Hello, this is Matsubara, CRM Evangelist.

The previousPart1Now, let's explain the three-tiered structure of DX (SoR, SoE, SoI), and why SoI is the most important,The only business system capable of handling SoI is CRM.This was the core argument they presented.

This time, we'll delve into the "why."

ERP, MA, BI tools, contact center systems—each of them handles data. Why is it that only CRM can fulfill the role of SoI? And how has CRM itself evolved to deepen its power as an SoI?

The history of CRM's evolution from 1.0 to 4.0 provides the answer to this question.

What does SoI require? — Why other systems can't do it.

First, let's clarify "why systems other than CRM cannot fulfill the role of SoI (Systems of Investor)."

SoI is defined as "a system that analyzes data and derives business-beneficial insights." While this definition might suggest that ERP and BI tools could do the same, SoI's true role is to "centralize data related to business resources, analyze customer and sales data, and propose effective strategies."

Notice that the phrase "customer information" is included here.

The core of the insights that SoI should generate lies in "customer insights"—deepening our understanding of customers: what they want, why they behave the way they do, and what they will need next.

Why ERP cannot handle SoI

ERP systems record the "facts of a transaction": when, how much, and what was bought. However, they don't record "why it was bought," "what will be bought next," or "what emotional state the customer is currently in." While ERP systems are perfect as Systems of Record (SoR), they are not designed to generate customer insights.

Why BI tools cannot handle SoI

BI is a tool for "making data visible." It creates graphs, sets up dashboards, and visualizes KPIs. However, BI only "shows the data" and does not have the function to "suggest the next action." BI is an auxiliary tool for analysis and does not have the function to manage and deepen relationships with customers.

Reasons why MA cannot handle SoI

Marketing automation (MA) automates "customer behavior on specific channels." Whether an email was opened or a web page was viewed—these are SoE activity data. However, MA does not provide a holistic understanding of "what state this customer is currently in." MA is a supplementary system to SoE.

Why CRM alone can handle SoI

CRM manages the entire customer relationship. It holds both transaction history (SoR-type data) and touchpoint, sentiment, and behavioral data (SoE-type data), and integrates them as the "context of the customer relationship."

CRM is the only system that possesses both quantitative data (purchase history, contact frequency, and amount) and qualitative data (emotions, values, and notes from the person in charge). Only when both of these factors are present can we gain insight into "why this customer is behaving in this way right now."

The History of CRM Development: A Trajectory of its Evolution as a System of Information (SoI)

CRM has evolved through four generations from the late 1990s to the present. This history of evolution is also a history of "deepening insights as a System of Information (SoI)."

CRM 1.0 (Best Practice CRM) — Starting as a System of Record (SoR)

period: Late 90s
Core concept: Customer information management (principle of 1 customer = 1 ID)
Technical background: Database (DB) / SFA

CRM originated from "mass marketing," which was based on mass production and mass sales in the industrial society, and evolved into "relationship marketing (RM)," which arose to respond to the diversification of consumer needs as the consumer economy matured.

At this stage, CRM was essentially "SoR" (Systems of Record). It was a phase of "protecting relationships by keeping records," where customer information was not lost and each customer was managed with a single ID.

Capabilities as a SoI:Almost zeroThe data was recorded, but it lacked the ability to automatically derive the "next action" from it.

CRM 2.0 (Platform-based CRM / xRM) — Connecting with SoE through integration

period: 2006 year~
Core concept: Multichannel Communication
Technical background: Cloud, SNS integration, omnichannel, MA

The evolution of IT technology has enabled the use of big data and in mission-critical applications, making it possible to integrate CRM subsystems. Subsystems that were previously optimized for specific parts, such as SFA, MA, and CTI, have been integrated into a single platform.

At this stage, the CRM strengthened its connection with the System of Engagement (SoE), enabling centralized management of customer data across different purchasing channels. Whether an email was opened, a website was visited, or a phone inquiry was made—the ability to integrate these elements and grasp the "entire picture of customer behavior" was created.

Capabilities as a SoI:Early stageWhile past customer behavior patterns became visible, the motivations and emotions behind those actions remained outside the system's scope.

CRM 3.0 (Personalized CRM) – Getting Closer to Customer Emotions

period: 2016 year~
Core concept: Customer Experience (CX), Emotion, and Behavior Prediction
Technical background: AI (Artificial Intelligence) Personalization

With the advancement of BI (Business Intelligence) and artificial intelligence (AI), CRM systems, which previously could only capture "explicit knowledge: customer experience (CX)," can now capture the most important "tacit knowledge: implicit customer experience (ICX)," which accounts for more than 8% of communication.

In other words, we can now access not only the information that customers express in words (explicit knowledge), but also their unspoken emotions, values, and latent needs (tacit knowledge).

In this phase, CRM began to truly demonstrate its capabilities as a "SoI" (System of Information). AI-powered personalization—who to deliver to, when, and what to deliver—became automatically optimized.

Capabilities as a SoI:Full-scale operationHowever, CRM 3.0's approach to customers is still "understanding customer emotions and predicting their behavior," and has not yet reached the point of "co-creation with customers."

CRM 4.0 (Creative CRM) — The pinnacle of SoI

period: the current~
Core concept: Empathy, resonance, co-creation, and sustainable relationships
Technical background: AI (Empathic Intelligence) / Web 3.0 / Metaverse

CRM4.0 works on the "deep level" of customer awareness, emotions, and values ​​(Implicit Customer Experience: ICX) formed in CRM3.0, going beyond customer emotions, behaviors, and predictions.A new generation of CRM built on the foundations of purpose, empathy, and sustainable relationships..

The most important key factors in CRM 4.0 are as follows:

Emotional Intelligence: AI understands emotions, culture, and values, and responds with empathy.

Wellbeing-linked CX: We not only focus on the customer's experience, but also on their "sense of well-being."

Purpose-driven: Turn customers who resonate with the company's philosophy into long-term fans.

Holistic analysis: Overall optimization encompassing health, lifestyle, thoughts, and social relationships.

The concept of CRM 4.0 is "from 'management' to 'co-creation'." Because it is important to resonate with the deep psychology of customers, an approach similar to that of psychology is required, which can be called "corporate psychology."

Capabilities as a SoI: Highest levelCRM 4.0 integrates data from SoR and SoE, and goes even further to understand the customer's unspoken inner psychology (ICX), creating what customers desire deep down, even if they are not consciously aware of it—this is the ultimate form of SoI.

The History of CRM Development and its Evolution as a System of Information (SoI) - Summary Table

Why "customer insights" are the foundation of business

This raises an important question: "Why is a deep understanding of customer insights essential to business?"

Companies have traditionally focused on understanding customer needs and reflecting them in their business. However, there is now an increasing need to create new needs and develop new markets by going beyond simply "what customers want" to "what customers desire deep down, even if they are not consciously aware of it."

This is the same idea as when Apple said, "We don't make what customers want, we make what they don't know they want." To anticipate these "unknown needs," you need a deep understanding of customers that cannot be reached through superficial data analysis.

CRM4.0 makes this possible, and it represents the ultimate form of SoI.

Furthermore, in a hyper-smart society, in addition to traditional supply chains and engineering chains, customer understanding is essential for creating new added value. SoI (a broad definition of CRM), which promotes customer understanding, is becoming a crucial key factor.

"Data duplication" is essential for CRM to function as a System of Interest (SOI).

Finally, let me clarify the most fundamental reason why CRM can serve as a System of Investor (SoI).

CRM is the only system that possesses both "time-series quantitative data" and "time-series qualitative data."

Quantitative data (time series): When, how much, how many times, what—purchase history, contact frequency, conversion rate

Qualitative data (time series): What emotions were involved? What values ​​did they hold? What did they react to? — Emotional notes, observations by the person in charge, and the customer's words.

To perform AI analysis, you need quantitative and qualitative data accumulated over time. Pattern matching is then performed from this data. CRM systems possess both of these necessary data (customer data and activity data), making them highly compatible with AI.

This combination of quantitative and qualitative analysis is what fundamentally sets CRM apart from all other systems.

In the next installment of this series, Part 3, building upon this theoretical background, we will specifically explain "how CRM 4.0 and EMOROCO CRM Lite can bring SoI (Systems of Investor Integration) to small and medium-sized enterprises (SMEs)." We will practically demonstrate what it means in actual business operations to "centralize management resources with SoI" and where SMEs should begin.

Summary – Why CRM is the only solution for SoI

Structural reasons: Other systems (ERP, BI, MA) are specialized in either SoR (Systems of Record) or SoE (Systems of Engagement), respectively, and are not designed to grasp the entire customer relationship from both quantitative and qualitative perspectives to generate the next action. Only CRM possesses both of these aspects.

Historical reasons: As CRM has evolved from 1.0 to 2.0, 3.0, and 4.0, the data it handles has deepened from "static customer information" to "behavioral history," "emotions and tacit knowledge," and "deep psychology and sense of purpose." This deepening is precisely the growth of its capabilities as a System of Information (SoI).

Essential reason: The "customer insights" that SoI should generate—what customers desire deep down, even if they are not consciously aware of it—cannot be derived without accumulating continuous relationships with customers. This "management and deepening of continuous relationships" is the essence of CRM and perfectly aligns with SoI.

Previous article:[DX and CRM Series, Part 1: Don't Talk About CRM Without Understanding the "Three-Layer Structure" of DX—How SoR, SoE, and SoI are Changing the Design Philosophy of Management]

Next article:[DX and CRM Series, Part 3: How CRM 4.0 and EMOROCO CRM Lite Enable the Implementation of SoI—"Insightful Management" that SMEs Can Start Today]

Related article:[What is CRM 4.0? — The latest CRM philosophy and practices that realize "co-creation" with customers]