Innovation and the Role of CRM

Innovation is increasingly being regarded as the most important driver of business growth and social welfare. For long, innovation has been about ‘surprising’ the customers, by presenting newer products with enhanced features, and possibly lower prices. But now with the advent of technology, and more importantly the Internet, the guesswork has gone out of the equation. Now customers can design what precisely (almost) they require and the task of the firm is reduced to delivering it at an acceptable value-price equation. The recent success of Dell’s Ideastorm, NikePlus and P&G’s Connect & Develop, among others, have raised a slew of questions on the role of a firms when the power of innovation increasingly lies in the hands of customers. Some of these are:
  • How does a firm engage with the customers to appropriate maximum value from customer generated ideas? 
  • Does the meaning of marketing change when customers aren’t just the recipients, but also contributors? 
  • When the locus of innovation shifts away from the firm, how easy is it to maintain customer loyalty?
These questions are interrelated and one of the common denominators that run through these is how the firm engages with customers. That’s where Customer Relationship Management (CRM) becomes imperative. In the following paras I discuss the role CRM solutions play in customer generated innovations and how in turn CRM gets impacted by the same.

CRM solutions have been gaining momentum among organisations and with increased consumerization and proliferation of the Internet, this practice has become almost virtuous for businesses, both large and small. In very simple terms, CRM intends to acquire, retain and enrich customers in order to enhance business value. It involves the activities of marketing, sales and services, and spans the entire lifecycle of the customers from a prospect stage all the way to retirement. Having known the host of alternates available to the customers and resulting hypercompetition in the marketplace, firms are increasingly realizing that 'a bird in the hand is worth two in the bush'. Hence customer retention is as important, if not more, than the customer acquisition, and if this satisfied customer can generate newer relationship, it’s worth the investment. With this backdrop, let’s investigate how the role of CRM changes when customer is no longer a source of money, but also that of ideas and that too ideas that could revitalize a business.

The way CRM solutions can leverage its already existing customer intimacy and business entrenchment to tap into customers’ creativity is the central issue the following passage discusses. Here’re a few recommendations of managers engaged in managing customer engagement-

1. Redefining the charter of CRM
CRM typically considers only the customers who can generate money or bring more customers as ‘valuable’. But how about those who don’t necessarily buy the firm’s products, but can propose useful ideas? Should they not be considered a part of the CRM process? They should be. Value needs to be redefined as anything ranging from raw ideas to mature relationships that could potentially bring more revenue to the firm. In this light, the charter of CRM should not only be to engage marketing, sales and services, but also product development and R&D division. This would also mean new reporting structure and incentive mechanism for the CRM group, such that both deals and ideas are rewarded.

2. ‘Listening’ to customers and prospects
While it’s important to listen to the customers, the departure from traditional CRM is that it isn’t about soliciting feedback or complaints, but about soliciting ideas. Here the Internet comes to resort. Firms need to create amicable online and offline environments where customers feel at ease, create communities and share ideas that firms can be recipient to. It’s not passive listening, but active engagement. One needs to however observe the caution that these online conversations about new ideas have to be shaped by the firm such that value can be derived; else the firm runs into the risk of letting chaos reign and in turn harming their brand value.

3. Share the responsibility and rewards
Customers feel the urge of exhibiting their individuality and by letting them do so, firms pass on a certain level of responsibility of value generation to them. But while the customer is participating in the making, they shouldn’t be deprived of the fruits either. And that’s where difficulty strikes. Knowing, evaluating and appropriating customer generated value isn’t that apparent and this may get even more tricky when multiple customers and firms are involved. Managers needs to factor such design constraints while implementing and reforming CRM software.

The next few years would see the rise of prosumers, even in India. The young, vibrant population, equipped with technology gadgets and an urge to exhibit their creativity, is the right concoction for such producer-consumers to flourish. And for firms that fail to tap into this opportunity, they would not only miss out on new products and markets, but also customer goodwill. Could India be a laboratory for such co-creation based solutions? I reckon so, especially in domains of telecom, entertainment, gaming and retail. CRM solutions, hence, has a task to play in engaging customers, and extracting value from such relationships to create new value.


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