Collaborate to Win

By Geoffrey James

CRM, as a technology, is almost a quarter of a century old. Back when CRM was called "sales force automation"(SFA), the job of the sales professional was to carry information to the customer and bring back an order – both tasks that CRM and SFA supported admirably.

Since then, the basic nature of the business-to-business customer relationship has been changing rapidly. Today’s customers want to drive the relationship, according to Selling Power publisher Gerhard Gschwandtner.  "What works today is what might be called ‘cocreation,’ in which sellers and buyers work together to find solutions," he explains. "To be successful in the future, you will need to get your customers involved in the creative process and convince them to become stakeholders in your company."

Unfortunately, CRM as currently defined provides little or no support for cocreation efforts. What’s needed, in addition to CRM, is an entirely new set of tools and an entirely new way of thinking about how sales teams should use technology.

THE COCREATION REVOLUTION

The Internet has utterly changed the way companies buy and sell. "A decade ago, sales reps were in the transportation business," explains Gschwandtner. "They traveled from place to place, carrying boxes of brochures and sales literature and giving informational presentations. Customers saw the sales rep as a valuable resource, because the rep knew and understood the products or services that the customers needed to fulfill their business objectives."

With the Internet, customers can now get product information without consulting a sales rep. More importantly, customers can get that information whenever and wherever they want it, a much more convenient arrangement than having to wait for a sales rep to deliver it by hand. As a result, the role of the sales rep has evolved toward consultative selling, in which the sales rep seeks to become a "trusted advisor."

But customers don’t just want an advisor, according to Patricia B. Seybold, author of Outside Innovation: How Your Customers Will Co-Design Your Company’s Future (Collins, 2006). "Your customers now want and expect to play a major role in defining the evolution of your company," she explains. "They want to see their ideas reflected in your products, they want you to adapt your selling to their way of buying, and they want you to, similarly, take responsibility for key elements of their business."

There are payoffs for both buyer and seller alike in the cocreation model. It not only allows sales professionals to engage high-level customer execs from multiple lines of business and functions, but it also allows customers similar access to the seller’s executive and technical team. The end result is a closer relationship and, ultimately, a larger number of financial transactions. "Your executives gain insights and stories from working with groups of customers to brainstorm better ways to help those customers reach their goals, and these insights spawn strategic conversations around customer-impacting issues and business opportunities," explains Seybold.

WHY CRM IS NO LONGER IN SYNC

Despite the implicit promise that CRM is intended to manage customer relationships, CRM is not playing a primary role in cocreation efforts, according to Seybold. "The action primarily takes place on the Internet using other kinds of technology," she explains. "Vendors get customers and prospects involved in codesign efforts, thereby creating a broad base from which to draw collective market wisdom and, in some cases, actually setting the strategic direction and marketing plans for an entire corporate division."

CRM is out of sync with these activities because it tends to be a vendor-focused technology, as opposed to a customer-focused technology, according to Michael Bosworth, coauthor of CustomerCentric Selling (McGraw-Hill, 2003). He’s repeatedly criticized CRM for discouraging customer-focused behavior, which would presumably include the cocreation activities. As Bosworth sees it, CRM…

  • puts the emphasis on internal processes and automating the way companies would like to sell, rather than the way customers would like to buy;
  • injects unnecessary technology into the work environment, creating additional complexity that focuses sales reps away from selling and toward the care and feeding of the CRM system;
  • forces sales reps to ignore or subvert the CRM system in order to meet customer needs, thereby creating confusion and draining sales productivity.

Gschwandtner agrees, saying, "CRM is an internal ecosystem that allows salespeople to track customers and sales managers to track salespeople. But we’ve now shifted to a conversation-based economy. Managing the dialogue outside the company has become far more important than tracking sales activity. The future will belong to the technology company that is able to create an external ecosystem. CRM vendors sell sales ecosystems, but what companies want today are customer ecosystems."

This is not to say that CRM is useless. In fact, there is definitely value in keeping track of sales data and sharing that data widely throughout the seller’s organization. However, because CRM focuses by default on an internal view of the outside world, it does little or nothing to encourage buyers and sellers to interact in new ways.

In other words, CRM is simply the wrong tool for the cocreation effort. Explains Gschwandtner, "If you want to sell more, you need to open up your business to your customers in more ways than putting feet on the street, setting up a Website, and tracking sales with CRM."

CUSTOMER ECOSYSTEM MANAGEMENT

According to Seybold, progressive sales organizations now use a variety of Internet-based tools to support cocreation activities:

  • Social Networking. Businesses are increasingly using sites such as MySpace and Facebook to build a corporate presence. Facebook, for example, allows the creation of pages for products and services, and all social networking sites support pages for individual employees. Such sites allow customers and sales reps to interact informally, strengthening customer relationships.
  • Customer Wikis. A "wiki" is a Website that can be quickly edited by its visitors with simple formatting rules. Wikis allow customers and sales reps to carry on collaborative discussions, edit group documents, and resolve debates on various issues, such as product designs, marketing direction, pricing policies, and so forth.
  • Customer Portals. These provide individual customers with a customized view of the seller’s company that’s tailored to the unique needs of the buyer. The portal reflects the business relationship, providing links to the sales reps and support organizations that the buyer needs to have a strong working relationship. Typically the rep can monitor the customer’s usage of the portal, thus gathering hints of future sales opportunities.
  • Online Meetings. Teleconferencing, of course, is already a sales technology mainstay, but the addition of video content and the ability to annotate documents on every viewer’s screen adds a new dimension to the remote meetings concept. Many of the newer systems allow meeting organizers to "ping" resources – such as a technical support expert – when a question arises that the sales rep can’t answer.
  • Design Sandboxes. These are collaborative environments where technically oriented customers can help engineers design products that will meet their needs. Sales reps can bring customers into the process, monitor activity, and work on ways to monetize or publicize the customer’s contribution. The result is a deeper strategic relationship.

Ironically, these activities are often pursued as part of an effort that’s completely separate from the CRM system. That’s unfortunate, because evidence suggests that all of these Web-based technologies, when combined with CRM, could easily help increase sales faster than if cocreation were pursued as a completely separate strategy.

COCREATION WITH TECHNOLOGY

Software vendors are taking baby steps in the right direction. For example, Microsoft recently hired a professional blogger, Robert Scoble, to publicly critique Microsoft’s products and business strategy.

By providing this forum, Microsoft can address problems more quickly, squelch incorrect rumors, and provide information to the most involved members of its customer community.

Similarly, Salesforce.com launched a new Website, ideas.sales force.com, that invites the customer to share product improvement ideas. Visitors can promote or demote an idea, and Salesforce engineers can decide which idea to implement next. Starbucks has recently adopted the same concept and named its site www.mystarbucksidea.com.

Encouraging customers to share their preferences is a great step forward. Today, companies can no longer afford to promise that they are customer-focused without actually putting the customer in the driver’s seat. Says Gschwandtner, "It is not good enough to just listen to the customer in order to diagnose a need with the intention to close a sale. What’s needed today is to engage customers in an ongoing conversation with the intention to rebuild the business and create more customers."

The deeper the level of cocreation, the greater the potential benefit, according to Seybold. She cites the example of National Semiconductor, a computer chip manufacturing firm that actively solicits its customer base to use its online tools to design their components, which National Semiconductor then manufactures. As part of the process, its customers request and contribute new tools and capabilities to the online workbench, thereby gradually adapting it to their changing needs.

With more than 100,000 engineers participating, this cocreation program at National Semiconductor has been wildly successful; however, that’s not the entire story of National’s customer relationship efforts. National Semiconductor has been extremely aggressive in its pursuit of a CRM capability that tracks customer relationships, provides email marketing triggers, and tightly integrates sales channel follow-ups, according to Phil Gibson, the company’s vice president of technical sales and Web tools. While it’s difficult to draw direct causal connections, the combination of cocreation and CRM has apparently been a winning one at National, whose gross margins have grown from 53 percent to 60 percent of revenue, according to Hoover’s, during the exact time that the cocreation and CRM efforts were running parallel.

When combined with more traditional sales technology, the new set of Internet-based tools, when used for cocreation, creates a customer-centric environment that goes far beyond the original vision of what CRM was supposed to accomplish, according to Gschwandtner. "Traditional B2B selling is like a choir; it’s assumed that marketing ‘writes the music,’ sales ‘sings the song,’ and the customers buy if they like what they hear. The market has shifted, and customers are tired of the old tunes. Today, companies need to engage customers in a process of cocreation. That’s more like a group of jazz musicians, in which one musician plays a riff and the others join in, each adding another riff as the graceful music emerges." And since cocreation leads to more profitable and synergistic relationships, customer ecosystems management will no doubt be music to the ears of customers, vendors, and investors alike.