It is often said that only a poor worker blames their tools and only an inferior supplier blames the customer for their problems with a product. But there has been an ongoing crash in the CRM which I have been monitoring for 20 years. As someone with another career in technology product sales and marketing, I feel qualified to make counterintuitive observations about CRM.
Certainly, CRM has been a godsend for companies that use it properly. My own pre-CRM experience of trying to maintain offers and opportunities or trying to find and market interested customers informs my estimate of the bad old days. It also shows how much can be accomplished when CRM is done right.
But too many user organizations just don’t seem to embrace CRM to the extent necessary to be successful, even after more than two decades of trying. I’ve made this point before, but it’s true, and the research I’ve conducted directly indicates that adoption is a major barrier to success.
A project we carried out for Oracle is particularly revealing. We found that people would rather do a lot of other things – even clean the bathroom – than update their CRM systems and Forbes had a field day with her.
As I pointed out, this has been going on for years. Where some companies invest in CRM, learn its methods and adopt it, many others choose a few applications without thinking about adapting to the technology. The results were hidden for a long time in part because, as my other studies have also shown, people, employees, are good at filling in the blanks. For example, they have up to eight screens and windows open at all times to integrate data on the fly that stubbornly remains in silos.
But here’s the trick. Business is now too busy, big and complex to keep pieces of it in your head or on post-it notes. More importantly, the kind of thinking that accompanies customers is changing in noticeable ways. Change is nothing less than a shift from deductive reasoning to inductive reasoning. The last time something like this happened, Western civilization emerged from the Middle Ages to the Enlightenment.
Inductive or deductive reasoning
Now I am not suggesting anything as dramatic as it is happening in our time, and to be sure we may have to wait a few hundred years to find out for sure. The crux of the matter is how we find and process information.
Compiling a sales forecast is an example of deductive reasoning. We make sales calls, take notes, and hopefully add them to our CRM systems from which we derive forecasts. This is all deductive reasoning and is the source of many leaders’ frustration with CRM because the forecast is, meh. Despite our best attempts, people may not report all the facts or confuse them in the forecast. How medieval.
Analysis and machine learning are the basis of inductive reasoning in CRM (and in the Enlightenment); they allow us to extract information from data that we may not even know. But inductive reasoning has a few drawbacks common to modern thinking in general which must be kept in mind and under control.
Inductive reasoning only leads to probabilities suggesting what will happen in the future. Whether a customer will actually close the deal can only be fully understood after the fact. Deductive reasoning, done correctly, gives us certainty even though it may be wrong. If a customer says they’re engaged in a purchase, we tend to flag it in the forecast and if the customer pulls out, well, we were right, except for that one thing.
Analytics and machine learning can look at the same data and identify inconsistencies with previous agreements, such as the salesperson forgetting to verify that a budget exists for the purchase. This is why inductive reasoning might be better in telling us that we will / will not forecast rather than telling us which offers will be safe.
If you are a deductive reasoner, you are probably the one who trusts his instincts. The corollary of CRM is that you buy and use record keeping systems, and unfortunately a lot of them are not connected. The eight screens noted by our survey panel (n = 510 btw) are symptomatic of this phenomenon. We buy SFA and CPQ but ignore the importance of integrating them, for example.
We used to assume that customer-facing employees collated the data into a quote – and they can – our survey shows. But then something great and unforeseen happened. The school of instinct began to lose out to the school of inductive reasoning because the latter had a much easier time generating quotes and propositions, among other things. Employees in contact with customers found it easier to do their jobs and could do more in a day.
Too many people in our survey reported working in their personal time and starting the day right after getting out of bed or in the bathroom.
The next big idea in CRM
Inductive reasoning is still in the minority of CRM ideas. By my estimate, only about 25% of businesses use CRM properly, but they get more than their share of transactions. All the talk about inductive and deductive reasoning and gut instinct probably won’t move the needle. What is lacking today in a more efficient CRM is of course technology, but also a culture change in many companies.
A culture of continuous improvement in the front office, supported by leadership teams willing to invest in employee time and training tools, may be the next big idea in CRM.
We have a lot of CRM technologies that are underused or misused simply because we don’t have enough trained people. It is precisely no one’s fault, things like this are sneaking up on you. But once a company with a culture of continuous improvement sees this, there is only one thing to do.