CRM’s evolution toward customer engagement

Wednesday, May 14th, 2014

Over the last two years, mergers and acquisitions have driven many of the headlines in the CRM world 1.  We’ve watched the broadest consolidation that CRM has seen in nearly a decade. At the same time, Gartner predicts the CRM market, on license revenue alone, will cross $23bn this year 2, and pegs it to hit $37bn by 2017 3.  Generally speaking, consolidating market segments don’t grow that rapidly.  So, what’s going on?  While Gartner’s definition of the CRM market may be evolving, a fundamental change has been underway for some time.  We started to see this change about five years ago as vendors, like RightNow, began to redefine CRM toward Customer Experience (CX).  The movement toward CX largely came about as social technologies were infused into CRM platforms, enabling the last quarter-mile of CRM 4.  This repositioning of CRM toward CX has now become a full-blown stampede, with nearly every major vendor claiming their technology is designed to put the customer’s experience first 5.

A half decade of CX momentum is now moving the market toward technologies that drive beyond ‘experiences’ and begin to focus on ‘engagement’.  Paul Greenberg, the resident Dean of the CRM community, recently posted some random thoughts on this shift:

The customer engagement market is far larger in potential than CRM and in fact is the replacement market for CRM. CRM as a market is going to be a sub-market – the operational requirements for customer engagement and the companies serving that need – will be a substantial chunk of the customer engagement market, but by no means the only segment of it.  Social CRM, which morphed CRM into what it is today, was the forerunner and the signal for this. Social channels are now inclusive in CRM systems and thinking – incorporated with the more traditional operational aspects of CRM systems and thinking. It’s the operational hub with pipes that are driven into the other areas around customer engagement. 6

 

Paul goes on to list seventeen areas that are either converging to, or sprouting from, traditional CRM markets.  The growth that Gartner predicts, can be seen on this list.  The CRM market is morphing from systems that focused on capturing transactional data, to technologies that drive greater context, decisioning, and involvement of customers.  These new areas are still disconnected, as Paul notes in his post, but I think the shift toward customer engagement [CEM] is going to happen faster than CRM’s move to CX.  This will happen faster, I think, because many of the CEM vendors which enable Paul’s seventeen areas are very small, agile, and don’t carry the legacy ‘baggage’ of traditional CRM.  CX was a ‘build-out’ of CRM, whereas the move to CEM is coming from outside the CRM world, in.  As CEM pulls the industry to closer toward a customer engagement approach, the next eighteen months or so will be an interesting time for the legacy CRM industry.


  1. Disclosure: I’m back at Oracle via their acquisition of RightNow Technologies, a CRM/CX cloud vendor.

  2. Gartner

  3. Forbes: Gartner predicts CRM will be a $37bn market by 2017

  4. The analogy refers to landline communications. The most expensive part of communications networks tend to be the ‘last quarter-mile’ to a residence.  Without that last quarter mile being in place, the network can’t fully function, but making those connections is extremely costly.

  5. Few actually deliver true CX applications, but nearly all know how to hype it

  6. Random thoughts on CRM – Paul Greenberg