CRM has failed? I am so tired of hearing that

No matter what SAP's press release says, CRM isn't a failed experiment, it's not dead, and it continues to thrive. Paul Greenberg answers the latest barb thrown.
Written by Paul Greenberg, Contributor on

There is this continuing drone I hear time and time again from vendors who think that they are making some major, market-shaking change that goes like this:

“CRM has failed. We are the leaders of the new (self-interested fill in the blank whatever).”

I’ve heard this for over a decade from multiple technology vendors who are changing their messaging and their approach for one reason or another. Each time they declare “CRM is dead, has failed, etc.” and then, of course, outline how they are taking things to the next phase.

The latest pronouncement comes from, of all places, SAP. This disturbs me more than most because I’ve been a believer that SAP, since 2007, has been building some very good CRM applications for their suite, including their still under-publicized field service application, which I consider best in the market.

I’ve also believed that SAP is one of the most innovative companies in the technology world. For example, SAP was the first I ever ran across that was co-creating products and services with their customers on a large scale; they were the first I ever saw to have a social listening product — T-Rex — which they never monetized; they developed the most advanced communities of any technology company, particularly the 3.5-million strong SDN. In other words, it is a progressive and smart company.

About a year ago, I saw SAP shift their messaging from customer experience to customer engagement — a wise move, since customer engagement, as a market, promises to be a bigger market than CRM. In fact, I think that it will subsume CRM in the next three or four years. Customer engagement, unlike customer experience, promises to be a huge technology market that is just beginning to realize its potential as it evolves now from its currently nascent state. I’ll go into the reasons why in future blog posts.

But at Sapphire, their annual conference — perhaps because of the prominence of the Hybris ecommerce platform acquisition — SAP changed its messaging from customer engagement to customer engagement and commerce, which, whether they intended it or not, denigrated customer engagement to something transactional. Don’t get me wrong: There is a transactional component to customer engagement — the direct sales are a result of customer engagement.

But there is much more to it than just that, including referral sales which are indirect; influence of customers on other customers to buy; and the impact of subject matter expertise on the customers decision to buy — all of which touch the surface of what comprises customer engagement. So the transactions are but a part of the composition of what Dr. V. Kumar calls customer engagement value. Adding commerce to the messaging reduces that value to transactions.

Okay, I can live with that. But then yesterday, I see in an SAP press release the following statement:

"The CRM experiment has failed. Today's empowered customer requires a new model for engagement. In a world where the consumer journey is fragmented across a range of different channels, devices and touchpoints, it is more critical — and challenging — than ever for organizations to provide highly consistent and personalized brand experiences that engage and delight customers every step of the way.”

If I hadn’t seen this quote, I wouldn’t be writing this post. I am truly sick and tired of seeing this “CRM experiment has failed” theme from varying vendors over the years.

I find this interesting because:

    1. It is an incredibly inconsistent statement. If they truly believed what they said, they’d jettison all their applications that are CRM related — like sales, marketing and customer service. They’d stop selling them the day their "CRM has failed" statement came out. Why continue on with a failed experiment or try to sell what is an unworkable capability? How does that honor customers? Yet, I don’t see nor have I ever seen that ejection of applications happen a single time. They go on selling sales, marketing and customer service.
    2. The pronouncements imply that customers are stupid. If this is a failed experiment, then why did customers spend $22 billion on it last year and are expected to spend $36.7 billion in 2017 according to Gartner? Why does CRM technology revenue increase year over year? Wouldn’t customers realize that it failed and stop buying it? Are they that stupid that they can’t see the failure in front of their own faces? Hardly. It has neither failed nor is it an experiment nor has it been either failing or experimental for well over a decade.
    3. Systems of engagement will never, ever replace systems of record. I heard a senior executive at a large software company declare that they will a few years ago, in a moment of unbridled enthusiasm about systems of engagement. But that’s like saying hamburgers (Kobe beef of course) will replace fries. Sure, you can eat either one separately, but they taste so good together — and they are entirely different in what they are. CRM has, at a minimum, been the system of record for so many companies its beyond numbers (well, I just don’t have the numbers handy). They are where the data is stored for transactions and interactions. Systems of engagement are the medium that allows customers to interact with the company. To put it really simplistically, the data gets captured from the interaction (via the system of engagement) and is stored for future use in the CRM system (system of record).

If I look at this SAP pronouncement in total, I agree with a lot of it. I think empowered customers do need a new model for engagement. I think that a consistent omnichannel approach that enhances personalized brand experiences that engage customers is exactly what has to be done. I don’t think that they have to be delightful every step of the way. They have to be good enough every step of the way since "delightful every step of the way" means that the bar for “delightful” continually gets raised and will bankrupt a company since “delight” is different for every customer. But the spirit of the statement is right.

However, this doesn’t give SAP the license to proclaim CRM a failed experiment. There is too much evidence to the contrary as I hope the above at least indicates, if not proves.

CRM is evolving and — in a few years — it will be what it has been for the last decade — the operational and transactional technologies needed to drive customer engagement. As such, it will be part of a broader engagement market and part of the decisions when figuring out the technologies needed to run business. CRM, which a year ago was still Social CRM, was the bridge that led to the evolution of customer engagement technologies and put the other pieces of engagement technology, like customer journey management, enterprise feedback systems, gamification, etc., into play. CRM will, most likely, be part of a customer engagement ecosystem in a few years.

As of now, despite their bold pronouncement, neither SAP nor anyone else has the portfolio yet to support a true customer engagement platform and suite. Most likely, no one will have a complete platform and suite. But a customer engagement ecosystem is possible and the companies that want to compete on the biggest stages will realize that and put together partnerships and products that will comprise that ecosystem.

It will include CRM.


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