The CRM market is shaping up to be the ultimate roller coaster ride. No other technology has been surrounded by such compelling hype and growth while being accompanied by so much hesitancy and expensive failures.
Will CRM become as much a staple in banking as a loan origination system? Will the use cases become so important to scale an organization that it’s considered a required investment?
Let’s start with the current status: CRM systems are a luxury good. This is an undeniable fact despite an ever-growing list of compelling use cases, more clear paths to a legitimate ROI, and the drool-worthy automation possibilities. The only way this will change is if the recent wave of CRM implementations demonstrates such a convincing return that onlookers are forced to adopt.
While that may very well come to pass, it won’t be this year. Recent purchases will take time to implement, adopt and digest. The bank-specific CRM models are still relatively new, and many organizations are either waiting to see the results or until other resource-intensive projects are behind them.
Salesforce as a Proxy
Another undeniable fact is that Salesforce currently represents the global CRM market. The annual Dreamforce conference has become a symbol for how pronounced Salesforce is in the industry. Sprawling across 11 city blocks in San Francisco, over 170,000 attendees weaved their way through endless speeches, vendor demos, sales pitches, networking sessions, game shows, concerts and late-night parties. Cornerstone attended Dreamforce in the shoes of a community financial institution in search of the CRM unicorn: ROI. Although there were plenty of great use cases to be found, it took sincere effort to navigate the 2,700 scheduled sessions to find the needles in a haystack of Salesforce euphoria.
More important than an annual popup theme park conference, recognizing Salesforce as a proxy helps assess and predict the broader market development. Salesforce’s “CRM” stock ticker has skyrocketed in recent years due to a combination of smart market segmentation and aggressive growth through acquisition. In the wake of the company’s success is a blossoming mix of rapidly improving incumbents, highly successful foreign entrants seeking U.S. expansion, and hungry startups funded by investors to seize on the opportunity.
Even if Salesforce isn’t the right solution for everyone (read: it’s not), its platform growth and forecasts should be monitored as a helpful indicator. The company has said financial services is their number one vertical and banking is the fastest growing segment. But will that continue in a more uncertain and tepid year for the industry?
Dreamers vs. Naysayers
The Dreamforce experience also sheds light on a growing divide between two factions: Dreamers and Naysayers. Representing the Dreamers are early adopting Salesforce acolytes who generally made massive investments in platform development to push the limits of relationship management and automation capabilities. In the opposing corner are the Naysayers, who witnessed their neighbors overspend on vague hopes of achieving a fuzzy math ROI pushed by sales reps and no meaningful progress to show for it.
Truthfully, categorizing current CRM adopters in either category is more challenging than either side would like to admit. Many of the Dreamers skipped evaluation of the vendor market and signed on with implementation partners naively assuming that the platform would automagically deliver growth or that the third-party developers would tell them how it’s done. Conversely, many Naysayers pessimistically claim their observations of a lack of bank-wide adoption and half-hearted attempts at managing a complicated platform are evidence that it’s a fruitless effort.
Unlike debates in my house, where I’ve learned my wife is always right, the CRM reality is somewhere in the middle. I’ve yet to see a believable ROI analysis produced by a vendor but have observed a variety of impactful use cases that have undoubtedly more than paid for the hefty expense. And the API-driven control over technologically enabled customer engagement sincerely offers community banks a suite of capabilities that have historically only been accessible by super regional and mega banks developing custom solutions.
The Conquerors
The middle ground between Dreamers and Naysayers is populated by a handful of Conquerors. This group doesn’t get the attention it deserves because they aren’t blindingly optimistic promoters preferred by Dreamers yet are pragmatically solving specific pain points felt by Naysayers. Cornerstone Advisors believes there are a handful of best practices that will be adopted to separate the winners and losers. As a starting point of best practices, the CRM Conquerors will commonly exhibit the following behaviors:
- View CRM as an accelerator and money saver without attempting to create a new point of sale or loan origination platform. Clearly identify the role of the CRM as part of a broader workflow and establish an integrated, standardized experience for employees.
- Be organized on use cases and a minimum viable product (MVP) philosophy. Expand functionality iteratively focusing on one line of business at a time.
- Tie use cases to success metrics and assign ownership to improvement. ROI isn’t calculated by broad assumptions of improved member profitability or decreased operational expenses without specific use cases supporting the logic.
- Drive the organizational change necessary to maximize adoption. Whether it’s employee responsibilities, habits or even incentives, buyers must anticipate both technical and organizational disruption to the business.
Predicting the Future of CRM
Several more Conquerors will emerge from their CRM trials and tribulations over the next 12 months. The question is, will there be enough successes to convince the industry the Dreamers were on to something, or will the number of unprepared buyers be more fodder for the Naysayers? I’m predicting there will be casualties from multiple organizations that underestimated the scope and costs, but there will be more positive momentum than bad as the most recent wave of purchases work their way toward go-live this year.
Will CRMs shed the “luxury good” label and become a key ancillary platform? Before that can happen, the total cost of ownership has to come down through further refinement of out of the box solutions. The theoretical shift won’t take place for at least three years, but 2019 will be very telling about the likelihood of a transformation. In the meantime, I like the competitive advantages that come with being one of CRM’s Conquerors.
Interested in specific examples of how Conquerors are working toward a realistic return on their investments? Watch for my next GonzoBanker article, “Banking’s CRM Conquerors,” which will provide a variety of real industry use cases that are applicable to just about any bank and credit union.