The Evolution of CRM

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Back in the days of customer relationship management (CRM) 1.0, the definition seemed so simple. CRM was the technology and processes that were used to improve the relationships with customers when it came to sales, marketing and support, that is, customer-facing departments.

The more technical definition was established in a classic sense by the META Group (now part of the Forrester Group), which defined the components of CRM 1.0 as operational (opportunity management, campaign management, etc.), collaborative (partner management, call center activities) and analytic (customer segmentation, etc.)

But what characterized CRM in the 1990s was that it was defined by a corporate business ecosystem, one that gave companies the opportunity to try to manage the relationships customers had with them — hence the name.

This was fine until the millennial transition and the emergence of what’s now called Web 2.0. Around 2004-2005, customers began to realize a few things:

 

 

  • They could buy similar products and services from multiple companies, and the company’s size didn’t matter anymore.
  • That the delivery of these products and services from any merchants was pretty much the same from merchant to merchant and much slower than getting it in person and definitely more convenient. After all, FedEx and UPS would delivery for anyone to anyone. Thus, e-commerce became a viable option for buying, and the world became the location for the stores that sold.
  • The customers had access to their peers and the opinions of their peers on the products and services, so they didn’t have to rely on the company marketing department for information — they could get authentic information from their peers on how good or bad the products and services were (www.epinions.com), as well as how good or bad the merchants selling it were (www.bizrate.com), and they had search engines to make the purchasing prices competitive (www.shopzilla.com).
  • They had access to tools that made their interaction with fellow consumers easy — the creation of user communities, blogs, podcasts and social networks flourished in 2006, and a remarkable number of them were devoted to consumer reviews. Even the Web 1.5 sites such as Amazon, eBay, Borders, Barnes & Noble and Circuit City made social networks through user comments a big part of their offering.

 

Companies that were at the forefront of customer relationships recognized the transformation, and they knew CRM was no longer just the use of best practices and technologies to improve the effectiveness of the company so it could develop improved and more personalized relationships with the customer. That was “old school” by 2005.

By 2005-2006 (and earlier in some cases), the market leaders were recognizing CRM 1.0 wasn’t going to cut it anymore, and a new way of working with customers was necessary.

What was that new way? Disney Destinations, the travel arm of Disney, perhaps most succinctly and literarily (not literally) expressed it. The organization changed its internal CRM strategy name to a CMR strategy, that is, what had been customer relationship management was morphed to customer-managed relationships.

In other words, the ecosystem no longer had the company at the hub, but the customer was the center point — all customers were looking at the various concerns they were doing business with as aggregators of great experiences rather than a provider of goods and services.

Essentially, the more they were in control of their personally satisfying experience with the company, through tools provided by the company — which could include products, services, user communities, Web-based tools for making the purchases smarter, etc. — the more they were likely to be advocates who became promoters. The “coolness factor” was becoming part of CRM, and it is to this day. Foremost, though, customers were gaining control over their relationship with the company, which was ideally a collaboration that provided value to and derived value from the customer.

Are we at CRM 2.0 yet? No, we aren’t. In fact, there is a wiki (we’ll hear about them next month in the column that will cover CRM training) devoted to defining it, if you’re interested (www.crm20.pbwiki.com).

But there are companies that get it. Let me leave you with the vision and mission of A.G. Lafley, CEO of Proctor & Gamble, the $44 billion giant with 300 branded products, 16 worth $1 billion or more. Proctor & Gamble sees the way the world is going, and Lafley is leading the charge. “We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion,” Lafley said. “We try to make a customer’s experience better, but better in her terms.”

That is CRM as it is now. I’d call it CRM 1.75. It is no longer just the processes and technologies that are defining it — it is now the active participation of the individual customer in the life of the company. I can’t wait for CRM 2.0.

 

Paul Greenberg is the author of “CRM at the Speed of Light: Essential Customer Strategies for the 21st Century.” Additionally, Greenberg is president of CRM consulting firm the 56 Group LLC, a founding partner of the CRM training company BPT Partners LLC, co-chairman of Rutgers University’s CRM Research Center, and executive vice president of the CRM Association. His blog, PGreenblog (www.the56group.typepad.com) was named the winner of the first annual CRM “Blog of the Year” in 2005 by TechTarget’s SearchCRM media. He can be reached at editor (at) certmag (dot) com.

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