We all want our businesses to grow and most of us can agree that growth comes through innovation. To innovate, a company must understand the needs of their customers. But research shows that very few companies have a methodology for accomplishing this, let alone having complete agreement on a what a customer need actually is.

As a CRM consultant who is interested in customer-centric business design, I see this as a fundamental piece of the CRM puzzle. From a strategic perspective because it creates value, and from a technical perspective because we have to design solutions that allow businesses to collect and analyze this information. This is the work that must be done before a company can design products and services (or communities) around customer segments. That means we’re getting outside-in before we get to Social CRM, right?

Some of you may have heard of the Social CRM Accidental Community if you’ve been following Social CRM. Most of us met on Twitter early last year using the hashtag #SCRM – and while it’s a challenge having a real conversation on Twitter, we somehow figured each other out. Since then, we’ve actually developed strong relationships with each other, ultimately meeting in Herndon, VA for the first Social CRM Summit (#scrmsummit).

It came to a point where we felt a need to move on from Twitter due to it’s inherent social weaknesses. Social relationships can’t be maintained in 140 character, unthreaded, sound bites.  So, we tried Google Wave.

Google Wave

I had high hopes for Google Wave. Unfortunately, it was too slow, some said it was too threaded (threading 2.0), some said it wasn’t threaded enough, real time group conversations were impossible to follow and it had no email notifications (that one has changed).

I just got done reading through Altimeter’s new paper entitled Social CRM: The New Rules of Relationship Management. While there is little to argue with regarding Altimeter’s report on the 18 use cases of Social CRM, there are some statements that I feel could have been worded differently – or simply left out. I also feel it could have buit a 5M chart that includes more traditional uses cases (even ones most business don’t do well), and how the two aspects of customer engagement relate to each other (traditional and social). The bottom line is…

Social CRM is not an all encompassing strategy

“Sure, we’re customer-centric”, I hear you saying. “Now, this new social stuff…how can we use it to promote our products?”

One of the big dangers, each time a new term is introduced to the world, is the “latching on” that takes place. People and companies latched onto the term CRM and sucked it dry until it really had no meaning left – and it had been commoditized. The term SCRM is also in grave danger – already. While it has been clearly defined (and a stake put in the ground), social media gurus and consultancies are trying to lay claim to a concept that has little or no cross-over into their specific skills and experience. Sorry for being blunt, but it has to be said (repeatedly).

For those of you who are not CRM thought leaders, academics or social media companies trying to invade the CRM space, I’d like to hit the reset button and explain a few things – hopefully in terms that the average business person (who’s creating value) can understand.  I’m am not a thought leader, or a big thinker, so I’ve had to burn some brain calories on this one to get the conversation back on track.

Business is business is business is business is business. Smart businesses have always known that a great customer experience is the best value driver. And delivering that kind of experience comes from knowing your customer’s needs.  The companies that are able to determine customer needs (and here’s a great paper on the subject I got from @GrahamHill) are in the best position innovate and grow.

As with most things in life, that little secret you knew (and didn’t tell your friends) gets “outed” because something changed. Suddenly, your competitive advantage is exposed to the world – and then Paul Greenberg has to go write a book about it. What changed? Well, the customer, of course! But while exposing this little gem something that many businesses had used as as competitive advantage was revealed – customer-centricity.

There are at least three types of business cultures out there.

This list could go on forever, but I’m making a point here —

If your CRM vendor has a website, a blog and an online community powered by Lithium, you probably think they get the whole social thing, right? And if they have the Ideas module installed you’re probably thrilled because now you have a place to offer your ideas directly to the vendor.

What a great concept. You offer ideas, they get voted on by the community, and some are ultimately considered for inclusion into the product. This whole idea of crowd-sourcing can be debated as to it’s effectiveness. But, in a small community of experienced professionals, you’ll usually identify a few ideas that really stand out, and the community votes them into prominence.

I have such an idea. It’s been at the top of the list since it was submitted – months ago. The Ideas community has been around for quite awhile now as well. So, I was pretty disappointed when I found out recently that none of the management had heard of the idea. Then, as I was poking around this community today, I noticed this box….

Since becoming a reborn CRM consultant – at least how I think about CRM – I’ve always tried to look at a business and figure out where they were, evolution-wise, on the path to true customer-centricity.  Placing a business on this simple linear chart makes it easy to understand the work that needs to be done, and it paints a simple picture for your customer.

1. You never even think about your customers
2. You realize that maybe products aren’t everything
3. You realize that customers are everything
4. You realize that your customers deserve more value
5. Your have everything you need to deliver what your customers really need, and you can even shape their behavior

Customer-centric companies have always gotten it. They’ve gone through this, or a similar evolutionary (or maturity) process. But you will stumble upon companies that are at varying stages of this process. Actually, some may think they are standing erect, because the own CRM software, but are actually still dragging their knuckles.

Once in awhile I sit back and try to envision what certain functional CRM pieces might look like in the social world. For instance, what will social relationship marketing look like in contrast to traditional relationship marketing?

I look at traditional relationship marketing, perhaps, differently than many. First, you have to have a relationship. Therefore, in many cases we are talking about customers, but we could also be talking about web prospects who have taken the time to provide some information (on a specific date / time). Obviously, customers have provided one or more transactions to analyze.

In a traditional world, if you were to analyze this information using RFM, you could determine many things. Most importantly, you would know exactly when someone was likely to stop being a customer (or visitor) and proactively do something about it – directly.

I will admit up front that I have never seen the ROI of CRM properly defined. Yes, that means that I have never classified it or calculated it for a client to my satisfaction. That said, I can also share with you that I am so dissatisfied with what I've seen over the years that I've decided to take myself on this journey.

Before I begin with the panel, I'd like you to know where I've come from. Well, I came from commercial banking and dabbled a bit while with a corporate finance boutique. Therefore, I was a believer that I could plop some inputs into a model and output a number (like ROI or NPV or IRR) that would justify an investment.

That can work pretty well when the investment is in computer technology used to consolidate operations, or real estate, or a huge piece of machinery that has definitive costs and the expected revenues can be reasonably estimated. I've always been into the cool financial models. But do they apply here? Simpler models that do basic ROI have problems...