Customer Relationship Management (CRM) software occupies an immense and rapidly growing corner of the software market. But when most people hear the term CRM, they think of one small corner of the total market, sales automation. In reality, CRM is much bigger than sales enablement and pipeline management tools.
Customer relationship management is an all-encompassing business strategy that includes many teams and multiple software products that can be used to nurture relationships across the entire customer journey.
Steve Blank reminds us in his classic book on building businesses, that every company can summarize its mission in three succinct phrases: 1) build great products, 2) get, keep, and grow customers, and 3) make money from them. CRM is used in all aspects of customer relations and includes all the people, processes, and tools that go into getting, keeping, and growing customers.
Over the last fifteen years the number of software tools designed to help companies manage their customer relationships has exploded. However, the vast majority of them only focus on the “get” and “keep” parts of the equation, leaving the “grow” function in the lurch. I’ve always found that odd.
Understanding Traditional CRMs
Today there are literally hundreds of applications that can be classified as CRM tools, and the vast majority fit into one of three categories: Marketing Automation, Sales Automation, or Helpdesk Automation. If you’ve ever used tools like HubSpot (Marketing Automation), Salesforce (Sales Automation), or Zendesk (Helpdesk Automation) - or any of the hundreds of similar products in each of these categories - you know that they are specifically designed to either help you get or keep customers. And, for the most part, they are great for helping you generate leads, work deals through a pipeline, and provide support to your customer base. But, when it comes to growing your customers, none of these systems is really up to the task. Why is that?
Well, it used to be that for most B2B companies, the majority of the lifetime value of a customer was realized at the initial point of sale. In such a world, companies were well served to implement software tools and best practices that helped them find, close, and support new customers as efficiently as possible. Naturally, hundreds of service providers and software companies sprang to life to help companies do just that.
However, the subscription economy has changed all of this. Nowadays, the vast majority of customer lifetime value – more than 80% in many industries – is created after the sale. In this new economy, account management and customer success teams are responsible for guiding and growing existing business relationships.
We have reached the point where “farming” has become more important to the long-term growth and success of companies than “hunting” but the tools they have at their disposal are woefully lacking.
Enter the next generation of CRM
Farming customer relationships to generate business growth is difficult, time-consuming, and often thankless work. It takes serious research and strategic planning to truly get to know your customer’s business and uncover new opportunities for your firm. More often than not the account planning, white space analysis, key relationship mapping, customer health scoring, playbook development, and business review processes a company’s long-term success depends on live in spreadsheets, Word documents, notebooks, or worst of all, in the heads of sales and account management reps.
If you’re one of the millions of people with an Account Manager, Account Executive, Account Director, or Customer Success Manager title you know what I’m getting at. All of the really important work you do should be reflected in your CRM system, but it isn’t. Traditional marketing, sales, and support tools simply aren’t built to support the qualitative and quantitative aspects of key account management.
It has always seemed odd to me that despite the fact that nearly every B2B company has a key account management strategy, the market for account management and key account planning software yields surprisingly few options.
Fortunately for those millions of account managers, there is a fourth, emerging category of CRM software coming into its own: Key Account Management and Customer Success. I’m talking my own book a little here since Synap is one of these companies, but this next wave of CRM products is poised to be larger than the sales automation space that came before. That isn’t to say companies like Synap are going to replace pure-play “hunter” focused sales products and methodologies or expand to be all-encompassing CRM solutions. Quite the opposite, actually.
All-in-One is All-in-Done
Neither single-function, or all-in-one CRM platforms are capable of giving businesses all the tools they need to manage the entire customer lifecycle. Businesses are too dynamic and the needs of individual teams - marketing, sales, support, services, and others - are just too varied for any one system to handle them all. As a result of this, we have witnessed a shift in the way companies select and implement software tools over the last several years.
It used to be that software purchasing decisions were made almost exclusively by IT after analyzing the business requirements of individual departments. Under that model, it made sense to try to cram as much functionality as possible into a single application from one vendor. But nowadays, the buying decision is being made by the teams themselves. Marketing, Sales, Services, and Support teams are going out and getting the tools that work best for them and IT is tasked with making sure all those tools can talk to each other.
Gartner summarized this concept best in a November 2016 piece on software adoption where they argue that, “by 2020, 50% of enterprise CRM initiatives will employ multiple integrated clouds, up from 20% in 2016.That report goes on to assert that since late 2015, the management of the customer journey has become the number one priority for CEOs.
It all comes down to the customer
This is a big deal for companies because when each of their customer-facing teams are free to adopt the best-of-breed tools for their functions, they will get even better at selling, servicing, supporting, and satisfying their customers.
Combined with the emergence of powerful key account management tools for account executives it's an even bigger deal because it means they finally have access to modern technologies that can help them develop and execute on customer success plans.
All of this is great for customers because it means that it will be easier for their trusted vendors to engage more meaningfully in their journey.
Regardless of the industry we work in or the role we play at our companies, the key to managing the customer journey lies with our CRM strategy and the tools we use to monitor and improve it. Finding and adopting the right tools for each of our important jobs to be done is essential to the long-term health of our customer relationships and the success of our companies.
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