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I watched the movie “Minority Report” last night for the first time (which goes to show, I suppose, my level of cultural currency), and I have to say I found it pretty scary. But probably not in the way most people would. The notion of predicting and preempting crime, a pretty much conventional Orwellian device, I didn’t find nearly as frightening as the scene in the Pentagon City mall in Washington, DC, where Tom Cruise goes shopping in a Gap store with someone else’s eyes in his head. The store’s biometric Customer Relationship Management program scans his transplanted retinas and addresses him by the name of their Japanese former owner, and asks (I assume rhetorically) how his last purchase had worked out.
Why do I find this particularly worrisome? Not because of the transplanted eyes. I’m concerned because the CRM system it depicts is very close to becoming a reality, though not with the biometric interface. The customer’s relationship is with a machine, and not with a person, and the implications of that I find very disturbing.
I live in the Metropolitan New York City area, and Macy’s of Herald Square (“The World’s Largest Department Store,” it says there) is a subway ride away. If I have time to kill (which isn’t often), I sometimes enjoy browsing in the Cellar, where all the new kitchen gadgets and appliances are kept, or going up to the eighth floor to look at furniture designs. But on the whole, I hate to shop there, especially when I need clothing or “Men’s Furnishings” because (1) the merchandising is sloppy and (2) it’s extremely difficult to get competent help on the sales floor. When a sales person swipes my credit card through the reader at the cash station, my name and address come up on the screen, and my sales history is available, but no one looks at it.
In contrast, shopping in a real Gap store, the shelves and racks are all kept neatly, and there is usually someone available to help find – or sometimes just figure out – what it is I am looking for. The only real difference between the biometric CRM system and Gap’s present human sales associates is the sales people don’t know anything about me or my history with the store until they swipe my credit card through the reader at the cash station. That much is no different from Macy’s.
The reason for developing a relationship with a customer is to sell him more stuff. The kind of sales help that will do that is far more expensive than any retailer today is willing to invest in. The growth of shopping malls and international retailing brands has been fueled to a significant extent by a philosophy of low cost, high turnover, interchangeable front line employees. This, in turn, is what is driving the CRM market.
One of my clients, an upscale retailer, has been developing a CRM system in its flagship stores based on PDA devices that the floor staff members carry. A sales person can use it to tap into the data in the ERP system and get almost anything from customer history (after reading the customer’s ID from a Customer Retention card) to available stock of an item in the warehouse or another shop when it is not available in this store. The idea is to support the sales person, who (unlike the downscale merchants) has developed a relationship with at least some customers. By checking on the customer’s recent purchases, the sales person can offer the customer complementary follow-up selections. The customer comes to trust the sales person’s judgment, and to view him as an ally rather than a nuisance.
But the mass merch mentality would be to replace, rather than support, the sales person with an automated CRM system. Already in stores like Sears, and even in some supermarkets, there are price check scanners placed strategically throughout the store. No longer does the customer have to go looking for a sales person to get a price (provided, of course, that the bar code tag is on the item). It is supposed to be a convenience for the customer. But as this convenience is accompanied by a concomitant scarcity of live sales help, it sends a message that the store doesn’t value a personal interaction with its customers.
Combine this trend with the emergence of E-tailing – merchandising over the Internet, as pioneered by Amazon.com and now practiced by an ever-growing roster of brand names. Front-line retailing is becoming an ever-more automated industry. Fewer people are being employed in selling positions. The first line of contact between the customer and the business is a machine. A call to Amazon for personal service is probably outsourced to India. With the growth in the use of debit cards and self-service checkout stations, the only people who will be employed in retail stores of the future will be low wage stock boys, the store manager, and a security guard. If a customer has a question that the in-store computer can’t handle, he will be directed to a phone that connects directly with Bangalore. The only local contact with the customer will be in cases of shoplifting.
I don’t see this as a good thing, either in terms of quality of life or business development. Culturally, we are becoming increasingly isolated, cutting ourselves off from the world as we move through it with an i-Pod and a pair of earplugs, reading and sending emails on a Crackberry instead of looking at the world around us. One day, there will be no retail stores at all. If all personal services are taken over by a machine, and the same level of service is available from home, most shopping will be done from home. First it will be because it is less hassle, quicker and with no crowds to contend with. Later it will be because going out is too dangerous: too few people will do it, and the streets will be taken over by bandits – people with no jobs, scrounging for a living by pouncing on anyone in the neighborhood. Our society will begin to resemble the agoraphobic one described by Isaac Asimov in “The Naked Sun.”
Am I being a little far-fetched? Hyperbolic? Maybe. But the point is that CRM and other Business Intelligence applications are – and should be viewed as – tools, not solutions, despite the marketing vogue to sell the latter. Before implementing the tool, the organization should be structured and conduct itself around the concept of customer service at a personal level. The tool should not be expected to make up for what the enterprise cannot and does not already provide. It should be seen as a way to leverage the sales and marketing strengths already in place. That, in my opinion, would be intelligent business.
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Early in my consulting career I worked for a DSS/OLAP software vendor that provided consulting services to promote the sale of the software. Consultants like myself were involved to at least some degree in selling activities that included examining the customer’s business, making preliminary recommendations, answering questions and RFPs, and giving customized demonstrations. That was all pre-sales. The purpose was to get the business. The demo was not just about the software: it was about our service. It really is hard to evaluate customer service from a sales pitch and a handshake. But if you actually do something for the customer (without doing too much) you have a better chance of getting his attention and, ultimately, his commitment.
Fast forward a few years. DSS/OLAP has evolved into Data Warehousing and Business Intelligence; vendors are getting bigger. Some are getting out of consulting altogether, relying on a network of consultant/resellers to promote their product. Now, a free demo is not a custom demo: it is canned, web-based, scripted, smoke and mirrors for mass consumption. “Look at the neat stuff our in-house geeks have dreamed up!” And in truth, it is pretty impressive to see in action. So how will it work in my environment? If I give you a sample of my data warehouse, can you demonstrate slice-and-dice, drill-down, and your neat query features on our data?
Sure. Just not for free.
I’m not unsympathetic to the reseller for being a little risk-averse. I know, from trying to sell my services, how much effort you put in to even find, let alone close, one deal. So doing a mini-consulting engagement on the “if-come” seems a little much. But what we are really dealing with here is a sale of a product. So consider the message that is being sent with a proposal to charge for a demo. “We never go the extra mile for the customer.” “This product is so complex we have to invest a lot of time to achieve the simplest request”. “You want the product, but we want to sell you consulting.”
Well, ok, you may say. Why does the customer want a custom demo, anyway?
It’s called “due diligence”. Enterprises launching BI initiatives a few years ago were entering largely uncharted territory. Decision makers had no experience with either data warehousing or with BI software, so a software vendor could come in and make an effective pitch, and the customer would choose the one that gave the best price and the glitziest demo.
Not anymore. While the territory may still be new for SMB clients, it isn’t exactly uncharted. Some of the decision makers may have experience with the leading BI products, which is both a good thing and a not so good thing. They know at least one product, warts and all, and they are looking at some of the newcomers to see if they have something better. So when a prospect asks for a custom demo of your product, he is offering you a chance to overcome his negative impressions, and show him your product really is the best in the field. Why on earth would you want to charge him for that?
And consider the multiplier effect. What enterprises is this customer affiliated with? Would a sale here lead to a sale to a parent company? Driven not just by the product, but by a satisfactory relationship with the vendor?
It just seems to me that charging consulting fees to make a sale is not intelligent business.
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