The Future of CRM

© 2010 RAZORFISH. ALL RIGHTS RESERVED.2
TABLE OF CONTENTS
CRM EVOLUTION:
EIGHT KEY DRIVERS PG. X
section ONE
THE CONSUMER'S
VIEW PG. X
section TWO
section THREE
THE FUTURE OF CRM:
SIX KEY TRENDS PG. X

© 2010 RAZORFISH. ALL RIGHTS RESERVED. 3
INTRODUCTION
In 2008, Razorfish explored The Future of Retail for JCPenney. We noted
the increasing complexity and sophistication of the global marketplace,and
that retailers who have embraced change—leveraging the power of new
technologies and media spaces, while putting the customer’s needs, wants,
and desires at the center of the experience—have flourished.
For 2010 and beyond,we have updated and broadened this study to provide
our point of view on The Future of CRM in general.It is our belief that this
discipline offers brands of all kinds the most comprehensive way to thrive
in a chaotic marketplace,to take advantage of new technologies,and to leap
on important trends and ride them at their crest. CRM is also the master
key to picking out high value customers—the ones with influence as well
as loyalty—and engaging with them in a sustained fashion.
WHEN WE SAY CRM,
Customer relationship marketing (CRM) is the strategic management
of customer interaction activities across multiple departments.
It enables companies to have a broad view of each customer. The
application of CRM builds marketing insight and direction that go
far beyond a single campaign to inform many parts of the business.
It includes a vision for technology that supports marketing automation
and channel solutions, where information from across the enterprise is
leveraged for multichannel marketing efforts.
Ultimately, CRM provides the framework for how retailers mobilize their
organization to most effectively nurture and retain and create advocates
out of their most valuable customers.
we mean...

INTRODUCTION
Where CRM is Heading
In the past, the emphasis (within retail organizations) was on
merchandising—getting attractive products to sell. Marketing
was about sending out a message and expecting it to be heard.
Today there is much more attention on getting to know the
customer better, orienting the marketing based on customer
needs and to retain the customer base.
But there is a power shift happening. Consumers now trust
one another more than they trust marketers, and social media
gives them new ways to connect with each other one to one
and en masse.They determine what is relevant to them, and
can avoid communications they don’t want by a click of the
mouse, a flick of the DVR ‘skip’ button, or a quick step to
the recycle bin.
To respond to this shift, organizations will need to take the
final steps in this direction and become fully customer-centric.
Some very successful companies are already walking the walk
of customer-centricity as well as talking the talk. Cisco, Gilt,
Polo Ralph Lauren’s Rugby—to name a few—are applying the
new principles to their organization and living them out.To be
competitive, all companies need to turn up the heat on their
urgency to get focused on the consumer—and know that they’re
in it for the long haul.

The future of CRM is firmly
centered on the consumer.
The consumer's world is fragmented—filled to distraction
with messages emanating from sources old and new. To
cut through the clutter and earn the trust of their customers,
marketers must know each individual customer and cater to
his or her needs, while being respectful of their personal data,
and engaging them in ways that are worthy of their attention.
Several emerging trends point the way
to future CRM success.
Understanding the importance of new trends and knowing
when and how to leverage them is another key element for
brands. Embracing the wave of innovation will require new
approaches to communication planning, shifting towards an
approach based on maximizing customer lifetime value. All
of this will require a revamped organizational model built
around consumer engagement.
A technology framework
is evolving that supports this future.
Brands will have access to an accelerating evolution of tools
and technology which, when harnessed, can bring order to
the chaos caused by the proliferation of new channels and
devices, new virtual communities and ubiquitous content
that are flooding the digital space and influencing purchase
patterns, loyalty, and modes of shopping.
EXECUTIVE
SUMMARY

OUR APPROACH
• Analysts and their
published reports—
Forrester, Gartner,
Aberdeen
• Others in the space—
Acxiom, Rapleaf
• Razorfish Outlook Report
– “One-to-One Marketing
to the Masses” and
“Fragmented Consumer”
• Razorfish5 2010
• eCRM Advisor
• Razorfish published
articles: MediaPost,
DM News
• Razorfish CRM
organization roadmaps
• Razorfish FEED 2009
• Virgin America Customer Study—
to be released publically in September
• Analyst surveys of consumers—
e.g. Compete, Forrester
• Our own client experience
• Cross-agency experience—
interviewing those teams,
reviewing results
• Publicized examples
CONSUMER
INSIGHT
FUTURE
OF CRM
CROSS-CLIENT
VIEW
OUR
EXPERIENCE/
REPORTS
ANALYST
VIEW
data SOURCES

OUR APPROACH
RESEARCH COMPLETED LEVERAGING VIRGIN AMERICA
CUSTOMERS CAN SERVE AS A PROXY FOR THE FUTURE
High technology adoption rate
(as compared to MRI/eMarketer data)
We predict technology will be mainstream
(accessible to the masses)
Asked about industry in general, yet may be pre-disposed to be in
an air-travel mentality—data comparison does show otherwise.
Respondent state of mind at the time of the survey—we do know
from the phone surveys, it is likely they were thinking about making
a purchase or addressing a customer service concern.
CAVEATS

CRM EVOLUTION:
EIGHT KEY DRIVERS
section ONE
CRM Evolution: Eight Key DriversSec. ONE

CRM Evolution: Eight Key Drivers Sec. ONE
DEMOCRATIZATION OF DIGITAL
CHANNEL PROLIFERATION
DATA COLLECTION & INTEGRATION
TOOLS & TECHNOLOGY
MEASUREMENT TECHNIQUES
CONSUMER MINDSET
CRISIS
PRIVACY & PERMISSION
As little as ten years ago, database/CRM marketing was
simple, compared to today. Statistical techniques leveraging
consumer behavior data used a 50-year-old segmentation
model of Recency, Frequency and Monetary Value (RFM),
and the number of channels through which we could
engage our consumers and prospects was minimal.
Today the “Place” in the Four P’s of database marketing
(People, Place, Price, and Promotion) has exploded well
beyond phone, direct mail, catalogs, and email to include
social sites, communities, mobile apps, and much more.
The sheer magnitude of getting a multichannel campaign
out the door has crushed many a talented marketer.
To effectively prepare for the future it is crucial first
to understand what influences its destiny.This section
identifies eight key factors in the evolution of CRM.
CRM EVOLUTION:
EIGHT KEY DRIVERS

The Digital Divide in America is one for the history
books at this point. According to the U.S. Census
Bureau’s Current Population Survey, 63.5% of the
population has broadband—up 25% from two years
earlier. Mobile phone adoption also continues to
accelerate, led by African American and Hispanic
minorities, well known for early adoption.
Tomorrow holds explosive growth as we watch
the broadband network grow, new purpose-built
devices introduced, and price tags decline.
With increased access comes enhanced
exploration and pushing the boundaries of
typical engagements with brands. How and
when a consumer shops and where she shops
are no longer restricted to in-store and website.
Devices such as the smartphone and iPad,
platforms such as Facebook and Twitter,
technologies such geo-tracking and RFID
tags mean brands can be ubiquitous.
Retailers need to start prioritizing channels
today, learning how to best engage through
those channels, and identifying the right level
of resources to support those engagements.
Now moore than evere , retailers need to fully unnded rstand Customer Lifetime Value (CLV), ene hance this equation withh social
influeencnce scorese ,, idene tify whih ch metethodsd are thee ggreata est driverss to acquirere aand retaia nn highg -valuee consumem rss, and creae tet
business cases too meet tthe needs and expectations of connsumers in those channels.
DEMOCRATIZATION OF DIGITAL CHANNEL PROLIFERATION

Kindle Books Outselling
Hardcover Books. “Tipping
Point” Reached, Amazon Says.
" The Wi-Fi Alliance is nearing comple-
tion of a new specification to enable
Wi-Fi devices [Wi-Fi Direct] to connect
to one another without joining a tradi-
tional home, office, or hotspot network."
" [You can] walk into your local wireless provider and walk out
with a smartphone-enabled phone that allows you to download
apps and be on social networking sites and communicate via
sharing photos and videos with your friends. The cost for that
has become much more accessible. And that's one of the
leading motivators."
Apple revealed it sold more than
3.27 million iPads in the three
months ended June 27, 2010.
Six in 10 African Americans and Hispanics use their cell
phones to get onto the Internet, a greater portion than for
the overall adult population.
(1.) WiFi Alliance Press Release, October 14, 2009 - http://www.wi-fi.org/news_articles.php?f=media_news&news_id=909 (2.) NPR, Blacks, Latinos Heavy Consumers Of Mobile Technology, July 21, 2010
(3.) Hartley, Matt, Profits Exceed Expectation with iPad, iPhone 4 Sales, The Vancouver Sun, July 21, 2010 (4.) Siegler, MG, Kindle Books Outselling Hardcover Books. “Tipping Point” Reached, Amazon Says,
TechCrunch, July 29, 2010 (5.) Kang, Cecilia, Going Wireless All the Way to the Web, Washington Post (citing Pew Research Center data)
(1.) WiFi Alliance Press Release, October 14, 2009 - http://www.wi-fi.org/news_articles.php?f=media_news&news_id=909 (2.) NPR, Blacks, Latinos Heavy Consumers Of Mobile Technology, July 21, 2010
(3.) Hartley, Matt, Profits Exceed Expectation with iPad, iPhone 4 Sales, The Vancouver Sun, July 21, 2010 (4.) Siegler, MG, Kindle Books Outselling Hardcover Books. “Tipping Point” Reached, Amazon Sa
TechCrunch, July 29, 2010 (5.) Kang, Cecilia, Going Wireless All the Way to the Web, Washington Post (citing Pew Research Center data)
azon Says,
" The Wi-Fi Alliance is nearing comple-
tion of a new specification to enable
Wi-Fi devices [Wi-Fi Direct] to connect
to one another without joining a tradi-
tional home, office, or hotspot network."
“The Wi-Fi Alliance is nearing
completion of a new specification to
enable Wi-Fi devices [Wi-Fi Direct] to
connect to one another without joining
a traditional home, office, or hotspot
network.” " [You can] walk into your local wireless provider and walk out
with a smartphone-enabled phone that allows you to download
apps and be on social networking sites and communicate via
sharing photos and videos with your friends. The cost for that
has become much more accessible. And that's one of the
leading motivators."
“[You can] walk into your local wireless provider and walk
out with a smartphone-enabled phone that allows you
to download apps and be on social networking sites and
communicate via sharing photos and videos with your friends.
The cost for that has become much more accessible. And
that's one of the leading motivators.”
(1.) WiFi Alliance Press Release, October 14, 2009 - http://www.wi-fi.org/news_articles.php?f=media_news&news_id=909 (2.) NPR, Blacks, Latinos Heavy Consumers Of Mobile Technology, July 21,
2010 (3.) Hartley, Matt, Profits Exceed Expectation with iPad, iPhone 4 Sales, The Vancouver Sun, July 21, 2010 (4.) Siegler, MG, Kindle Books Outselling Hardcover Books. “Tipping Point” Reached,
Amazon Says, TechCrunch, July 29, 2010 (5.) Kang, Cecilia, Going Wireless All the Way to the Web, Washington Post (citing Pew Research Center data)

Data is expected to grow tenfold in the next five
years, according to a 2009 IDC study. Unless
marketers look closely at where customers are truly
interacting with the company, how that engagement
takes place, what opportunities to collect key data
exist, and how to leverage that data, marketers will
surely drown in all this information.
The ability to take action is as important as the
ability to collect the data. Over time there has
been a convergence of technology taking place
which is enabling companies to manage customer
data in new ways.These advancements are making
complex tasks simple without breaking the bank,
and allowing you to grow without having to tear
down walls to add server space.
Today’s technologiese (and tht ose right around tthe corner) make what once wass impossiblee, possibble when it comes
to levvereraga ing keeyy datat to creaate excepe tiono al custot mem rr engagementn s. Yet nowow more thhana evev r IT andn markek tingg need
to work hand-in-hahand to lay out the roadmap to supportt theh se growiwing needs.
DATA COLLECTION & INTEGRATION TOOLS & TECHNOLOGY

180
06
07
08
09
10
11
Interactions between people via
email, messaging, social networks,
etc. will grow by a factor of 8.0.
Over the next four years, the number of
mobile users will triple, and 600 million
more people will become Internet users.
Nearly two-thirds of all Internet users
will use mobile devices at least some of
the time.
While the pace of digital information increased in 2008, IT
budgets declined, thus creating an even larger divide between
the amount of information generated and the amount of IT
resources purchased and deployed to manage it.
Non-traditional IT devices such as wireless meters,
automobile navigation systems, industrial machines,
RFID readers, and intelligent sensor controllers
will grow by a factor of 3.6.
EMC-sponsored IDC study titled
“As the Economy Contracts, the Digital Universe Expands,” May 18, 2009
(EXABYTES)
1,800
digital information
10x growth in 5 years

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This new discipline of text analytics allows us
to turn text into data, and to measure sentiment
more accurately.
Thus, no longer will an open-ended question in
a survey make a statistician quake. And the Paco
Underhill disciples of the world can improve their
expensive, time-consuming brand exploration
exercises by listening to tens of thousands of
people at once.
The new measurement techniques give us a less
risky starting point on brand positioning and
messaging, and inform us, in terms of CRM,
how best to engage.
Measurement plans are steeped in time-tested
methodology.Yet, with the desire to harness all the
conversations occurring online, new technologies
created to meet these needs are quickly dissolving
what once was a barrier between qualitative and
quantitative measurement approaches.
Derived from Defense Department research aimed
at identifying terrorists and monitoring trends in
their communications and activities, new tools are
available to marketers that permit us to model and
structure the information content of textual sources.
MEASUREMENT TECHNIQUES
A well-ddefined meaasurementn plan coupled witht these new techniques providese a less risks y starting point on brand pop sitioning
and memesss aging, aand informss, in termsm off CRM, hhoww bbese t to engagge. Regarrdldlese s if it is a time-testede appror achh or a newe
method, measuremement plp ans need to be designed, developped, and imi plemented uniforormlm y acror ss the entire organization.

Younger generations and early adopters are putting
pressure on the integration of cultural norms with
their digital world, creating a growing, always-
tracked, always-on, always-engaged population.
Customers want to feel valued and want their needs
addressed in real-time—regardless of the channel
they choose.Treat customers with respect and
trust and they will return the favor.This means our
traditionally held beliefs and approaches around
engaging consumers need to change.
CONSUMER MINDSET
In the “old days,”if a customer had a good
experience with your company they might tell
3 people, and if they had a bad one, they would
tell 10.Today, that 10 could be 10 thousand or
10 million thanks to the megaphone of blogs,
YouTube and Twitter. Companies must learn from
the crises others have faced and be proactive in
addressing customer complaints—or providing
better service in the first place. Comcast turned its
customer service on its head after millions viewed
a video of an employee asleep in a customer’s
chair. Conversely, Zappos has harnessed the social
space to address customer service needs with great
flourish and creativity.
Now, more thann ever markkete ing, sales, public relations, annd custstomer service need to wwork togethher to monitor, listen, and
engagege thiss new consumer. Retentioon is no longere achieved simply with an ooffffer fror m marketing to stay (orr come back) and
sas les andd custommerr service reppresenttattivess ccannot to be teethered to a scs ript. ReR membere , wiw th the pottential for dissasa terr also
coomes the unnique oppp oro tuniityy to surprise and delight.
CRISIS

Digital brand experiences create customers. As we’ve found
in our study, the overwhelming majority of consumers who
actively engage with a brand digitally—whether by creating
content for a contest or by liking a brand on Facebook—show
a propensity both to purchase products and recommend those
products or that brand to others. When they respond to customer complaints on
Facebook, Golfsmith learned that those customers
were more likely to come back to Golfsmith.
(1) Razorfish’s FEED
(2) Bazaarvoice, Social Commerce Trends Report, April 19-21, 2010

We are engaged in an ever-progressing and broadening debate about
the proper handling of Personally Identifiable Information (PII) and
the proper use of behaviorally targeted advertising. Here are four key
considerations all marketers should be thinking about when it comes to
privacy and permission.
(1) Standards & Laws Are Changing All the Time. Consumer privacy
and preferences, as they relate to marketing, are a key concern for clients.
While the approach in the U.S. has generally been to rely on companies
and organizations to self-regulate, there is legislation that attempts to
limit the display, purchase, or sale of Personally Identifiable Information
without the person's consent.
(2) Transparency & Disclosure Are Critical -Notice & the Ability
to Opt-Out are Not Enough. In reference to a study conducted by The
University of Pennsylvania and University of California (Berkeley),
Every time your customer browses the Internet
in search of a new house, texts to give ten dollars
to Haiti, responds to an offer to receive more
information about the iPad, or checks the balance
of their 401(k) from their smartphone, they
demonstrate trust that the information they chose
to share will be protected.Whether or not they
know these activities can be tracked and used by
marketers to target you in future, based on those
behaviors, is an ongoing discussion.
PRIVACY & PERMISSION

(3) Privacy Will Challenge Everyone's Technical Infrastructure.
Exactly where Personally Identifiable Information should reside
within a company or organization is a very important question
being asked today.The decision can not only make the difference
between being in compliance with such standards as PCI (the
Payment Card Industry data security standards), but can also
have a huge financial impact on a company.
(4) Permission or Consensual Marketing Really Does Matter.
Make no mistake, customers are in charge these days.They
can filter you out, search anonymously, blog about their
recent experiences with you, and broadcast a message to their
professional network online to avoid you and your services.
In short, ultimately the consumer decides when it is time to
engage. It’s what your mother always told you—listening is more
important than talking. So next time, ask them for permission
before you start talking.
the Center for Digital Democracy recently pointed
out that privacy policies are often misunderstood
and alone may be inadequate. Many adults (63%)
incorrectly believe that if a website has a privacy
policy, it means that the site cannot share collected
information about them with other companies
without their permission. One reason for this
misunderstanding may be that privacy policies
are written in legalese that most consumers can’t
understand. If marketers must get consumers’
affirmative consent to track their behavior for
advertising purposes, the marketers will have to
clearly explain the benefits to persuade people
to sign up.
CONTINUED...
Customer-cenntrt ic organizzations need someone in charge of the whole issue of prp ivaccy—y a Chief Privacy Officer or Privacy
Czarr—who understands connsumersr ’ needs, perrceptions, and expectations,, ana d knows how to balana ce theh m against thhe
markettini g depap rtment’s needd for datat in oro der to create relevancy. The Czar wiill alsoo woork with the legal dedepartmem nt to
ensure the ccompany acts wiwitht inn the bbounds of applicac ble legislation.

THE
CONSUMER'S VIEW
section TWO
The Consumer's View Sec. TWO

The Consumer's ViewSec. TWO
Consumers’ relationships with brands have become
more fragmented. The industry has seen a trend of
specialty stores stealing share from department stores.
Even outside of retail, boutique brands like hotels and
airlines are stealing from the big players. Additionally,
discount stores have gotten more aggressive with both
lowering prices and upping their style ante.
Consumers have shifted from having more of a retail
best friend (often referred to as “my store”), to more
of a collection of good friends and acquaintances
(a mix of retailers across the spectrum, each with
varying levels of engagement).
THE RELATIONSHIP BETWEEN
THE CONSUMER & THE BRAND
HAS CHANGED
WHERE CONSUMERS STAND

EVERYONE IS CREATING
THEIR OWN MIX
As we see in the Young Moms research, she shops a mix of department stores,
discounters, and specialty retailers—adapting her shopping preferences as her
needs and goals for the family fluidly change.
DIFFERENT OCCASIONS
MEAN CALLING ON DIFFERENT STORES
As she shops across her mix, her level of expected
relationship varies. With some stores she wants to
share an exciting and deep relationship, while with
others she just hopes for a generally forgettable,
pain-free experience.

At a minimum, all the stores in her mix give her rational fulfillment—
they allow her to check off her to-do list and go about her day.
But like her good friends, her favorite stores add an extra layer of
emotional fulfillment as well. They win both her mind and her heart.
THE PAYOFF FOR CONSUMERS:
REWARDS FOR BOTH THE MIND & HEART
“I got this cute thing for a great price.”
THEY MAKE HER FEEL SMART/SAVVY
“I love all the little things they do for me.”
THEY MAKE HER FEEL APPRECIATED
“I like shopping here because their products make me feel
_________ (stylish, eco-friendly, comfortable…).”
THEY MAKE HER FEEL CONFIDENT

To take these insights further, Razorfish conducted research into
how consumers want to engage with brands, the value they see in
the channels being offered, and what types of experiences they
want in each of the channels.
What we found is that engagement is more than just the channel.
It is the dialogue that takes place (one-way or two-way),
the ability to choose how and when to engage (e.g., opt-in
or opt-out), the value each channel represents, and whether
or not expectations were met.
Our research also revealed six primary qualities, or elements
consumers expect from brands with which they wish to maintain
a relationship.
engagement
HOW CONSUMERS VIEW

SHE FEELS THAT A COMPANY CARES
ABOUT HER AS A PERSON, GOES
OUT OF ITS WAY TO SUPPORT HER
NEEDS, AND IS WILLING TO LISTEN.
HER TIME AND ENERGY ARE
RESPECTED AND HER NEEDS ARE
ADDRESSED IN A TIMELY MANNER.
SHE FEELS CONFIDENT THAT THE
INFORMATION RECEIVED FROM A
COMPANY IS BELIEVABLE.
SHE CAN SEE UNIFORMITY IN
THE POLICY, ATTITUDE,
COMMUNICATION STYLE, AND
MESSAGING FROM A COMPANY.
SHE WANTS MESSAGING OR
RESPONSES FROM A COMPANY THAT
ARE THOUGHTFUL, OF INTEREST
AND PERSONALLY APPLICABLE.
SHE CAN DETERMINE IF, WHEN,
AND HOW A COMPANY WILL
COMMUNICATE WITH HER.
VALUED
CONSISTENCY
RELEVANCE
EFFICIENCY
TRUST
CONTROL
HOW CONSUMERS VIEW ENGAGEMENT
THE SIX
ELEMENTS OF
ENGAGEMENT

Currently, engagement is broadly defined by marketers as a specific set of measures within
a single channel that do not take into account the qualitative aspects of the engagement.
However, when measured in our 5,400 participant survey, we found that Value, Efficiency
and Trust, respectively, were overwhelmingly the three most important engagement
attributes. These were followed by Consistency, Relevance, and Control, in that order.
ELEMENTS OF ENGAGEMENT
25 - 34 35 - 44 45 +
VALUED
3.0
2.5
2.0
1.5
1.0
0.5
0.0
EFFICIENCY
TRUST
CONSISTENCY
RELEVANCE
CONTROL
LEASTIMPORTANTTOMOSTIMPORTANT

BOINGO TOOK THE TIME TO FIND
WHEN CONSUMERS WERE TALKING
ABOUT THEM AND ADDRESSED
THE CONCERN.
RESPONSES WERE
IN NEAR-REAL TIME.
HUMAN RESPONSES (NOT CANNED)
CAME FROM THE @BOINGO
TEAM, WHO ARE DEDICATED TO
SUPPORTING CUSTOMER NEEDS.
COMMUNICATION TONE AND
MANNER ALIGN WITH BOINGO'S
ON-THE-GO WI-FI SERVICE.
RESPONSE WAS
DIRECTLY RELATED TO
THE ISSUE.
EVERYTHING REMAINED WITHINEVERYTHING REMAINED WITHIN
TWITTER, WHICH WAS THE
CUSTOMER'S CHOSEN MEDIUM.
VALUED
CONSISTENCY
RELEVANCE
EFFICIENCY
TRUST
CONTROL
THE SIX ELEMENTS
IN ACTION: BOINGO
The above Twitter exchanges
demonstrate how Boingo delivered
the type of engagement expectations
that consumers want.
The
@boingo
team

Consumers in our research identified a wide range of channels they use to engage
with brands, yet when asked how they would rank the methods they felt were most
important when engaging with a brand, we see the tried and true channels bubble
to the top.
CHANNELS OF ENGAGEMENT
5.8
5.3
4.8
4.3
3.8
3.3
2.8
2.3
1.8
INDIVIDUALEMAIL
COMPANYWEBSITE
WORDOFMOUTH
FACE-TO-FACEINTERACTION
MOBILEAPPS
INSTANTMESSAGING
PRINTAD
FACEBOOK
COMMUNITYSITE
POSTALMAIL
LINKEDIN
TWITTER
GEONETWORKING
REVIEWSITE
PHONE
EMAILNEWSLETTER
LEASTIMPORTANTTOMOSTIMPORTANT
25 - 34 35 - 44 45 +

Source: 360i White Paper, Twitter & the Consumer-Marketer Dynamic;
CrossView, July 2010
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dedeliliveveryry mmetethohodss.
DELIVERY OF PROMTION = % OF RESPONDENTS
PREFERRED RETAIL
PROMOTION DELIVERY
CONSUMERS ARE ENGAGING IN MORE
BRAND CONVERSATIONS & IN MORE WAYS
UNDERSTANDING WHAT,
WHEN AND HOW CONSUMERS
USE THESE CHANNELS
WILL BECOME ESSENTIAL
IN MAINTAINING THE RIGHT
LEVEL OF ENGAGEMENT AND
COMMUNICATION.
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Across generations, we see noticeable differences between
elements and channels.
When we look at our survey results, the order of importance
of the six elements of engagement remain the same across
all generations.
However, there are significant differences in the strength of
feeling about certain elements and the reliance on certain
channels when the younger group of consumers, 25-34,
is compared to the older segment of consumers, 45+.
Breaking down the two groups gives us the best projection
into the future.
the age gap
GENERATIONAL DIFFERENCES

QUALITIES OF ENGAGEMENT
VALUED &
TRUST &
EFFICIENCY
RELEVANCE
25-34 (YOUNGER GENERATION)
45+ (OLDER GENERATION)
HIGHEST
RANKINGS
When broken out by age group , the segments do not view the elements
with the same weight. Instead, they adjust each element like levers to
create the perfect combination. These variances in brand expectations
can help determine the appropriate approaches to successfully engage
and connect with the desired audience.

It is little surprise to see that the younger generation ranks digital channels
relatively higher in importance when engaging with companies than the
older generation.
CHANNELS
OF ENGAGEMENT
displayed large dips in importance for
Yelp, mobile applications, Facebook,
Twitter, LinkedIn and Location-based
social networking.
45+
fell short of the older generation in
phone, email newsletter, print ads
and postal mail.
25-34

THE LIMINALS:
THEY ACT YOUNGER, BUT THINK OLDER
This mid-range age group thinks and feels like the
45+ group, but their channel usage is more like that
of the younger group.
In the research we performed, we found 35-44 aligns
with the 45+ when thinking about the elements. Yet,
when we looked at frequency of use and the element
importance by channel we see 35-44 segment lines
up with the 25-34.
Because the younger segment is pushing and
influencing technological change, we may start
to see that the mid-range group will think and
continue to behave like them. This is an especially
important shift to watch when thinking about
future customers.
THE
LIMINALS
35-44
ENGAGEMENT
ELEMENTS
45+
CHANNELS
25-34

WHAT THE FUTURE HOLDS
FOR ENGAGING CONSUMERS
This isn’t to say that the future of certain channels or even elements
immediately dies off in favor of what the younger generation prefer.
However, it does indicate a progression toward younger preferences
that requires a calculated approach in CRM efforts
Because these generations do not exist in isolation, the younger
generation will continue to influence the older ones in behavior
while vocally driving their values before brands.
Regardless of age, we need to truly understand what value means
for retailers and ensure it is incorporated into every engagement.
We will need to prepare for this paradigm shift.
HOW THIS AFFECTS CRM
MOVING FORWARD

Privacy is a special topic because it is such a hot button today. We discussed
the technical and legal issues involved in privacy in the previous section, but
here, we take a quick pulse of the consumer’s point of view.
PRIVACY

PRIVACY “I love it when Amazon.com recommends a new album to buy, but I still
hate it when Facebook tells the world about my recent break-up.”
Internet
Ads.
Virus or Malware
Downloads.
Identity
Theft.
AS RELATIONSHIPS WITH BRANDS
CHANGE, SO DO EXPECTATIONS
AROUND PRIVACY
Privacy is a huge topic for debate. As behavioral
targeting evolves and becomes more valuable
for both marketers and consumers, we’re seeing
gradual (but careful) adoption of the trend.
From Facebook to Gmail to Amazon, adoption
has been a rocky course, typically following
this sequence:
Our hypothesis is that people (and brands) are
still figuring it out.
AROUND PRIVAC
I don’t understand it. I hate it.
I get it. I love it.

WHILE COMPANIES HAVE
PRIVACY POLICIES,
CONSUMERS DO NOT
Consumers are often not aware of or frankly that interested in what
privacy policies contain. Their approach is much more pragmatic.
They need to see what they’re getting from allowing companies
to track and store their information.
They need to be able to trust the company with their
information, meaning companies must be transparent about
their practices and intentions and respect their data.
They need to feel somewhat in control of their information.
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Gamestation’s April Fool’s stunt made its way into the
Congressional record during FTC consumer protection chief
David Vladeck's testimony at a hearing about online privacy.
In discussing potential new privacy laws, Vladeck stressed
the need for short and concise notifications to consumers.
To illustrate just how few consumers read privacy policies,
Vladeck told lawmakers about Gamestation’s prank, which
involved adding this clause to its terms of service:
“By placing an order via this Web site on the first day of the
fourth month of the year 2010 Anno Domini, you agree to Us
a non transferable option to claim, for now and for ever more,
your immortal soul.”
Even though Gamestation provided an opt-out link–and gave
anyone who opted out an $8 voucher–only 12% of users
opted out, while 7,500 users agreed to sell their soul.
Vladeck also told Congress that many consumers care about
privacy “as a value in and of itself,” apart from concerns
about potential identity theft or tangible financial loss. Even
so, he said, consumers don’t understand the extent to which
their data is being collected and used.

Only when brands bring together the right mix of values and reach
consumers with the appropriate channels will they be open to
engaging with a brand.
Much of this process is respecting the generational differences and
engaging them in a manner that matters most to each segment. We
should also recognize that not all customers want the same level of
relationship with all brands.
These values and channels will continue to fluctuate and change
over time. This prompts the need for continued monitoring and
understanding of the desired consumers.
FIND THE RIGHT MIX
OF VALUE ELEMENTS
& APPROPRIATE
CHANNELS
TURNING INSIGHT
INTO ACTION

The desire to share information and unlock “a better, more personal experience”
seems to boil down to three key questions:
- Is it from a brand I trust?
- Is it a brand I’m looking to have a closer, more personal relationship with?
- Will I truly benefit from sharing my information and preferences, or will it
just be used for more marketing?
Transparency of a company’s actions and intentions will help
ease their concerns, as will giving consumers more control and
choice over their privacy.
CREATE A PERSONALIZED EXPERIENCE
THROUGH MUTUAL TRUST
TURNING INSIGHT INTO ACTION
STARWOOD HOTELS
Starwood Hotels use the known preferences of their
Starwood Preferred Guests program members to
create an individualized Offbeat Guide, with events,
activities and sights-to-see tailored to the time and
location of a guest’s stay.

SHOW THEM WHAT
THEY’RE GETTING
FOR ENGAGING
WITH BRANDS
TURNING INSIGHT
INTO ACTION
Consumers always need to see what they’re getting when
companies ask so much of them. You could call this the
consumer’s own ROI = Return on Information.
- Why should I give you my email and phone number?
- What do I get out of creating a profile and updating
my preferences?
- What happens to my feedback and comments?
With technology changing so quickly for even more ways
to communicate and exchange information, consumers
will expect to see more return from companies before
allowing them further access into their lives.

THE FUTURE OF CRM:
SIX KEY TRENDS
section TWOsection THREE

The Future of CRM: Six Key TrendsSec. THREE
ENABLING A SUSTAINED ENGAGEMENT:
SIX KEY TRENDS
When a level of value, efficiency and trust is established between a
consumer and a business, this results in a consumer willingness to sustain
ongoing engagements across multiple channels, brands, and products.
We believe that the emergence of social channels—as outlets for
consumers to express opinions, preferences, and satisfaction with a
brand’s products or services—has created the opportunity to elongate
the depth of the dialogue, and also the period of time that interaction
takes place.
Most importantly, if organizations are to create a sustained engagement,
they must be customer-centric CRM organizations and create their
approach based on how consumers define engagement.
It is more than just the channel. It is the dialogue that takes place (one-way or
two-way), the ability to choose how / when to engage (e.g., opt-in or opt-out),
the value each channel represents, and whether or not expectations were met.
In order to achieve this “Big Hairy Audacious Goal,” (BHAG) we
believe organizations need to make the following trends key areas
a focus not investment.
CHANNEL
INTEGRATION
COMMUNITIES
THAT CROSS
CHANNELS
CRM GETS
SOCIAL
BI &
ANALYTICS
THE ENGAGED
ENTERPRISE
SAAS & CLOUD
COMPUTING

The Future of CRM: Six Key Trends Sec. THREE
COMMUNITIES
THAT CROSS
CHANNELS
CRM GETS
SOCIAL
THE ENGAGED
ENTERPRISE
CONSUMER
ENGAGEMENT

Across a rapidly evolving mix of digital channels, tribes of consumers
convene, communicate, and control the information they see like
never before.
Empowered by social media and reacting fluidly to topics of interest,
they have the power to turn off marketing messages, and the power
to turn those messages on to others if they choose. As they share
increasing levels of data with brands, their demand for relevance is
increasingly absolute.
They are part of communities that cross channels,
and they aren’t waiting for brands to catch up.
FOURSQUARE.COM
A Foursquare “Mayor”–the most frequent guest
at a popular restaurant–Tweets discontent.
COMMUNITIES
THAT CROSS
CHANNELS
CONSUMERS ARE CONGREGATING
ALL OVER THE PLACE

COMMUNITIES
THAT CROSS
CHANNELS
CRM has traditionally focused on brand-to-consumer communication as a means to
create value for both customers and the brand. This one-dimensional approach is
fundamentally out of step with consumer behavior in the digital age.
Consumer-to-consumer communication is widely proven to impact sales metrics, and
consumers show broad interest in communicating about past or potential purchases.
Eighty-three percent of online shoppers said they are interested in sharing information
about their purchases with people they know(1)
and 53% of Twitter users recommend
companies or products.(2)
Whether brands want to engage or not, consumers clearly want to interact with
companies online: consumer-to-brand. The Razorfish Feed survey of 2009 found that
73% of respondents have posted a product or brand review on a website like Amazon,
Yelp, Facebook, or Twitter, and 65% have had an experience with a brand online that
positively or negatively impacted their perception of the brand.
With communities that cross channels, value will be created–or destroyed–
across the three dimensions of brand-to-consumer, consumer-to-brand, and
consumer-to-consumer interaction.
THREE-DIMENSIONAL COMMUNICATION
(1) Friends still play an important role in influencing consumers. Eighty-three percent of online shoppers said they are interested in sharing information about their purchases with people they
know, while 74 percent are influenced by the opinions of others in their decision to buy the product in the first place. (Manage Smarter, September 2009) (2). 53% of people on Twitter recommend
companies and/or products in their Tweets, with 48% of them delivering on their intention to buy the product. (ROI Research for Performance, June 2010)

OLDSPICE.COM
Old Spice turned a successful TV campaign into a three-dimensional
phenomenon, with the commercial character shooting 80 personalized
video responses to responses to the ad.
URBANOUTFITTERS.COM
Urban Outfitters “ask and answer” allows customers to ask other customers
about products. Sometimes questions are answered by UO product designers.
COMMUNITIES
THAT CROSS
CHANNELS

GROUPON.COM
Groupon turns daily coupons into events by requiring a group minimum, creating an
inherently social promotion. Groupon has recently begun a program to personalize
offers based on customer profile and behavioral data.
The notion of channel-specific communities—the million Facebook fans, the Twitter
audience, the customer panel—will be revealed as a false construct. Consumers don’t
confine themselves to a channel, and since when could one corporate fan page be
relevant to a million different people?
While these presences won’t go away—they will in fact serve as connection points—
community engagement will increasingly be episodic in nature. Consumers will engage
around a point of interest at a point in time, with more narrowly focused communities
forming and dissolving fluidly.
This trend is already being successfully tapped by retailers such as Gilt, who create episodic
shopping experiences, including this partnership with Starbucks that launched a rare product
through a Gilt shopping event, exclusively to Starbucks My Rewards Gold customers.
Rather than being confined to one channel, these episodic ripples will inevitably cross
channels. Social media becomes a glue, and mobile devices provide an always-on tool
that crosses channels from the bedroom to the board room.
RIPPLES ACROSS PONDSCOMMUNITIES
THAT CROSS
CHANNELS

We are at a point of database growth that mirrors 1990, where
everyone opened their eyes to email andsaid, “Why don’t we have
an email database? We have an opportunity to bridge customer
experiences more efficiently than postal (the start of creating a
Sustained Engagement) and we need to capitalize on it.” We are
entering the same era with mobile where brands will wake up in
2011-2012 (if not sooner) and say, “Why do we have 16MM
consumers in our database and less than 100K mobile addresses?”
Or“I want to do a mobile campaign” and brands will be limited to a
mobile app that is competing with 20MM apps today. To compound
this issue, brands are doing the right thing by engaging their
consumers where they want to be engaged through social networks
such as Twitter and Facebook, yet brands tend to forget (or do not
think about the fact) they do not own this customer data. Facebook
replaced MySpace, what will replace Facebook? And will you know
where your customers went when that happened?
Mobile devices and social media only provide that connective
tissue for communities that cross channels when you are
actively collecting the data needed to connect the dots
to your consumers. And a Sustained Engagement is only
achieved when the Engagement Element expectations are
fulfilled and consumers feel they will receive value in return
for providing permission.
COMMUNITIES
THAT CROSS
CHANNELS
WHAT HAPPENED
TO OUR CUSTOMERS?

This proliferation of channels and communities in the social space does offer
more opportunities for relationship marketers, yet not without a price. When
consumers interact with a brand on a more direct level, remember they will
expect some mix of the six elements defined in the beginning of this report,
with “feeling valued” being the most important component of engagement.
With communities that cross channels, the consumer demand for immediate
response in the channel desired is nearly absolute. As consumers migrate
more of their daily social interactions into digital channels and behaviors,
they will expect brands to honor their whole relationship with the brand.
Additionally, as CRM goes social, the brand must consider more than
the brand-consumer relationship—the relationship that the consumer
can have with other buyers needs to be measured. There clearly will be
a struggle to truly segment customers into different value tiers based on
their power to influence others.
It is without question that companies will need the ability to identify
their customers on the fly, use traditional and new social media
methods to gauge long-term value, and build business cases for
appropriate engagement moving forward.
CRM GETS
SOCIAL
IS ANYBODY THERE?CRM GETS
SOCIAL

THE ENGAGED
ENTERPRISE
$260 million per $10B in revenue per year: this is the figure that Forrester claims is
the incremental revenue retailers can generate when they achieve a 10-point swing
in the Customer Experience Index.
Given the episodic, customer-driven, multichannel nature of social CRM,
organizations will need an evolved engagement infrastructure. Besides the technology
components, this engagement infrastructure will include people and processes that:
- Approach communication and merchandising from a customer-segment
perspective rather than a product perspective.
- Systematically listen to consumer feedback and seek to actively involve consumers
in product design and promotion decisions.
- Provide high-social-value customers with differentiated experiences that drive
social currency; merchandise previews, product-feature tradeoff decisions, etc.
- Measure the impact of CRM on upstream activities; for example, holding CRM
accountable for making acquisition more efficient through customer and
network modeling.
ORGANIZING FOR ENGAGEMENT—
THINK CUSTOMER-CENTRIC
Forrester’s explanation of their Index: To calculate each firm's CxPi, we subtracted the percentage of its customers that reported a bad experience from the percentage that reported a good experience—for all three
questions. The overall CxPi is an average of those three results (how effective in meeting needs, how easy to work with, how enjoyable the interactions) Source: Temkin, Bruce, “The Customer Experience Index, 2008,”
Forrester, December 12, 2008.

THE ENGAGED
ENTERPRISE
VOCALPOINT.COM
Launched in 2006, Proctor & Gamble’s Vocalpoint is its community used for
consumer research through to mobilizing 600,000 “Connectors” who participate
in word of mouth marketing programs.

THE ENGAGED
ENTERPRISE
COMPANIES CANNOT SIMPLY SAY THEY TAKE A CUSTOMER-CENTRIC
APPROACH—IT MUST PERMEATE ALL ASPECTS OF THEIR ORGANIZATION
THE CUSTOMER-CENTRIC ENTERPRISE
Enterprise-Wide
Customer Strategy
Data Quality & Integration
Measurement & Analytics
Functional Reporting Structures
Collaborative Processes & Prioritization
Consolidated Consumer Insight
to Create Sustained Engagement
Incentive Program
Common Measurement of Lifetime Value
DISTRIBUTION OF INFORMATION

THE ENGAGED
ENTERPRISE
While organizations move to enterprise-wide customer-centric solutions, functionally sales,
marketing, and customer service can start learning how to be customer-centric. One way is
to understand that consumers are looking to sources in addition to the official corporate-speak
to influence their decisions.
A humanized brand voice expressed through social media shows the way for other parts of
the company to have a voice, too.
- Topic experts
- “Veteran” consumers (regular people who have been there/done that)
- General population (crowd)
These voices open the conversation about brands in a safe environment in which consumers
are willing to participate.
From the viewer’s perspective, they want to know that the voices are authentic, sympathetic to their
situation and open to feedback/dialogue. From the contributor’s perspective, they need to feel that
their contribution is valuable and that they are free to express themselves uncensored. This enables
others to provide valuable content like unedited haul videos straight from consumers.
Brands need to empower consumers to speak in their favor, but the brand too has a say
as a valuable content provider. The voice of the company shouldn’t come solely from the
marketing department.
INFLUENCE COMES FROM AUTHENTIC,
PERSONAL SOURCES

THE ENGAGED
ENTERPRISE
JCREW.COM
When Jenna Lyons was promoted from Creative Director to president of J.Crew, she
created “Jenna’s Picks” for customers—a personal selection of recommendations.
Jenna’s Picks have become the darling of the fashion industry, and have been
featured on Oprah.

With a login as the only access to shopping sites like Gilt, consumers are willingly
opening themselves up, and they immediately see the value in sharing their information.
Not only do they get exclusive deals on coveted brands, but they are experiencing a fresh
new way of shopping.
- Emails for that day’s sales and upcoming sales
- Calendar function for appointment shopping
- Consumer-initiated collaborative shopping
- By invitation only—consumers feel like they are in a smaller community
- VERY multichannel
It’s part eBay auction, part concert ticket gambling. And they bring their like-minded
shopping friends into the mix as a group effort.
This is one example of how a retailer is successfully meeting today’s retail landscape
while engaging in multiple consumer touch points.
HIGH-PASSION RETAIL REQUIRES TRUST &
DEMONSTRATES VALUE IN SHARING INFORMATION
THE ENGAGED
ENTERPRISE
LOTS OF FAVORITE BRANDS
WEB
APPOINTMENT SHOPPING
EMAIL & MOBILE
MULTI-CHANNEL
SOCIAL

CHANNEL
INTEGRATION
SAAS & CLOUD
COMPUTING
BI &
ANALYTICS
TECHNOLOGY
& ANALYTICS

CHANNEL
INTEGRATION
HANNEL
EGRATION
The technical capability to integrate multiple channels has existed
for more than a decade, through products such as Unica, Aprimo,
Alterian and Chordiant, as well as through custom integration.
Successful implementations are plentiful, although potential
roadblocks for multichannel implementation are high costs and
lack of organizational commitment.
The growth of online marketing created an inflection point in channel
integration. Online marketing largely matured independently from
offline channels, and many firms leveraged the services of outside
providers to build an online presence.
Fortunately, the technology for integrating the Big 4 of channels (TV,
POS, CRM, WWW) has improved markedly in the past several years,
and real-time decision engines are now established technology. Industry
adoption is most advanced in financial services, where real-time platforms
support POS authorization, online credit approvals, fraud prevention, and
comparable applications with a strong business case.
Integrating across online and offline channels remains a persistent
challenge; according to Forrester, only about 30% of surveyed firms
say they are able to achieve it.
OFFLINE & OUTBOUND
INTEGRATION

1989 - 1993 1994-1998 1999-2004 2005-2009 2010 & BEYOND
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become primary
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methods
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ads emerge
The golden age of the Web
OFFLINE & OUTBOUND INTEGRATION
THE INFORMATION AGE ENTERS A NEW ERA - FORRESTER RESEARCH, INC
CHANNEL
INTEGRATION

CHANNEL
INTEGRATION
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Comprehensive channel integration is a desirable goal, but it is also a moving target. New and emerging
channels will pose new challenges. The splintering of digital into proprietary worlds owned by Apple,
Facebook and others will create new obstacles to the acquisition of customer data.
CHANNEL INTEGRATION WILL BE “TABLE STAKES”
THE SPLINTERNET REINVENTS INTERACTIVE MARKETING - FORRESTER RESEARCH, INC

Privacy laws and guidelines will continue to evolve in ways that will require careful consideration, monitoring and
assessment to ensure trust between consumer and organizations is sustained. Shifting attitudes towards privacy,
and resulting changes to laws and policies will remain an ever-present part of the landscape.
US ADULT INTERNET USERS' ATTITUDE TOWARDS ONLINE PRIVACY
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%%%%%%%%
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%%%%%%%%%%
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%%%%%%%%
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%%%%%%%%%%
%%%%%%%%%
%%%%%%%%%
Source: TNS Global comissioned by TRSUTe. "2008 Study: Consumer Attitudes About Behaviorial Targeting." provided to eMarketer, March 28, 2008
CHANNEL
INTEGRATION

HOW TO BUILD A PERSONALIZATION ENGINE - RAZORFISH OUTLOOK REPORT
On the other hand, decision/personalization engines and Customer Data Integration technology will add new capabilities, and the technology trends
discussed in the next section will reduce costs and improve the business case for integration. Organizational challenges will become less of an
obstacle as organizations’ CRM maturity level increases, particularly in retail where financial pressures continue.
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nenetwtwororksks ffinindd tatargrggeteteded uusesersrs aandnd aassssememblblee ththee adada uusisingng
dydyynanamimm c adad sserervivingngn ..
MAMARKRKETETININNGG CHCHANANNENEL.L. FiFiF nanan llllly,y, tthehe ccusustotomimizezedd adad iiss
dedelilivevereredd toto tthehe uuseserr ththrorougughhh ththee rerelelevavantnt cchahannnnelel iinn
rerealal-t-timime.e.
CRCREAEATITIVEVE DDEVEVELELOPOPMEMENTNT.
PePePersrsononalalizizeded aadsds aaareere ppprorooduduceceddd
wiwiththt aann eyeye ee toto dddevevelelopopiningg asas
mamanyny ddifffefererentnt aadd ununititss asas
popossssibiblele iin aa wawayy ththatat mmaxaximimizizeses
efeffificicienencycy. ToTo dddoo ththt isiss,, crcreaeatitiveve
asassesetsts aarere ddevevele opopeded iinn aa momodudulalarr
fafashshioionn wiwiw thth hheaeavyvy uusese ooff exexisistitingngn
asasssetss, alallolowiwingng tthehe eeempmphahah sisiss toto
gogog ttowowarardd crcreaeatitingngg aadsds tthahatt araree
rerelelevavantnt ttoo ththee coconsnsn umummerer..
TVTV WWWWWWPOSPOSPOS CRMCRM
LASLAST AT ACTICTIONON
RULRULU ESESE
RECRECOMMOMMENDENDATIATIONSONSS
OFFERS
IMAGES
MESSAGING
DESIGN
LOGLOGO/CO/COOO TATAT
OFFOFFOO ERERR
MESMESMEM SAGSAGA ESES
IMAIMAAGEGEGGEG
CHANNEL
INTEGRATION

CHANNEL
INTEGRATION
Consumers increasingly expect firms to synchronize the customer experience across channels.
Organizations that understand this mandate will make the necessary investments, and benefit from the results.
MULTICHANNEL CUSTOMER VIEW - FORRESTER RESEARCH, INC
ts.
REDEEM
PURCHASE
DISCUSS
sentiment
USE
registration
DISCOVER
media impressions
BROWSE
site hits
email offer
in-store purchases
Database >> Dashboard

SAAS & CLOUD
COMPUTING
S & CLOUD
MPUTING
In the 1990s, organizations began to invest in large-scale data
warehousing projects. While data warehouses have not always
lived up to the claims of visionaries, they are now an indispensable
part of the relationship marketing environment.
Centralized data warehouses faced a number of critical challenges:
- The number of data sources and volume of data increased rapidly,
then exploded with the growth of digital marketing and e-commerce.
- Merging of warehouse data with online activity for marketing caused
additional operational struggles for IT and Marketing.
- Budget constraints lengthened development queues and made it
more difficult to keep the warehouse current with business needs.
These challenges contributed to a sense of dissatisfaction among
business stakeholders; new approaches were necessary.
CENTRALIZED DATA WAREHOUSES
LED THE WAY

When centralized repositories failed to keep up with business needs,
organizations developed new techniques. Today, firms use virtual data
layers to join data from multiple data sources without physically extracting
and moving data from one repository to another. These virtual layers are
sometimes intermediary solutions yet they can deliver reporting quickly
while longer term solutions are developed.
The introduction of Software as a Service (SaaS) has revolutionized the
way firms procure software across a multitude of processes. Historically,
SaaS has been most salient for new adopters and for small-to-medium
businesses. Today, SaaS is impacting large organizations as well, because
it creates credible alternatives to massively expensive enterprise CRM
projects. Since entry costs are low, SaaS improves the business case
and lowers the risk of investing in CRM for enterprises of all sizes.
The transition of CRM to SaaS is an interest for most firms, with planning
of the transition commencing within 12 months. Some of the motivating
reasons behind the transition to SaaS for CRM are low cost of entry,
software mods without IT issues, 24 by 7 uptime with around-the-clock
staffing, and vested vendor interest in the success of the platform.
VIRTUAL DATA LAYERS &
SAAS FILL A GAP
SAAS & CLOUD
COMPUTING

VIRTUAL DATA LAYERS & SAAS FILL A GAP
41% OF COMPANIES ARE INTERESTED IN MOVING IKM INTO THE CLOUD - FORRESTER RESEARCH, INC
PROPROODUCDUCCT LT LLIFEFEIFE-CY-CY-CYYYCLECLECLECLL MAMAM NAGNAGN EMEEMEEME NTNTN (PL(PLM)M)M
INFNFORMORMOO ATIATIAT ONON & K& KNOWNOWWLEDLEDGEGEEE MANMANMAMMA AGEAGEMENMENTT
HUMHUMANAN CAPCAPA ITAITATAT L MML MANAAANAANAGEMGEMGEMENTENT (H(H(( CM)CM)M
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
SUPSUPSSU PLIPLIIIIERERE RELRELATIATTIAT ONSONSONSONSONSHIPHIPIPPP MAMAMANAGNAGNAGEMEEMEEMENTTNTT
INDINDUSTUSTU RY-RY-SPESPEECIFCIFFICIC PROPROPROPP CESCESSCESS SS SSSS OFTOFTWARWARWA EE
ENTENTNTTTERPERPERER RISRISRISR E AE ASSESSSSSET MT MANAANAGEMGEMGE ENTENTEN (E(EAM)AM)
SUPSUPPLYPLY CHCHHAINAIN MAMMAM NAGNAGEMEEMEENTNTN (SC(SCM)M))
ORDORDERER MANMANANNAGEAGEAAAGA MENMENTT
ENTENTN ERPERPRISRISE RE RRESOESOS URCURCU E PE PLANLANNINNING (G (ERPERPRP)))
FINFINNNANCANCANCNCANCE &E &E &EE ACACCOUCOUO NTINTINGNG (F&(F&&A)))A)A)
33333333
%%%%%%%%
999999
%%%%%
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%%%%%%%%
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%%%%%%
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%%%%%%%%%
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PlaPlaPlanninninnin ngnggg tototo impimpim lemmententent inin
lesesese s ttthanhaha 1211212 momomm s.
Intnn ereeee sted bd ut no plaplalanssss
PlaP nningg toto impimmimplemmmlementene ininnn
mormorm e tthanhananhan 1212121 momomos.ss.
Source: Enterprise & SMB Software Survey, North American & Europe, Q4 2009
WhWhWW ataa aarereer yyyyour firrm'mm'm's plplpp anssss tototto ddddepepeplololol yyyy ororoo migiggrarar tetetete tttheheheh fffololollowiww ngnggg aaapppliicacc tiiiionnns tooo sofofooftwtwttwararare-e-e asasas-a-a-serrviiceceece ((((SaSS aSaSSS)?)?)?)
CRM is on the forefront of making the transition to SaaS, as other software applications
will continue to be headed into SaaS and cloud computing as a whole.
SAAS & CLOUD
COMPUTING

SAAS & CLOUD
COMPUTING
Cloud computing will revolutionize CRM. Cloud computing customers do not own the computing infrastructure; they rent usage
from a certified third-party provider, consuming resources as a service and paying only for resources used. No longer having to
worry about things like constant server updates and other computing issues, organizations are free to concentrate on innovation.
CLOUD COMPUTING &
CUSTOMER DATA MANAGEMENT
Source: "Forces Driving Cloud Computing, An IT Market View," IDC, September 2008
1 THE SEARCH FOR
NEW MARKET GROWTH
Traditional IT Markets
Maturing/Slowing
Underpenetrated
& New IT Growth
Markets Emerge
BRIC + Markets, SMB, Online Media
& Entertainment, et al.
Internet-driven
Models &
Technologies
Coming of Age
THE NEED FOR
NEW APPROACHES2
Traditional IT
Models Inadequate
for Growth
Markets
cost, speed,
complexity
3 COMPETITIVE PRESSURE
Disrupters
Forcing the Path
e.g., Google, Amazon,
Salesforce.com
TT
u
I
AC
ORO
CLOUD COMPUTING ERA

CLOUD COMPUTING &
Source: Razorfish 5
Here’s an amazing example of how cloud computing provided the ability to scale a large IT undertaking
and how it also saved the company a fortune to accomplish this feat.
AA rereseses ararchcherer aatt phphp arara mamacecec uuticicalal ggiaiantnt EElili LLilillyly aandnd CCCo.o. nneeeedededd toto aanananalylyyzezeze aa llotott oooff dadatata qquiu ckckklyy. IfIf tthehe rresessulultstst ttururnenen dd
ououo tt asas hhee exexpepectcteded,, ththee cocompmpananyy cocoululdd hahaveve aa wwororldd-b-beaeaeatitingng ddrurugg onon iitsts hhananandsds.
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momontntthshs ttooo gegett apapprprovovalal fforor tthehee iinvnvesestmtmmenent.t. IInn anan iindndusustrt yyy whwhereree ththee cocooststs ooff dedeelaayiyingng aa pprorodudud ctct iiss hihighgh, $1$15050 pperer
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inin ttthihiss ththininggg cacacalllll eded ‘‘ththt e clclououd’d’.. ThTheee gugug yy gogott ououtt hihhiss crcrededitit ccarard,d,d, pppluluggggededd iitt inintoto AAmamazozonn WeWebb SeServrvrviciciceseses,, ananandd hahadd
25252 serere veversrs uupp anaandd rurunnnniningg inin tthehee ccclololoudud wwitithihinn anann hhouour.r.
WiWiW ththhinin ttwowo hhouoursrs,, ththeyey wwwerere eee crcrununchchiningg ththheee dadad tata. ThhThee reresesearaarchch ttimimee hahadd susus ddddenenlyly ccololllalapspsededd ffroromm ththrereee momontnthshss tttooo
aa mamatttterer ooofff hohoururs.s. TTheheyy cocompmpleletetedd ththee tatasksk aandnd wwereree gigivevenn aa bibilll ffroromm AmAmAmazazonon fforor $$$8989. AtAt $$151515000 peperr sesecoconddnd,, aa
ththreree-e-momontnthh wawaw ititt ccououldld hhavavee cocostst mmororee ththanan $$11 bibilllioion.n.
SAAS & CLOUD
COMPUTING

Since cloud computing reduces capital and
operating expenditures, it improves the business
case for investing in CRM. Moreover, cloud
computing is “location independent”—the
service levels provided do not depend on physical
proximity to an organization’s servers.
Combined with customer data management—where
firms collaborate with business partners to develop
data models that integrate internal and external
data—cloud computing will significantly reduce
the cost and time required to integrate new channels
and partners into the CRM solution.
SAAS & CLOUD
COMPUTING
CLOUD COMPUTING &
CUSTOMER DATA
MANAGEMENT

SAAS & CLOUD
COMPUTING
Source: IDC, October 2008
11%
18%
57%
9%
5%
9%
18%
52%
8%
13%
INFRASTRUCTURE
SOFTWARE
INFRASTRUCTURE
SOFTWARE
APP DEV
-AND-
DEPLOYMENT
APP DEV
-AND-
DEPLOYMENT
SERVER
SERVER
STORAGE
STORAGE
BUSINESS
APPLICATIONS
BUSINESS
APPLICATIONS
COMPUTING
CLOUD COMPUTING &
2012 - $42.3 BIL2008 - $16.2 BIL
WORLDWIDE IT CLOUD SERVICES SPENDING

BI &
ANALYTICS
For the past decade, business intelligence and
analytics systems were operated separately from
campaign management systems. Users could query
and segment data, but acting on insights required
a separate set of tools and/or an organizational
interface. Tracking results from campaigns often
required custom programming.
Using a broader definition of analytics, direct
marketers and database marketers have used
segmentation and predictive modeling techniques
for years. These efforts were not limited to single
channels, yet they were limited to combining offline
and online channels. Moreover, the process to build
and apply analytical models was slow and labor
intensive, which inhibited adoption.
POWER USERS RULED

Enterprises have implemented business intelligence tools supported by
large-scale data warehouses that allow for efficient reporting and analysis.
BI systems are better integrated with marketing automation systems for
results tracking, so campaign results are available to stakeholders without
intervention by a programmer or “super-user.”
Despite advances in BI tools, data warehouses remain largely limited to
internal (transactional) data, and most organizations have not yet fully
integrated online and offline customer information. Organizational barriers
inhibit full deployment of offer optimization technology, and high initial
costs remain a barrier to investment in real time brokers.
Analytical applications enable trained users to leverage advanced
segmentation and prediction techniques to draw insight from marketing
data. Marketing automation systems are able to leverage these insights
to optimize offers to customers under budget and policy constraints.
In addition, these solutions have evolved distinct tool sets to broker
communications across online and offline channels in real time.
BI &
ANALYTICS
POWERFUL TOOLS, BUT…

BI &
ANALYTICS
POWERFUL TOOLS, BUT...
THE MODERN WEB ANALYTICS PLATFORM - FORRESTER RESEARCH, INC
BIBIDD MAANANAGEGEMEMENTNT DADATAT WWARAREHEHOUOUSIS NGNG EMAIL SERVRVICCE PRP OVIDERRS
SISITETE OOPTPTIMIMIZZATATIOIONN WEB ANALYTICS PLATFORMS ADA NETETWWORKSS
SEGMENE TATIT ONN ADAD HHOCOC REPEPORORTITINGNG LIISTENINI GG PLATA FOORMS
ExExece ututee anndd opoptit mimizeze ppayay-p-perer-c-clilickck
seseararchch aadvdverertitisisingng
A/A B teteststining,g, mmulultit vav ririatatee teteststining,g,
bebehahavovorir ala tarargegetitingng, anandd
rerecoommmmenendadatitiononss
Segment visitorss based oon
behavior and outcomess
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anandd tht iri d-papartrtyy dadatata
Corer Web analytics,
collection and measurement
of site activity
Advavancnceded aananalylytiticscs
anndd dadatata rrepeporo titingng
Desis gn aandnd ddeploloyy eme aia l
mamarketing cac mpaigns
TaT rgete and delliver ads to
onliinen publishs errs
Track and measa ure social
media aca tivityy
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exttextextensense ionionono sss
BidBidBidB irerectictctionan l dataaaa
flof w &w &w APAPAPIsIsIs
ThiThThiTh rd-rd parpappartyty
intntintintegregrg atiatationsonsons

Web analytics and online display advertising will merge with customer
analytics. Marketers will understand and influence customer behavior
based on a richer profile of integrating online and offline behaviors.
Marketing campaign management applications will enable marketers to
define rules or conditions that will trigger a message to the consumer.
This will replace broadcast campaigns to batches of customers.
Offers and value propositions will be optimized across campaigns and
channels to maximize ROI within budget and policy constraints. Advanced
analytics will be routinely deployed into optimization procedures and
real-time decision engines. Optimization and channel brokering will
increase marketer’s agility in adapting to changing market conditions.
BI &
ANALYTICS
ANALYTICS WILL BE EMBEDDED
IN SYSTEMS THAT DRIVE
CUSTOMER COMMUNICATIONS

BI &
ANALYTICS
ANALYTICS WILL BE EMBEDDED IN SYSTEMS
THAT DRIVE CUSTOMER COMMUNICATIONS
Source: Forrester Research, INC
TRATRATRATRATRATRATTRARAR DITDITDITDITITDITDITDITDITIONNIONIONIONIONOOOOO ALALALALALAALALALAAAAL WEBWEBWEBWEBWEBWEBWEBWEWWEWW CHCHCHCHCHCHCCCHHANNANNANNANNANNANANNNNNNNN LSELSELSELSELSELSELSELSLSSS EMEEMEEMEEMEEMEEMEEEMEEMEME RGIRGIRGIRGIRGIGGRGIRGGG NGNGNGNGNGNGGGNGG WEBWEBWEBWEBWEBWEBWEBWW CHCHCHCHCHCHCHHHANNANNANNANNANNANNANNANNANNAANNANANANNN ELSELSELSELSELSELSELSLSLSS
CRCRMM
EnEnteterprpririseses
dadatata
wawarerehohoususee
CuCuststomomerer
dadatatababasese
MUMUMUMUMUMUMUULTLTLTLTLTTTTLTLTLTICICICICICICICICCHAHAHAHAHAHAHAHAHANNNNNNNNNNNNNNNNNNNNELELELELELELELEEE MMMMMMMMMARARARARARARARARAARA KEKEKEKEKEKEKEKKEKEKKEK TITITITITITITIITIITINGNGNGNGNGNGNGNGGNGNGGN
A/A/BB
teteststiningg
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teteststiningg
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tatargrgetetinngg
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SoSocicialal
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CuCuststomomerer
DaDatataa
CaC mpmpaiaigngnss
WEB ANALYTICS PLATFORM
WEB INTELLIGENCE
(evolves in two phases)
ToToToTomommomom rrrrrowwowowow:::: PuPuPuPPushshhh WWWWWebebebebeb IIIIntntelelele lilililigegegegegencncncnnceee
ToToTToToddadaay:yyy PPPPululullll WeWeWeWeWebbbbb InInInInI teteetelllllllligigigiigenenencececc

Techniques such as Marketing Mix Analysis will be routinely used to
optimize spending decisions; similar methods will optimize size, pricing,
promotions and markdowns. Although these techniques may continue
to require expert services to develop and tune the underlying models,
analytical results and forecasts will be readily available to business
users through BI dashboards.
Organizations will leverage Web-based test environments to rapidly
evaluate the effectiveness of alternate strategies. Combined with
experimental design and conjoint capabilities, firms will be able
to evaluate price/value tradeoffs and optimize price positioning to
individual customers on a large scale.
BI &
ANALYTICS
ANALYTICS WILL BE EMBEDDED
IN SYSTEMS THAT DRIVE
CUSTOMER COMMUNICATIONS

ISSUES AT HAND
WHAT DOES THIS ALL MEAN?
The biggest challenge CEOs see is rapid escalation of complexity. And they
feel their companies are not equipped to cope.
Above all priorities, CEOs plan to focus on getting closer to customers.
A staggering number of CEOs described their organization as data rich but
insight poor. Many voiced frustration at not being able to transform available
data into feasible action plans, let alone to detect emerging opportunities.
Source: Capitalizing on Complexity—Insights from the Global Chief Executive Officer Study by IBM.
CHANNEL
INTEGRATION
BI &
ANALYTICS
SAAS & CLOUD
COMPUTING

CONCLUSIONS
WHAT DOES THIS ALL MEAN?
Channels:
The splintering of digital is here, thus making channels more difficult to control. Decision
and personalization engines are key to ensuring relationships with consumers that are hiding
behind the proprietary lines of Facebook and Apple and to embrace the mobile revolution.
Technology:
Large-scale data warehouses will begin to be replaced with both SaaS and cloud computing.
Procurement of software becomes less extensive and less expensive utilizing SaaS for CRM
and other broad based corporate-wide software.
Cloud computing will significantly reduce the cost and time required to integrate new
channels and partners into the CRM solution. Cloud computing will help to bridge
the gap between IT and marketing, and your competitors are already looking into it.
Analytics:
The days of power-users and standalone reporting systems are numbered. Analytics will
be embedded in systems that drive customer communications, changing the notion of
Web analytics to Web intelligence.Testing and Market Mix Analysis will become the
norm to optimize spending and campaign decisions.
CHANNEL
INTEGRATION
BI &
ANALYTICS
SAAS & CLOUD
COMPUTING

CUSTOMER
RELATIONSHIP
MARKETING
VIEW INTO YESTERDAY, TODAY & TOMORROW

YESTERDAY TODAY TOMORROW
CUSTOMER
ENGAGEMENT
One-way: Coupons and customer service. Two-way: Ratings & reviews, proactive/self-
service, re-tweeting, commenting, sharing.
Experiential: Communities that cross
channels. Through further democratization
social media becomes the glue, and mobile
devices provide an always-on tool.
MARKETING
APPROACHES
Database Marketing: Companies collected
RFMP, survey, behavioral, and contextual
data and used it to market to their
customers, retain them, and create loyalty
and advocacy more effectively.
Social CRM: Using the new engagement
definition and influence scoring to
actively engage consumers, proactively
address questions and concerns, and
form deeper relationships.
Project VRM: Although yet to be seen,
some predict customers will own their
own data through open source applications,
potentially giving companies the opportunity
to merge marketing and social CRM data
and keep it fresh.
CUSTOMER
DATA
Channel Marketing: Marketing departments
are built up around specific channel
expertise: branding, advertising, direct
marketing, ecommerce, etc.
Customer-Centric by Function: Sales,
marketing, buying organizations individually
tap into customer insights to drive strategic
decision making. Departments move to
more of a focus on customer lifecycle and
structure around it.
Engaged Enterprise: Enterprise-wide
customer strategy supported by functional
reporting structures. Adopting a single
calculation of CLV and implementing
corporate customer data governance as
a defined function within the organization.
CHANNELS
TOUCH POINTS
Offline and Online Integration: Disparate
IS handling data from traditional channels:
direct mail, email, call center, in-store/
POS, on/off line media, website, in-store.
Organizational commitment and
high-costs hindered the growth of
multichannel marketing.
One-to-One Marketing to the Masses:
Managing the splintering of data across
mobile, social, and apps is top priority to
service the customer. Through use of digital
tags access, aggregate multiple media
sources, and a decision engine, behavior-
based personalization engine and dynamic
ad serving can be built.
Multichannel CRM: Synchronization
of the customer experience across all
channels. New proprietary technologies
in development allow true tracking of
engagement for social and mobile–
and allow for an actionable single view
of the customer.
TECHNOLOGY Centralized Data Warehouses SaaS Solutions Cloud Computing
ANALYTICS Separated Business Intelligence and
Campaign Management Systems:
Implementations were slow and labor-
intensive, and seldom accomplished
goals within time constraints. Queries
were available, although acting on
insights required additional tools.
Global Dashboard: A central repository
to, in real-time, aggregate data from
disparate systems, track user behavior,
and perform media optimization across
all channels. Allows for personalization
of critical business data.
Test & Learn Automation Engines used
to accurately measure the profit impact
of pricing, marketing, merchandising,
operations, and capital initiatives, tailoring
ongoing investments in these areas to
maximize ROI.
CUSTOMER
ENGAGEMENT
One-way: Coupons and customer service. Two-way: Ratings & reviews, proactive/self-
service, re-tweeting, commenting, sharing.
Experiential: Communities that cross
channels. Through further democratization
social media becomes the glue, and mobile
devices provide an always-on tool.
MARKETING
APPROACHES
Database Marketing: Companies collected
RFMP, survey, behavioral, and contextual
data and used it to market to their
Social CRM: Using the new engagement
definition and influence scoring to
actively engage consumers proactively
Project VRM: Although yet to be seen,
some predict customers will own their
own data through open source applications
RELATIONSHIP
MARKETING TRENDS

CONSUMERS ARE EXPERIENCING
TREMENDOUS CHANGESTT
RETAILERS ARE LOSING
THEIR CONNECTION TO THIS
CHANGED CONSUMER
WE LOOKED BEYOND
JUST MASS RETAIL
THE BOUNDARIES OF ONLINE AND
OFFLINE RETAIL ARE BLURRING
ONLINE RETAIL IS EMBRACING
AN EXPERIENTIAL FOCUS
MOBILE WILL BE THE
GREAT INTERMEDIARY
TO THE CONSUMER, MOBILE IS
THE NEW SWISS ARMY KNIFE
OFFLINE RETAIL IS EMBRACING
A MORE TECHNOLOGY-DRIVEN
SHOPPING EXPERIENCES
SUMMARY
THIS PAGE IS NOT FINAL
D
E RETAIL IS EMBRACING
E TECHNOLOGY-DRIVEN
NG EXPERIENCES

A NEW CAPABILITY FOR DIGITAL
SELF-EXPRESSION HAS EMERGED:
THE DEVELOPMENT OF A PERSONAL STYLE
THE CONNECTION BETWEEN THE
RETAILER AND THE CONSUMER
HAS CHANGED FROM A MERCHANT
SELLING GOODS TO A PARTNER IN
A LONG TERM RELATIONSHIP
MICRO-EXPERIENCES AS AN
EXTENSION OF PERSONALIZATION
FORMS OF SOCIAL COMMERCE
WILL TAKE ROOT IN THE
MAINSTREAM TOMORROW
THE ULTIMATE PERSONAL EMPOWERMENT
IN COMMERCE: TURNING THE CONSUMER
INTO THE RETAILER
ONLINE IS NOT A
CHANNEL, IT IS A WORLD
THIS PAGE IS NOT FINAL

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