How Customer Trends Impact CRM Technologies and the Vendor Landscape

1. How Customer Trends Impact CRM Technologies and the Vendor Landscape CRM Expo 2011, Sofia, 20.10.2011 On behalf of Ivan Maglić, Regional Director Gartner Adriatic / Calisto Janet Naidenova, Marketing Partner This presentation is built based on research and insights developed by Gartner analysts!

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4. CRM Trends Sales Marketing Customer Service

5. CRM Trends and interest change... • During 2010. changes in growth of three categories of CRM applications were changing due to: • rapid rise in use of social networks; • enterprises re-evaluating use of smartphones and tablets; • increase in access to information for customers – "shift of power"; Social CRM is the hottest area of interest in customer service and marketing departments, followed by related areas like digital marketing and e-commerce.

6. CRM Trends and interest change... • Majority of spending on CRM is still concentrated in: traditional sales force automation (SFA), campaign management and customer care in contact center. • Software as a Service (SaaS) delivery represented approximately 26% of all CRM application spending in 2010. • In sales applications, almost 50% was delivered via SaaS • Mobile applications are priorities for sales in 2011 – interest has swung from the BlackBerry to the iPhone to Android, to the iPad and other tablets. • In the short term, the Chief Marketing Officer (CMO) is under pressure to support improved digital marketing and need for social media tools. • Social or community customer service became the hottest topic in customer service department in 2010. The interest is not uniform, but sectors such as high-tech, media, travel, telecommunications, retail and education are leading the way.

7. CRM Vision and Strategy Putting the CRM Pieces Together to Generate Success

8. As the World Gets Smaller, Customer-Centric Strategies Get Larger Mobile Devices Communications Security • Ubiquitous computing • Devices for life • Portable computing power • Convergence of communication • Broadband, Wi-Fi and WiMAX • Always accessible or online • Biometrics • Profiling or access Convergence of Corporate Systems and Data CollaborativePlatforms • Outside four walls • Extend out to customer, back to suppliers LocationTechnology • Real-time data • Unified view of the customer • Complete transaction history • Noncorporate data (satisfaction) • Tagging • Proximitymonitoring The challenge in customer-centric strategies will move from giving customer-facing employees better tools, to putting the tools directly in the hands of customers.

9. CRM Applications Remain Fragmented:More Than 50 Submarkets Segmentation/Event Triggers Field Sales MRM E-Commerce Marketing E-Marketing Inside Sales Sales Field Marketing Partner Management Promotions Mgmt. Order Management Location-Based Configuration Social Networking Business Intelligence Performance Mgmt. Pricing Personal Productivity Analytics CRM Application Value Chain Self-Service Customer Value Analysis Analyzing Interactive Data Mining Finding In-Line, Event-Driven Knowledge Management Dashboards/KPIs Customer Service E-Learning Communicating RFID/Telematics Forming Warranty Mgmt. Rewarding Field Service WFO Parts Planning Norming Wireless Mobility Performing Contracts Trouble Ticketing/Case Mgmt. Product Life Cycle Managing Monitoring Fraud Detection Product Information Mgmt. Information &Infrastructure Customer Data Integration E-Commerce RFID Information Mgmt. Inventory BPM Logistics App. Architecture Application Infrastructure The CRM market is too fragmented to start with a tools discussion. Strategy drives the decisions on tools and technologies.

10. More-Effective Customer Interactions Customer-Satisfying Behaviors Greater Customer Access Traditional Business Components of CRM Integration Among Front-Office Functions ERP Business Organized Around Customer CRM E-ERP Field Sales E-Business Retail Sales Customers Telemarketing R&D E-CRM SCM Customer-Centric Processes Telesales Partner Relationship Management Finance Customer Service Supplier Extended CRM Enterprise Distribution & Logistics Field Service Human Resources Marketing Info. Systems Database Marketing Integration WithBack-Office Functions Manufacturing Customer Insightand Understanding Acronym Key CRM = customer relationship management ERP = enterprise resource planning SCM = supply chain management Areas Covered Within CRM

11. More-Effective Customer Interactions Customer-Satisfying Behaviors Greater Customer Access The Reality of Customer-Centric Strategies Integration Among Front-Office Functions Business Organized Around Customer CRM E-ERP Field Sales E-Business Retail Sales Customers Telemarketing R&D E-CRM SCM Customer-Centric Processes Telesales Partner Relationship Management Finance Customer Service Supplier Extended CRM Enterprise Distribution & Logistics Field Service Human Resources Marketing Info. Systems Database Marketing Integration WithBack-Office Functions Manufacturing Customer Insightand Understanding The old designations of operational systems, ERP, SCM and CRM should be replaced by the concept of customer-centric strategiesand other related strategies that will focus on process issues. Areas Covered Within CRM

12. The Eight Building Blocks of CRM 1. CRM Vision 2. CRM Strategy 3. Valued CustomerExperience 4. OrganizationalCollaboration 5. CRM Processes 6. CRM Information 7. CRM Technology 8. CRM Metrics

13. 1. CRM vision 2. CRM strategy 3. Valued customerexperience 4. Organizationalcollaboration 5. CRM processes 6. CRM information 7. CRM technology 8. CRM metrics The Eight Building Blocks of CRM: Much-Loved, but Apparently Forgotten Building a market position against competitors with defined value propositions based on requirements, personified by the brand and communicated. Turning the customer base into an asset via delivery of customer value propositions. Provides objectives and how resources will be used in interaction. Constantly ensuring that the propositions have value to customers and the enterprise, achieve the market position, and are delivered consistently. Involving the changing of culture, structures and behaviors to ensure that staff, partners and suppliers work together to deliver what is promised. Managing customer life cycle processes and processes in analysis and planning that build customer knowledge. Ensuring that the right data is collected and the right information goes to the right place. Involving internaland externalmeasures of CRM success and failure. Involving dataand Informationmanagement, customer-facing applications, and supporting IT infrastructure and architecture.

14. Customer-Centric Generational Framework First Second Third Fourth Fifth CRM Vision None Initial productivity and visibility Function or channel effectiveness Intracompany integration Value-network- enabled CRM Strategy None Isolated projects; initiated from the bottom up More "joined up" thinking, but still silo-oriented Company-level CRM program Value-based collaboration for mutual benefit Valued Customer Experience Unknownconcept; designs itself Unknownconcept; designs itself Understanding and focus at silo level Understandingand focus acrosslines of business Understanding of wider scope; collaboration Organizational Collaboration Inward focus; silo structures First signs of customer- centricity; silos Changing culture and incentives; silos Customer-centric; reorganized by segment Shared customer- centricity; goal alignment CRM Processes Inward focus; silo-oriented Start optimizing for efficiency; silo-oriented Optimization at silo level for cost and value reasons Company-level optimization for cost and value End-to-end process optimization CRM Information Basic and fragmented Team-based; fragmented; minimal insight Shared info. at silo level; insightdeveloping Shared info. andinsight across the company Shared info. andinsight beyond the company CRM Technology Very fragmented;weakfunctionality Fragmented;limited functionality and focus Strong functionality within silos Strong functionality with company-level integration Strong functionality; integrated beyond the company Few metrics; inward focus Fragmented and limited metrics; operational focus Focus on silo efficiency; lacks customer focus Company- and customer-focused balanced hierarchy Shared objectives and balancedmetrics; aligned CRM Metrics Most organizations today:

15. Which technology trends will dominate and shape the CRM application environment to 2014?  How will CRM technology platforms, architectures, delivery methods and applications evolve to embrace these trends?  How will the CRM application vendor landscape evolve in response to the new architectures and technologies?

16. 2011: CIO Business Priorities Reimagining IT: The 2011 CIO Agenda  1 January 2011, ID: G00210688

17. 2011: CIO Technology Priorities Reimagining IT: The 2011 CIO Agenda  1 January 2011; ID: G00210688

18. What's Hot in 2011:CRM Priorities in Recovery Sales Customer Service Marketing Mobility — tablets/smartphones Social CRM/community Social media for marketing SaaS CSS SaaS SFA Digital marketing E-Commerce/Web 2.0/B2B Web self-service Loyalty management Knowledge management for service resolution Lead management Lead management Social CRM sales Mobile support Marketing resource mgmt. Price optimization Real-time decisioning Marketing perf. measurement Sales performance mgmt. Feedback management Predictive analytics Configure, price, quote Multichannel service BPM Inbound marketing Partner, distributed and field marketing Sales incentive comp. Web chat for service Forecasting and pipeline Workforce optimization Mobile marketing Unified communications and collaboration Sales effectiveness content Web analytics & advert mgmt. Sales training Text mining Event-triggered marketing Multichannel selling VOIP and presence Integrated marketing mgmt. Cross-CRM Master data management Business process mgmt. Customer-centric Web

19. How will CRM technology platforms, architectures, delivery methods and applications evolve to embrace these trends? 

20. Top 5 Technology Trends for CRM

21. Evaluate and Shop Listen and Learn Participate and Communicate Play and Interact Share and Broadcast 1. Social and Interaction: More Than "Spare-Time Activity" Changing Businessand Opinions Giffgaff is a mobile phone service in the United Kingdom. It operates as a mobile virtual network operator using the O2 network and launched on 25 November 2009. Giffgaff differs from conventional mobile phone operators in that the users of the service may also participate in certain aspects of the company's operation, e.g. sales, customer service and marketing. In return for this activity, the user receives remuneration. Customer service The customer service works by relying on members of the network to provide answers to questions raised by others, and the company's small customer service team provides support for those issues that cannot be dealt with in this way, for example credit card issues. A forum on the website has an active community to answer routine issues, and integration with facebook and twitter was introduced in October 2010.

22. Social and Interaction:Digital Marketing Focus Digital Advertising Digital Video Digital Signage Digital Branding In-Game Advertising Podcasts Search Marketing (SEO) Mobile Marketing Digital Recommendation Engines Digital Analytics Event-Triggered/Inbound Augmented Reality Marketing AddressableAdvertising ContextualMarketing Social Monitoring Ideation Management Social Campaigns Social Engineering Forums Word of Mouth Social Event Networking Reputation Management Digital Branding E-Mail Marketing Digital Campaigns E-Commerce Product Reviews Gift Registry Cross-Selling, Upselling Loyalty Marketing SocialMarketing TransactionalMarketing

23. 2. E-Commerce and Mobile: iPad, Android, and the rest… By 2015, companies will generate 50% of Web sales via their social presence and mobile applications. • E-commerce continues to grow; B2B and B2C. • Website style, innovation and ease of use drives adoption. • Mobile accelerates the trend. • Do you need an app store? iPhone/iPad (and others): applications are easy, simple and fun. B2C and B2B customers are hungry for these innovations. Consumer-driven impact on enterprises.

24. 2. E-Commerce and Mobile: Context-Aware Computing By 2015, context will be as influential to mobile consumer services and relationships as search engines are to the Web. What? Identity Community Organizations Providers Where? Who? Users Why? When? Intent Environment How? Context-Aware

25. 3. Business Intelligence and Analytics: Data Sources Will Shift • From DemographicData • Income • Gender • Socioeconomicstatus • To PsychographicData • Lifestyle • Personality • Attitude • Belief • Reputation • Actions • Implicit behavior • Explicit behavior Marketing and Service Mix New Media Chosen ResponseofChoice Unique Four "Ps" Customer Personal • Name • Marital status Purchase Decision CustomSegmentationDeveloped Geographic • Country • Region • Address • Climate Behavioral • Brand loyalty • Product use • Personalongevity Behavioral Data Collected Database Updated Those responsible for the "customer" will need to shift from collecting personal data about individual customers toward collecting more complete and more relevant data around online persons and interactions: the analytics to make sense of this data will be a hot area for many years to come.

26. Call Center Branches Internet 3. Business Intelligence and Analytics: Social CRM and MDM and Data Marketing Systems Upstream/Operational Systems Social Networks Analysis and Campaign Management Channels Marketing and Data Mining Database(s) Trusted External Data Sources MDM Hub Downstream/Analytical Data Warehouse and Data Marts Business Rules Engine Business Applications Voice of the Customer An accurate, consistent and timely view is key to improved business processes and decision making BI and Performance Management

27. 4. Cloud and SaaS:The Role of SaaS With Cloud Computing PaaS SaaS Business Services V-Cloud Information Services Application Services Mgmt. and Security App. Infrastructure Services IaaS Cloud Enablers System Infrastructure Services Vendor names are samples; this is not an exhaustive list.

28. 4. Cloud and SaaS:Integrating SaaS Into Existing Applications SaaS Provider A SaaS Provider B Customer Data Sales Force Automation Incentive Compensation Opportunity Customer Data Two-Way Data Synchronization Sales Forecast Opportunity Info. Quote Info. (Web Service) Enterprise Firewall Browse and Search Products (one-way data integration) Product Quoting Performance Management SaaS Customer Master Data Order Management Sales Configuration ERP On-Premises Best-of-Breed On-Premises Account Receivables Custom Application 75% of large-enterprise SaaS deployments will have at least five integration or interoperable points to on-premises applications.

29. 5. BPM (Business Process Management) and SOA: Gartner's Pace Layers Facebook, Twitter, YouTube, Communities, Portal, etc. People are talking about us; what do we do? Sentiment Analysis Service iPhone App Droid App Facebook Presence Open Innovation Submission Box Product Review Service Recommendation Engine Systems of Innovation Customer Service Processes & Systems R&D & Product Development Systems & Processes Configurator Systems of Differentiation Systems of Record Customer Product Supplier Order

30. How will the CRM application vendor landscape evolve in response to the new architectures and technologies?

31. L L L Depth Depth Depth H H H Megavendors Continue to Dominate 1999 2011 2002 H Megasuite Vendors Megasuite Vendors No-Man's Land Breadth Focused Vendors Ecosystem L • Megavendors continue to extend their functional footprints into the "front office" • End-to-end process integration being their differentiator • Analytics, performance management, compliance being their lead reasons to buy

32. Sales, Marketing and Customer Service • E-commerce, Customer Experience Suite and Project Northstar drive a focus on marketing. • Acquisition focus: Unica, Coremetrics and SPSS. • Microsoft Dynamics CRM: sound technology for multiple delivery models — SaaS, on-premises, partner-hosted; current version 5.0. • SFA or customer service play first; CRM suite plays second. • App platform; needs better segmentation messaging as there is confusion in the installed base regarding most appropriate choice. • Legacy CRM applications covered by Applications Unlimited. • Oracle Fusion Applications announced for sales and marketing. • Siebel CRM — campaign management, loyalty managementand analytics are now the primary revenue drivers. • SAP CRM 7.0 doubled live end users in the past 18 months. • First 7.1 innovation pack delivered for flexible upgrades. • Largely considered as an enterprise apps play, not a stand-alone. • Momentum gaining in marketing.

33. And…Cool Vendors Will Continue to Emerge 2008 • Advizor Solutions • Aggregate Knowledge • Cvent • EveryScape • The Fizzback Group • GetAbby • LandSonar • Lemonade • Orchestra Networks • Saepio Technologies • SalesCentric • SupportSpace • TopQuadrant • Vitrium Systems • Xmonic • Ydilo • Zoomix 2009 Sales • Cloud9 Analytics • Digby • Makana Solutions • Silent Edge Marketing and Analytics • dna13 • MuseWorx • Pontis • Visible Measures Customer Service • NexJ Systems • Helpstream • Reimage • Vi-Clone 2010 Sales • Artesian Solutions • Jigsaw • Prolifiq Marketing and Analytics • Thunderhead • Balihoo • NextStage Evolution • Siri Customer Service • Transera • QuickSeach • The Selfservice Company • Synthetix 2007 • 5square.com* • Accept Software • Eloqua • Enkata • Exploria* • Hitwise • Infonis • InsideView • KXEN • Landslide • Loyalty Lab • NearbyNow* • OpenQ* • PowerReviews • RLPTechnologies* • Swivel* • TOA Technologies • Vistaar • XpertUniverse *Industry specialists

34. Case study PHOTOBOX

35. Gartner EMEA CRM Excellence Award 2010 PhotoBox won the Gartner EMEA CRM Excellence Award 2010 in the customer experience management category. Founded in 2000, PhotoBox aimed to help its customers transition to digital photography by providing an online service they could use to create personalized merchandise using their own images. In 2006, PhotoBox merged with its French equivalent, Photoways, to create a European market leader with 32% market share. Spurred by the merger and other planned expansions, PhotoBox migrated to a single Web platform that went live in early 2008. The migration included the launch of a new website. However, insufficient customer input into the site planning led to poor customer feedback for the new site. PhotoBox acted quickly to turn the situation around and put the customer at the center of the business. PhotoBox now has more than 11 million members.

36. Case study: Photobox • Key Findings • It is impossible to provide exceptional customer service without understanding customer wants and needs. • Don't underestimate the time and effort needed to set up analytics applications that can sort, validate and present customer information in an easy-to-digest format. • Change management starts with improved employee cross-department collaboration — in this case, they were facilitated by "huddle meetings."

37. Case study: Photobox • The Challenge • Customers felt confused and disoriented by the new website. • Consumer activity on the new site declined by about 30%, compared with the prior year. • In the week post-launch, Web issues drove an unprecedented and unforecast 29% increase in inquiries (about 6,000 more contacts within a month of the migration). • The customer service operation became swamped. • Customers using the new website became frustrated because they couldn't get through to customer support. • PhotoBox had difficulty managing customers with multiple accounts. The company could link the accounts only if the inquiry included the incident number.

38. Case study: Photobox • Approach • PhotoBox developed a customer experience strategy aimed at providing "spotless" customer experiences, thus reducing costs and increasing sales revenue. • The initial strategy had four goals and three principles. • Goals: • Reduce inbound contacts. • Reduce the number of customer contacts received as a percentage of the number of dispatched orders. • Increase customer advocacy and acquisitions via a "refer a friend" incentive. • Increase sales among existing customers • Principles: • Engage and listen — Consolidate customer data, make better use of customer surveys, co-create products with customers, and use additional beta and focus groups to test new ideas. • Learn and act — Institute a 30-minute post order "cooling off" period to allow customers to self-help with regards to any required order amends, simplify photo uploads and increase communications with customers. • Be accountable — Have one unifying metric for the team and weekly "huddles" to discuss issues and answers.

39. Case study: Photobox • Results - PhotoBox's results from 2008 to 2009 included: • Customer base grew by 44.5% • Market share increased to 37.4% (from 32%) • 40% customer growth per year • Increased overall sales among existing customers by 15% (not including new customers) • £240,000 in savings in cost-to-serve in 2009 • Customer care operational efficiencies enabled the company to reallocate two to three FTEs to other areas of the business. • Consistent, branded customer experience delivered in nine languages • In 2009, the "refer a friend" program delivered: • 24% increase in new customers registered via refer a friend • 45% increase (£260,184) in new referred customers placing their first order • 15% increase in sales from existing customers • £260,184 in new orders • 57,432 new registrations • 39,534 first orders placed • 81,092 unique people who referred a friend

40. Related Gartner Research • How to Profit From Social CRM(G00206168) • What's 'Hot' in CRM Applications in 2011 (G00211657 ) • Essential SaaS Overview and 2010 Guide to SaaS Research(G00200890) • Reimagining IT: The 2011 CIO Agenda(G00210688) • Case Study: Digital Photo Personal Publisher Improves Its Reputation With Customer Experience Management (G00212893) • Predicts 2011: CRM Enters a Three-Year Shake-Up (G00208813) Find them at: www.gartner.com

41. Gartner Adriatic – contacts Executive Programs team Mr. Boris Vrabec Executive Partner Gartner Adriatic/Calisto boris.vrabec@gartner.com Mobile: +38598 4416 896 Tel: +385 1 6176 416 Mr. Awi Lifshitz Executive Client Manager (EXP) Gartner Austria Awi.Lifshitz@gartner.com Mobile: +43 664 8851 2035 Tel: +43 1 5332 3500 Gartner Adriatic /Calisto Koranska 1b/I 10000 Zagreb Tel: +38516171 431 Fax: +38516171 431 Mr. Ivan Maglić Regional Manager ivan.maglic@gartner.com Mobile: +38598416 896 Mrs. Nataša Glavović Sales and Marketing Executive natasa.glavovic@gartner.com Mobile: +38598 678 972 Calisto Adriatic / GartnerBulgaria 6, Hubavka Str. 1111 Sofia Tel: +359 2 971 14 01 Fax: +359 2 971 14 02 Alexander Zahariev Country Manager alex.zahariev@gartner.com Mobile: +359 87 7677113

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