CRM 2.0 = The Conversation - But First....The Intro

Summary:This is my first post for ZDNET.  I'm back from a 10 day cruise to the Caribbean - had a great time - came back to the economy worse than what I left - though gas prices are great - and I'm feeling relaxed anyway - so I thought it might be a good time to introduce you to either a) why I'm doing this blog for ZDNET or b) me - depending on how closely you follow CRM.

This is my first post for ZDNET.  I'm back from a 10 day cruise to the Caribbean - had a great time - came back to the economy worse than what I left - though gas prices are great - and I'm feeling relaxed anyway - so I thought it might be a good time to introduce you to either a) why I'm doing this blog for ZDNET or b) me - depending on how closely you follow CRM. Keep in mind, I've been around the CRM block a few times, though if you saw my recent weight gain, "around the block" probably isn't the right metaphor since movement of any kind wasn't in my most recent environment - except via stairs to the dining rooms.

I'm going to be high level and introductory here so bear with me since I'm introducing how I'm gonna be putting this whole blog forward from now on.  Hopefully, you'll find it useful - and, also, entertaining.  If some of this stuff around CRM and CRM 2.0 is too basic for you, skip this entry and go straight to number 2.  That way you don't have to think, "I know that stuff. What a a lame dude this is." Don't want that as my reputation from the get go - and, as we'll see in ongoing posts - especially on the social stack and other sundry contemporary themes - reputation matters.

CRM 2.0 - The Strategy

Customer relationship management (CRM) plays an important, often critical role in business as a strategy.  Of that there is no question, whatever. Regardless of whatever question you might have. That means that as I've stated over the years, starting with a CRM Magazine column in 2003, (and I am not alone in stating this),"CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment." What that means (and, not to give away to much, meant) is that CRM is NOT a technology nor does People, Process, Technology (PPT) do it justice - To me, PPT means "PowerPoint."  It is a science of business that attempts to duplicate the art of life. That means, aside from the lovely poetic considerations, that CRM is the business strategy that attempts to understand, involve and benefit customers in ways that benefit the individual business trying to accomplish that.

But that's not such a simple process - and thus, the reason for this blog. Because over the last three years roughly, CRM has evolved from its traditional purpose - to enhance the success of sales, marketing and customer service, usually called "customer-facing departments"  - by improving the operational and transactional capabilities of businesses in those three areas.  But the customer has changed in the last three years and that's changed their demands on business dramatically. Adhering to a  strategy for managing how you are going to control the relationships that you have with your individual customers by understanding them better is no longer viable - though it won't kill you either. But customers are demanding a lot more and that demands a lot more of your business' customer strategy. Now your thinking has to move from customer management to a strategy for customer engagement.  CRM - the traditional, historical, "classic", operational and transactional business strategy has now become CRM 2.0 a.k.a. Social CRM - a strategy for willful engagement of the individual customer in a way that provides mutually derived value.  Here is the new, evolving definition of CRM 2.0 - as defined by the CRM community itself in a wiki that I created in 2006 for that very purpose (you're all welcome to join):

"CRM 2.0 is a philosophy & a business strategy, supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It's the company's response to the customer's ownership of the conversation."

There is a notable difference, n'est ce pas?

CRM 2.0 is built around business models, strategies for interaction and engagement, where CRM 1.0 was around transactions and management.

But here's the rub, Shakespeare fans. You can't just substitute CRM 2.0 for CRM 1.0 and expect to succeed.

Let me repeat that.

You can't just substitute CRM 2.0 for CRM 1.0 and expect to succeed.

I can't emphasize that enough - though maybe I just did. CRM 1.0 - the transactional, operational CRM that was technologically defined by its use of algorithms and processes that were built around triggering actions that would provide data about customers that would be useful to upsell or cross-sell or even capture the fancy of the customer - is a necessary part of the technology strategy for CRM.  The key to CRM 2.0 is that it involves this and so much more.

The Social Customer

Thing is, we have a different far more demanding customer than we did several years ago. The customer we have now is more potent, more involved, more interested in using your company to resolve his or her personal agenda. No longer do they view their key relationships to companies as being with companies that they are just going to purchase "things" from. They now want the companies they are willing to give their time and money to for an extended period as companies that will provide them with ways to resolve their personal requirements on a given day.  For example, there is a Gen Y- oriented company called Karmaloop that has a very well defined CRM 2.0 business model. Their model and metrics are not strictly revenue-related; they are community related. They understand that the more they build and then engage their community, the more that they have a customer base that consists of advocates who will actually help them sell - and be the key purchasers of goods. Their clothing lines - which includes their own clothing and the more international brands like Nike - are sold by their own people and via ecommerce to their 800,000 strong community but also by one percent of that community - who drives 15% of their multimillion dollar revenue. They provide the platform to their community to not only upload videos & photos of how they wear their clothes, but also rankings and comments of the same.  In one respect, the most important thing they do is highlight indie designers from their community. They give them a place to show their stuff - figuratively & literally. If the indies do good work, they can be featured in a Karmaloop produced e-zine or a WebTV show. Plus of course, hawk their goods in a section on the site known as the Kazbah. Key here? Those 800,000 social customers are advocates for something they feel they not only buy from but have an influence over and thus a stake in. Plus they are rewarded for their behavior - not just selling as a street team - that 1% I mentioned - but for getting people to participate in the community - even if they don't buy right away.

This is the social customer, plain and simple. They get transparency, a feeling of some connection to the company and rewards for their efforts on behalf of the company. Their loyalty is attitudinal, not just behavioral.  If things go just right, they become advocates. This is the CRM 2.0 company - they involve and engage their customers, reward them.  They aren't just identifying the relationships as data points plugged into analytics to help predict behaviors endemic to satisfied, chops-licking by their customers. Nor are the company's objectives just the ordinary traditional left-brained ones of revenue and profitability. The admittedly idealized CRM 2.0 company is focused on revenue and profitability, sure,  but also more emotional right-brained community building and creation of customer advocates. The Holy Grail is no longer the 360 degree view of the customer. That's a pre-requisite. The Holy Grail in the Era of the Social Customer is "a company like me" - something you'll hear more about as I take this forward.

I want to use this blog to create a "community of self-interest" akin to a CRM 2.0 perspective - a place that you can actually find stuff that you think makes perfect sense for your companies as you deepen your understanding of your customer - hopefully, in part through here. I really don't just want to blather.

THAT is the kind of thing I'm going to be writing about as long as this blog lives. I'll keep doing the blog until they pry it from my cold, dead hands - or they decide they don't want me anymore. I'll hook you into the new business models out there; the new strategies for engagement large and small companies are approaching; who's doing good at this; who's doing bad at this; what's going on in the CRM industry that works and doesn't; how CRM 2.0 and traditional CRM interact. I'll be happy to write on specific things you ask me to write as often as I can - and if it makes sense to a larger group. If it only makes sense for you, I'll email you an answer. If you think I'm full of....let me know. I'm originally from New York. I can take it. But expect it back atcha too.

My bio if you don't know anything about me is here for you to read. Thanks for giving me this shot. Hope you like what you "hear." Or not.

Topics: Enterprise Software, Software

About

In addition to being the author of the best-selling CRM at the Speed of Light: Social CRM Strategies, Tools, and Techniques for Engaging Your Customers Paul Greenberg is President of The 56 Group, LLC, a customer strategy consulting firm, focused on cutting edge CRM strategic services and a founding partner of the CRM training company, BP... Full Bio

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