Third Idea Consulting

It’s important for us to stay current with the best thinking in the CRM industry, which is why I try to read the output of my friends and colleagues as much as possible. After falling behind a bit—there’s a lot out there that my blogroll doesn’t cover, must update—I ran across this excellent piece of opinionizing by Denis Pombriant, founder and principal analyst of Beagle Research Group.

Denis is without a doubt the world’s second smartest beagle. (Sorry man—I have a long-standing loyalty to Snoopy.) Clear thinking and the ability to look at the long-term effects of short-term actions make him a great source, and if I have nothing useful to say, I can always direct people to him. As usual, he’s spot on with his comments, so I’ll only add a few thoughts.

When Denis writes, “Too often in early markets customers buy market leading products regardless of their merits and vendors accommodate this need by bragging about market share,” he shows how eager so many of us are to follow the herd. Basing a business operations decision like CRM on market share is the grownup’s version of “all the cool kids are doing it.” It’s fair to include measurable market share—not necessarily leading, just on the charts—as one criterion of the buying decision, but it’s something that should be graded pass/fail. I might not even include it on my list unless there’s likely to be pushback from shareholders worried about where their money is going; there’s a place for small vendors, and not just for catering to customers with tight budgets.

Speaking of tight budgets, there’s this: “[T]ightness in the credit markets has caused a significant amount of demand destruction and that has changed the terms of selling.” I’ve been saying it for years, but it bears repeating that it’s much more important right now to hold onto existing customers than to find new ones. If you know what you need your CRM for—and you’d better—then you have a good head start on picking your vendor criteria. Allow yourself to be guided by what will provide the customer insight to keep your regulars on the balance sheet.

Kudos again to Denis for rocking the smarts.

We’ve been in this recession for a long time. What is it now, two years? (Answer: Yes. The National Bureau of Economic Research says it started in December 2007.) Businesses in all sectors have been hard pressed, especially financial services. That’s not really so surprising; the great sage Homer Simpson once said that beer was “the cause of and the solution to all of life’s problems,” and that sentiment applies fairly accurately to the stock market.

The desperation of the brokerages is plain to see if you catch their advertisements on TV or radio. Each is more eager than ever before to crow about its funds’ performance against this average or that index, as though it was the only company to have a clue how to make money in a down market. And each one’s advice is the same: Switch to us right now.

This is bad advice for just about everybody. The reason it’s bad is that things are tough all over. If any particular financial advisor was significantly outperforming the rest, we likely wouldn’t be in a recession, and that advisor would be raking in the bucks (even more than usual, since they profit by skimming the action like a casino does). Even Goldman Sachs, the company with more Washington influence than should be legal, is having its share of woes. Every broker has some funds that are doing well, and some that aren’t.

On the flip side of this, there are some Internet brokers advertising their own services on the premise that relationships are worthless. They suggest your relationship with your broker is a sham that only benefits the broker. For some people, this might be true. For others, there might not be a need to pay a commission to somebody else for your own informed financial decisions.

Changing your financial advisor is a major step, not something you do because of a commercial. In fact, making any change to your portfolio on a whim is generally a bad idea, though there are still day traders who think the path to success is rapid buying and selling. Successful investing is about patience, long-term plans, and—this is key—the relationship you have with your advisor. If you’re comfortable with your advisor, and believe they understand and are capable of helping you achieve your goals, you’re in the right place.

I’m open to disagreement on these points, as always. FinServ is not the business where I’m smartest, and the preceding post is heavily influenced by the opinions of people I respect and who know better. But isn’t that exactly what I’m talking about with relationships?

Sorry for my recent absence—I wonder what it says about my personality that so many of my blogposts begin with an apology—but I’m mostly to blame. I’ve been doing plenty of writing lately, but I have been trying to coordinate my posts here with those on another site (since I’m guest-blogging for them and crossposting here). Their schedule has reduced the frequency with which I get page time, and I let my posting here follow suit.

You deserve better than this, O my loyal readers, so here’s one to chew on while I wait for my updates. To be honest, this is one of the posts I’ve already written, so it would have wound up here anyway. But blogs are useless when left to gather dust, and I owe you for finding my work interesting.

Getting Schooled in Social CRM

Good news from the world of academia shows me there’s hope for the future of business. There’s at least one MBA student who takes customer experience seriously. The evidence can be found on 1to1 Weekly, in a news article by Elizabeth Glagowski detailing Breanna Vanstrom’s paper on the subject.

It’s all fine and dandy for businesses to talk about social CRM as the Next Big Thing in the continuing effort to better serve customers—merely saying so puts a company in a positive light for at least a little while. But businesses are too often more about inertia than action; making a few superficial changes to CRM tactics is much easier than revising the entire CRM strategy, and achieves quicker results for shareholders. The customer often receives no long-term benefit. The phrase “business as usual” has negative connotations for a reason, y’see.

Knowing that the next generation of business managers is learning from the start that a business can’t truly succeed without serving and delighting the customer is heartening to me. Even putting aside the PR angle—the customer relationship marketing course that produced the paper is taught by Dr. Tom Lacki, a member of Peppers & Rogers Group’s 1to1 Faculty—this is a sign that the stereotypical soulless MBA is becoming a thing of the past. Good luck to Vanstrom and her classmates.

For a look at some companies that are delivering great customer experiences, take a look at this news piece by destinationCRM’s Lauren McKay about the leaders in this year’s Customer Experience Index from Forrester Research’s Bruce Temkin.

I was thinking today about the similarities between bad CRM practices and owning cats. I realize that telling you this and then writing about it may hurt my credibility, but (1) it’s true that I was thinking this and (2) I am really tapped for better ideas today, so here goes.

The dialogue, if you can call it that, between cats and their owners is mostly in one direction. I buy a new toy or type of food for the cats, and then try to interpret their interest—marketing. We don’t speak the same language, just as businesses often don’t think of a successful product in the same way a customer would.

Once I’ve started the marketing campaign, the next step in KRM (Kitty Relationship Management) is trying to close the deal, turning up the pressure in order to sell the cats (their names are Cookie and Dr. Harbl, in case you were wondering) on the wonders of these new rawhide mice, or frozen raw venison burgers, or whatever. Again, the success or failure of my efforts is dependent on factors I can neither predict nor understand. In time I might develop some insight to what these particular cats prefer, but I can’t necessarily communicate that information to somebody else, nor can I apply it to other cats.

Kitty customer service? Again, failure to communicate is the order of the day. I am prepared to respond to certain requests from my cats, so every time they provide input I try to interpret it in light of those expected requests: feed me, pet me, or clean the litter box. It took a while to learn that last request, mainly because my own data told me I was doing an adequate job. If I’m not doing what the cats want, they have limited means for setting me on the right track, and if they don’t lodge some kind of protest, I continue with what I’ve been doing.

Good CRM, especially the social kind, is like speaking cat language. Maybe that doesn’t sound like a ringing endorsement, but trust me—it’s huge. If you’ve ever had a cat deposit its “customer feedback” on your laundry bag, you’ll agree.

Businesses are starting to understand the value and importance of a social media approach to CRM, if the calls I’ve been taking are any indication. That’s good, but sometimes I feel that for some people, the terms we use—social media, social CRM, Enterprise 2.0 and the rest—are just words hung onto a concept, their meanings ignored.

While letting “social CRM” exist merely as shorthand for a broader concept—like Paul Greenberg’s excellent and tweetable definition, “the company’s response to the customer’s control of the conversation”—I prefer for the concept to remain grounded in the words that describe it. In this case, the best definition of social itself is from Merriam-Webster: of or relating to human society, the interaction of the individual and the group, or the welfare of human beings as members of society; tending to form cooperative and interdependent relationships with others of one’s kind.

It’s great if your company is engaging its customers and partners in conversation through its own social networking tools. It’s beyond great, it’s necessary in most cases. But there must be more. You’ve got to reach out beyond your own circle, and start exchanging ideas with new people and organizations, ones in whom you don’t already have a financial interest.

This is not to say that you should abandon any current social efforts. Just make sure you’re sticking your corporate nose into somebody else’s as well. I’m not talking about corporate espionage—that’s bad. I mean participation in timely and topical discussion groups (the Answers section of LinkedIn is an excellent example), attending Webinars, and just letting your people explore where their interest takes them.

If our hunter/gatherer ancestors hadn’t been willing to meet other bands of like-minded people, we would never have gotten beyond tribes and clans, warring with one another for access to water, hunting grounds, and abundant vegetation. (You could make a decent argument that we still haven’t gotten beyond that, but I’m feeling generous to our insane species today.) Communication with “the other” brought trade, exchange of ideas, and the peace of mind that comes from knowing what those guys in the next cave are up to.

It’s no different in modern society. Looking for new ideas and new associates to share them with is a major driver for the modern, socially-aware business. Does your desire for partnership and creativity outweigh your fear of competition? It should; competition is healthy. Social interaction means business doesn’t have to be a zero-sum game. Your competitors may glean some ideas from you that they might otherwise not have, but you will do the same. You will each innovate, raising the standard for all. You will allow your entire industry to serve the customer better.

Take the next step. Get your company onto somebody else’s social network. It’s only natural.

When budgets are tight, businesses tend to focus on cutting costs and reducing expenses. This usually leads to reticence on the part of executives to spend for new or upgraded business technology. Sadly, this is a case of being penny wise but pound foolish, if the figures reported in a recent study are to be believed. Billions of dollars are slipping through the fingers of companies who deliver poor customer service, and a lack of good CRM is one of the causes.

“The Cost of Poor Customer Service: The Economic Impact of the Customer Experience and Engagement,” a joint study by Ovum and Greenfield Online (commissioned by Genesys Telecommunications Laboratories) surveyed nearly 9,000 consumers in 16 countries. It revealed that lost relationships—defined in the study as transactions taken to a competitor or abandoned entirely—cost businesses $338.5 billion per year. That works out to about $243 per loss, according to the study. So if somebody ever says, “So what’s one customer more or less,” now you can tell them. For complete reporting, see the destinationCRM.com article by Christopher Musico.

Certainly, poor business processes and a lack of understanding of how to best relate to customers take part of the blame, but everything cited in the study as needing improvement—being trapped in automated self-service, waiting too long for service, callers having to repeat themselves, and customer service representatives lacking the skills to answer inquiries—everything can be remedied by smart use of CRM technology. Here’s a list of the traditional solutions to these problems:

• Trapped in automated self service? This one is easy, even anti-tech: Make sure there’s a way to escalate from the IVR to a live agent. Call deflection has value only if customers are getting the help they need. A timer or tracker that follows a customer’s call and lets a customer service rep break in with live service if the call goes too long or revisits the same menu too often would work if the company (foolishly, in my opinion) doesn’t want a “press zero to speak to an agent” option.
• Waiting too long? There are more than a few on-demand contact centers out there, as well as software that allows companies to direct their call overflow to work-at-home agents who can help absorb the volume. Take your pick.
• Callers having to repeat themselves? This makes me sad, because even simple integration between the CRM system, the IVR, and the agent’s desktop takes care of this, 100 percent. I can’t believe it’s still an issue.
• Representatives lacking the required skills and permissions? A well-stocked and -maintained knowledgebase means that your customers don’t have to suffer for gaps in a particular agent’s expertise. E-learning tools help agents stay current on important information. Not penalizing an agent for handing the call off to somebody who does know how to help, rather than flailing uselessly at a problem, is also wise.

Those are the usual ways to deal with the issues brought up in Musico’s article. It also mentions social media as a potential problem solver. I don’t deny the closing statements of the piece, where Ovum analyst Daniel Hong says it will take some time to get businesses comfortable and proficient with social CRM, but the investment of time and money must be made. It’s been shown that fellow customers are often better at solving some problems than a CSR, so answers are provided for free without costing agent time. Answers generated by the community can be added to the company’s knowledgebase, and over time this feedback can help fix issues with the next product or service in development. That sense of shared experience also makes for loyal customer advocates, which is money in your pocket.

Basic integration has been too long in coming for too many businesses, so perhaps the study will show them the true cost of delay. I hope they remember the social CRM part of the integration as well—bringing businesses into closer and more productive contact with their customers.

Sage Summit has begun, even if the official welcoming keynote hasn’t yet been delivered. This is a customer event, y’see, so it’s fitting that Sage started by recognizing some of its more notable ones. In other words, it was the Sage Customer Awards Program luncheon. Here, in brief, are the winners, with a few comments by me where needed.

• MyBizCounts.com Contest Winner: INDIE PEACE, an Atlanta-based fashion design company that focuses on sustainable, eco-friendly products and manufacturing techniques. (This contest called for original video commercials and essays from people with new business ideas or young startups (two years and under), with $20,000 and a bunch of Sage software—Peachtree, ACT!, and Timeslips—as the prize. The company made a cute presentation, and has some really nice wearable designs that won’t kill the planet. Good stuff.)

• Rookie of the Year: Coilhose Pneumatics, East Brunswick, NJ, using MAS 500; Net@Work is the Sage implementation partner. (Product costing and inter-company transactions are some of the more onerous parts of a business that deals in specialized products. Guess what Coilhouse improved with MAS 500? Net@Work is known to me as a talented integrator, so kudos to that team as well.)

• Best Use of Customization: Metropolitan Regional Information Systems (MRIS), Rockville, MD, using Sage MAS 500; Blytheco LLC is the implementation partner. (MRIS got more than 32,000 customers to use the online bill-pay system it built this year, something that wouldn’t have been possible with its legacy accounting system. Automation is a good thing sometimes.)

• Community Stewardship: Teach For America, New York, NY using SalesLogix; Infinity Info Systems is the implementation partner. (I’ve met with IIS before, and its founder Yacov Wrosherinsky is one of the most-recognized Sage partners there is; I’m not surprised one of his clients took an award.)

• Best End-to-End Deployment: Curbers, Inc., Salisbury, NC, using MAS 500, FAS, and SalesLogix; Practical Software Solutions is the implementation partner. (Combining ERP and CRM throughout the enterprise makes tremendous sense for many businesses, especially those in heavy industry. Power Curbers makes, customizes, and sells machines for making sidewalks, curbs, barriers, bridges, and other concrete items—that’s about as heavy as heavy industry gets.)

• Best Innovation Award: Entertainment Lighting Services, Inc., Sun Valley, CA, using MAS 500; Information Integration Group is the implementation partner. (ELS really needed to get enterprise software in place, and the results are telling. It reduced inventory shrinkage by half, and reduced the month-end close process from four weeks to five days—their monthly close used to take a month. Think about that.)

• Lifetime Achievement Award: Amix Salvage & Sales Ltd. , Surrey, BC, using Accpac and SageCRM; Plus Computer Solutions is the implementation partner. (Too often, especially at the Oscars, lifetime achievement awards are a way of saying, “you’ve never won a real award, so here’s a pat on the back to thank you for hard work.” That’s not what this is; Amix has been a Sage customer for 17 years, and had its first software package installed under MS-DOS. Sage has seen Amix through booms and busts for longer than I’ve had a writing career. Clearly both companies are doing something right.)

Congratulations to all the winners. I’m hoping to track down Denis Pombriant, founder and managing principal of Beagle Research Group and one of the contest judges, to talk about what went into the award decisions.

I’m about to start a guest blogging project for Sage Software, the company that brings you ACT!, Sage CRM, and SalesLogix. With their partner summit starting Monday, we figured it was a good time for me to introduce myself to the Sage user community, and here’s how I did it:

“Hi, I’m Marshall Lager, and if you read the ACT! by Sage blogs you’ll be seeing a fair bit more of that name in the coming weeks. That’s because Sage has invited me in as a guest blogger to provide my own perspective on CRM, Sage products, and customer experience. I’ll be kicking it off at Sage Summit, the annual partner conference, but I wanted to introduce myself and give you an idea of what you’ll be in for.

“You may be wondering, “Who is this guy, and why should I care?” Fair questions. I’m the founder and managing principal of Third Idea Consulting LLC, a consultancy focusing on CRM, especially social CRM and the increased power social media have given to customers. Those of you who read CRM magazine may also know me from there, where I was senior editor for four and a half excellent years. I’m the guy who wrote (and still writes) the back page column, Pint of View.

“That tells you a bit about who and what I am, but it might be just as useful to tell you who and what I am not.

• I am not a Sage implementer, employee, or partner. I am being paid formy writing, and I respect Sage’s products and am familiar enough with them to not make a fool of myself or the company. If you have specific technical questions about integration, business processes, or software capabilities, though, you’ll be better off talking to a Sage exec or ACT! Certified Consultant (ACC). I’m more of an ideas guy.
• I am not a spokesperson for anybody’s brand but my own. But maybe I can help you with yours. One of my chief contentions is that businesses don’t have the monodirectional control of their communications or their brands that they once did, and I think it’s a good thing. I’m all about customer empowerment, and how it can ultimately make businesses better. As such, I don’t really care what CRM system or techniques you use, as long as you are doing whatever it takes to keep your customers coming back with smiles on their faces, cash in their hands, and referrals in their mouths.
• I am not always serious. Writing is a pleasure for me. Thinking about CRM is also a pleasure. Combining them makes me do a little happy dance in my brain. At the same time, I realize that serious business shouldn’t always be serious, and we all need a change of perspective from time to time in order to prevent tunnel vision. Again, readers of Pint of View already know what I’m talking about. You might not always agree with me, or laugh with me, or find my comments in good taste, but they should make you think. If that’s happening, I’m doing my job.

“So, what can you expect from me? Over the next couple of months, I’ll be providing you with my perspective on the CRM industry, Sage news, and the state of customer/company dialogue in general. I’m starting with Sage Summit because it’s a big event, so you will see me all over the conference, talking to people like you about what matters to you. There will probably be some video podcasts or Q&A sessions along the way, so you can interact more directly with me.

“I’m also available for phone consultations, on-site visits, white papers, weddings, and bar mitzvahs. But you’ll have to pay me. The guest blog is entirely at your disposal. I hope you find it useful.”

There it is. If anybody’s going to be in the Atlanta area this week, look for me with notebook and Flip video in hand, trying to provide my perspective on what’s going on with Sage. I’ll be continuing the guest blog for a couple of months, and will mirror it here. I’m looking forward to the access to Sage that this will give me, as well as the chance to affect its users and partners in a (hopefully) positive way.

I’ve just spent (and am still spending) a busy and informative demi-week at the RightNow Summit in lovely Colorado Springs, and I’m glad I came. Greg Gianforte and company are doing some very smart things.I’ve dinged RightNow in the past for sometimes lacking in effective media/analyst outreach, but that appears to no longer be the case, and the timing is excellent.

The reason for my enthusiasm is that RightNow’s message of customer experience is now a product and a strategy, CX. The social CRM and SaaS stars are finally in alignment, and the RightNow CX customer experience suite that Greg G. announced on Tuesday was born under those auspices. My tweets from that morning’s general session will give you some idea of what RightNow CX is all about, but I’ll summarize it here in a more coherent fashion. I’ve got to rely on text because I’m having trouble getting slides to work, but bullet lists are clear enough.

From the ground up, there are five main components of RightNow CX, each containing part of the package. RightNow CX Platform is the technology that supports the traditional CRM functions of RightNow Engage, which in turn supports the three customer experience components (Web Experience, Social Experience, and Contact Center Experience). Thus,

RightNow CX Platform

• Knowledge management
• Integration
• Mission-critical SaaS (more about this later)

RightNow Engage

• Marketing
• Voice of the Customer
• Sales
• Analytics

RightNow Web Experience

• Customer Portal (including Web self-service and mobile)
• Chat and Co-Browse
• Email Management
• Web Experience Design

RightNow Social Experience

• Support communities
• Innovation communities
• Cloud monitoring
• Social experience design

RightNow Contact Center Experience

• Phone and multichannel interaction management
• Case management
• Voice automation
• Contact center experience design (including desktop workflow, agent scripting, and contextual workspaces)

Mission-critical SaaS includes something the company is calling Invisible Updates, with elimination of downtime as the goal. The concept appears similar to Salesforce.com’s 5-minute upgrades, but RightNow is aiming for true seamlessness. It also prides itself on having always provided service level agreements with teeth—the company cuts checks for its customers when downtime exceeds what’s spelled out in the SLA. It’ll be fun to see how the two rivals stack up in this matter.

A lot of the new customer experience functionality, especially the knowledge base and Social Experience parts, are the fruit of RightNow’s acquisition of HiveLive in September of this year, followed by what must be the fastest assimilation of technology since Star Trek introduced the Borg. A six-week turnaround from acquisition to deployment was unheard of before this, as far as I know.

RightNow takes the position that customer experience is everything, and is making “ridding the world of bad experiences” its goal. The path to achieving this leads through the contact center, and recognizes the power of the customer to make or break a business no matter how good the products might be. Numbers from the 2009 Customer Experience Impact Report (commissioned by RightNow from Harris Interactive) back this up:

• 86% of consumers will never go back to a company after a bad customer experience
• 60% will always or often pay more for a better customer experience (up from 58% in 2008)
• 82% who had a bad customer experience told others about it (up from 67% in 2006)
• 53% will recommend a company to someone else because they provide outstanding service

To illustrate the potential impact of one bad experience, we were treated to one more showing of the “United Breaks Guitars” video—but with a twist, because Dave Carroll (the creator) took the stage partway through to finish out the song and give us a first-hand account of his experiences. As he finished up, he revealed what I’d call PR gold for him and RightNow: Carroll’s only option for getting to the conference was to fly United, and the airline lost his luggage. If you listen carefully, you can hear United’s market capitalization dropping even further than the $180 million attributed to the initial incident.

If RightNow CX Platform is as good as it looks, and the company is true to its word, 2010 could very well be RightNow’s year. Every single one of Greg G’s customer visits in the past three to four months (he’s done more than 300 customer visits in the past 18 months) has had social CRM as a focus—driven by the customers, pulling RightNow into the conversation. That’s encouraging to me, since I’d hate to have established a practice in a field nobody cares about.

You’ll also be glad to know that I am now officially Huge On Twitter, at least as far as the PR team from Horn Group and RightNow Technology is concerned. I hope to continue living up to the accolade.

Hey folks: I’m at a conference with functioning WiFi! It’s RightNow Summit ‘09, and we’re just a few minutes away from the opening address. Look for my live updates on Twitter, and a full account of the news later today. Anything I don’t get, you should be able to learn from Christopher Musico of CRM magazine, Esteban Kolsky, or Forrester Research’s Dr. Natalie Petouhoff.