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Gartner CRM summit
London, March 2007

The Gartner Customer Relationship Management summit 2007 attracted once again a truly international group of attendees comprised of senior managers and consultants/ specialists representing sectors as varied as telecommunications, banking, healthcare, digital media, travel, automotive, general retailing, financial service and airlines. The over-arching theme of the conference was that with customers tuning out of mainstream media, relying instead on recommendations and reviews from peers, and with the current state of abundance where customers already have what they need and much of what they want, customer insight is increasingly critical for customer engagement.

The workshop started with general welcome from John Radcliffe, Gartner's VP for Research, and this led to a very informative keynote presentation from Scott Nelson, Managing VP for Application Strategy and Governance.

Gartner's predictions for the immediate future (2-5 year span; anything longer they discount as 'futurology' and not researchable with precision) were as follows:

• large scale, long term CRM initiatives will be re-visited and approved in 2007;
• there would be a revisiting of the 'build your own' CRM solutions by organizations in 2007;
• CRM initiatives with a 'single view of the customer' will increase two-fold in 2007;
• during 2007, spending on open-source CRM will increase three-fold;
• through 2008, vendors would move to SOAs (Service Orientated Architectures);
• also, and very revealing, their conclusion that most companies will fail to understand the value of customer feedback and continue in 2008 to throw away these insights.

The core of Scott Nelson's presentation was the trend that their research is revealing against what they define as the 8 building blocks of CRM. A key strategic assumption that they assign a 90% probability is that by 2010 most customer-centric organisations will be moving from providing customer management tools to their employees towards putting these tools directly in the hands of the customer. He also reviewed the extreme fragmentation of CRM applications in the value chain and the need for a balanced, heterogeneous approach; 'stay with the big picture' was the message for CIOs. He outlined 4 guiding principles for successful customer-centric strategies:

• extend the depth and breadth of relationships to achieve a larger share of the customer relationship (editor: coalitions and ever broader brands such as Tesco Plc do this very well generally);
• reduce delivery channel costs and create barriers to entry;
• reinforce the brand via more interactive media;
• create customer satisfaction and loyalty (editor: easier stated than achieved?).

As a follow-up to the presentation, the Wise Marketer interviewed Scott Nelson, who made the following observations regarding the medium-term future for CRM:

"CRM research grew out of the combination of many other strands of research that large corporations were undertaking in the late 1990s. My orientation has always been business user than the IT user."

"IT's role is to control and govern; the business user is concerned about producing results. The key is for business users to view IT as a strategic enabler. This makes IT a bit more flexible and business users seek assistance; then a bridge gets built."

One of the recurrent themes of all the Gartner speaker presentations at this conference was what they define as the 8 building blocks of customer-centricity. These are listed as Vision, Strategy, Customer experience, Organizational collaboration, Processes, Information, Technology, Metrics. The blocks are generational in context and most organisations are more advanced in some areas than others. CRM as a 'journey, not a one-time initiative' is frequently repeated by Gartner.

We asked Scott to explain this in more detail during the interview.

"The 8 building blocks came from research on success and failure. Every time any organization was successful it was apparent that the 8 building blocks are consistently present in their CRM applications. Some banks and financial services organisations are already at 4^th generation stage. These businesses generally have a lot of data available, they have good control of all of their channels. Firms that are in retailing have less control and find it harder. They only have to compete in their own industry to be ahead of the pack even if they are behind other players in other markets."

We also explored the issue of specific skills shortages in CRM. The Gartner view in this area is that the shortage tends to be sporadic, with better supply in cities such as London or New York, but that a general shortage in CRM will persist for the next 18 months.

He developed this theme further by also stating that the senior management of many organizations just do not understand the world of communities: they have a culture gap: they do not understand a world of consumers who engage with blogs, routinely play with 'second life' and build communities. Only their most recent hires direct from university would understand this space.

A specific problem area in CRM applications is that Gartner see a gap between the massive players such as Oracle and Microsoft versus the innovative but small-scale suppliers. They believe that it will be essential for mid-size vendors to grow and supply sector-specific solutions to the IT departments of large corporations so as to accelerate the maturation of CRM.

We asked Scott what single wishlist action he would recommend to the CEO of any organization seeking to deliver better customer service and loyalty.

"Appoint at board level a CCO (Chief Customer Officer)" was his immediate and definitive response.

During the conference the Wise Marketer spoke to and reviewed the products and applications of many vendors. One discussion with that provided a different perspective was with Colin Rickard, the MD of Dataflux, which is a specialist data cleaning, integration and compliance software solutions provider to the fast growth area of CDI (Customer Data Integration). Dataflux are owned by SAS Institute but allowed to operate independently. Colin talked about the issues of data being those of yesterday, today and tomorrow: much of what gets written in CRM focuses on customer-centric delivery in a forward-looking future 'nirvana'. He takes the view that 80% of the ROI from CRM investments emanates from a backward focus on the logistics of clear operational efficiency.

One of the most thoughtful insights from vendor was offered by Jason Mittelstaedt, the VP of Marketing at RightNow Technologies. This is a fast-growing supplier of customer-driven, real-time applications that are open source and on-demand. Jason spoke at great length about technologies that 'empower the consumer', about developing internal processes to let the customer manage the business. This is and sounds very scary stuff to the average MBA educated, cost-focused and strategy planning CEO. He cited in defence of his views the fact that Time magazine had voted the typical consumer 'Man of the Year' and that many organisations just do not understand how fast their customers and markets are changing. "Marketing in the future will be self selecting. 65% of customers stop doing business with companies due to a bad experience of a product or service and 27% will never return" was his way of defining this trend.

The theme of customer empowerment was addressed with typical gusto by Martha Rodgers of the Carlson-owned Peppers & Rodgers Group. Which is harder for business to produce: products, services, capital or customers? she asked in classic rhetorical fashion. The answer is the customer, stupid! Customers are the limiting factor; as she graphically stated, without customers you do not have a business, you have a hobby. The idea that analysts should look at the ROC (return on customer) figures instead of a laser-like focus on the ROI figures is not a new theme for Peppers & Rodgers but the scale of the mountain to climb that most business wishing to be more customer-centric is evinced by the fact that this metric is still rarely referenced in most CEO/ CFO City briefings. Only a few large organisations such as Tesco plc seem to have grasped this truth in the context of 21^st century marketing.

As Scott Nelson himself remarked at the opening of his session, he enjoys the London event more than most Gartner conferences since it tends to attract a mix of marketing and IT professionals, which is unusual for the industry. As organisations globally struggle to keep pace with fast evolving consumers who are increasingly dictating the terms under which they will transact with suppliers, a mega-billion dollar industry has evolved around CRM. This has historically been the domain of CIOs and IT professionals who have made investment decisions around the hardware and software used to understand the customer flows in their business. The entire feel of most conferences in this CRM space are technical, 'nerdy' and positively discouraging to the marketing departments which are using some of this technology to try to understand the 21^st century consumer. Gartner goes out of its way to try to bring to this space a research-based and strategic perspective. It even has the self-depreciating honesty to include in the press pack briefing a DVD guide to the conference events that has as a headline item a 54 page list of 'common' Gartner acronyms! Yes, you did read that correctly: a 54 page guide.

The conference ended with another thought-provoking presentation given by Prof Patrick Barwise from London Business School, who is well known for the book he co-authored in 2004 called 'Simply Better'. This built on a researched hypothesis that what customers wanted most was simply better service not more complex products or choice. His presentation to close out the conference was a sample of the work that he is now undertaking for a new book due out in 2008, 'Customer Insights, beyond market research', which will explore the way in which consumers are now moving to take even greater control of the supplier/ customer relationship and punishing heavily those organisations which seek to control the relationship with techniques from the past.

This was a typically professional and thoughtful summit from Gartner that reviewed and debated many of the key challenges facing brands in the problem of how to engage with and understand 21^st century consumers in a world of oversupply and increasing technical complexity.