Gartner´s Ed Thompson´s Keynote the life and times of CRM

The Life and Times

of CRM 1982-2020

Ed ThompsonVP & Distinguished Analyst

Agenda

What have we learned?

What’s happening today?

Where are we heading?

Customer

Relationship

Management

Customer Relationship Marketing

The initial research was done by Leonard Berry at Texas A&M (Berry, L. 1982) Berry, Leonard (1983). Relationship Marketing. American Marketing Association, Chicago and Jagdish Sheth at Emory, both of whom were the initial users of the term "Relationship Marketing", and by marketing theorist Theodore Levitt at Harvard (Levitt, T. 1983) who broadened the scope of marketing, from individual transactions to personalizing the consumer-producer relationship.

1980 1985 1990 1995

Siebel founded

Leonard Berry, Jagdish Sheth Relationship Marketing

articles and books

The Loyalty Effect by Fred

Reichheld

Brock founded

Andersen, PriceWaterhouse, KPMG,

Coopers, Ernst & Young CRM practices founded

Pegasystems founded

Act!founded

Firepond founded

Goldmine founded

The One to One Future by Peppers &

Rogers

Vantive founded

Maximizerfounded

Profs Christopher,

Payne, Ballantyne on Relationship

Marketing

Lehtinen, Gronroos, Crosby, Relationship

Marketing articles

2000 2005 20101995

CRM new license

spending drops 38%

Oracle acquires

SiebelSAP CRM launched

salesforce.com founded

CRM application

spending flat year on year

Customer Experience book frenzy Social

CRMhype starts

Amdocs acquires Clarify

Microsoft CRM

launched

RightNow founded

Siebel buys Scopus

BAAN buys Aurum

CRM at the Speed of

Light by Paul Green berg

Initiate, Siperian, Biz360, Chordiant,

Sterling Commerce,

Jigsaw, Scoutlabs, Cast Iron, Sybase

acquired

MDM heats up

SugarCRM founded

The Eight Building Blocks of CRM

1. CRM Vision

2. CRM Strategy

3. Valued CustomerExperience

4. OrganizationalCollaboration

8. CRM Metrics

7. CRM Technology

6. CRM Information

5. CRM Processes

0% 20% 40% 60% 80% 100%

Customer-centric vision

Customer-centric metrics

AverageDifficultyRating*

* 1 = easy, 4 = extremely difficult

(No. of Responses = 59-62)

2.0

Customer experience

CRM strategy 2.2

2.3

Organizational restructuring 2.7

Customer process re-engineering 2.6

Customer-centric data mgmt. 2.2

Technology infrastructure 2.1

2.8

To What Extent Is Deployment Challenging Your Enterprise?

Not Considered

Easy Difficult Very DifficultExtremely

Difficult

A Hierarchy of CRM Performance Metrics

Operational

Process

CustomerStrategic

Corporate

Stakeholder Focus

Employees Efficiency

Management Effectiveness

Executives Feedback on Strategy

Shareholders Bottom-Line Results

Level

Risk / Reward

Reward

Risk

eCommerce

MarketingCustomer

Service

MDM

PRM

SFA

Pricing

Field Service

Inside Sales

Analytics

Top-10 Technology Failings in Sales Technology Rollouts (20 Percent)

1. Enabling too Many Functions (20 Percent)

2. Dirty Data (18 Percent)

3. Poor System Management and Development Tools (15 Percent)

4. Insufficient Effort on Back-End Integration (13 Percent)

5. Poor Application Architecture Selection (11 Percent)

6. Performance and Reliability Needs of Hardware Are Underestimated (8%)

7. Poor Synchronization Tools Deployed (6 Percent)

8. Integration With Other Front-Office Applications Is Ignored (4 Percent)

9. Forgetting About Internationalization (3 Percent)

10. Over-Relying on Telecommunications (2 Percent)

Top-10 Management Failings in Sales Technology Rollouts (80 Percent)1. Projects Initiated With Unclear Goals, Metrics and Expectations (25%)

3. Poorly Defined or Flawed Sales Processes (15 Percent)

2. Lack of Commitment From Senior Executives, Sales Management and Channel Partners (13 Percent)

4. Lack of Strong End-User Salesperson Buy-In (12 Percent)

5. Focusing on Management Needs, With Not Enough Emphasis on Salespeople and Customers (10 Percent)

6. Making Do With Inadequate Resources for Development and Deployment (8 Percent)

7. Insufficient and Irrelevant Training (7 Percent)

8. Making Poor Software Vendor or ESP Selections (5 Percent)

9. Overstandardizing (3 Percent)

10. Overly Besotted by Features, Functions or "Cool" Technology (2%)

Functionality24%

TechnicalArchitecture16%

Costs15%

Services20%

Viability18%

Vision7%

Upward Trend for Weightings

CRM Application Selection Criteria Weightings 2000-2010

Downward Trend for Weightings

Average Percentage CRM Spend by TCO Category and Trend

Systems Integrators 27%

Internal Staff 16%

Software Licenses16%

Software Maintenance 6%

Hardware 7%

Other 19%

Software Vendor Professional Services

4%

Telecommunications 5%

November 15th 1971

August 12th 1981

August 6th 1991

January 10th 2001

April 23rd 2005

August 19th 2004

August 2003

February 4th 2004

March 21st 2006

Rate of Change

① What matters most

② Which CRM is most risky

③ How much it costs

④ The rate of change is accelerating

What you should have heard

Agenda




Traditional CRMDriven by the Organization

CEOs Are Focused Back On Customers

Source: Gartner CEO and Senior Business Executive Survey, 2010: Anticipating the Post-Recession Landscape

CEO Concerns 2010 vs. 2009

Start 2009

1. Cutting operating costs

2. Increasing revenues

3. Preserving cash

4. Sourcing fresh capital

5. Liquidating assets

Start 20101. Retaining customers and

enhancing existing relationships

2. Maintaining competitive advantage

3. Attracting new customers

4. Attracting and retaining skilled workers/talent

5. Reducing costs via better efficiency

#1 Technology CEOs see as

adding strategic value?

Gartner 2010 CEO & Business Executive Survey

More Advanced CRM

CIO Business Priorities 2010

Source: Gartner EXP WW CIO Survey 2010; N = 1,600

Expanding current customer relation ships

Targeting customers and markets more effectively

Attracting and retaining new customers

Creating new products or services (innovation)

Worldwide IT Spending:Will Increase 1.3% in 2010

Source: Gartner EXP WW CIO Survey 2010; N = 1,600

Primary Business Objectives From CRM Projects For 2010

0 10 20 30 40

Reduce operations costs

Increase campaign response rates

Improve lead quality and conversion

Acquire new customers

Enhance cross-sell/upsell opportunities

Increase customer loyalty

Increase customer retention

Increase sales revenues

Increase customer satisfaction

Percentage of Responses

Loyalty/Satisfaction

Cost Reduction

Revenue

Source: Gartner CRM Summit Pre-conference Survey August 2009, n = 198, Three responses permitted

Reduce cost of service

50

Reduce cost of sales

Sales Customer Service Marketing

Predictive analytics

Anonymous personas marketing

Marketing resource mgmt

Event-triggered marketing

Social media and reputation marketing

Web analytics & Advert mgmt

Marketing perf. measurement

What's Hot in 2010:CRM Priorities After Recession

Inbound marketing

Mobile marketing

Lead management

Partner, distributed and field marketing

Sales analytics

Web 2.0 E-commerce

Incentive compensation

Proposal generation

Mobile Web 2.0

Forecasting and pipeline

SaaS SFA

Pricing management

Open source SFA

Lead management

Sales performance mgt

Digital marketing

Master Data Management Business Process Mgmt WOA Customer-Centric Web

Inside sales Webchat

Loyalty management

Social CRM sales

Workforce optimization

Feedback management

Contact center outsourcing

Webchat for service

Web self-service

Knowledge management for service resolution

SaaS CSS

Social CRM / community

Composite service desktop

VOIP and Presence

Text mining

Real time decisioning

Cross-CRM

Multichannel Service BPM

1.6%

1.5%

1.2%

3.1%

7.3%4.2%

12.5%

16.2%

20.2%30%

2.6%

SAP

Oracle

salesforce.com

AmdocsMicrosoft

SAS

SPSS

Cegedim

ATG

Other Vendors

Market Size $9.316 Billion, +1%

1. Siebel – 4,500k2. Sage – 3,100k3. FrontRange – 2,000k4. Salesforce.com – 1,900k5. Microsoft – 950k6. Amdocs – 600k7. SAP – 500k

8. SuperOffice – 250k9. Oracle – 160k10. PeopleSoft – 150k

Top 10 1H2010Live User Seat Estimate

Worldwide CRM Software License and Maintenance Revenue: Market Share, 2009

(2008 comparisons)

(10.5%)(6.3%)

(22.3%)

(16.0%)

RightNow

New CRMDriven by the Customer

My World!

My Way!

Consumerisation

of IT

Social

Computing

Socially Connected

Digitally Enabled

Peter F. Drucker

“In a few hundred years, when the history of our time is written from a long-term perspective, it is likely the most important event historians will see is not technology, but the unprecedented change in the human condition. For the first time, people have choices.”

If it is Digital –

it is Discoverable!

Privacy is Dead!

- Get Used to It!

Control is an Illusion!

- Get Over It!

What do People

REALLY Want?

Value

Matters

Trust

Matters

Reputation

Matters

The “Collective”

You Cannot

Control the

Collective

Don’t under-

estimate the

Collective

The Collective can change the

course of History

The Facebook Generation

“There’s just so much to DO! You can

never get bored when you’re on

facebook!

….our generation has a constant need

for stimulation and the stimulus need to

be ever-changing…

We have grown up multi-tasking!”

Rishi Iyengar

① Ignore It

② Assume it is wrong, so ignore it

③ Make it fit your model

④ Fail to act on it

The Four Mistakes

"We are entering the period of the open-source brand, where in order for people to feel it is relevant to them, they have to have a part in creating it."

Mark Kingdon, former CEO of Ad agency Organic

① CEOs care more about CRM

② CIOs are lining up with CEOs

③ Consumers are driving technology

R&D not defense

④ The customers are taking control


Agenda




Three Viewpoints

The future customer

The future business

The future IT

Expert Power

Cu

sto

mer

Bu

sin

ess

Coercive Power

Positional Power

Referent Power

Reward Power

20oo2010

More Powerful

Source: Five bases of power

Modernized But Not Westernized

“Modern societies thus have much in common. But do they necessarily merge into homogeneity? The argument that they do rests on the assumption that modern society must approximate a single type, the Western type... This, however, is a totally false identification.”

The Clash of Civilizations – Samuel P. Huntington, 1996

ab·stract (b-strkt, bstrkt)adj.1. Considered apart from concrete existence

in·stru·ment·ed (-mnt) tr.v.1. To provide or equip with instruments.

skep·ti·cal (skep-ti-kuhl)adj.1. Inclined to skepticism; having doubt

Customers Will BeMore…

Primary

Secondary

Tertiary

Quaternary

Customer Jobs Will Be More Quaternary

Source: Jean Fourastié: Die große Hoffnung des 20. Jahrhunderts.("The Great Hope of the 20th Century") Köln-Deutz 1954

Extraction of raw

materials

Manufacture

Services

Information generation, information

sharing, consultation,

education and R&D

Source: Maslow’s Hierarchy of Needs

Customer Needs Will be Higher Level

Instrumentation: Personal Metrics

Heart

resting heart rate // maximum heart rate // ejection fraction

Lungs

lung capacity

Body and Nutrition

body mass index // lean body mass // body fat percentage // basal

metabolic rate // glycemic index

Vital Statistics

height // weight // age // birth weight // birth length

Vital Signs

body temperature // pulse // blood pressure // respiratory rate

Senses

visual acuity // auditory acuity

Blood

glucose level // blood-alcohol level // hemoglobin level // HDL level // LDL

level // liver enzyme level

Women Only

estrogen levels // menstrual cycle

Men Only

testosterone levels // sperm count

Living

caloric intake // hours of sleep // exercise duration // exercise intensity //

lactate threshold // steps taken in day // mood // medication taken // hours

worked // cigarettes smokedSource: Wired

Geotag Map ofSanFranciscoSource: Geotaggers world Atlas

Edelman Trust Barometer 2010: Trust

0

10

20

30

40

50

60

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Trust in Business 2001 to 2010

U.S. U.K./France/Germany

Edelman Trust Barometer 2010: Reputation

45

47

48

58

64

72

75

79

83

83

Financial returns

Top leadership

Innovator

Prices fairly

Good corporate citizen

Treats employees well

Communicates frequently

High quality products and services

Company I can trust

Transparent and honest practices

How important are these factors to corporate reputation?

Women less trusting when taking testosterone

New research suggests women become less trusting, less open, more vigilant, and more skeptical and cynical if they are given the male hormone testosterone.

Source: Proceedings of the National Academy of Sciences of the United States of America (PNAS) - Dr Jack van Honk

Customers Care More About the Customer Experience Than in the PastThose discontinuing business with a company after a negative customer experience climbed from 68% in 2006 to 86% in 2009

60% of consumers will always or often pay more for a better customer experience. 82% of consumers with a bad experience told others about it, up from 67% in 2006

69% of consumers switched providers in at least one industry sector because of poor service in the last year, 89 percent tell their friends about their bad experiences, and 25 percent use social media

40% of loyal customers said that they are willing to pay 10% or more to continue purchasing from companies delivering great experiences, in contrast with 9% of dissatisfied customers. 52% of dissatisfied customers expect discounts of 5% or more to continue doing business

87% of people felt they had a right to a better contact center experience if they regularly spend money with a company

Sources: Customer Experience Impact Report, 2009 by Harris Interactive for RightNow, Sept. 2009; 2009 4th Annual Customer Service Survey, Accenture, Nov. 12th 2009; 2009 Customer Experience Consumer Study, Strativity Group, Aug. 4th 2009, Consumers Unforgiving When it comes to Customer Care, YouGov for Teleperformance, Oct. 2009

SPA 1: In 2015 75% of consumers will tell their friends about their bad experiences using social media up from 25% in 2010

Three Viewpoints

The future customer view

The future business

The future IT

New Era Leaders: The 8% of Firms that are both Digital Market and Customer Insight Leaders

Source: The Path Forward: New Models for Customer-Focused LeadershipThe IBV 2009 Global CRM Study. Survey 478 CRM Executives in 66 countries, May 2009

Worst and Best Advertising Channels For Driving Web Purchase Consideration

52

34

16

8

8

0

-3

-21

-26

-31

-38

-50 -40 -30 -20 -10 0 10 20 30 40 50 60

Customer Email

TV/Newspaper Advert

Targeted Personalised Direct Mail

Sponsored Search Engine Link

Advert on/with Bill or Statement / 3rd party inserts

Loose Insert in Magazine

Customer Mobile Text

Untargeted Direct Mail

Social Networking Advert

Unsolicited Email

Unsolicited Mobile Text

Source: Effectiveness of different types of advertising in driving web visits and online purchase consideration, Response One, 2008

Radical Changes of Approach

Customer service: No human service / extreme self-service / proactive service

Marketing: Assume the customer is always wrong

Sales: Throw in the towel – stop trying to force sales people to adopt sales force automation

Best Time/Cost

Best Productat BestTime/Cost

Best Time/CostPlus High Touch

The Majority Claim to Be Customer Intimate

Operational Efficiency

High Touch and Best Product

BestProduct

MiddleGround

ProductLeadership

BestHigh Touch

Source: The Discipline of Market Leaders, 1995, Michael Treacy and Fred Wiersema

CustomerIntimacy (57%)

SPA 2: Less than 40% of organizations will aim to excel at customer intimacy in 2015 down from almost 60% in 2010

Three Viewpoints

The future customer view

The future business

The future IT

Beyond Email

Source: Graphical representation of a series of world-wide Gartner studies into the Next Generation Communications Consumer through 2008

Importance

Chat

Blog

VoIP

Social Network

Email

Mobile Voice & SMS

Fixed Voice

Age10 24

Mobile Overtakes the PC by 2013

0

1

World PopulationInternet Users2000 2009

3

5

4

2

6

7

361% growth 00-09

24.5% of world on WWW

74.5% of NA on WWW

450m on Facebook

2013

Billions

Source: InternetWorldStats.com, Point topic broadband Source: Gartner, Forecast: Mobile Devices, Worldwide, 2003-2013 (3Q09 Update)

Internet Users, Worldwide

Mobile Phones2009

Mobile Phones, InstalledWorldwide

2000 2009 2013

0.9

3.5

4.7

1.7

0.4

1.6

0.36

2.2

0.450.68

289% growth 00-09

60m Facebook mobile

Mobile data traffic doubles each year 2009 to 2014

6.8

broadband smartphone

By 2014, the various forms of video (TV, VoD, Internet, P2P) will exceed 91% of global consumer traffic

Source: Cisco VNI Forecast, 6/2010

More Video

Spending Shifts From Operational to Analytical and Social CRM

1% of spending60% of growth

29% of spending, 30% of Growth70% of spending, 10% of growth

Analytical CRM

CRM AnalyticsHistorical and Predictive

Data Mart

Data Mart

DataWarehouse

Marketing, Sales, Service, Order Fulfillment

Acronym Key: ETL = extraction, transformation and loading

Collaborative and Social CRM

External DataOperational CRM

ERP,SCM

VerticalIndustrySystems

CustomerInteractionDatabase

PartnerETL,Cleansing,Enrichment

Business Process Management tools

CommunityPortal/Extranet

VoiceIVR, CTI,ACD

Face-to-FaceInteraction

Mail/SMS

ERMS

Conference

Web Conf.

Twitter,Jigsaw

New stuff!

Mobile

Context state detection bus

2) Publish State Change

3) Analyze State Change1) Monitor/Capture State Change

4) Apply Business Rule Predict

Sense

Visualize

Analyze

Respond

Reliance on DataReliance on TechnologyReliance on the IT Department

SPA 3: IT departments willHave involvement in 65% of CRM projects in 2015 down from 85% in 2010

2010 2012 2014 2016

CRM application spending grows 5%

In 2010

Social CRM

market tops $1 Billion

Initiate, Siperian, Biz360, Chordiant,

Sterling Commerce,

Jigsaw, Scoutlabs, Cast Iron, Sybase

acquired

Salesforce.com overtakes Oracle as second largest

CRM vendorMicrosoft Dynamics CRM tops

$1Bn revenues

40% of all CRM sold as

SaaS

3rd marketing application

vendor reaches $100m

revenues

CRM Apps market reaches

$11.7 Billion(up 28% on

2009)

Fred Reichheld’s next great

book

Tata, Wipro, Infosys or Cognizant become

4th largest CRM service provider in NA

Facebook reaches two

Billion members

51%

Given that the percentage of SaaS-based CRM deployments in 2009 was 22% what do you think it will be by 2020?

36%

Given that E-Commerce accounted for 8% of consumer retail sales in 2009, what % do you think it will be in 2020?

2 billion

Given that Facebook has 500m in mid-2010, what do you think this will have changed to in 2020?

Which organization do you think is most likely to enter the CRM software market by 2020 and become a competitor?

Google

38%

Given that less than 10% of Fortune 1000 companies currently use active crowdsourcing as part of the new product or service development process, what percentage of Fortune 1000 companies will use active crowdsourcing for the same purpose in 2020?

What CRM Could Look Like in 2020

1990 2000 2010 2020

App Penetration 2% 25% 40% 90%+10%(!)

DIY vs. COTS 90:10 80:20 50:50 30:70

Hot App SFA Suites Social Mobile/IDM**

Hot Tech Laptop Single View SaaS Utility

Hot Sector Pharma Telco CPG Retail

Differentiator Viability Function Ease of Use Price

P/U/P/M* $300 $150 $75 $25

Vendor Numbers 50 800 700 500

"8BB" Most Tricky Tech Strategy Metrics Governance

Department $ IT Sales Marketing CSS

Biggest Projects $10m $500m $100m $200m

Customer-Focused Medium Low Medium High

* Price of software per user, per month. **IDM = intelligent device management

① Customers will be more abstract,

instrumented and skeptical

② Businesses will need to be more

radical in response

③ IT will be more critical, but IT

departments less so

④ CRM in 2020 is on Wednesday


The Life and Times of CRM

1982-2020

Ed ThompsonVP & Distinguished Analyst

Gartner´s Ed Thompson´s Keynote the life and times of CRM

Business

Transcript of Gartner´s Ed Thompson´s Keynote the life and times of CRM