Tuesday, January 3, 2012

CRM 2012 Forecast–The Era of Customer Engagement Begins– Part II


Gamification becomes Serious Business

No matter how old you are, human beings never lose their desire to play. Play makes us happy. Each of us, and I challenge you to deny this, wants to have a happy life. We do what we have to in life to improve our chances to have one. One of those things is to have as many happy moments as we can accumulate throughout our lives. Even if we aren’t all that universally happy (not projecting here), each of us has had times where we were that we can point to.

Gamification, while often over hyped and misunderstood, is a concept that has increasingly important business value. It doesn’t mean playing games; it isn’t game theory; it isn’t a form of hunting meat. My favorite definition comes from Constellation Research Group CEO (and key influencer) (and great friend) Ray Wang from his recent research paper, “Demystifying Enterprise Gamification for Business:Behind the Hype of Influencing Behaviors and Effecting Business Outcomes:”

“Gamification describes a series of design principles, processes and systems used to influence, engage and motivate individuals, groups and communities to drive behaviors and effect desired outcomes.”
To see it in action, even in an unexpected place, take a look at how SAP has gamified Accounts Payable. As odd as that may sound, they’ve done a genuinely good job. Here is a post on it with screenshots at Enterprise Gamification.

These aren’t edge cases for a small niche. Gartner Group in April 2011 thinks that by 2014, 70% of all businesses in the Global 2000 will have “gamified apps.” Research firm, M2 says that by 2016, the gamification market, currently sized at $100,000,000 will reach $2.8 billion, with 200% growth in 2012.
In other words this is starting to get big.

The vendors are in the game too. Those who have enterprise ready gamification platforms out there include Bunchball, Badgeville, and of course, Gamify, all in all about a bakers dozen.
We’re already seeing sophisticated gamification frameworks being set up. Innovative small companies like the award-winning UK virtual mobile network operator GiffGaff used gamification to recruit their initial customer community prior to their beta launch by providing DIY tools to create videos – the best of which got a £5000 prize.
For a more complete discussion on gamification worth reading, please make sure that you read the posts by thought leader and Lithium Chief Scientist, Dr. Michael Wu. They are well worth it.
Ray Wong, Gartner, M2, all say gamification in a big way starting this year over the next few. I say, amen, brothers and sisters.

Insight Solutions will emerge as a technology category of its own

One thing that we can’t ignore (okay, that I can’t ignore) is that if customer engagement is to work, then insights into how customers want it to work are becoming increasingly necessary.
But again, we’re dealing with scale and we’re dealing with a dynamic social web with constant conversations that are liquid and changing continually. They are being carried out in multiple channels – channels that number all in all, in the thousands, both public and private.

The current generation of social media monitoring tools with a few exceptions – Radian6 and Attensity come immediately to mind – are somewhat passive tools that scour the web, find the conversations and organize unstructured data in the form of a report that provides the users with what is being said, usually in a positive, negative or neutral vein. The better tools provide strong analytic capabilities that give some insight into how customer segments are thinking or how “nodes” are responding. That would be Attensity, for example. Or they provide highly focused, highly specific, well thought out intelligence such as the sales intelligence focus of InsideView. Radian6 takes this to a whole new level with their Insights Platform which takes Radian6’s vast data mining and information organizing capabilities and integrate other technology tools that combined with Radian6 provide deep insight into individual customers, if that’s where you want to go. With the future capacity to tie this to salesforce.com or database.com or data.com transactional data, and contact information, we are beginning to see how an insight solution would work. It’s obvious limitation is that it will be tied to salesforce.com only customer data. But that aside, we are talking about something that at least foreshadows what are a future class of applications. Bryan Jennewein, the product manager for the Insights platform calls the results “social insight”, which is not an inappropriate term, in this case.

But Radian6 hardly plays in its own sandbox here. There are a number of emerging players in this space which I’m calling “insight solutions” who have been misplaced in or evolved from other market categories. Currently, the runaway number #1 of these for me is Coveo, which came from the Enterprise Search space. Following them is Allegiance, emerging from the Enterprise Feedback Management world and Lattice Engines, which inhabits the sales intelligence world uncomfortably. Another newcomer that has flown under the radar is WiseWindow, a "mass opinion business intelligence" (MOBI) provider, who specializes in vertical insights among other things and come from the BI world All four have the technology to provide insights. Each takes an entirely different approach to attaining the knowledge that can support insight, but each minimally provides dynamic data mining, collaboration and analytics. All four either can or do integrate with CRM, by the way.

This is not to say that more “traditional” analytics such as text and sentiment analysis, business intelligence, etc are going to be replaced or suffering. In 2012, they will be even more important than they are now.
Several vendors are either upping the ante or providing new ways of looking at the data – all in the name of recognition of the importance of insight – into customers primarily, but also employees, opportunities, processes, etc.

For example, Clarabridge is both upping the ante and providing a new approach to analytics by taking sentiment analysis to a whole other level beyond the traditional five-point expression (very positive, positive, neutral, negative, very negative) and ratcheting it up to eleven points using semantic analysis so that there is context to the sentiment, besides. Recently, SAP, despite the fact that they own the best analytics firm known to man – Business Objects, recently announced a partnership with social analytics provider Netbase to become a VAR that would sell “SAP Social Analytics by Netbase” to their customers. They realized like others before them, insight is 2012 table stakes and social data is the tableware.

Analytics as a whole is becoming fundamental to all business strategy. 2012 brings more of that than ever and the rise of a new category customer-focused solution that provides a combination the surfacing of dynamic information and the analysis of that behavior as dynamically as it is surfaced.

An optimal customer experience becomes the core of what CRM can provide. Finally.

In 2011, we saw a significant shift away from the pure left-brained messaging of CRM toward a much stronger focus on customer interactions, engagement and behaviors. Traditional CRM vendors for reasons that are both good and bad began to rebrand their messaging around the idea of technologies that can support an enhanced customer experience. The good reason is that they needed to do that and they did. The bad reason is that they did it as a reaction to historic CRM bad press a lot of times, rather than just recognizing that the context had shifted and we were entering a period that demanded that customer experience and engagement got attention. Right results, sometimes wrong reasons.

Vendors like Sword-Ciboodle have taken it further and begun to present their product portfolios not as a menu of features and functions but around solution sets that help you do your jobs better. The name for it is jobs-based thinking. The academic framework for that is Service Design Logic, something that is gaining increasing credence in the business world. If you look at the Sword-Ciboodle site, you’ll see that it’s got a roles-based focus. The reason for this is that there is a recognition that we are dealing with behaviors – both customers and employees, not just products.
But the interest in providing the “right” customer experience high. Witness these numbers that come from the 2011 State of Customer Experience Management” put together by ubër-expert Bruce Temkin, the leading customer experience influencer and best of the lot in my book. These numbers are indicative of both where things are (not new but embedded) and where they can go (toward maturity). Temkin found that:
  • Nearly 60% of the companies surveyed have a senior executive in charge of customer experience
  • There are 30% of the companies that have 20+ employees who are delegated to the customer experience
  • There have been positive results (measureable ones, people!) from Voice of the Customer programs in 84% of the companies using them
  • The percentage of companies that received a moderate or better competency rating rose from 22% on 2010 to 30% in 2011.
That’s the good news.
The signs that this is still immature?
· “Only 3% of companies reached the highest level of customer experience maturity, which (Temkin calls) a Customer-Centric Organization
· Only 17% of respondents believe that their executives regularly support decisions to trade off short-term financial results for longer-term customer loyalty.” (source: Temkin, 2011 State of Customer Experience Management)

That means that there is a lot of room to grow and in 2012, I expect that we’ll see a continuation of these efforts to improve and get measurable benefit, though nothing dramatic.
The only real “trend” that will likely stand out when it comes to customer experience in 2012 is that I think vendor messaging will be increasingly focused around it. That’s not really much of a trend, if you think about it. You feel me?

Social marketing becomes an integral part of an explosive marketing automation sector

Social marketing and the broader, customer-facing interactive marketing are becoming ubiquitous as customer engagement becomes the increasing focus of companies thoughts.

Chief Marketer in their 2011 Social Marketing survey found that 73% of the respondent companies were incorporating some kind of “social messaging” into their marketing campaigns and in 2012 an additional 10% (meaning around 83%) would be doing the same.
What’s interesting is the primary reason that the respondents were doing so. Fully 85% of them felt it was a way to “reach customers at multiple touchpoints.” That’s 25% more than the next reason, which is that customers are spending more time on social networks. In other words, there is a recognition that social channels are now part of the mainstream and that they are additions to the channels that we’ve reached customers on traditionally. To get a feel for how big a deal this really is, in August 2011, Forrester Group came out with their “U.S. Interactive Marketing Forecast, 2011-2016” and saw the market spend up from $34 billion in 2011 to nearly $42 billion in 2012 and $77 billion by 2016. The bulk of the spend will be in the more traditional channels of interactive marketing – e.g. display ads and search marketing with emerging marketing such as mobile and social increasing about 250% in that time.

This is not surprising and if you look at it, the technologies available are once again more primitive than the efforts expended by the practitioner marketing departments.

The vendors are beginning to recognize the value of social marketing and are trying mightily to catch up and either incorporate it into their existing marketing automation or revenue performance management (sigh) applications and services. There are only a few genuinely useful pure social marketing or niche related apps out there at the moment, notably CRM Idol 2011 finalist Crowd Factory. One example of a niche related vendor would be the FuzeDigital reputation engine.

However the larger marketing automation/revenue performance vendors are taking note too. We are seeing social features being incorporated into more traditional applications from Marketo, Eloqua and Silverpop for example. Analytics giant SAS, rather than incorporating too much social into their marketing automation application, built and social media analytics application to take the pulse of the brand conversations going on out there. Companies like Infor, who provide customer interaction engines like Epiphany are using them to engage their prospects.

2012 will bring us continued explosive growth in marketing, especially social marketing because we have reached ubiquity when it comes to utilizing social channels as part of campaign planning. The more engagement is on the table, the more that marketing – with social marketing functionality as a prerequisite for a contemporary marketing suite – will grow dramatically. Forrester has it partially right with the increase of some 20% year over year in interactive marketing expenditures.
Think I’m wrong? Prove it. Launch a campaign on Twitter to do that. Ha!

Short Bursts: Other Trends

These aren’t meant to be full blown prognostications – just short takes on interesting trends that I’ve noticed that I want to make you aware of. There is too much in the sections above for me to draw these out but I didn’t think I should ignore them even if I don't spend a lot of digital ink making the case.
  1. Mobile CRM - As in 2011, the creative development of mobile CRM will be driven by the tablet market and by the ability to analyze large amounts of data quickly that will show up on the tablets. The iPad will still be the dominant driver of mobile CRM application development. But we will see more activity around mobile payment than we will around anything else as Near Field Communication (NFC) is deployed on devices to a much greater extent than 2011 and Google Wallet grabs share of….mind as more and more businesses adopt.
  2. Small Business SCRM – The success of Hubspot in 2011 and the emergence of a myriad of other technology platforms and companies who are small business focused (see CRM Idol again for many of the technology companies who concentrate on small business) is an indicator of the interest that small business has when it comes to doing business using social channels. I’m going to leave the details to Brent Leary in a forthcoming post here on the small business CRM market in 2012.
  3. Big Data Becomes Really Big Data - The issue of how to data the massive increase in data and especially desirable data becomes possible the highlight of 2012. This is being fueled by the substantial increases in unstructured data on the social web, in the use of video, images, audio files and other rich data and by the growing ubiquity of the cloud all leading to what IDC feels is going to jump to more than 2.7 zettabytes (that would be 1021) in 2012, which is 48% higher rate of growth than 2011 – and 90% of it will be unstructured (Source: IDC Predictions for 2012: Competing for 2020). Managing this data will drive not only the storage and infrastructure markets, but will make even more “traditional” areas like Master Data Management (MDM) something that businesses will be investing in. This is a massive opportunity and a massive issue.
  4. Acquisitions – The shrinkage of the market via acquisitions and it’s strengthening via strategic partnerships that support Social CRM and social business ecosystems will continue as they did in 2011. IN 2011 we saw, among others, salesforce.com acquiring DimDim, Radian6, Assistly, Model Metrics and Rypple; Oracle acquiring Inquira, Endeca and RightNow; SAP acquiring SuccessFactors and Microsoft acquiring Skype. We also saw a key strategic partnership between IBM and SugarCRM which was crucial to both companies. There will be more of the same in 2012 with interesting acquisition targets (at least interesting to me, not because I heard anything. Just to be clear) will be Marketo, InsideView, Coveo, SugarCRM and a handful of others including several of the CRM Idol contestants. Though, as always I’m sure I’ll be surprised and completely wrong. But acquisitions and partnerships will be the stars of 2012, whether I’m surprised or wrong or not.
  5. The Cloud – 2012 continues the bandwagon though the hype will slow. This year not only did we see Amazon continue to be the cloud to beat, but companies like Oracle announce their “public cloud” and SAP went deep into the cloud as they announced at the recent SAP Business Influencers Conference not only buying SuccessFactors shortly after they announced that they wanted to significantly compete in the cloud but also announcing that from here on they are going to architect what they produce as cloud and will adapt it to on premises, rather than the other way around – a 180° turn in philosophy and development strategy. We also saw the cloud become the delivery system of choice, if you take it from the rate of adoption, not the amount of deployments out there in the on premises v. the cloud competition. Since this is short, let me recommend the always fantastic, quiet thought leader, Louis Columbus’ great aggregation post on cloud adoption. Read that to get the picture. On premises still is the dominant installation for CRM and other business technology, with hybrid deployments a popular option – and one offered by companies who have historically been invested in on premises software. In fact, all the leaders but salesforce.com offer it as part of their portfolio. More of this in 2012 as the unstoppable cloud juggernaut continues to gain delivery mechanism share.
  6. Innovation/Co-Creation – This will continue to be in the purview of the most progressive companies – the leading edge of thinking and practice in business. But only at the lowest levels – feedback etc. will it be pre-eminent. The true practitioners of co-creation are just beginning to make their appearance on the global stage. I expect we’ll see most of this in the Fortune 3500 companies. I’ll be writing more on this and you’ll be seeing guest posts on this subject in 2012.
  7. Knowledge Management – while there will be no slacking off of the existing models for knowledge management – accessible knowledgebases being the core of that – there will be considerably more focus on dynamic knowledge with as close to real time response as possible and the use of knowledge for insight (via analysis). The technologies to meet the requirements for the latter are just beginning to appear in the market. Knowledge grabbed from customer user forums and other external "unstructured":
  8. Applications Marketplaces – Application marketplaces are becoming increasingly prevalent as more and more companies begin to view things from the standpoint of providing their customers with customized/configurable ecosystems. So now, in addition to the technology company marketplaces we know and…whatever emotion you want goes here….we are seeing even government agencies like the U.S. General Services Administration or the U.S. Army providing these application marketplaces to their constituents – in the former case, the other U.S. federal agencies and the latter case, varying Army commands. There is no reason to think that this is going to slack in 2012. In fact, look for it to accelerate.

The One By Itself

This is the most important prognostication for 2012. Period.
The Yankees Win the World Series – Locked and loaded. Our starting pitching straightens itself out, Teixeira gets his batting average back to a normal .290 or so; A-Rod revives his career enough to be a difference maker; Jeter just continues from his 2011 second half and Rivera of course is Rivera. Thus, The Yankees Win. The Yankeeeeeees Wiiiiiiiiin! Yay!


Look. This may be the most uncomfortable "forecast" I've ever made. It wasn't easy. I'm evolving a perspective I've had for almost 10 years and it has implications that are important, though not that dramatic, for how the industry will be developing and the strategies that need to be considered - if I'm right.

And that makes me uncomfortable. But I've learned a few things in my 62 years that I think have done me well over the years - some of it due to adversity that makes my skin very thick. Let's just say criticism doesn't exactly phase me.

First, I've learned that you are always learning.  That means that what I am writing here while I think its useful is only the beginning of something that I hope will have some impact but that will be constantly evolving even as it does due to collegial inputs from smarter people than me and those who are testing out what I'm hypothesizing here and finding how to tweak it or to show me that I'm wrong.

But if there is one thing I've learned that probably will never change, there is a way to think about all this. You make as good a case as your observations allow and then get on with your life and see how the next phase plays out. Which is what I'm now doing for 2012.