WizKids Give Us Something to Think About

It’s that time of year again when we announce who the WizKids are. Confused? It’s our annual award to emerging companies and companies with emerging innovations. When you get right down to it, we track new and cool stuff and report on it.

Two years ago, we started the process with a simple question: What’s new and going right in CRM? We were specifically interested in identifying companies that were introducing new ideas along with new technology in the CRM or front-office space. If you were bringing to market a new sales force automation application to compete with the established players through low cost, we would say, “Thanks, but no.” However, if you had a new application idea for a business process that no one had thought of before, we were very interested to learn more.

Changing Standards

In the handful of years since I started watching the CRM market, the goal line for something like this has continuously moved, and each year we need to recalibrate the definition of WizKid. So, for example, if there had been a WizKids award in 2000 it might have gone to a lot of ASP vendors, including Salesforce.com and some that aren’t officially around any more like Upshot, which was bought by Siebel.

ASP/hosting/on demand/SaaS is a good example of what’s good — as well as what’s risky — about being a WizKid. There’s absolutely no guarantee that just because you have a cool new idea, you will gain long-term stability and a market niche. That’s why each year when we announce the WizKids award, we have to admit that we have no real insight into which ones will go on to bigger success and which will not. A lot has to do with how well a company manages itself and its innovative idea.

Nevertheless, it’s fun to look at what these innovators are doing, to ask questions of ourselves about the applicability of new solutions, and to project into the future how these companies will do. It sort of has a fantasy football aspect to it.

The Report

To complete the picture, tomorrow — in addition to announcing a list of companies that we have classified as WizKids for 2006 — Beagle Research Group will issue a report that contains case-study examples of how customers have used the new solutions these companies have brought to market.

Our decision about who made the cut is totally arbitrary in that there are probably other companies equally deserving that we did not get to know over the last year. Still, our decision making was significantly influenced by several factors.

First, there is my own belief that the CRM market has played out. The benefits from the original CRM pulse have been incorporated into much of our thinking and our business processes. Sure, many companies are still buying their first CRM solutions and that will continue. But today’s buyers are buying perhaps more to keep up with the competition than to gain advantage. The ability to gain advantage from CRM is decreasing because so many competitors in any given market already have it.

The second influence is the belief, built up from continuing market research, that we have reached an inflection point where general demand is relatively slack compared to the boom times of a few years ago, and some traditional parts of CRM are losing effectiveness. Without demand — even latent demand — it’s hard to make effective use of SFA or call-center solutions. You can effectively use those tools to accelerate your business processes only to the extent that the people on the other side want to engage with you.

Building on What We Know

Lastly, there have been several books by serious thought leaders — each of which identifies an aspect of the marketplace that is out of tune, to a degree, with conventional CRM thinking. They state what we all know: that no one wants to be called at dinner time — even by the slickest new software — and even the best SFA is not going to accelerate our decision making. One book in particular, Return on Customer by Peppers and Rogers, makes the very good point that companies must spend a lot more energy on building the relationships that will yield multiple sales and higher lifetime value than they do currently.

What’s ahead involves a lot of getting inside the customer’s head, which was once an expensive and time-consuming proposition. Modern technology delivered by WizKids is changing that situation — and it’s what keeps me interested in research.