, quality and standards, and a purchasing manager always has a lot more clout than a department manager who’s just trying to get today’s work done today.
On the personal or consumer side though there isn’t much technology and certainly no equivalent of CRM. Consumers are constantly — some would say relentlessly — bombarded with ads and offers in the media, on-line, in the mail, you name it. Might the consumer benefit from a purchasing department of its own? Hmmm….
Think of how you make a purchase today of anything substantial, let’s say a car. You might go on-line to research the vehicle of your dreams and the typical destinations might be the manufacturer, the dealer, the lender, the insurance company and several consumer oriented sites that will give you the skinny on a new model or the important history for a used car.
Thanks to the Internet this kind of searching has never been easier. In an hour you can have a wealth of information downloaded to your computer and you might still be in your jammies. How cool is that? Trouble is, as soon as you disclose a bit of information like your email address or, if you went for a test drive, your phone number, you’ll start hearing from well intended folks who want to help you with your decision. There’s nothing wrong with that but the leverage of modern technology assures us that with all the information you’ve gathered you will be getting a lot of emails and calls.
Suppose you had your own purchasing department though, in this case a software application that took care of capturing your needs and then scoured the Internet looking for close fits. The idea isn’t new, I will admit that, but has there ever been a greater need? As the analog to CRM we might call it vendor relationship management (VRM) and I think it might be good for all parties. How?
They say it takes many people upwards of six months to buy a car and a lot of that time is spent gathering information and evaluating it. Sales people really don’t want to deal with someone who is literally just kicking the tires, they want to deal with people who are ready to commit. So I see VRM as something that might make life easier for the customer but at the same time, it might function in a way analogous to lead nurturing software only from a customer’s point of view.
I doubt if very many customers would pay for such a service because customers are completely used to getting just about everything for free on the Internet. However, VRM might support an advertising model very nicely. Imagine this, a Web crawler with my name on it goes out to explore a class of cars for me, something with two seats, no roof and bad aerodynamics so that I can’t hear the cell phone ringing (joy!). The vendor of such a chariot could simply say to the crawler here’s the information you want and a url to a really cool simulated video driving experience.
The more I think about it the more VRM makes sense. If you think about vendor customer interactions as an arms race then you have to admit that vendors have invested heavily in their weapons while customers are still playing with slingshots. Time to recalibrate.
Intelligence takes wasted effort out of selling
Back in the bad old days, before there was too much information available on the Internet, there was practically no useful information available about companies, their managements and their possible business problems. If you wanted to sell to a private company good luck, hopefully you went to college with someone there who could give you the skinny or perhaps a former co-worker worked there. People networked, but the network was not very fast.
If you wanted to sell to a public company you went to the library where there were many volumes of generic information like compiled annual reports. There were also back issues of business magazines and the trusty Readers Guide to Periodicals. There was also the daily business press, The Wall Street Journal and The Financial Times. You could waste a lot of valuable selling time doing research.
If research wasn’t your thing and you needed to make your number you could cold call some C-level officer or vice president to pitch your idea. Many books have been written advising sales people how to get through the screeners — the switchboard, the great man or woman’s assistant, the voice mail system — all in an effort to convince a decision maker that you had a solution to a problem and get an appointment. All of that was hugely inefficient and it is a wonder anyone ever sold anything.
Thank goodness the Internet came along. Now we have the opposite problem, there’s a lot of information around and sales people can spend their time using search engines, reading what they bring in and formulating sales strategies.
Of course I am being facetious; time spent in any of these pursuits is not as well spent as face time with prospects. Many organizations today still rely on salesperson initiative and cold calling to identify opportunities and there’s nothing wrong with that but the reality is that if that’s all you’ve got, chances are good that other sales people have developed the same information.
There’s nothing like being first and that’s where sales intelligence, a relatively new field of front office automation, is gaining traction. I really like the idea of sales intelligence for several reasons. First, it uses Web 2.0 technologies to find and organize information. Web crawlers, for example, continuously search the Web for nuggets of information that the user decides is important such as information about a company, a person or a business problem. If you have a target universe of 300 companies or executives that you must sell to, there’s no way you are going to effectively track them without technology like this.
Second, sales intelligence systems organize and prioritize the information they collect and present it in a format that is easily readable, enabling users to take appropriate action. Third, some also integrate a social networking component. It’s nice to know that Joe Blow, CEO at some company expressed a need for a product or service that your company produces, but it’s even better to know that you’ve got a mutual acquaintance. It goes on like that but you get the picture.
Sales intelligence isn’t a panacea; there is still plenty of opportunity for rejection even if you know that you have something to sell that is vital to your target customer’s success. Nevertheless, selling with intelligence is a heck of a lot better than selling blind or cold. Products that I have seen and liked include SalesGenius by Genius.com, the eponymous InsideView and Carousel by DreamFactory. There are lots more and this short list is not intended to be exclusive.
With all of that you might expect that selling has gotten easier, but it hasn’t. Selling is an arms race. As Woody Allen once said, always go to a knife fight with a hatchet. Good advice, especially these days when customers have more of an upper hand than they have had in a long time. Today, things like sales intelligence and sales knowledge (see last week’s piece) are as indispensable as SFA. It’s still possible to operate with just a spreadsheet full of contact information but that limits your possible opportunities and almost guarantees that you’ll find it increasingly hard to compete with others that have more advanced tools.
Of course sales intelligence is not the only way to improve selling and you’ll need to carefully evaluate your sales operation to identify the solutions that will do you the most good. Ideally, solutions like sales intelligence, sales knowledge, SFA, marketing nurturing applications and others should come together to make a suite because in the real world their outputs are linked. We’re beginning so see good integration with SFA as the core technology and no place better than via salesforce.com’s platform. Nevertheless, that’s still too ad hoc and I wouldn’t be surprised to see whole new CRM 2.0 methodologies grow up around some of these integrations in the future and the methods will drive suite development.
There’s never been a better time to improve your sales process though and there’s never been so much additional help you can access. Of course, a lot of the help we’re talking about is available on-demand too which means it won’t kill your budget to try a few solutions.
Sales effectiveness through knowledge
I’d like to continue on the idea of modernizing our sales processes. Part of this modernization has been the focus on de-spreadsheeting selling. As we all know it started with sales force automation or SFA but the trend is alive and well and, if anything, gaining momentum.
It’s hard to believe but not that long ago selling was managed out of a salesperson’s head — intuitively you knew who was serious and who was not, what was in the pipeline, when it would close, who the competition was and a lot more. You kept a rolodex and a bunch of business cards, mostly as mnemonic devices. I never wrote anything down largely because I didn’t want to mess with all that paper but possibly also because I knew my knowledge was power and in a tenuous job environment, it was security.
I wouldn’t want to try that today and maybe that says a lot about the graying of the sales force but it also says a lot about how far selling has come. Selling can still be a grind but there’s much more help for the representative today. There are more ways to generate and nurture quality leads than ever before and it’s easier than ever to identify who to approach with your products and ideas.
Selling is also much more of a team sport than ever before, which in some ways is ironic. Sports metaphors have always been part of selling, celebrating the efforts and accomplishments of the individual. Today there is greater opportunity and need to focus on the shared responsibilities of the team as well as the accomplishments of the individual. As a result, new tools that focus on the idea of sales knowledge are coming to the forefront.
Sales knowledge is one of those topics that has been around for a long time but, unlike other areas of selling it does not lend itself to partial automation by spreadsheets. As a result, an organization’s attempts at providing a comprehensive sales knowledge solution for its practitioners are most likely even more primitive than a spreadsheet based sales compensation management “system.”
There are two parts to sales knowledge. Part one is everything a company collects on its market, the competition, target customers and the like. Part two involves everything a company produces about itself. What makes it all work is a third part that is often unaccounted for — email. It takes a significant amount of email to coordinate this information from company to representative and from sales rep to sales rep and often it is done at the last minute.
Email with subject lines that summarize their content or their author’s needs such as “Competing with company X,” “Our positioning against Y,” “Newest Corp Preso” or “RFP Ans for Z” routinely make the rounds. Rather than being contained in spreadsheets, these individual documents accumulate clogging disk drives and causing confusion because no matter how old and out of date some of these documents are, sales representatives are loath to get rid of them for fear they might be needed at some future point.
The result is predictable — no single version of the truth and no point of control which makes it hard for organization veterans and nearly impossible for new comers. A top down hierarchical approach is not much of a solution here since so much that is valuable comes from the experiences of people in the field so some method of coordinating information becomes essential. The thing that a sales knowledge system has in common with other sales effectiveness solutions is the use of a database to coordinate what a company knows about the world and what it knows and shares about itself.
More than simply providing a central repository for all of this information, the knowledgebase provides the checks and balances needed to maintain a single version of the truth. There can only be one current corporate presentation, for example, and it serves no one if a sales representative must compare multiple to figure out which is right, that’s the power of a repository.
Some organizations and their sales knowledge systems have taken this a step further and rather than grouping things by presentations or whole responses to RFPs they index information on a more granular scale such as individual slides or statements. The power of this granularity is that it can be selected and used on an individual basis so for example, a sales representative can more easily customize a presentation for a client and the organization can stipulate that, no matter what, certain information should always be conveyed in a specific manner.
At the same time, the people in the field can also have the ability to contribute their knowledge through an organized and simple process. Rather than individuals gathering competitive information through email, they can simply query the knowledgebase saving time that can be redeployed to customer interactions.
The repository based sales knowledge system is not a perfect solution but it makes an important contribution to the way we sell today and coupled with other effectiveness solutions it is changing the way we sell for the better. I only wish we had them when I was selling.
Front office trends hard to miss
The front office computing market continues to impress me despite the fact that I have been covering it for so long. Early solutions evolved into suites that covered what we once thought were all of the niches possible but the surprising thing is that all that coverage simply initiates many new niches. Today we talk about the customer experience but increasingly we also have a growing sense of how important it has become to integrate the front office with the back office.
Front to back integration has been on a lot of radar screens for a long time though initially it referred more to the idea of bringing together production systems and sales. For example, sales data can and does perform a lot of useful work up the supply chain to help tune production and delivery. Increasingly though, we’re seeing a lot of focus on the reverse trip — back office numbers influencing the ways that front office workers operate.
Some of the more interesting front-to-back integrations these days might really be classified as back-to-front for the ways that centralized data is transforming the front office. Some examples include compensation management, sales effectiveness and configuration-pricing-quotation.
Compensation management
We’ve looked at compensation management before but what’s interesting to me is how many organizations zipped through the idea that compensation management is important for calculating commissions and went straight to using it to influence the behavior of their sales representatives.
You can’t say enough about getting sales and finance people out of their spreadsheets and into a database driven application. The database enables things you can only dream about with a spreadsheet, like reporting and customizing plans to meet organizational needs as well as to spike performance. That’s all good back office thinking but the fact is that when you take the information about deals that is found in an SFA system and mash it together with back office information about pricing, commission rates and compensation, it is a wonderful way to focus the attention of a sales team. Beautiful things happen after that. Companies like Centive, Callidus and Xactly have my attention here.
Sales effectiveness
One of the broader categories in the front office, sales effectiveness is responsible for many of the technologies that influence selling especially at the beginning and near the close. Compensation management could easily be considered a sales effectiveness tool, but it has distinguished itself in its own right and deserves to be its own category. Sales effectiveness still has a lot of lead development and lead management capabilities built in and some of that overlaps with marketing.
It’s a good thing that marketing and sales are overlapping a bit since the better the communication between these two groups, the better the results. These efforts can no longer be kept apart. Sales knowledge is one of those areas that gains a lot from the overlap. As with compensation management, sales knowledge brings a real database into the picture for the first time, with very positive results.
The database here is used as a repository for things like competitive information, collateral and proposal elements that can be quickly reformatted and configured to deliver the exact information a customer needs rather than a pre-formatted generic piece. I have seen companies begin to build whole methodologies around their sales knowledge systems and that’s pretty exciting. Companies like Pragmatech, Sant, Savo Group and others have briefed me and are impressive for different reasons and each addresses a slightly different niche.
Lead handling and demand generation are other areas where there is significant innovation going on and companies like iCentera, ON24 and Eloqua are interesting. Each has identified a solution that repeatedly touches a customer on the customer’s terms and helps mature a lead from its earliest state to something that is actionable and closable. The result is what sales people have always asked for, better quality leads, not just a bigger list of suspects.
CPQ
My third area of interest lately has been configuration, pricing and quotation (CPQ) and while these solutions attack a different part of the sales process, they implement some of the same kinds of technologies we’ve already identified.
CPQ was and in many places still is approached with a spreadsheet and modern solutions that use databases are making significant inroads. On-line aggregations of product catalogs are doing a lot to simplify certain sales process where product lists, prices, discounts and more must be monitored and signed off. A simple CPQ system can do a lot to reduce email traffic between sales representatives and their bosses and speed accurate information to customers for decisions. Firepond has a pretty good system here and they’ve recently gone to an on-demand solution model too.
Reference management
This discussion wouldn’t be complete without a quick mention of reference management. I have noticed that the big company habit of managing client references is making its way down to the SMB space where it can really be beneficial. Reference management is just what it sounds like, finding a way to off-load your best customer references so that they don’t get burned out. A smart approach that can help drive sales processes. One of my favorites in this space is References On-line the company that got the ball rolling.
Your sales process
There’s never been a better time to customize your sales process taking into account your products, people, the way you sell and who you sell to. We’ve come a long way from the days when we kept sales records on scraps of legal paper but the job is not done by a long shot. Early CRM gave everyone the tools to build rather rigid sales processes and the reports looked great though the impact on the sales force was dubious. Today we’re at a point where we can do a lot more and do it better because we have a choice of tools.
In my mind the analogy is that software companies have now done the equivalent of customer experience management but for the vendor. There ought to be a name for it.
