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Will “Generation Virtual” Change the Nature of CRM?

April 3rd, 2008 by Matt

Traditional ways of selling to customers, based on demographic information, will become irrelevant in the online world, according to Gartner. The market research firm is touting the idea that something it calls “Generation Virtual” is emerging and that this sociological development will change the way that customers buy.

According to Gartner, Generation Virtual (also known as Generation V) is not defined by age or gender, social demographics or geography, but instead on “demonstrated achievement, accomplishments, and an increasing preference for the use of digital media channels to discover information, build knowledge, and share insights.” Gartner believes that “Generation V” is a phenomenon reflecting that general behavior, attitudes, and interests are starting to blend together in an online environment. Furthermore, Gartner believes that this development changes the nature of the buyer-seller relationship.

“Conventional wisdom has focused on customer identification as the foundation for one-to-one marketing campaigns,” says Adam Sarner, principal analyst at Gartner. “The reality of Generation V creating anonymous online personas, and the sheer power of their growing influence in an online environment, mean companies must change their methods of acquisition and relationship building.” He believes that CRM-focused companies and particularly their marketing departments must take notice of this change and engage with these “online personas” rather than with the actual customers who stand behind them.

“Going forward, customers’ true identities will have less importance, and instead companies will need to understand the role or persona that customers are playing at any given time and treat them accordingly,” says Sarner, who further believes that providers of third-party customer data, business intelligence, and analytic tools will shift toward consumer applications and eventually arm companies with automated, artificial intelligence and self-learning “persona bots” to seek customers’ needs and desires. Consequently, Sarner has the following recommendations for CRM-focused organizations:

  1. Collect “persona” data not just personal data. The way that a customer represents himself or herself on the Web will be a better determinant of buying behavior than the customer’s actual identity. Persona information will therefore be useful for product development, customer feedback, loyalty management, customer segmentation, campaign targeting, and persona group customer satisfaction management. This wealth of data can be used for marketing and selling and will provide insight into how customers want to be treated.
  2. Move away from product-based segmentation. Because “personas” often have wide tastes and interests, companies that want to sell to them should segment their marketing activities according to persona “wants” rather than toward product offerings. Gartner notes that various virtual worlds, such as Second Life, already provide sandbox scenarios, where multiple personas can explore wants and desires that companies are attempting to fulfill.
  3. Develop a mutually beneficial relationship. Use the information that you gather from your customer base (through data collection and communication) to create a two-way flow of information between your “persona” customers and your company. Use that input to hone your offerings to match various “persona” wants.
  4. Focus on social sciences, anthropology, and game design. These are skills that will attract, connect with, contribute to, and gain insight from personas and virtual environments. Few companies currently employ people with these skills, but they will be vital to understand how personas interact, to draw insight from cultures, and to create engaging virtual environments in the future.
  5. Understand how “persona bots” are going to change business. A persona bot is an automated, personality-infused, self-replicating, virtual representative that will be used as a tool to facilitate life events in an online environment. Gartner predicts that by 2017 the persona bot will be mass adopted with more than 20 million active persona bots in the U.S. alone. If so, they’re going to play a major role in driving buying behavior.
  6. Create your own “automated bots.” To fully engage with Generation V, companies will have their own automated bots for critical relationship handling, such as sales, customer service, and marketing. Key drivers, such as 24/7 presence and the capability to communicate domain expertise, will help customers navigate their way toward purchases.

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