For years, the central software tool for maintaining relationships with prospects and customers has been the Customer Relationship Management (CRM) system. Recently, Customer Data Platforms (CDPs) have also joined the mix.
Now, a group of data-oriented vendors say it’s time to move the CRM out to pasture.
Led by customer data infrastructure provider Segment, the group calls itself The Platform of Independents. Another nine software companies are also part of this effort, including customer engagement platform Airship (formerly Urban Airship), product intelligence platform Amplitude, conversational marketing platform Drift, marketing platform Iterable, analytics and engagement platform Mixpanel, sales engagement platform Outreach, usage analytics provider Pendo, location data infrastructure Radar, and enterprise automation platform Tray.io. More than 190 other firms are cosignatories.
The group has issued an open letter that was published this week in The Wall Street Journal. The main takeaways: CRMs are not enough to maintain customer relationships, they don’t adequately respect customer privacy, and they represent a one-size-fits-all approach, whereas customer relationships and the ability to leverage data require more flexibility and capabilities.
‘Perfect for Rolodex Era’
“CRMs were perfect for the Rolodex era,” reads the open letter. “They are not equipped for today’s digital age, where massive volumes of data about customer interactions flow directly from your websites, mobile apps, emails, kiosks, and call centers every single second of every day. Companies need to use the best technology available for each of these channels. Instead, they are often locked in to the tools and capabilities (or lack thereof) which their CRM suites provide.”
Additionally, the group says, CRMs often require salespeople to manually enter customer data, an input flow that can’t adequately handle hundreds of data touch points. A 2018 Gartner report cited by the group (“2019 Strategic Roadmap for CRM Technologies”) found that three-quarters of CRMs were built for specific departments’ needs instead of the business as a whole, resulting in siloed data and an inability to handle a full customer data stack.
Today’s world is “completely different” than when CRMs first entered the picture, Segment CEO Peter Reinhardt told RampUp via email. “Companies are interacting with customers on dozens of channels and pulling in data from hundreds of touch points.”
‘Locked into Legacy CRM Suites’
“Only a tiny fraction of customer data is held in a CRM,” he said. “You can try for years to jam your website and mobile data into a CRM … it’s not going to work. If you keep trying, you’ll just get data silos, incomplete information, and inaccurate data driving customer experiences (and, as a result, poor customer experiences.)”
“We’ve all outgrown the CRM model,” he added.
Instead, says the group, software that manages customer data should provide flexibility for the business, should be able to acquire data from any source, and should be utilized across an entire organization.
Given that CRMs have been around for a long time, and that brands have long been asking for a “single view of the customer” synthesized from multiple data sources, why make this declaration now?
Reinhardt told us that “many companies are locked into their legacy CRM suites and don’t know that there is an enormous ecosystem of independent, best-in-class tools that already exist.” These tools, he added, are “deeply integrated with each other,” and have grown from about 150 tools in 2011 to more than 7,000 today.
Born for B2B
CRMs were born for B2B customers, and were originally designed for maintenance by sales people for their clients and accounts. As late as 2017, for instance, Boston-based Zaius could claim to create the CRM-for-B2C category, because CRMs had been so closely associated with B2B.
B2B sales have a particular flow. A company that sells office furniture to other companies, for instance, manages its relationships by accounts, knows that purchase decisions are often made by committees of key people, and runs its sales on the central idea that personal relationships matter.
Even though business buyers these days have often done their homework by the time they get to a salesperson, the final leg of the purchase flow can be dependent on such factors as favors, purchase history, and how much the salesperson wants to compromise to land this account.
The management of B2C customers, however, is a vastly different task.
These days, consumers often conduct their research, make a decision, and complete the purchase without ever talking to a salesperson. When a salesperson is involved, such as asking a few tech questions about a new TV set, the interaction is minimal and often anonymous.
Data and Experiences
Automatically processing data from brand-consumer interactions is a necessary given in this age of multiple channels and big data. CRMs typically were not designed to handle such volumes or to handle unstructured data like call center transcripts or social media posts.
Instead, the Customer Data Platform in particular has arisen as a system that was built from scratch to assemble and manage customer and prospect profiles from many sources of structured and unstructured data. (Segment now bills itself as a CDP.)
In fact, the pendulum is now shifting the other way, as business-focused CDPs are emerging for a category that was originally born to handle consumer interactions.
Additionally, the Platform of Independents group points to the need to manage customer experiences, which can be a massive management of data when conducted for real-time interaction.
‘A Much-Needed Conversation’
“Today’s consumers demand consistent, personalized, in-the-moment experiences across touch points,” Airship CEO Brett Caine said in a statement accompanying the group’s announcement. “Removing CRM silos is critical to grow brand advocates and champions.”
CRMs, however, were never designed to support real-time experience management, a demanding task that can challenge even CDPs.
The broader industry needs to change how it approaches customer experience, Reinhardt said, and the intent of this declaration is to “start a much-needed conversation.”
“There are so many businesses out there that don’t even know there’s an alternative to the CRM suite they’re currently locked into,” he added.
CRMs are “a great fit as a sales tool,” he said, but CRMs “as the centerpiece of a tech stack is no longer the right approach.” Instead, the group promotes best-in-class tool providers, such as Iterable for email, Amplitude for analytics, Segment for CDPs, or Drift for chat.