Do We Really NEED CRM 2.0?

Do We Really NEED CRM 2.0?

Summary: (I'm taking a weird or, to make that more polite, unusual step and publishing this at both PGreenblog and ZDNET because it impacts both audiences. Honestly, I'm not being lazy.


(I'm taking a weird or, to make that more polite, unusual step and publishing this at both PGreenblog and ZDNET because it impacts both audiences. Honestly, I'm not being lazy. I swear....okay, maybe a little)

For the last several weeks, I've been thinking over what CRM 2.0 looks like. The reason for these fevered thoughts was pretty straightforward. We've ("we" meaning the CRM industry and CRM practitioners) have been proclaiming the arrival of CRM 2.0 for a fairly long time now - a couple of years and I've been particularly guilty in touting its charms.  The marketing machines of CRM and social software vendors are also in gear and are proclaiming the era of CRM 2.0.

But is it the era of CRM 2.0? I'd have to say yes and no.


At the level of strategy there truly is a CRM 2.0. CRM 1.0 strategy was operational and tactical but was at its core a strategy for actually managing corporate transactions with customers - and at its best a strategy for managing the interactions with customers. The software associated with it was based on process efficiencies and interaction effectiveness. Pretty much the best you could expect from it was a greater knowledge of a customer via the 360 degree view of the single customer - which, still is in woeful short supply at the companies that claimed CRM in their portfolios. A McKinsey study placed it at 38% (though I'll be damned if I can find the link). On the other hand, the recent Speed-Trap/Econsultancy CRM 2.0 study found that 70% of their respondents had at least centralized storage for customer data - which isn't the same as a single customer record but at least shows some promise of progress.

But that was CRM 1.0. CRM 2.0 is widely recognized as a customer engagement strategy. And it is. What it does is take CRM 1.0 and extend it far beyond what its original bounds are. CRM 2.0 as a strategy is actually maturing. It implies a lot that 1.0 didn't. For example, it assumes the existence of a social customer who controls their own interactions with other customers and with the company. In fact the fundamental idea behind CRM 2.0 strategy is that the customer will engage with the company in a way that provides mutually beneficial value. The company's skin in that game is to be honest and straightforward with the customer (authenticity is the buzzword du jour) and to be open with the customer and visible to the customer so that they have the information they need to make intelligent decisions on how they are going to interact with the company - in the context of their personal agenda.

The CRM 2.0 definition from the CRM 2.0 wiki is the following:

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.

Increasingly, companies are buying into this and the recognition of this as a necessary strategy is shown by the numbers of companies that are using blogs, developing communities and participating in communities not built by them - e.g. Facebook or more specific communities that cater to the company's interests. But, that's the one real "yes" when it comes to CRM 2.0.


Have the vendors really kept up with the strategy in their desire to provide CRM 2.0 applications? Is this even something they need to do? Those are rather important questions because they affect budgets, and innovation, personnel decisions, partnerships, and technology roadmaps, among other things. When marketing is removed and a cold hard look is taken at the applications out there with a view from the CRM 2.0 precipice, the answer is that as of now, there is very little that can be called true CRM 2.0. The question is what is the state of that state and does it matter whether or not they exist as of now?

First things first.

The Criteria

What would be the criteria that would determine whether or not something is stampable as "CRM 2.0" or "Social CRM" if you really care which it is.  What it should include features/functions and social characteristics that allow a community or individual customers to:

  1. Collaborate with the company and its other customers via multiple possible channels from mobile to desktop to web to email to phone through the availability of tools to customize how the customer wants to collaborate and communicate.  This could include community creation tools or social media tools for example.
  2. Be tracked and analyzed while doing that.
  3. Be contacted when the company becomes aware of an event or occurrence that needs attention - through workflow and business rules.

This would be in conjunction with the traditional operational capabilities that CRM has always provided.

The Vendors - Close?

I'd say if I had to pick the "purest" CRM 2.0 application I've seen it would be Helpstream, which, technically is Customer Service 2.0, not CRM 2.0 which of course, now that I think of it, makes it "not pure."  But it does, for its particular customer-facing slice, what a CRM 2.0 application needs to do. Provide operational and transactional capabilities and combines them with social functionality, ties it all together through its business rules, workflow and analytic engines in a way that provides an extended benefit to both the customer and the company using the applications. Recently, Helpstream found that 17 percent of the customer service issues that their clients had were being solved by community members, not agents or knowledgebases.

Oracle's is the one that is the most enigmatic. They call what they have Social CRM, and when it comes to their mobile marketing application it most definitely is. This is an iPhone application that is being done in conjunction with L'Oreal that not only allows the iPhone owner (BTW, the Kindle app for the iPhone ROCKS!) to take a look at and purchase products but also to tap into the community knowledge about those products as an integrated feature of the application. Plus, of course, rating those products and commenting on them. It looks slick and does what you also would expect of a CRM 2.0 application - it extends the company's value chain to the customer and incorporates the customer into the pores of that value chain in addition to allowing them to tap the unstructured information that is out there for the picking on the web.

Would I call the Oracle Sales Prospector, Sales Library etc. applications Social CRM? Not really. They are designed for sales person collaboration (and other appropriate parties) so that the changes of sales success are increased by whatever multiples they can be.  But they are not built around external customer engagement but, instead a model for employees and perhaps partners.

While the jury is still out on SAP's CRM 7.0, my initial take is that this begins to approach CRM 2.0 a bit more closely than any application suite I've seen, but still veers toward an Enterprise 2.0 approach resembling (though not identical) to Oracle's - aimed at the supporting the company's interactions with the customer through the use of social tools, but not actually engaging the customer in the interactions.  They have sales and marketing down pat so far but not an integrated customer service application that I've found - though they do have, apparently separately, the customer service application that uses sentiment analysis, business rules, workflow and Twitter to follow and flag customer service-relevant chatter going on via Twitter. They also have an integrated community strategy - though its not an application strategy that is driving the creation of new tools that might give this a more CRM 2.0ish coloratura. They have a location-aware, context-aware mobile sales force automation application for the Blackberry.  So they have a strong leaning in the direction. I'm going to withhold final judgment until I do a deep dive on the products sometime in the next month or around Sapphire in May. has integrated their into the platform so that they have a framework for CRM 2.0 development but their SFA application combined with the AppStore etc. creates an intriguing but also not-there-yet set of possibilities for a true CRM 2.0 suite.

From the Social Side

We're also seeing claims of Social CRM from the social side, as they've realized that CRM is a good market for them to be in because its mature and there is a lot of money in it still AND that their products are part of the customer engagement strategy.  Companies like Radian6, a very high caliber social media monitoring tool is claiming "Social CRM" here and there, but really isn't - though their application is of a high enough quality on its own to not need any claim.

Social Software + CRM Software = CRM 2.0 Software?

Where we are seeing what could loosely be called Social CRM or CRM 2.0 is in integration between the CRM vendors and the social software vendors. So for example, Atlassian integrates with, Siebel, and SugarCRM; IBM's Lotus Connection suite integrates with iEnterprise's CRM; and Neighborhood America, the social network platform integrates with

This reflects a recognition that CRM 2.0 software is, as a standalone suite, deficient.

Does It Really Matter?

That's the 2 billion dollar question.  Does it really matter or not that we have CRM 2.0 software?

The answer?


It doesn't matter if the fully integrated suite of CRM 2.0 products has been produced by a vendor somewhere now, somehow. Not as long as the capacity to combine traditional CRM with social tools exists in a less than onerous way.  Which it does.

Companies like Oracle,, and SAP may not be there entirely yet, but who really cares?  It just isn't that big a deal.  If these companies and others deliver the right functionality needed for a contemporary business environment and If that functionality  provides businesses with the tools they need to engage customers which fulfills a CRM 2.0 strategy, then I say - good for them. What matters is that they produce what a business needs.

This is a new world that we're all navigating and while I'm sure everyone in the universe including me is highly opinionated on where its going or whether or not the vendors claims are true or false and their positioning accurate, most of that is just talk that doesn't deal with the real question - which is, does the vendor deliver what the businesses specifically need? Frankly, the businesses with the need, should do the due diligence to find out. Marketing claims are claims, not fact.  Fact finding is up to the practitioner. If they find the vendors less than honorable, then don't use them. Tell others. But do the work to find out.

Conclusion, Anyone?

So. Let's recap.  Whether Oracle is actually providing Social CRM or SAP's CRM 7.0 Suite is really CRM 2.0 is a matter of trivial importance - not one to be debated big time. What we do have is an identifiable CRM 2.0 strategy that is built around a customer-controlled ecosystem and designed to engage customers. That much exists. CRM 2.0/Social CRM as a fully realized application suite doesn't exist yet but the integration in that direction is underway - though at an early stage. So don't go expecting to buy something "best of breed" when the breed barely has its name straight.  Don't worry about what the software is called - CRM 2.0, social CRM, CRM 1.0, SFA, EMA, Call Center, whatever. That's not what matters. What matters is does it do what you want it to do.  Period.

Does it matter? Any thoughts? Let me know.

Topics: Enterprise Software, Software

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  • what is CRM?

    After reading first two sentences i give up on article
    • Customer Relations Manager 2.0

      Every company should have its own philosophy.
  • RE: Do We Really NEED CRM 2.0?

    Great post. I really think it doesn't matter whether one vendor is able to provide the complete "CRM 2.0 solution". Similar to closed-loop marketing, the productivity comes, IMHO, from making the "old digitalizaton" work with the "new digitization". During the last 40 years most of the effort has been on digitizing operations within the company's four walls (in addition to productivity software, etc.). Now that this is more mature, the focus o digitalization is outside the four written above, in this case letting the outside customers/prospects reach you. The productivity comes when you have both worlds talking. Let's not even get into the cultural shift that needs to take place for CRM 1.0 to work and, now, the titanic shift for CRM 2.0 (compared to old ways of doing things). :)
  • CRM doesn't mean to be un-social, it's just designed that way

    Paul, great post. Well balanced and thoughtful.

    As you know, I started in 2000 with the premise that CRM is a business strategy that balanced creating value for the enterprise by creating value for customers.

    Or, said more simply: win/win.

    You, me and many other CRM "gurus" have preached this for years, and to be sure there are some shining CRM success stories of customer-centric businesses that lead their industries.

    And yet, like or not (I don't), CRM has settled in as a brand in people's minds that means "internal automation designed to extract more value from customers." Yes, that's important, but it's not really about the customer, is it? For most companies (not all) CRM is about marketing, selling and managing what the customer will spend, not about delivering a great experience, creating value or really engaging. You know, having a real relationship.

    That's why we changed our site name to CustomerThink in 2007. What the market thinks CRM means falls far short of what it could/should mean.

    Despite your evangelism of CRM 2.0 as the socialization of CRM, I'm afraid that it really is just "lipstick on a pig." Because you can't put a thin veneer of "social" on a CRM app or market it that way and change much of anything. Although it may sell a few more CRM seats for Oracle and others (see

    Bob Thompson
    Founder, CustomerThink
  • RE: Do We Really NEED CRM 2.0?

    Great piece Paul.

    I just finished a phone call a few moments ago with a CRM vendor and we spoke about Social CRM as the future of CRM. I have already blogged on it being "the perfect business application". And what could be better? Your customers maintain their own data on a system you use to interact with them; and you can learn stuff about them that they would never ever tell you directly but are happy to share on social networks. Who could argue that this doesn't crap all over the half baked CRM 1.0 deployments that most companies struggle along with now?

    I am less sold on social media being the channel through which all communication is done -- why limit yourself to only one medium? -- but the wealth of data you can mine with the full participation of your customers through social media is absolutely staggering. When calling a customer, why would you NOT want to know not only their accurate contact details -- often a big ask of CRM systems today -- but what they are blogging about, what products or companies they are fans of, what they tweet...? Preparation is everything in moving customer contact forward and that much information to hand ahead of a call is way beyond what most companies can make use of today. As well as sales and customer support using thsi information, think of how better targetted marketing could be? John Wannamaker said "Half the money I spend on advertising is wasted, but I don't know which half" but how often do you hear it repeated? Social CRM could consign that quote to history.

    The challenge is what social media the CRM systems tap into. It may be corporations want to build their own social networks, but until unified login is more widespread they'll always struggle for acceptance against their mainstream competitors. But which of those to tie up with? Well Twitter for almost everything; Facebook for consumers. Companies selling B2B have it harder, as LinkedIn leads business networking in terms of numbers, but a profile is a personal brand page; there isn't so much company data to mine within it. Also people post on LinkedIn what they want prospective employers to read, not what is useful data for potential or existing suppliers.

    I am absolutely determined CRM 2.0 will success and I am already in discussion with CRM vendors about linking their systems to our sales lead and business referral network. I didn't expect to see WeCanDo.BIZ innovating in this area, but I share your view Paul that in spite of the might of some CRM vendors, they seem clueless as to how to move forward with the next big innovation in their own market.

    More from me on this over at ZDNet UK:

    Ian Hendry
    CEO, WeCanDo.BIZ
  • RE: Do We Really NEED CRM 2.0?

    Of course we do! But, it's an evolution based on the new things swirling around customer engagement. You quoted companies like Radian6 but they are really just monitoring (counting like a press clipping service for online content) and do not deliver on the 2.0 reality of understanding. Players like Oracle and SAP are delivering far more value and preparing for the ultimate arrival of CRM 3.0.
    • NOT CRM, but not just newsclippings

      Steve, I agree we need CRM 2.0, but at the same time I don't denigrate the value of the social media monitoring tools either though they are not CRM or CRM 2.0. They are invaluable for sale, marketing and customer support because they give us actionable intelligence that, combined with the CRM transactional data, provides the customer-facing folks with a much richer view of who the customer is - as an individual. To even compare Oracle and SAP with Radian6 is actually neither a fair comparison nor a useful one. They can complement each other which is precisely the value of CRM 2.0 when it comes to technology.
  • RE: Do We Really NEED CRM 2.0?

    First, thanks to Paul for a great post.

    We definetely need CRM2.0, the aim of the 2.0 version of an enterprise's CRM strategy should be to engage the customer (as rightly pointed out here). However, customers come in 'different varieties'. It may be correct to say 'Each cutomer is unique', hence having a 'customer-controlled' CRM strategy might not be possible. Also, for enterprises to change their products/services as dynamically as the theme of content on Social Networks might also be a difficult proposition.

    I believe, CRM2.0 should have more to do with an organization adapting to the demands of the customers by reorienting to cater to these demands (offering innovative products/services to satisfy these demands). Social Networks may be used as one of the means to 'gauge' the pulse of the customer community.

    • So Right

      I can't say more than you are SO right. I agree. The only thing I would add is that the company has to be mindful of their own business plans to determine exactly how they are going to adapt.
  • The great thing is not to P off customers.

    Most customers don't want a relationship with their suppliers. They just need to know what is for sale, how much, and how to get it. Accurate websites - not partial stock but the whole stock listed. And good search facility, and good photographs. Most people hate salespersons and junk mail, which is all we seem to get from CRM systems.
  • Great epecially if it doesn't add to the cost

    These are wonderful features to add to existing CRM implementations especially if they can be priced reasonably, like few cents more than what it costs now.

    Otherwise, pass. Mash-ups, anyone?

    Alain Yap
    Morph Labs
  • RE: Do We Really NEED CRM 2.0?

    ?This is an intriguing discussion that does not have one simple answer. CRM 2.0 or social CRM continue to evolve as consumer demands change and require better service, regardless of which channel (chat, email, phone, web, co-browse, communities) they choose to engage with. The goal of any CRM provider should be simple; help companies engage with their customers. Many CRM vendors get caught up in ?what should our strategy be around social CRM? before actually listening to what functionality will help customers the most.?
  • Yes, CRM is the need for the hour

    Customers are the most important resources of any business.
    A CRM system helps you stay in touch with your customers'
    needs. CRM best practices should help you stay in tune with
    those needs and measure customer satisfaction.

    To know more about CRM,CRM vendors,Reviews visit
    <a href= </a>

  • RE: Do We Really NEED CRM 2.0?


    You're right, as long as it delivers what the companies needs. Don't tell anyone, but there are probably businesses that engage their customers just fine without a bunch of new software tools.
  • Are we reacting or leading?

    Great post, Paul, and thanks for the mention of Helpstream.

    There's a full spectrum of perspectives out there on the role, desirability, timetable, and delivery (strategy, technologies, etc.) for Social CRM.

    I like to step back and understand what problem an organization wants to solve as well as anticipating what new problems organizations are likely to face.

    The Social Web has changed the calculus of customer satisfaction, how buyers inform themselves to make decisions, and how brands communicate their strengths and establish a mindshare. The degree of change and impact is a function of industry, customer demographics, and a whole host of things, but that change and impact are only accelerating for every single business. For some it is already huge, for others, that day is yet to come, but everyone can probably measure some impact already.

    Organizations need to decide when the change will affect them, how strong the impact will be, and what they want to do about it.

    Are we going to take a "minimize the risk/cost" view and wait to react, or are we going to seize the opportunity for our benefit and show leadership?

    Each organization needs to decide, and the decision coupled with how fast the change overtakes their world will dictate how vigorous the response needs to be and when. That decision will also carry with it profound upside if it is made well, and some risk if it is poorly made. Therefore, it behooves everyone to think about it carefully and not just let things "happen."


    Bob Warfield
    CEO, Helpstream
  • SugarCRM is the best open source solution for CRMs

    I just pulled mine out of the box and it works awesome. I have to thank Brian at for customizing and helping my organization.