Romi Mahajan, President Pepper
Ann Eberle Thomas, CRO Pepper
Dharmesh Godha, President Advaiya

In a recent discussion with an executive, CRM software came up as a hot topic. Her assertion was that too many customers see CRM as a “commodity” and thus balk at upgrades, new purchases, and list-prices. The comment was interesting for a variety of reasons of which the most important was the degree to which this flies in the face of the claims (obviously) that CRM providers make. After all, they argue, if your customers are your lifeblood (as you claim) then how can the system that enhances your ability to build long, loyal relationships be relegated to commodity status? Isn’t a CRM system your best front-end to the customer and as such a core tool to boost sales? If so, how can you think of it as being “just there?”

Commodity? Not a commodity? The grass is green on both sides of the fence, but that is because our imagination has failed when it comes to both CRM and software in general. We continue to make software fit our calcified methods and processes versus letting it liberate us from these very constraints.

Let’s focus on CRM as an illustrative case. From the beginning, organizations have had relationships with their customers- this is simply a truism. Before machines, before computers, before software, before it all, organizations connected with customers and prospects and conducted business. But when some decades ago, intrepid entrepreneurs like Tom Siebel and Marc Benioff realized that specialized software solutions could be used to enhance an already existing idea, the category “CRM” was born. Once the genie leaves the bottle, it cannot be put back in. Once a category is in the world and the lexicon is understood by all, it takes on a life of its own. As such, today CRM is a decabillion dollar business and there are over a thousand companies that build CRM solutions and platforms.

When faced with so many choices and so many seemingly mundane applications of the category, it is no wonder that many think of it as a commodity. This is an understandable if unfortunate fact. When we take an existing idea and an existing process and simply make it “a bit better” with software, the software itself is measured in increments of value. The game in this case is linear.

What if, however, the CRM system allows you to quickly revisit the taxonomies and hierarchies you’ve held as sacrosanct before? What if the CRM system allows you to do different and dynamic things at scale whereas the previous dispensation made those ambitions impossible? In these cases, CRM is not a commodity but is, to use an overused term, a game-changer. Here, the game is non-linear.

That indeed is the nature of innovation. Incremental change and enhancements are good but when an entire epistemology or process is changed, innovation occurs. Innovation is very much a product of the outcome. As such, customers are thus the judge of whether a software solution is innovative or not.

Coming back to CRM. Yes, organizations have from time immemorial “related” to their customers, but the ability to do it not only at scale but by bringing to bear a variety of otherwise disparate data points, is powerful and indeed innovative. The watchword here is “integration” and how it relates to customer engagement. Customers are not monoliths, given to a unidimensional description. They are active, dynamic, multi-faceted beings. When CRM can help you not only discover deep context but also capitalize on it to offer value to these customers, then it ceases to be a commodity.

It requires us to use our imagination.

Most e-commerce sites still struggle to leverage the growing wealth of customer data to which they have access. This failure to integrate customer relationship management (CRM) activities with online visitor behavior is wasting a significant opportunity to transform CRM into Customer Relationship Marketing.

During the last economic downturn, the Web was the only sales channel that grew, while brick-and-mortar businesses contracted significantly. The Web is now such a powerful, commanding route to market that in some pre-Internet sectors, more than 90% of business is now done online. Moreover, this year Cyber Monday sales alone hit $1.98 billion.

One of the best examples of this growth in e-commerce is the airline industry, which was once dominated by call center activity. Today, JetBlue now handles more than 80 percent of its reservation transactions online. Yet, while Internet businesses have made great progress in catching up with more traditional sales outlets in terms of the breadth and sophistication of their product offerings and how they are presented online, they have failed to integrate their CRM activities, which limits their impact as they try to personalize promotional offers.

Following the Leaders

Amazon.com certainly set the gold standard for best practices in personalization—with its unparalleled ability to recognize and deftly exploit consumers’ online browsing and buying habits. But, it also has the advantage that its route to market was 100% Web-based. Certainly, many ecommerce shops attempt to mimic Amazon’s highly successful interactions with returning customers (“You were interested in XYZ, so you may enjoy ABC,” etc.) — but most companies are not going far enough, allowing customers to slip through the cracks. For instance, an insurance business may not realize that the person making a call center inquiry about auto insurance was just browsing life insurance offers on the Web the day before calling.

Going for Cross Channel Optimization

However, the website is just one of several channels—and consumers don’t think in channels, they think in brands. So, as hard as some have worked to blend their operations and business data across their brick-and-mortar, call center and Web operations, many gaps still exist.

Disjointed marketing and sales practices are leading to frustrated and disgruntled customers when they are forced to rehash the same details whenever they switch between channels. This scenario is one that causes many customers to abandon their inquiries and take their business elsewhere.

Consider financial services as an example. A bank, which might use its CRM system and propensity modeling to address gaps in a customer’s portfolio of products, may suggest a new account upgrade, an improved insurance policy, or a more favorable home equity line through the customer’s local branch or a direct mail offer. But what if that same bank knew that a customer had visited its mortgage calculator facility when last visiting its website? This would present an ideal opportunity to make a timely, customized offer. Even more compelling would be to have the offer serve as the primary landing page content presented the next time the customer goes online to transfer money or pay a bill.

The ability to adapt online content for customers and prospects based on their known preferences is a powerful way to build and strengthen relationships, particularly if dovetailed with offline activities.

The Path to CRM Nirvana

he potential impact of personalized marketing over the Web is undisputedly enormous. E-business owners have about seven seconds to capture the attention of an online visitor and engage their interest. If this opportunity is lost, the customer will move to a competitor. And if that competitive experience provides more relevant, personalized content and a pertinent offer, the customer may never come back — despite previous loyalty to the brand.

Imagine if it were possible provide real-time targeting your visitors while they were still browsing your site, therefore able to influence their final purchase— no hoping for the next visit, no lost opportunities. Instead, you seize the moment, right when it matters. Imagine the possibilities and the revenue potential it could bring.

It is imperative that companies integrate customer data across all channels. Understanding what customers have been doing across channels can make every interaction an extension of what they may have begun elsewhere — creating a more personal, relevant and rewarding experience for both the customer and the business.

While the majority of organizations appreciate the value of personalization (Forrester Research notes that organizations have wanted to personalize their Web marketing for the past 15 years), only a small minority have actually followed through.

The building blocks exist to get e-businesses started — organizations can model what customers do as they navigate a site’s Web pages, and they can segment this data so it can be used for tailored promotions both on the Web, during a current or future session, or across other channels. Nirvana is a fully integrated CRM solution that feeds into specific online offers.

By waiting to see what the competition does first, companies risk losing the advantage — and customers. Use the personalization capabilities available today to move swiftly, offer a killer deal, and potentially gain a lifelong customer.