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Issue Date: February 2008

Will Web 2.0 give birth to a CRM monster?

February 2008
Angela Eager

A new generation of CRM is in gestation, fuelled by the 2.0 phenomenon.

But will the birth result in a friendly feline or an unpredictable monster?
Changes in consumer behavior, business efficiency drivers, and technology have led to the reality of Web 2.0. Characterised by user-generated content and the use of the web as the platform, Web 2.0 is being manifested through social networking sites, blogs, forums, wikis, RSS feeds, webinars, application mash-ups, and so on. With many of the new initiatives originating in the consumer web world, the challenge is harnessing them to the business CRM environment, and this is fuelling the concept of CRM 2.0.
Many organisations and enterprise application vendors are looking to graft Web 2.0 concepts and technologies onto classic customer relationship management platforms and strategies in order to engage and involve their customers in new ways. One of the objectives is to create a collaborative customer experience that makes customers feel that they are an important element in the business relationship. Businesses are trying to learn to communicate in the manner the customer wants, to move away from the scenario where the customer is just a target for the business, and toward a situation where they are engaged and their activities become the driver for the marketing process.
This approach has emerged in several guises before: in the original CRM promise and the promise of 1-2-1 marketing, neither of which was particularly successful. The difference this time is that the power balance between organisations and consumers has shifted. Despite the rhetoric, previous initiatives perpetuated the idea that the organisation controlled the relationship, and interactions were essentially one-way.
The use of the web, the rise of user-generated content, and peer-to-peer communication via the web means the organisation can never be fully in control of its relationship with its prospects and customers again, or how its brand is managed and perceived. So the first step in helping ensure that CRM 2.0 emerges as a baby instead of a monster is the need for organisations to understand that the use of 2.0 in any form will result in less control, with control being replaced by varying degrees of collaboration. More disturbingly, the web and peer-to-peer nature of 2.0 forms means the situation cannot be avoided simply by ignoring the issue. To avoid the monster scenario, organisations need to take hold of 2.0 and buy into the culture of participation.
The outcome comes down to understanding what is possible and what is appropriate. Put out a closed device for instance and customers will hack it. It is better to invite customers to participate (collaborate) than sow the seeds of dissatisfaction and defection. Companies as different as BMW and Lego have discovered this.
Collaboration should be a win-win situation with customers getting what they want, how and when they want it, and businesses benefiting from continuous improvement enabled by collaboration between all parts of its customer ecosystem, where the experience and insights of one customer, partner, or employee benefit everyone. But it is important to remember that although an organisation can guide what happens, it cannot absolutely control the outcome.
Social networking technology is emerging as a feature in CRM applications and it is easy to see how it could be viewed as a monster-in-waiting, but with the right approach it can be used as a business tool. In a B2C environment it could be perceived as the consumer version of business intelligence because it can be used to provide organisations with a consumer-facing platform to discover what they do not know and did not know they should ask.
In addition, as customer management is all about relationships and communication, it can provide a new method of communicating with and understanding, not merely identifying, customers. It can also be used in B2B context, within and between partner organisations to uncover the business equivalent of 'six degrees of separation' for example. Used in this way 2.0 technologies can be tamed.
Whether B2B or B2C, 2.0 technologies and concepts mean CRM functions like marketing are becoming more like a series of conversations with customers. What is key is that the customer has to be engaged, not directed, and that requires genuine collaboration between the company and customer at the peer level. That way 2.0 can be birthed and develop as a friendly feline not an out of control monster.

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