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Could CRM lead to innovation?

For companies to innovate, it is largely understood that there are two components involved: exploiting existing internal repository of knowledge and secondly, exploring new ideas, some of which can be directly adopted from external sources including customers, suppliers, partners etc. On one hand, managers may experience a cultural inertia on the idea of customer as a collaborator; on other hand, there is also an access issue - how do you make relevant customer feedback flow through the organization?

Lego, for example, used a virtual platform legoclick.com to invite customers to suggest new product features and the company rewarded those whose ideas were marketable. Others like Dell are collaborating with customers through online forums, helping it identify new avenues for growth. SAP has a formal program for inviting "expert" customers (or partners) to test out new functionalities in SAP products. At the end of the testing session, partners are required for fill out an online feedback form on areas including usability, performance, functional completeness and correctness.

An IBM study reveals that collaborative partnership with customers makes sound business sense - it not only reduces overall costs, but also helps increase revenues by approximately 40%. Moreover, customers tend to be better retained (loyalty) and enjoy a close partnership with the company.

Which brings me to the question: Is CRM the untapped avenue for innovation? Customer-led innovation can occur when CRM system essentially captures ideas from customers by engaging them in a community-like forum, and some of these ideas could be pursued by the company and tracked through the CRM system. Nowhere this is more relevant than in context of social CRM, that attempts to use external social conversations for business benefit. Customer roles in such an engagement can be broadly formalized into conceptualization, design, testing, support and marketing stages. However, currently, CRM systems are not equipped to incorporate customer involvement in the first three stages. CRM vendors need to explore the possibility of modifying existing capabilities to fit in new ones - for example, in conceptualization, which includes suggestions for new products or for product improvement, the current opportunity management could be modified, the key difference being the change from sales-driven approach to a value-driven one. Linking to other areas of CRM such as loyalty management should also be explored.

Comments

I agree with the fact that the Customer-led innovation has proved many time in the history. Why not CRM? SAP captures ideas from customers though. The best example would be CRM 7.0. SAP has given CRM flavor to few customers and developed, improved many functionalities like assignment of territories, Authorization mgmt, Optimal coverage of sales territories, data validation and pipeline performance mgmt.

Thanks,
Krishna

Thanks for your comments, Krishna. SAP CRM 7.0 being an innovative product is one part of the story, but the question is: could we track innovation through CRM systems? Co-innovation involves customers being part of the innovation process, and CRM system should ideally be equipped to handle this customer interaction.

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