While on the phone with a car rental company (one of the world's largest and most successful), I recalled an insightful observation from a business book. It goes something like this: "No one has ever returned a car rental washed and vacuumed." The author's point was that we do things that will yield us some benefit. With rental cars, drivers will treat the car in ways they might never treat their own vehicle, because short of visible damage, there is no clear and immediate benefit to caring for the vehicle.

As my conversation with the agent progressed, I felt just how far they still had to go to win my admiration. The fact that I used their cars, without damage, almost 15 times in five countries in the past year was not taken into account on the call. They also could not, and did not want to, provide a different treatment for me as a vacationer vs. the other 15 times where I was a business traveler. How would they know that? Well, by destination perhaps. By the size of the vehicle — which was different from every other reservation. By day of the week and time of the year; arriving at a vacation spot on a Friday? Or, of course, they could go low tech and just ask me. Might they want to offer me an upgrade or a navigation system? Something to reflect gratitude over the fact that I am a highly profitable customer?

When I asked if there were any available discounts, the agent sounded shocked that I would ask. "Sir," he said, "it is up to the customer to tell us about any coupons or special rates they may have received in the mail or seen in print. We can't see that." I gently pointed out that he might record for his supervisor that the client, me, did not accept this. In fact, in the retail clothing business, regardless of where a campaign offer appears — on the Web, in a flyer in the mail, or in a magazine or newspaper — the customer could claim it when calling into the call center. Is it the company's intent to hide offers? Do they hope that their expensive marketing incentives will not be acted upon? It sure feels that way.

When a business cannot differentiate service based on customer value, nor understand the intent of the customer (business traveler vs. tourist) or provide them consistent treatment by channel, the message is: we don't want to know you, except to the extent that you pay your bills. Is that enough of a reason for you to return that car washed and vacuumed? Or to remain a loyal customer?

Where have you seen businesses demonstrate a clear understanding of what they want from the customer in real time?

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A few weeks ago (April 24th edition), BusinessWeek posted a list of the(ir) 25 most-innovative companies. Thinking about the CRM space, I was struck by the fact that so many of the companies on the list got there as a result of innovative customer relationships. But when I think about the CRM vendor market, few of the vendors are particularly innovative. I give Salesforce.com credit for changing the landscape in the sales environment, but I would be interested in hearing from anyone (except vendors themselves, no offence) about software vendors that you think are being innovative in the way they market or provide service and support to you, their customers.

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Gartner's Spring Symposium/IT Expo is being held in San Francisco next week. On Sunday, I am going to be talking about why CRM succeeds and why it fails, and what to do about it.

The amazing thing to me is that, in all my research over the years, projects and fads have come and gone, but the reasons for CRM failure are strangely the same, in spite of all the attempts of many (such as myself) to educate the market.

If you are in San Francisco, stop by the session at 3:30 p.m. and see if your experiences are the same. And if you can't be there, drop me a note and let me know what your experiences are. Maybe together we can help shake the stigma of CRM failure rates and help firms understand how and why to do it right.

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Debates surrounding who "owns" the customer often prevail in many organizations, from product lines to channels to retail delivery to sales to marketing and even finance. In many companies, marketing has become a centralized point for customer understanding through the aggregation, segmentation and analysis of data. Now, it is being thought of as a centralized point for execution by managing all customer communications, not just marketing campaigns. Creating a single view of the customer gives rise not just to analysis for marketing purposes, but when made operational through a customer data hub, it improves the coordination and execution of multiple types of communications (such as sales; customer service as well as marketing; and outbound, inbound and event-triggered communications). By centralizing execution via marketing, companies improve the coordination of multiple messages and the consistency of the customer experience across all channels.

As the next generation of CRM begins to take shape, one thing is clear: Marketing's role in powering CRM strategies continues to grow. Hot topics in the next generation of CRM include customer loyalty, customer experience management, customer value, brand value and the voice of the customer. All have a strong association with marketing. This next generation of CRM is all about looking from the outside in, rather than the inside out.

So, if the first generation of marketing-powered CRM strategies was about understanding the customer, and the second generation was about becoming a centralized point of multichannel communications, then the third is about listening to the customer and enabling companies to finally put the "C" in CRM.

What role does marketing currently play in your CRM strategy? Is your marketing organization ready to support the next generation of CRM and actually listen to the customer?

Want to learn more about the next generation of CRM? Come to the Gartner CRM Summit in September.

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As the buzz of Web 2.0 reaches online business-to-consumer sellers, many are wondering how to leverage Web 2.0 capabilities. For example, how can I penetrate the social networks world and promote by brand and products, without being asked to leave by its members. How can I use blogs to help my customers, without having to become the censor of the blog? Can I use Ajax to jazz up my site experience?

It's great to think about these things, but you better make sure your site is based on open Web services. I know many homegrown sites that are having problems keeping up the speed of business. This is because they were assembled with the idea that everything about commerce would be contained. The same goes for those using packages. You better make sure your package passes the "openness" test.

Another item on the mind of site owners is whether to respond to bloggers that post entries about products or services and any real or perceived problems. Here's where the legal department shows up, and the marketing department will also be there to ask you how to measure the company's Internet buzz.

Is Web 2.0 making you lose sleep? If it isn't, then you may lose more than just sleep.

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My 18-month-old daughter is already putting things together that make sense — words into sentences, building blocks into towers, pictures into pairs and so on. It's a shame that we don't always do so as adults.

Call center managers are beginning to cast off the shackles of efficiency and make bold claims about becoming more effective. However, most are not looking at how to work with other departments or make connections to other key "building blocks." A good example of this is the lack of connectivity to marketing or sales. A company's campaign management plan should theoretically influence agent scheduling, training, incentives and evaluations, but it rarely does — thus significantly reducing campaign effectiveness. Numerous other examples like this exist and each must be explored during a call center effectiveness drive.
OK, so it's more complex than putting two pictures of a puppy together or saying "daddy's car," but we have a few more years under the belt and more resources to call on.

I'd love to hear from anyone who's ahead of the learning curve and already making these kinds of connections.

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I was thinking about something the other day. I believe that most people, left to themselves, would treat others as they would like to be treated. At a minimum, they at least would not treat people badly. Yet, when we put people together and call it a company, we find that the treatment received is less than adequate. Therefore, individuals, by nature, would tend to give good customer service, but the firms they work for, don't. Why is that?

I think the issue comes down to motivation and rewards. When individuals have no one to answer to but themselves, they tend to let their own sense of right and wrong motivate them. To them, it is "wrong" to be less than courteous to another unless they have caused that behavior through their own bad conduct. But when we answer to a firm, there is often no clear sense of what is right and wrong in regards to customer service. We know that our employer expects certain things in certain areas. We know when we are expected at work, and what is expected in regards to honesty. But we often don't know what is expected in regards to customers. We are looking for the firm to tell us what is right and wrong, and that information is often not provided.

I have looked at a large number of firms that are good and not so good at customer service. The interesting thing is that the good ones tend to spell out for customers what is expected. Not just in something vague like a mission statement, but day to day. They hold up good behavior. They correct bad behavior, and they make sure that, in the process, they produce a culture of customer service.

What about your firm? Do you have a good sense of what is right and wrong in regards to the customer, or are you using you own internal metric as a substitute for lack of direction?

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During a recent research community meeting, we discussed the evolution and current role of a CRM suite as a solution to customer management issues. Among the several good points made, one was particularly interesting: Since Oracle acquired and owns three-fourths of the CRM suite market for large enterprises, are CRM suites a viable alternative for enterprises? My answer: no, and with very few exceptions, organizations should stay away from them.

The concept of a CRM suite, as originally created, calls for the merging of entire departments and disciplines within an organization. The theory states that if sales, marketing and customer service worked together as one, the organization could serve more customers more effectively the fist time around. Thus, the theory continues, you need an enterprise application that can address not only the different domains, but also the interaction between them. A common data model, the theory concludes, and common data flows are just what the doctor ordered.

This, however, is not true. Actually, there is nothing further from the truth for most organizations (this is probably the leading reason CRM could not prove to be what it was said to be). Organizations conduct business in the form of multichannel, multifunction and multidomain processes. These processes change from organization to organization — even within the same vertical market. This is what provides competitive differentiation. Yet, the consistent execution of CRM modules across organizations, despite the millions of dollars spent attempting to customize them, cannot provide for the heavy adoption and use of these modules. In addition, future planning and execution is heavily dependent on not being able to customize these modules too much — else organizations won't be able to upgrade and stay current.

Compared with a preferred solution of an infrastructure that can provide a basic framework, a customer interaction hub can "bolt" best-of-breed, domain-specific solutions that can be heavily customized for performance and logic as needed, since the heavy work of integrating and talking to other components is taken away from the logic and transferred to the infrastructure.

We are seeing more of these infrastructure-based solutions. Are you considering an infrastructure solution? Let me know what you think…

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Having opted out of telemarketing calls by signing up for the Telephone Preference Service — the U.K.'s equivalent of the U.S. Federal Trade Commission's (FTC's) Do Not Call Registry — I waited with interest to see what new strategy marketers would use to reach (annoy) me. It was with considerable relief that the suspense was broken by my bank who tried to cross sell me a student loan the next time I called to inquire about my pension. With large numbers of customers opting out (more than 50 percent of U.S. listed telephone numbers were registered with the FTC’s Do Not Call Registry within three months of the registry’s opening; and in the U.K., 85 percent of AB consumers' ABC1C2DE societal status are similarly excluded), I suspect that the age of the telespammer is dead. However, the interesting thing is that in most cases, companies we already do business with are exempt from the restriction, and they can keep calling even after we have opted out.

Therefore, the question is, should they? I for one do not want a telemarketer calling me (as companies may deduce from the fact that I opted out) under any circumstances, whether they are "allowed" to or not.

What do you think? Do you think the fact that people are opting out leaves the phones and customer patience clear for "legitimate" calls from their existing suppliers, or is this a sign that customers' phones are their own and we need to find a better way of reaching them?

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I recently read an article describing how American and European workers are migrating to Bangalore, India to get customer service jobs. Most of these people are young, single, have no responsibilities and are interested in doing it as an experience. They also have a limited time frame, no more than two years, usually less than one, for the job. For Indian-based customer service outsourcing companies, this is a great boom — they continue to pay similar wages (premiums for fluency in any language are almost nonexistent) but they get native speakers — addressing the number one complaint about offshoring.

This move, which was inevitable, is a good thing for the outsourcing industry. By providing native speakers of several languages, they give the caller the impression that he or she is talking to someone in his or her local country, while the company continues to operate at the lower costs it promised its clients. In a globally connected economy, place of residence is no longer an issue. Whether a customer service agent is located in Bangalore, Turkey or San Francisco makes no difference. Technology breaks all distance barriers. The differentiation then becomes the nuances that customers expect to receive from a vendor: faster service, correct answers and a local accent.

I believe that offshoring is here to stay, but we need to address language barriers efficiently. Care to move to Bangalore?

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As spring arrives, many of us take a second "go" at the New Year's resolutions we made a few months ago. Now is the time to start jogging, work in the garden or fix the gutters. But what about our more fundamental aspirations and those of our customers? Do we understand why the customer is buying running shoes or lawn fertilizer, or just the fact that they are doing it? What difference could it make?

When we talk about relationships, we mean seeing the person not just for who or what they are, but also for who or what they see themselves as, and who or what they would like to be. As we continually renew our customer relationships, maybe the data points we need to collect are not the ones that say who they are (student/analyst/engineer), but those that say who they think of themselves as (a future teacher or creator). I think if we (as companies to our customers, and as individuals to our social networks) help others become what they wish to become, we build stronger relationships, and that is more profitable for everyone.

Do you think the business of business is business and leave the rest for self-help gurus? Or do you have an example of a company that is helping not only the material needs of their customers, but also their customers' desires to become what they wanted to become?

I recently completed an application with the bank I used during my college years. As part of the application process, they helpfully pre-completed parts of the application form that contained the information they already had on me. Nothing too disturbing; nothing that would raise privacy hackles; but one data point struck me as odd. Although they used my updated address and left blank things like telephone numbers I had not updated them on, they continued to list my occupation as "student."

In many ways, I like the idea of lifelong learning and remaining a "quester" of knowledge (and consumer of pizza) for my entire life. But in reality, their understanding of me is outdated, and their assumptions of who I am and what I wanted as a "student" are unlikely to be true of me now.

Who we are and what we want changes over the course of our lives. Some of this change is incidental: we start families, we change employers, we move to a new house. Some of it is driven by aspiration: I want to see sights I have never seen before, I want to read ideas I would never have thought of, I want to become someone who can balance his checkbook.

Does your company still hold antiquated views of your clients?

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Call recording is something most organizations have been doing for years. We are all familiar with phrases like, "Your call will be monitored for training purposes" at the beginning of a call. The reason for this is that in many U.S. states (and countries around the world) it is illegal to record conversations without the consent of all parties involved. However, the introduction of speech analytics takes us into new territory. Making a statement saying a call is being recording for training purposes informs the customer of the purpose of the recording so they can make a decision about whether they want to be recorded or not. But, if companies are then taking that audio file and analyzing it to obtain deeper customer insights (such as churn likelihood, campaign management feedback or competitive situations), then the customer needs to be told this. If companies don't clearly articulate the purpose of the call recording in their initial message, they may be breaking the law.

Perhaps it's time to rethink those antiquated messages? I'd love to hear from you if you've already done this. How have you phrased the wording, and how has this impacted customer recording objections.

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I had a $5-off coupon for two stores (they were part of a chain attempting to drive cross-sell between its brands). Both sell a pack of socks for $4.99 before tax, $5.34 after tax. At each store, I asked if I could use the coupon. First store: "No sir, I don't think you can." Second store: "I don't know, let's scan it and find out." Aside from the issue of service consistency and whether a store can make a profit by giving away free socks, the interesting thing to me was the willingness of the second clerk to actually test the limits of her knowledge. Not only did this result in more knowledge for her, but it also indicated that she cared enough to take the time to find out the answer to my question while engaging me in the process of knowledge discovery — in my opinion, a good CRM story.

Moving beyond getting an answer to my tactical question, the impressive thing was her ability to engage in a process of expanding her understanding. In this case, it was a relatively straightforward process of scanning the item and the coupon. But for many enterprises, the process is more complex (even though the results may be as equally profound). If you want to find out who are your most valuable customers, your best prospects or your best salesperson, the most common question in the service center is, where do you go? Who do you ask? I am not referring to the data that is already available to you in a canned report; I am talking about the ad hoc analysis that gets you answers to the questions you haven't asked before. The only reason for not already having an established way of getting the answers to these questions is that you don't care, in which case you really should. That is what "out of the box" and "pushing the envelope" thinking is all about, and that is what will drive your learning curve in the enterprise.
In the words of Bertrand Russell: "In all affairs, it's a healthy thing now and then to hang a question mark on the things you have long taken for granted."

What was the last unexpected insight you gained by questioning an assumption?

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Many companies that deploy price management software remain quiet about their deployments in an attempt to maintain a competitive edge or to avoid the perception of customer price gauging. We have talked to companies that are finding $10 million in new pocket margin, have increased overall margin by 3 percent or decreased special price approval time by 50 percent. These are great success stories; the problem is, unless you're a Gartner analyst you will never know who these companies are or what their best practices were for being successful.

The organizations that get hurt the most are the vendors trying to sell price management systems. Without public market knowledge of these successful deployments, price management stagnates in the early adopter phase. This makes it difficult for a small vendor to grow as a business. If your vendor is not successful, then it will not be good for you in the long run.

Do you have price management issues? Have you used price modeling or optimization technology to set better pricing? Or have you automated your price execution process to obtain more consistent, profitable margins?

Let us know. It's ok to be anonymous, but if you want to help the industry, let us know who you are.

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When outsourcing CRM processes, most organizations should know — even before they start — that they are not going to be successful. Even if they achieve what they set out to accomplish, they still won't be successful. Why? They fail to look at the proper metrics, often emphasizing efficiency metrics instead of effectiveness metrics. A recent Gartner survey highlights that even though most organizations cite effectiveness metrics like better customer relationships and improved business processes as the number one and number two reasons for outsourcing, the reality is that they use cost-savings metrics to measure the success of the implementation.

It is as if they thought somebody was monitoring what they were doing, and they are using more accepted reasons or excuses to get approvals, but secretly they just want to save money. There is nothing wrong with saving money, but in this case that is the wrong option. In the past three years, CRM moved away from money-saving as a result and into strategic goals like increased wallet-share, higher cross- and up-sell, and even better-leveraged customers. We discovered that money-saving comes as a result of doing better business, not as a goal, but it requires an investment into doing it right.

Alas, there is a dichotomy at work: You cannot save money by letting someone else do the work and still reap all the benefits of better managing relationships. Third-party providers have no vested interest in assisting you in improving your relationships. In most cases, they get paid by the interaction, not the relationship. That is why you can save money — they get so good at shaving time off interactions that they can do more and get paid more while keeping per-transaction costs low. Of course, there are exceptions to this: There are innovative outsourcing implementations out there that look at metrics like first-call resolution (effectiveness) as opposed to the number of phone calls (efficiency) or the length of phone calls (efficiency). Or number of leads generated as opposed to the number of phone calls made. Or even revenue dollars as opposed to the number of phone calls taken in. These are the few organizations that realized they were doing it wrong and changed to doing it right.

How about you, are you still interested in doing it wrong? Let me know what you think.

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Everyone who is a frequent business traveler at some point runs into the long delay from airport traffic or the dreaded mechanical problem that takes at least an hour to have someone even look at to figure out the issue. On a recent business trip, the airplane I was supposed to be traveling on ruptured its hydraulic line. The pilot made the decision rather than to have us sit on the plane while they fixed it, to delay boarding so as not to overburden us in our seats. Most pilots will seat the plane so they can take off right away, but this one chose to focus on the comfort of the passengers. We then got on the plane and the pilot apologized. As we pulled back from the gate, the engines slowed down. The pilot again comes on and says, "I am not going to sugar coat this, the hydraulic line ruptured again." He then openly lays out the options. One of which is a new plane.

We go back to the gate and the pilot says we can deplane. The problem is that no one is at the gate to meet us. The pilot again comes on and says, "The gate person saw fit to leave us, but don't worry I will fix the problem right now." The pilot leaves the cockpit, goes into the terminal and gets a gate person to let us off the plane. At this point, we are all feeling that the captain is really behind us, therefore, the airline as well. As we deplane, passengers were pleading to get a new plane and not to try to fix this one. The pilot said not to worry he would take care of us. Sure enough, less than an hour later, we have a new plane. This experience and the actions of the pilot as a true customer advocate have gone a long way in convincing me to fly with this airline again. Something I will be doing in a couple of weeks.

Is customer advocacy important in your organization? If so, please share how it has made a difference developing your customer relationships? On the flip side, we would love to hear your own experiences where customer advocacy made a difference in your own personal customer relationships.

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Call center technologies such as quality monitoring and workforce management perform necessary tasks. They have done so for decades and will continue to do so for as long as customers communicate with enterprises. They remind me of donkeys on a beach giving rides to children. The children (call center managers) come and go over the years, but the donkeys keep plodding along, backwards and forwards along the beach, never looking left or right, with the knowledge that tomorrow will be the same as today, which in turn was the same as yesterday. But things need to change. These donkeys (and their owners) need to cast off their blinkers and embrace CRM. In fact, more than that, they need to view themselves as part of CRM. Your company is probably "doing" CRM, but that commitment enterprisewide rarely filters down into the alignment and optimization of call center technologies.

In my previous blog, I highlighted the drive toward technology consolidation and enhanced value, but this goes hand in hand with CRM. The call center is a critical influencer of CRM from the execution of strategy to functional effectiveness across marketing, sales and service. From a strategic perspective, high-level objectives to improve customer satisfaction or grow the business should have a direct bearing on call center planning — that is, how many agents with what skills do we need (such as varying service-level agreements per customer segment), what should we be evaluating them on, what training should they be given and how should they be rewarded. Drilling down to a functional level, if we take campaign management, the creation of a multiwave, multichannel, multicustomer segment campaign should impact call center staff planning such as skills, forecasts and scheduling (inbound and outbound), as well as the provision of execution feedback via performance management tools and speech analytics (for example, 25 percent of calls last week mentioned the fluffy bunny campaign). Rarely does this actually happen, but until my last breath as a Gartner analyst it is my quest to drive this fundamental change in the marketplace.

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Individually, shredded duck, cucumber, hoi sin sauce, spring onion and pancakes have very little appeal. But put them together and bingo — a taste fit for the gods. While devouring my fifth aromatic duck pancake one night, it dawned on me that the very same concept applies to the vast majority of call center technologies. On their own, technologies such as quality monitoring, recruitment, workforce management, e-learning and performance management provide necessary sustenance for call center managers, but they don't really ignite their taste buds. It is only by entwining these tools into a unified, workflow-driven suite that their value can be maximized. If you don't believe me, speak to one of the growing number of reference sites from suite providers like Envision and Witness. They appreciate the taste. Do you?

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Today is the second day of the Gartner CRM Summit in London, and while it is too early to say that there is a return to the "good old days" of CRM, we are definitely seeing some of the healthiest signs than have been evident for some time: Attendance is much higher then anticipated, client attitudes are very positive, vendors are seeing revenue increases and consultants are reporting that they are fully booked in their CRM practice for the rest of the year and beyond.

But the thing I noticed most is the questions. Past conferences, in both EMEA and North America, tended to produce vendor and function questions. Such questions as, "Who do I look at for a solution?" "What do I automate first?" and "Where is the return on investment going to come from?" were common. But a sampling of the one-on-one questions I received yesterday shows the difference: "What are the steps to designing a CRM strategy?" "I realize my initial vision was too limiting. How do I expand it?" and "How do I balance all the quick wins I can see happening with the long-term benefits I want my management to be aware of?" Clearly, CRM practitioners are getting more sophisticated, taking into account more complex issues of strategy and vision. It is refreshing to see.

One comment from an attendee puts it best: "If I understood ERP as well as I understand CRM, we would be a different company today. Luckily, it's not too late to be a different company tomorrow."

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One thing that I've noticed during the past several years is that Type A (leading) companies tend to look for new CRM technologies and capabilities to provide them with a competitive advantage in the market. New, emerging and immature areas of CRM applications are often dominated by best-of-breed players who have deep functionality (for example, MRM); the view being that innovation comes from smaller vendors with bleeding-edge capabilities. As a market matures (for example, SFA and the contact center), two things seem to happen: 1) Type B (followers) companies tend to prefer more-integrated solutions that meet specific requirements, and they are willing to trade functionality for an integrated suite of applications; and 2) larger vendors tend to become fast followers behind the best-of-breed vendors adopting the proven functionality and not pursuing the functionality that didn't work.

This raises an interesting question for companies pursuing CRM. CRM is a business strategy that includes a variety of different applications across functional domains, such as marketing, sales and customer service. Within the context of CRM, the maturity of these applications varies greatly, from very immature (such as MRM) to more mainstream (such as SFA and the contact center). So, how does a company decide whether to select a best-of-breed solution for an area such as marketing (that is, MRM or campaign management), or a CRM suite that includes marketing, sales and customer service? What role do best-of-breed vendors play in your organization? If using a best-of-breed solution, what is your long-term plan for using such vendors? How strategic are these vendors to your organization? Where do you look for innovation? We'd love to hear how you selected your CRM solutions or how you are approaching CRM solution selection.

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