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Move Over, Baby Boomers
Gen X-ers want far more collaboration with companies - both as customers and as employees. CIOs are uniquely positioned to help their enterprises meet the demands of this new technology-savvy generation.
Last July, I had the honor of speaking on CRM and sports at the annual offsite conference of Comcast Spectacor (the owners of the Philadelphia Flyers and 76ers, among other franchises). The offsite was attended by 250 enthusiastic employees, of which about 240 were 35 and under. No exaggeration. Two months prior, I went to Croatia to keynote that country's first-ever CRM conference. There were about 165 attendees, roughly 80 percent of whom were 40 and under.
This youthful phenomenon transcends the anecdotal.
Gen X, those born between 1961 and 1982, are just beginning to enter business leadership en masse. In the United States, there are approximately 132 million combined Gen X-ers and Gen Y-ers - a.k.a. echo boomers - as opposed to nearly 79 million baby boomers. The youngest echo boomer is 16 years old - of age to be a consumer with money to spend. The oldest Gen X-er is 43 years old - and poised to take those leadership positions coming available as baby boomers step down.
These new generations think differently and want significantly different things out of life than previous generations. And they are demanding new business models to give them the kinds of customer experiences they seek. What do they mean by a great experience? They desire enough visibility into companies they deal with to enable them to make smart choices easily through many means of communication.
There is a reason why Samsung Electronics has passed Sony as the leader in consumer electronics. In my opinion, Sony developers are a cloistered group of engineering monks. Samsung spends a lot of time, energy and dollars on working with its customers through advisory boards that help determine its next lines of consumer products. Samsung's approach is a harbinger of what happens when a business model is based on real collaboration between companies and their customers.
This is no trivial matter. If your company doesn't develop a new business model that provides this kind of proactive collaboration between you and your customers, then these new consumers will simply take their business elsewhere. The CIOs willing to figure out how to make these new models work in the context of their own businesses will be well positioned to flourish in this era. Those who don't will be toast.
Who Are These Gen X-ers?
But don't take my word for it. Let's look at what the research shows. According to generational consultant Claire Raines in her book Beyond Generation X, Gen X-ers grew up with both parents working, so they became self-reliant - the "latchkey generation." They desire to control their own destinies and their own experiences. You can see this in the incessant advertising aimed at "lifestyle" choices. These ads attempt to sell not a particular product or service, but the experience consumers might have using a particular product or service. Products and services are now being sold as lifestyle solutions by companies that understand the deeply rooted desire of these new consumers to control what kind of lives they have.
As customers, Gen X-ers and Gen Y-ers are more volatile and high-maintenance than any other generation in history. They are voracious in their desire for immediate information and have sophisticated behavioral approaches to filtering that information, no matter how many sources it comes from.
In a recent study, for example, Yankelovitch found that 63 percent of this group will research products before they consider a purchase. What makes this statistic even more compelling is that these new customers are creating extensive communities to exchange information. Even though nary a handshake occurs, the information swap is trusted?and thus is more powerful than any marketing pitch ever could be. As Christopher Locke, Doc Searls and David Weinberger said in 1999's foresighted book The Cluetrain Manifesto, "When we have questions, we turn to each other for answers."
Want an example? Have you seen Epinions.com? If you go there, you'll see reviews of tens of thousands of products by perhaps millions of people, all of whom are personally interacting to provide more information about the products and services than even the creators of those products can provide. The "wisdom of the masses" helps people know whom to trust and why to trust (or not trust) them. These exchanges are instantaneous, real-time and decisive.
For business tools such as CRM to be considered viable for this new generation, a dramatic facelift is in order. Traditional CRM is no longer suited to the business ecosystem that we now live in. That's because the customer is at the hub of this new ecosystem, not the corporation. Traditional CRM organized internal processes and key performance indicators around providing a presumed value to the customer. But the customers themselves were usually not consulted, nor did companies consider the actual value of these changes from their customers' perspectives.
In contrast, the new generation of CRM tools must involve the customer in the planning of business processes. Skype is an example of a company that gets this. By engaging with its customers as participants, primarily through Internet "word of mouse," Skype fostered more than 238 million downloads (and counting) of its VoIP technology, which provides the company with a customer base of roughly 54 million users. Skype worked with online communities such as the Public Mind to gather up user-suggested features, and then adopted those features that the users wanted and that were also profitable. Skype's new business model has been so successful that the company was recently acquired by eBay for $2.6 billion.
"Collaborative customer experiences" are the watchwords of the new CRM model. That means that a relationship between company and customer provides customers with transparency into corporate thinking, which enables the two parties to craft the customer experience jointly. Today, running a successful business is no longer a matter of producing better products and services, whether or not the customer requests them; CRM should be organized around providing a significantly positive customer experience. Since millions of customers can't each get personal attention, the company must enable its customer to craft her own experience. So, in the current primitive stage of the customer ecosystem, we see BMW providing what can be defined as an innovation toolkit?a set of Web-based templates that aid BMW owners in thinking through ideas that they want to see in future models. This toolkit has led to 13 consumer-driven designs involving online services in cars - la OnStar that will be unveiled in forthcoming BMW models.
CRM is even more important in this new era because the customer defines the value, rather than the corporation. The PC/video game industry understands this. Many of these game companies release their game engines and authoring tools to the public so that game modifications can be made by consumers for every aspect of the game, from the interactions to the graphics. This has spawned what is called the "mod community" where hundreds of thousands of Gen X-ers and Gen Y-ers participate in creating entirely personalized versions of any game. For example, a company called Valve Software released the game engine that it used to develop the highly popular sci-fi game Half Life. Consumers then used this engine to create a new game known as CounterStrike, which didn't resemble its parent at all. The game became so wildly popular as a freely downloaded "mod" that Valve acquired the team of young adults who created it and commercialized CounterStrike. The result? Millions of units sold, 30,000 servers dedicated, 85,000 people playing any given second in a 24/7 week totaling 4.5 billion minutes per month, and many of the users paying monthly fees to play this incredible user-created game. It's no coincidence that revenue for the gaming industry was projected by PricewaterhouseCoopers to be more than $25 billion in 2004 and $55 billion by 2009.
To retain customers and fully realize their value, companies will have to restructure their entire value chain - encompassing sales, marketing, customer service, delivery, logistics and supply chain. To paraphrase Hillary Clinton, "it takes a village" to please a single customer. And that means a no-mistakes experience along the entire value chain. Research shows that companies that make customers their focus can generate greater revenue and higher profit margins.
A note of interest: The architecture that supports the new customer experience is much more akin to the on-demand architecture as represented by companies like Salesforce.com, NetSuite and RightNow because of its "multichannel, anytime, anywhere" availability and ease of use. The willingness of the on-demand vendors to provide the code needed to develop valuable additional applications and extensions to the original services they provide (see the AppsExchange website from Salesforce.com, for example) gives the new generation a more flexible set of tools to work with in providing customized services.
This profound shift creates enormous opportunities for CIOs. The business models and tools that will allow the technology-savvy Gen X-ers and Gen Y-ers to control their own experiences have to be created one company at a time. CIOs can reassert their strategic role by explaining this new directionto other C-level executives and then working with them to provide the tools this new breed of customers so determinedly wants. This will be a challenge, but a necessary one if your company is to stay alive in the coming years. And you, as the CIO, are one of the best-equipped executives to get the ball rolling.
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