Is there a missing zero in the CRM equation?

While I'm in the midst of assessing all the candidates for the CRM Watchlist for this year, I've solicited some guest posts for your reading pleasure and for the benefit of your thought from people who I think have something to contribute to the industry discussion. Prior, you've seen both Allen Bonde's piece on "small data" and Alan Berkson's piece on storytelling, both incredible and both by people with the same sounding names in case you didn't notice.

Well, I'm breaking the Alan/Allen tradition here, and putting forward something by a smart thinker and friend, who is currently the CTO and is a co-founder of SugarCRM, Clint Oram. For those of you who don't know Clint, first, you should. Second, he is a good man who always has unique takes on things roiling in his head and I am happy to say, I've been persuasive enough to get him to put one down on digital paper. 

Clint goes through something which is almost irrefutable here - which is that CRM is for the single user and there are a lot of them in the world that aren't using it yet. But that isn't the whole thing. Its meaningful beyond that.  But I'll let Clint fill you in.

Take it away, Clint. The stage is yours. 

CRM as a software concept has been around for a long time, and its definition has evolved over the years. But at the heart, we are talking about customer-facing individuals inside various organizations using software applications to acquire and support customer relationships.

And for the most part, business has been good. One need only look to IDC or Gartner’s projected growth numbers to see an industry that is expected to hit at least $30bn in revenues in the next few years. There are some giants in the industry, and some smaller and niche players. In short, we are talking about a mature market that must have penetrated a majority of its potential user base.

Right?

Well, maybe not. And to be honest, more like “definitely not.”

You see, when we talk about CRM as a multi-billion dollar business, we are still only talking about a user base of less than 30 million users of packaged CRM software. And, this would seem to be a healthy industry, and in some sense it is. However, when you look at other software markets, we see a HUGE gap in terms of today’s market penetration for CRM versus the potential.

The gap becomes ever more clear when we look at similar “relationship management” tools available today. LinkedIn, perhaps the most popular professional relationship management tool for individuals, has more than 200 million users. Facebook, clearly the largest personal relationship network, counts over a billion users.

Now, we are not saying there should be a billion CRM users in the world. But why are there not 200 million? Surely, across this planet of seven billion people, there are 200 million business professionals that interact with customers as part of their daily work?

So, why the huge gap between users of CRM and the more consumer-oriented relationship management tools?  The answer, it might seem, lies in the history of CRM design and delivery. Since CRM pre-dates the Internet, social media, etc. – it has traditionally been designed in such a way that benefits managers before the “front line” everyday users of the software. And this frankly made some sense for the first generation of CRM software: why build for the user when the decision maker is the manager?

Also, CRM was born out of relational databases which required rigid data structures, and was thus primarily viewed as a point of data capture and consolidation – not as a resource for customer-facing employees.  And, the cost and complexity of conventional CRM meant that usage was usually limited to sales or support organizations – meaning individuals inside organizations that should have access to customer insights, did not. That is why CRM has, when compared to its true potential, seen sluggish user adoption and growth for the better part of the past two decades.

On the flip side, let’s look at consumer applications like LinkedIn. They are flexible, simple, and work anywhere.  There is pretty much zero learning curve, and the value to using the system is apparent – users get more out of the system then they put in. Data is free flowing, easily shared, and available anywhere. The cost is minimal, with a freemium version providing enough benefits to ensure users stay on the network.

By learning from consumer applications and services like LinkedIn, we can see how CRM can close this gap, and fill in the missing zero that will bring the industry from one with 20 million  users to one with more than 200 million.

We believe that CRM tools MUST be easy, and built for the individual NOT the manager. Getting started should not require a week of training. Getting useful data into (and out of) the system should be seamless, and not an issue for IT. The user must get something back for every action they take in the system. Mobility should not be an afterthought – but rather systems need to be designed from the beginning to offer meaningful, intuitive user experiences across any device.

Also, a CRM system should be priced in a way that is more in line with the needs of the organization. While not every single employee may need the system, surely more than quota-carrying sales reps will touch the customer and as such should have access to the right information and history to make informed decisions, or at least put the customer in the right direction any time they engage.  Squeezing every cent out of a company via overpriced subscription licenses models is not the answer. As an industry, we need to better align value received with the price paid, and understand the true nature of CRM usage across different departments, and price accordingly.

The good news is that a lot of CRM providers are listening. Mobile and social has crept into the design process of some providers, but we have a long way to go. Only by aligning CRM designed for the individual, with proper pricing to truly equip everyone who should be using CRM with the tools they need – can we bridge this gap, and find the missing zero.