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SAP, businesses move toward customer engagement management

Customer relationship management is giving way to customer engagement management as the new business strategy. SAP is evolving in recognition of this change.

From the early days of customer relationship management (CRM), the focus has been on giving companies control of their relationships with customers -- that is, allowing them to manage customer interactions.

But that is changing.

Customers today have the upper hand in their interactions with businesses, thanks to such factors as their increased use of online shopping and social media. In today's competitive, global economy, businesses must do more to better understand their customers and engage with them in more meaningful, personal ways.

To accomplish those goals, companies are moving away from the era of CRM to the era of customer engagement management, where brands first focus on the customer, then empower their employees so they can more easily engage -- and react in the moment -- with their customers. Take SAP, for example.

"A while back, SAP did some messaging around customer experience. Then about a year or a year and a half ago, they shifted, kind of suddenly, from customer experience to customer engagement, which has actually given the market a much more appropriate strategy," said Paul Greenberg, president of The 56 Group LLC, a Manassas, Va.-based consulting firm focused on CRM.

Business strategy embraces customer engagement

From the standpoint of a technology company, customer experience as a strategy is going nowhere, because customer experience is the emotional state of a customer toward a company, Greenberg said. "Customer engagement as a strategy, on the other hand, makes a lot of sense because there are actual systems of engagement -- the interactions and intercommunications -- between companies and customers and the impact and effect of that, and the value derived on both ends," said Greenberg, whose company advises SAP.

To win over customers, companies must create personalized and consistent brand experiences across the entire customer lifecycle, from initial engagement to ongoing service and support, said Jamie Anderson, senior vice president of marketing for customer engagement and commerce solutions at SAP. Anderson agreed with Greenberg that tech companies don't sell customer experience, they sell the tools of engagement.

"The notion of selling customer experience is wrong. Customer experience is an emotional bond between the brand or the seller and the buyer," he said. "It's not something that technology alone solves. So, that's why I like to focus on what we can do as technology vendors, which is provide the tools for engagement."

SAP has recognized the change in the way customers speak about their interactions, engagements and experiences, and as a result, is changing its message to adapt to that change, said Esteban Kolsky, founder and principal of thinkJar, a Sacramento, Calif.-based customer strategy consulting firm.

But calling it customer engagement doesn't change what SAP's CRM software does; it's just a question of messaging that better reflects what customers are discussing and asking for, Kolsky added. With that in mind, SAP's product continues to evolve to support customer engagement or customer experience.

SAP's CRM product continues to evolve

"The product still does all the basics well. It keeps tracks of customers, it keeps track of campaigns, it keeps track of service issues. It does what it always did -- it's just a different way to message it," Kolsky said. "SAP is focusing on how to become a platform vendor, not how to become a customer engagement vendor. So, as the evolution of the platform continues, SAP can present it in different ways because it is a platform and that's where calling it customer engagement comes in."

But how well is that evolution going?

"Everybody recognizes that it's a new digital era for customer engagement," said Andrew Leigh, vice president of alliances at cloud integration provider Jitterbit in Alameda, Calif. "We have a tremendous respect for SAP, and they have been the gorilla, the leader in ERP applications for well over 20 years, but what they have always struggled to deliver is to be best of breed in a platform of engagement."

The reason: SAP customers are not looking to SAP for customer engagement – rather, they're looking for cloud-based solutions, Leigh said. "The number one that we're seeing is Salesforce, but we also see people going to NetSuite and e-commerce solutions like eBay and Magento and Marketo -- all cloud-based. SAP is playing catch-up, but we have faith in their ability to innovate and be able to engage at that level," he said.

Today's world has moved far beyond CRM -- it's mobile, it's social, it's empowered customers, it's a company's ability to react in real time, as well as proactively engage customers in some contextual conversation -- and it's customer-driven, SAP's Anderson said.

"Over time, what we've witnessed is less customer relationship management and more command and control of customer information being exerted through the use of these systems," Anderson said. "We're asking customers to conform to processes that were written for a bygone age, just because we need to get that information rather than respond to their needs."

But customer relationship management has changed, and it's no longer relevant in the way in which these systems were built, he said.

Customers today manage relationships with companies

What exists now is customer-managed relationships; that is, customers are managing the relationships they want to have. So, although CRM is a useful store of customer information, it doesn't have the flexibility to offer customers a 360-degree view of the business to enable them to navigate and get the information they need.

"SAP recognized that this change was happening three years ago, and that's what's informing our strategy for customer engagement and commerce," Anderson said. "We're flipping it around and we're seeing this omnichannel experience becoming so important. We acquired Hybris because we saw it not just as an e-commerce platform but as an omnichannel engagement platform."

However, putting commerce on the same playing field as customer engagement is not the right move, 56 Group's Greenberg said. After SAP acquired Hybris in 2013, its message at its Sapphire conference in May was customer engagement and commerce, which diminishes what customer engagement really is by turning it into something more transactional and operational, he said. Although commerce and e-commerce are part of customer engagement, they're not on equal playing fields.

"That's SAP's messaging currently and they're trying to make it palatable, but to me it's not palatable," Greenberg said. "To them, it fits the model of the business that they have, which is that the Hybris people are running the CRM practice and e-commerce is being associated directly with CRM at SAP. So, there's something a little self-serving in it."

What SAP has today is a message -- although it needs some honing -- about customer engagement. What it doesn't have is the portfolio of products to fully back it up, but that will come in time, Greenberg said. He suggested that SAP needs to go back to where it was a year ago, which is just straight engagement, and then drop commerce in as a tiny piece of it rather than as an equal partner. Additionally, he said, SAP has to have the portfolio of products, as well as partnerships and alliances to support it.

"If you're selling engagement as your message and somebody says, 'OK, I'm buying,' what are they buying?" Greenberg asked.

Today, SAP still has an expanding CRM portfolio and the company is in the middle of putting together partnerships. It also has a number of solid pieces around its more traditional CRM applications; Hybris is a subsumed piece of it, Greenberg said.

"SAP also has a number of the collaborative capabilities, like SAP Jam, that integrates with CRM but that allows for collaborative features for employees and eventually extending to customers around communities. And they have partnerships with some of the community providers, which is another piece of it," he said.

So, what SAP has, Greenberg said, is a series of solid pieces, partnerships and alliances -- as well as go-to-market strategic relationships and technology relationships -- so it has a native portfolio of some of the elements the company needs for an effective customer engagement strategy. "SAP is piecing it together," he said.

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