Social CRM and disrupting analyst business models

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I recently had a chat with R “Ray” Wang of Altimeter Group about what we’re up to and our respective business models. Among other things, Ray said that Altimeter wants to work in new spaces that others aren’t covering. ERP is boring. But Social CRM, for example, is on the leading edge of where value is being created, but traditional analyst firms are not working.

As a recent entrant to the market (the firm was founded in July 2008 by Charlene Li and now has 7 partners), Altimeter has the flexibility to use different approaches to the existing large firms. In this case, instead of charging in the thousands of dollars for a cutting-edge analyst report, it has launched Social CRM: The New Rules of Relationship Management for free, enabling anyone to embed it on their own site, as I have below.

While it is certainly a high-value report, it is clearly no substitute for detailed and context-specific advice on implementation. Altimeter will no doubt get consulting engagements from this report, which works for its current business model. However this places pressure on the existing large firms. Clearly Altimeter or other small firms cannot provide the scope of coverage of the large firms, so cannot replace them, but they can take the most interesting and highest-value work.

Part of this model is the ability to hire the most talented analysts who are getting tired of the drudgery of work in the major analyst firms. This hilarious excerpt from a post by analyst analyzer SageCircle, Will there be “Altimeter envy” among some analysts at the largest firms? , points to the danger signals you need to look for:

If departures do increase, this will be something that will concern both analyst relations (AR) professionals and research consumers at both enterprises and vendors. How will you know if an analyst has picked up a case of “Altimeter envy”? In many cases there will be some obvious signs that you only need to be looking for such as:

* Conversations with analysts always seem to turn to the analyst’s growing preoccupation with social media

* LinkedIn connections grow dramatically

* Twitter updates, follows, and followers increase significantly

* Personal blog is launched or expanded with official firm blog posts decreasing

* Community is launched using a free service with invitations going to end users, vendors, and even competing analysts

* Promotion of the analyst’s social media links becomes pronounced in email signature block, presentations, and verbally

I recently wrote about The power of personal brands in strategy and attracting talent, pointing to how this kind of thinking resulted in Forrester banning personally-branded research blogs. If these approaches continue, the most talented will all flee the large firms and build boutiques.

Coming back to the theme of Social CRM, this is a topic of special interest to me, having worked extensively helping large organizations develop their client relationship capabilities, and also having been actively engaged in the social media space for the last eight years.

I recently did a keynote on The Future of Sales is Social. Many CRM vendors are adding social bells and whistles to their suites, and calling it Social CRM. However social CRM can and should be more bold, reworking how the organization builds, maintains and develops its external relationships. One of the six recommendations in the report is:

Complement existing CRM processes. Align the Social CRM use cases with existing

CRM strategy. The move to social channels adds a series of new customer interaction

models that must be integrated into existing customer facing processes. However,

Social CRM does not replace your overall customer strategy. In fact, you must

augment and in some cases redesign your overall CRM program to support new

models.

Finally, demonstrating that Altimeter doesn’t just talk about social media, they have established an open Google Group on Social CRM: http://groups.google.com/group/social-crm-pioneers , starting off with the thorny problem of ‘How do you define Social CRM?’, referencing Paul Greenberg’s definition.

  • Ross,
    You know that the basic issues are organizational, regardless of the label used in the technical consulting approach (E 2.0, SCRM, SBD, etc.) The established vendors aren’t going to face down the issue, although Mike Gotta does get close in his work.
    The one thing I’d be interested in hearing from you about is how SCRM in particular can work when most of the large, say Fortune 500, firms outsource their customer support and a large part of their telemarketing. Any thoughts? I just don’t see much of a way to work through the cultural issues in that kind of ecosystem.
    Regards,
    Larry

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  • What a great question Larry!
    Of course there are no easy answers, but some quick thoughts:
    * This kind of issues puts into sharp focus the critical (and rarely well-addressed) question of what resides inside and outside the organization. Many aspects of CRM as traditionally practised can in fact work outside; when you get to deeper customer engagement that becomes a lot harder. It is certainly possible to segment the more wholistic SCRM into will work in different configurations.
    * The only way much at all can function well outside is with strong cultural alignment between the organizations. I’ll soon put up an excerpt from Living Networks in which I discussed how Convergys had worked on client alignment to the point where its staff identified more with Convergys’ customers than their actual employer.

  • Ross,
    Nice insights. I must disagree with you though, on one point: your view that analysts aren’t covering social CRM. I can’t think of any analyst firms in the space who do *not* cover it!
    Altimeter Group brings its own perspective to social CRM trends, benchmarks and best practices. However it’s hardly virgin territory at this late stage.
    Regards,
    Barbara

  • Ross,
    Fun post!
    It is fun, because Social CRM is so many different things to so many people. Ask 5 people what is and you are likely to get 6 answers! It is one thing for small companies and another for large, one industry versus another.
    What is ‘Fun’ about the post is that there are a number of organizations that have never really done CRM, so to add on to “their current process” is a non-starter – they do not have any in place. Now, I am obviously not talking about the larger companies – or I hope not.
    What I feel is happening, and I am readying some posts on it, is that Social has created enough interest in the Customer, beyond just transactions, that companies are just realizing the power of what they already have.
    I also think that for larger companies, E2.0 will play a significant role in that boundary problem you discuss.
    Mitch

  • Our CRM Consulting company Intelestream just published a whitepaper that deals with Social CRM in the context of small businesses. It can be downloaded at http://www.intelestream.net/en/whitepapers/the-power-of-social-crm.html
    Best!

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