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When most people hear the term CRM (customer relationship
management), often they still think of the call center. For the
uninitiated, CRM is a suite of products that helps a vendor better
communicate with the customer. I’ve described CRM as a religion because
of its intangibility. While there are products that clearly fall under the
CRM umbrella, CRM is more of a way of dealing with customer satisfaction
as opposed to something easily stuffed into a box.
That being said, it is undeniable that CRM’s roots are
in the call center. Although the term “call center” has become
something of a dirty word, replaced by the more acceptable “contact
center,” the call center was the birthplace of remote, measurable
customer service. That is what CRM is all about. Subsequently it was the
call center vendors who made the first inroads into the CRM market, and by
call center vendors I mean anyone with a stake producing products that
reside there such as PBXs, ACDs, databases, predictive dialers, and
workforce management software. These pioneers invented the industry.
Those of you who read this column with any regularity know
that I like to categorize products and markets. As an analyst I am forced
to both size and forecast markets; without clear borders that becomes a
practical impossibility. So once again I am going to draw a red line
through a market. In the past, for a CRM solution one would simply go to
the same vendor that equipped the rest of the call center. Now there is an
entirely new breed of CRM vendors -- those who have their roots somewhere
other than the call center. I call these two categories the traditional
and non-traditional CRM players.
TRADITIONAL VENDORS
There are very significant differences between the two groups. The
traditional vendors (with roots in the call center) typically are entering
the CRM space from a voice standpoint. Most of them were in the business
of manipulating voice (or contact center databases like in the case of
Siebel or Oracle.) While this gives them a head start in voice processes,
it also means that in many cases they are playing catch-up in other
contact methods, namely Web-based forms of communication like chat or
e-mail response management.
Second, traditional vendors have been in the contact
center space for over two years (many more in some cases.) This gives them
a significant advantage in the areas of installation and integration, as
they have been dealing with the potholes and pitfalls inherent in legacy
equipment for several years. Finally, most traditional vendors offer their
solution as a hardware and/or software platform. This means a more robust,
customized solution, but also a greater degree of difficulty with
installation and upgrades.
Traditional vendors have an early lead in providing
complete CRM solutions. This is primarily because in many cases, they have
been in the contact center business for over a decade and have significant
experience to draw from. The same sort of management and skills used to
man a call center can be used to manage an Internet-enabled contact
center. The technology is different, but the philosophy and integration
skills are the same. However, this lead will not last forever. The
non-traditional vendors are quickly creating products that have the same
administrative tools and integrate just as well with existing systems.
Integration and administration are the only significant advantages the
traditional vendors have over the non-traditional, and this situation won’t
last long.
Traditional vendors also need to change their mindset
about types of contact. Voice is still the most important contact medium,
and will likely remain so into the foreseeable future. However, most of
the non-traditional vendors come from a data background and have very
strong offerings in the areas of e-mail, chat, and Web collaboration --
areas in which traditional vendors are not experienced. As the
non-traditional vendors get better at administration and integration,
traditional vendors will increasingly need to offer stronger Web-based
contact points to stay competitive.
While traditional CRM vendors have years of provisioning
voice-centric CRM solutions to the market, non-traditional vendors emerged
on the scene less than two years ago. Although new to the CRM game, the
non-traditional vendors are a notable force of change as they bring new
technologies to interact with customers. Born of the Internet, their small
size and flexible architecture give them an advantage over the industry
giants that were typically steeped in client/server architecture and
lengthy implementations.
Unlike their traditional counterparts, non-traditional
vendors have their origins in Web-based forms of communication, such as
e-mail response management, Web collaboration, VoIP, and chat.
Capitalizing on the need for online customer interaction, non-traditional
vendors emerged to provide Web-based solutions to businesses looking to
leverage the interactive nature of the Web. Finally, non-traditional CRM
vendors typically provide a software-based solution either through
licensing or a hosted option giving them an advantage in install time and
scalability.
The traction and market share gained by the
non-traditional vendors is starting to come under pressure as businesses
seek one solution to address multiple touch points. As the CRM market
continues to consolidate, non-traditional vendors will face considerable
competition from the traditional vendors as they broaden their
capabilities to include Web-based channels. Traditional vendors have a
distinct advantage as they have already developed complex solutions and
will be able to add the less complicated technology of Web-based
solutions. The development of the Web-based market represents an
opportunity for traditional vendors to accommodate the needs of existing
customers as well as provide a more complete solution to new ones.
However, the reverse is not true for non-traditional vendors whose
customers will already have voice products making it harder to penetrate
into the more developed market of provisioning voice.
The success of the non-traditional vendors is notable but
pales in comparison to the expansive number of an installed customer base
of many long-time traditional solution providers. Building out their
solutions, traditional vendors have the luxury of established
relationships with customers that will simply implement the new Web-based
applications with their legacy system as part of an overall upgrade.
Adding an e-mail response management or chat application from a telephony
provider will be much more appealing to businesses than implementing
another CRM solution from a new provider.
While it is easy to draw a red line through the industry
now, that line will fade as time passes. Traditional vendors will offer
more Internet-based solutions, and even acquire some of the
non-traditional vendors to speed implementation. The non-traditional
vendors will do the reverse, offering voice solutions and may even start
selling software and hardware. These are two very different approaches to
a similar philosophy and neither one is better than the other. Like many
other business segments that compete in the Internet, I expect the lines
to blur quickly.
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