In the coming years, growing competition among customer relationship management (CRM) providers—including technology titans like Microsoft, Salesforce, and Zoho—will cause a fundamental shift in the way we interact with CRM tools. While most of the hype will be surrounding artificial intelligence (AI) and machine learning (ML), the real driving forces in the future of CRM might be much simpler than you think.
According to Manny Medina, CEO of Seattle-based sales automation startup Outreach, CRM providers will want to take a back-to-basics approach when it comes to their product. Medina has a long history in business tech. He was one of the first employees on the Amazon Web Services team and also worked as a Microsoft executive before taking on his currrent role. We recently spoke with Medina regarding some of his predictions about where the CRM field is going.
The State of Things
To understand where CRM is going, you must look at where it is now. "With CRM, the outcome that we're all yearning for is a unified view of the customer journey—all the way from before you knew the customer to the stages of retention and upselling," said Medina. "Everybody is trying to go after this entire end-to-end thing."
Since the migration to cloud-based software, companies have cornered discrete parts of this journey. "Salesforce has taken the midpoint of that funnel while apps like Marketo took that top part of the funnel for the marketing automation feed," said Medina. "At the bottom you have ticketing system apps that were more downstream." While tools at all ends of the sales funnel are powerful, this has created fragmentation problems for businesses. "The problem is that the unique representation of [the customer] in something like Marketo is not the same representation in CRM and its not the same representation in the ticketing system," said Medina. As a result, he said there is a race to become an all-encompassing hub that captures the entire customer journey. Salesforce's Lightning collection continues to evolve to meet this need, and tools such as Zapier can help connect different platforms to give salespeople a more complete view.
Perhaps the biggest pitfall, however, is manual entry. "A lot of companies tell reps, 'If you want to get paid, you need to enter the data into CRM.' And what happens is, a lot of reps don't put in the data until the deal closes," said Medina. "A lot of really bad habits have developed with CRM, which renders the data useless."
Medina cited his own team at Outreach where reps can handle upward of 100 emails in a day. "Entering all of their information and reasonable notes manually is a huge chore," he said. While there are tools that can help automate these processes, they aren't comprehensive. Capturing activity data is a pain and the data is useless because employees aren't using the solution correctly.
AI and ML are not new to the CRM space. In 2017, Salesforce introduced its Einstein engine and made it available to all of its customers. Zoho offers a similar tool in the form of its Zoho Intelligent Assistant (Zia). These systems are designed to use predictive analytics and other methods to boost a company's sales process. That is the idea, at least. So far, Medina considers the intelligence push to be a dud.
"Salesforce was a little too happy to bring out Einstein. They announced capabilities that didn't really work. I think they need more time to actually make it work," said Medina. "The problem with ML is that people went too quickly with predictive analytics, without offering [customers] help with actually understanding the crossover relationships."
The problem lies in the way that ML works in CRM. In most cases, ML identifies large relationships in large data sets. It spots a large number of correlations without providing any real insights in terms of why things are happening.
Zapier co-founder and CEO Wade Foster also believes that AI isn't quite ready for prime time. " AI has a long way to go before we begin to see the radical transformations being heralded in the tech community," he said. "The simpler solution is automation. Sales reps can incorporate automation into their existing processes to get instantaneous alerts and updates from the various CRM tools they already use to better understand current and prospective customers."
Outreach's Medina offered an example about teams using a ML model to improve sales operations. The model showed that the prospects that representatives spent more time working with had the greatest chance of being converted into a sale. According to Medina, however, what was actually happening is that the reps were simply choosing to spend more time working on those prospects because they felt they were more likely to make a sale on them in the first place. "This is like saying that the rise in drowning is caused by ice cream consumption when, in reality, it just happens to be summer," said Medina. "Correlation is not causation."
A Focus on Simplicity
For the next year, Medina predicts that AI and ML will not be as high-profile as company marketing might have you think. "[We're going to see] a bunch of disappointments, a bunch of things that are not working, and a back-to-basics approach where we are going to stop talking about ML and go back to real data science a bit."
Medina offers the data operations of Facebook, Google, and Netflix as model examples of companies taking intelligent insights into their data. Data insights will be gathered from human analysis to spot opportunities for improvement in sales teams.
Medina said that this back-to-basics approach is what guides his work at Outreach. "There's going to be a separation between where the rep lives and where the data's stored," he said. "That's the way we're attacking the market. We're creating a sales engagement platform where the rep actually sends emails and it's where the playbook lives, so reps know what to do in all situations."
What Outreach aims to do is combine the convenient automations we are used to with a personable human touch. "This improves the rep's efficiency," said Medina. "Then what we do is, we turn around and take all of that data and give it to our user, the customer, to spot opportunities for improvement."
Throughout our conversation, Medina mentioned that he thinks all of the CRM providers are getting "data-hungry." He predicted that, in a drive to encompass more parts of the customer journey, developers such as Salesforce will be signing more strategic partnerships like they did with Amazon Web Services in 2016. These partnerships serve both to encompass the entire customer journey and to expand their data. "Salesforce is built on an Oracle database," said Medina. "It doesn't scale well. It cannot accommodate unstructured data as well as structured data. This is why we see all of these partnerships. They need a diverse, multi-vendor strategy."
While the CRM space will continue to update its infrastructure, businesses will look for new and effective ways to source leads. The majority of LinkedIn users would probably consider the website a platform for networking and sharing content. But to many companies, including CRM developers, LinkedIn is a rich data mine for leveraging user information.
"LinkedIn is the only self-updating social database for work at the moment," said Medina. "Because of that, Microsoft has a bit of an advantage because they can slow-roll the opening of their API [application programming interface]." Considering the fact that Microsoft offers their own CRM platform, the idea of the company using the LinkedIn data for themselves isn't hard to imagine.