Conclusions from the Gartner CRM summit

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By: Wise Marketer Staff |

Posted on March 26, 2007

Conclusions from the Gartner CRM summit

This year the Gartner CRM summit attracted an international group of senior managers and consultants representing sectors as varied as telecommunications, banking, healthcare, digital media, travel, automotive, general retailing, financial service and airlines, according to our special correspondent, Peter Wray.

The overall theme was simply that, with consumers tuning out the mainstream media and relying instead on recommendations and reviews from peers, and with the current state of abundance where customers already have what they need and much of what they want, customer insight is increasingly critical for customer engagement.

Short term predictions The workshop started with general welcome from John Radcliffe the VP, Research for Gartner and this led to a very informative keynote presentation from Scott Nelson, Managing VP, Application Strategy and Governance at Gartner.

The Gartner-researched predictions for the immediate future (a 2-5 year span, as anything longer they discount as 'futurology' and not researchable with precision) included:

  • Large scale, long term CRM initiatives will be re-visited and approved in 2007;  
  • There will be a revisiting of the 'build your own' CRM solutions by organisations in 2007;  
  • CRM initiatives with a 'single view of the customer' will increase two-fold in 2007;  
  • During 2007, spending on open-source CRM will increase three-fold;  
  • Through to 2008 vendors will transition to SOAs (Service Orientated Architectures);  
  • Most companies will continue to fail to understand the value of customer feedback, and continue in 2008 to throw away such insights.

The core of Scott Nelson's presentation was the trend lines that their research is revealing against what they define as the "eight building blocks of CRM". A key strategic assumption that they define with a 90% probability is that by 2010 most customer centric organisations will be moving from providing customer management tools to their employees toward putting these tools directly in the hands of the customer. He also reviewed the extreme fragmentation of CRM Applications in the value chain and the need for a balanced, heterogeneous approach, stay with the 'big picture' was the message for CIOs.

Principles of customer-centricity He outlined four guiding principles for successful customer-centric strategies:

  1. Extend the depth and breadth of relationships to achieve a larger share of the customer relationship;  
  2. Reduce delivery channel costs and create barriers to entry;  
  3. Reinforce the brand via more interactive media;  
  4. Create customer satisfaction and loyalty.

As a follow up to the presentation The Wise Marketer interviewed Scott Nelson, and he had the following observations regarding the medium term future for CRM: "CRM research grew out of the combination of many other strands of research that large corporations were undertaking in the late 1990's. My orientation has always been business user than the IT user. IT's role is to control and govern, the business user is concerned about producing results. The key is for business user's to view IT as a strategic enabler, this makes IT a bit more flexible and business users seek assistance then a bridge gets built."

One of the recurrent themes of all the Gartner speaker presentations was "eight building blocks of customer-centricity". These are listed as: 1. Vision; 2. Strategy; 3. Customer experience; 4. Organisational collaboration; 5. Processes; 6. Information; 7. Technology; 8. Metrics.

Ongoing CRM efforts The blocks are generational in context and most organisations are more advanced in some areas than others: "CRM is a journey, not a one-time initiative" is an oft-used term in 'Gartner speak'. We asked Scott to explain this in more detail during the interview.

According to Scott, the eight building blocks came from research on success and failure, every-time any organisation was successful it was apparent that these eight building blocks are consistently present in their CRM applications. Some banks and financial services organisations are already at a 4th generation stage. These businesses generally have a lot of data available, and they have good control of all of their channels. Firms that are in retailing tend have less control and find this harder to achieve; But they only have to compete in their own industry to be ahead of the pack, even if they are behind other players in other markets.

Skills shortage We also explored the issue of skills shortage in CRM for specific skill sets. The Gartner view in this area is that the shortage tends to be sporadic with better supply in cities such as London or New York, but that a general shortage in CRM will be seen for the next 18 months.

Scott developed this theme further by also stating that the senior management of many organisations just do not understand the world of communities - they have a culture gap, they do not understand a world of consumers who engage with blogs, routinely play with 'second life' and build communities. Only their most recent hires direct from university would understand this space.

Gaps in the market A specific problem area in CRM applications is that Gartner has noted a gap between the massive players such as Oracle and Microsoft versus the innovative but small scale suppliers. They believe that it will essential for mid size vendors to grow and supply sector specific solutions into the IT departments of large corporations to accelerate the maturing of CRM.

We asked Scott what single "wish list" action he would recommend to the CEO of any organisation seeking to deliver better customer service and loyalty: "Appoint at Board level a CCO (Chief Customer Officer)," was his immediate and definitive response.

What the vendors say During the conference The Wise Marketer spoke to and reviewed the products and applications of many vendors. One discussion that provided a different perspective was with Colin Rickard, managing director for Dataflux (a specialist data cleaning, integration and compliance software solutions provider in the fast-growth area of Customer Data Integration). Dataflux is owned by the SAS Institute but is allowed to operate independently. Rickard spoke about the problems of the "Yesterday-Today-Tomorrow" nature of data, and how much of what is written about CRM focuses on customer-centric delivery in a future 'Nirvana'. He takes the view that 80% 0f the ROI from CRM investments emanates from a backward focus on the logistics of clear operational efficiency.

But one of the most thoughtful insights from vendor was offered by Jason Mittelstaedt, vice president of marketing for RightNow Technologies (a supplier of customer driven, real-time applications that are open source and on-demand). Mittelstaedt spoke at length about technologies that empower the consumer, and about developing internal processes to let the customer manage the business. This sounds - and often is - a scary idea to the average cost-focused and strategically-planned CEO. But Mittelstaedt cited in defence of his views the fact that Time magazine had recently voted the typical consumer 'Man of the Year' and that many organisations just don't understand how fast their customers and markets are changing: "Marketing in the future will be self-selecting, as 65% of customers stop doing business with companies due to a bad experience with a product or service, and 27% will never return."

The key limiting factor The theme of customer empowerment was addressed well by Martha Rogers of the Carlson Marketing-owned Peppers & Rogers Group. "Which is harder for business to produce: products, services, capital or customers?" she asked. Of course the answer was "customers".

"Customers are the limiting factor," Rogers explained. "Without customers you do not have a business - you have a hobby. The idea of analysts looking at the ROC (Return On Customer) figures instead of a laser-like focus on the ROI figures is not a new theme for Peppers & Rogers, but the scale of the mountain to climb that most business wishing to be more customer-centric is evidenced by the fact that this metric is still rarely referenced in most CEO/CFO city briefings. Only a few large organisations such as Tesco seem to have grasped this truth in the context of 21st century marketing."

As Scott Nelson remarked at the opening of his session, as organisations globally struggle to keep pace with fast evolving consumers (who are increasingly dictating the terms under which they will transact with suppliers) a mega-billion dollar industry has evolved around CRM. This tends to have historically been the domain of CIOs and IT professionals, who have been making investment decisions around the hardware and software to understand the customer flows in their business. But while the feel of most conferences on CRM is technical - perhaps even 'nerdy' - Gartner went out of its way to introduce a research and strategic perspective.

Better service is another key The conference ended with another thought provoking presentation from Professor Patrick Barwise from the London Business School, who is well known for the book he co-authored in 2004, called 'Simply Better'. This built on a researched hypothesis that what customers wanted most was simply better service rather than more complex products or choices.

His presentation comprised a sample of the work that he is now undertaking for a new book (due out in 2008 under the title 'Customer Insights, beyond market research') which will explore the way in which consumers are now moving to take even greater control of the supplier-customer relationship, and punishing heavily those organisations that seek to try to control the relationship with techniques from the past. The theme of Barwise's current research is that what consumers are seeking is simply better, not more differentiated or more complex service suppliers.

Peter Wray is a contributing editor for The Wise Marketer, and managing director of UK-based customer loyalty consultancy Loyalty Matters Ltd. He can be contacted directly via

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