The CRM 2.0 train is gaining steam, but most of its first uses are of little relevance to small businesses. Might they get looked over by one of the most exciting business web iniatives ever?

Anyone who reads my blog posts will know I’m a big advocate of Social CRM: the coming together of social networks with Customer Realtionship Management system to provide businesses with a wealth of data never before available. I’ve called the union ‘The Perfect Business Application’.

So it’s been very exciting for me to watch an increasing number of established CRM vendors — the latest of which is Microsoft with its Dynamics CRM offering — start to offer various degrees of integration with social networks and other social media. Micosoft’s announcement comes within a week of Salesforce.com and Social Media Monitoring experts Radian6 announcing a tie-up to help bring a view of the Social Web into the leading cloud-based CRM system.

In addition to these established CRM players making their applications more “socially aware” there are also companies coming at the challenge from the other end; CoTweet is an application that enables workflow and task assignment to be attached to Twitter activity, making it easier for a team of people to ‘tweet’ through a single corporate Twitter account. It could provide particularly useful making Twitter-based enquiry handling scalable.

But I have concerns. Most of the ways I hear the benefits of Social CRM being discussed is in the context of helping to drive conversation about brands, either from a marketing or customer service perspective. The idea of most of these unions is that you can be there when people across the Social Web discuss your company and products, helping to drive the conversation or manage negative publicity.

I understand these benefits, but I just don’t believe many small businesses find conversations being had about their company or products — that’s the problem. They’re too small for this to be a problem; the real opportunity for them with Social Media is as much about winning new customers as it is serving existing ones. Their “brands” aren’t known, so what is it they use Social CRM to follow exactly?

And that’s when I get frustrated, because I just don’t hear enough being said of how Social CRM might help companies market better and sell more. Rather than searching for conversations that might be going on across the web that could affect reputation, how about using the wealth of free specific customer insight that’s being shared to better market to those customers online and offline?

Think about this: as much as you might ask your customers or target market what they like and what they want, few ever answer and those that do can give you skewed answers. But that sort of information is available across the Social Web as those same customers update their profiles; post, tweet, StumbleUpon and Digg. Your customers are revealing aspects of their needs that they’d never bother sharing with you directly, but by knowing where they are online a whole heap of additional information can be at your fingertips before you contact them; helping to drive the dialogue you have before they’ve even started thinking about your company, let alone discussing it.

By attaching CRM records to social identities, you can build a profile that sigificantly advances what you know about your customers and how you market to them. Using all the contact methods at your disposal, not just social media, you can build a need rather than wait for them to chirp up online before you chip in and interrupt their conversation in attempt to ensure they say only nice things about you.

This is the sort of use of Social CRM that small companies can most benefit from, as most simply won’t find their companies being discussed — they just aren’t well known enough.

Why aren’t we hearing more about this use or the opportunities in Social CRM for SMEs?

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More brands are looking to add the mobile channel to build relationships and be a part of the CRM mix. Sears, FedEx, The Weather Channel and 1-800-Flowers are all using this medium to engage consumers on a deeper level. Sears, for instance, has added customer service on mobile, showing if items are in stock.

“Most of what we are seeing from mobile CRM has been SMS-based, but we are now starting to see click-to-call, store locators, ‘view our catalog’ and ‘buy our product’ buttons,” said Michael Dulong, SVP of business development/founder of Billing Revolution, a mobile billing platform. “There is a lot of potential here.”

Some brands are integrating mobile with other channels in a move to build customer databases or to keep a consumer more engaged with the brand.

“We’re seeing brands increasingly realize that every single [mobile] ad is a CRM opportunity, and that is by virtue of the fact that a mobile phone is in a consumer’s hand almost all the time,” said Adam Lichstein, COO at ShopText, which works with clients running these integrated campaigns to build a customer database.

While mobile has benefits for CRM programs, it also has its challenges. They include, rendering issues on different screen sizes and resolutions, as well as varied carriers, networks and devices.

“The budget challenges also remain. Merging media are often a low priority in terms of media spending,” he added.

“As mobile evolves, we’ll see it become even more important for a CRM channel, but for now it is still in its infancy,” said?Matt Harris, CEO of iLoop Mobile. “Now, we can track if someone uses a coupon from a mobile phone, but we can’t track what they have bought. It will evolve so that we can track this information and put it into the funnel.”

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Companies seeking to organize and centralize customer, account and opportunity information are leveraging salesforce automation (SFA) and customer relationship management (CRM) tools to provide sales managers with better visibility into internal operations and improve overall sales productivity. Despite the proposed benefits of an SFA/CRM initiative, some companies are still not realizing the sales potential of their SFA/CRM solutions due to inefficient processes and incomplete employee adoption.

The early findings from the upcoming Aberdeen benchmark, “The 2009 SFA Report: Best-inClass Strategies for Increasing Returns on SFA Investments,” reveal that 34 percent of end-users surveyed are unsatisfied with the effect their SFA tool has on sales productivity; in fact, only 10 percent of 203 survey respondents are “extremely satisfied” with their current SFA initiative. This article examines two popular methods of sparking employee adoption of sales automation tools and the effect each method has on sales performance.

Business Context

According to early findings, 61 percent of survey respondents believe the need to improve sales effectiveness (i.e., the number of closed deals) is a top-two business pressure causing the organization to devote resources toward an SFA initiative. Closely related to this challenge is the need to improve sales productivity. Fifty-two percent of respondents believe that increasing the number of prospects or leads identified as opportunities in the sales pipeline is also a top-two business challenge.

Naturally, in any selling environment, and particularly during a slumping economy, the need to increase the productivity and effectiveness of the sales staff is a concern for organizations. The third pressure identified (the need for improved visibility), however, speaks directly to the challenges of user adoption.

Twenty-seven percent of survey respondents need to increase internal visibility into sales operations. Increased visibility, accurate forecasting, and comprehensive reporting, however, are often impossible without the widespread adoption of an SFA or CRM tool by the sales force. In order to achieve this higher level of internal visibility, organizations are choosing between two common methods for sparking employee adoption of existing sales tools.

The Carrot Method

When it comes to the user adoption of existing SFA or CRM tools, organizations find they typically have two methods of choice: the carrot or the stick. The “carrot” method finds companies proving out the value of SFA/CRM to sales reps by making the content they crave available directly within the tool. By reducing the amount of time reps spend searching for relevant account information online, organizations are able to help their reps maximize their selling time. By integrating key sales information from third-party providers — such as ZoomInfo, SalesGenie.com or Jigsaw– directly into the SFA/CRM tool, reps are able to spend more time using the solution, making targeted and meaningful dials, and inputting call histories.

Best-in-Class companies are 1.6 times more likely than all others to integrate key sales intelligence, such as competitive intelligence and company information, directly into an existing SFA or CRM solution.

Furthermore, the eventual adoption rate of 58 percent amongst Best-in-Class outpaces the 48 percent of Industry Average and 44 percent of Laggards who plan to integrate key sales information into SFA or CRM. The use of third-party information is a key component of a “carrot” strategy.

The Stick Method

Some companies opt to mandate the use of existing tools. The ’stick’ method finds companies mandating SFA or CRM adoption and usage by linking SFA or CRM activity to performance reviews, commission payouts and bonuses.

For example, some companies will not pay out the commission on a sale unless the rep has successfully moved the opportunity through all the predetermined phases in the SFA or CRM prior to marking it “Closed-Won.”

While this method is somewhat successful in getting reps to use the solutions, it can possibly have a negative effect on sales culture and how employees view the organization.

Recommended Actions

Organizations evaluating SFA/CRM solution providers or those examining ways to increase the returns from their ongoing initiative should consider the following points.

Develop a Plan for User Adoption- Companies struggling to determine the ROI of their SFA/CRM investment are often challenged with incomplete user adoption.

Content Is King - An SFA/CRM tool is only as valuable as the information that populates it. Whether an organization mandates the use of its SFA/CRM tool or simply promotes it through the integration of key sales information, the ultimate goal is to build a repository of complete and accurate contact, account and opportunity information.

Customize - No two businesses operate exactly the same; therefore, companies must be able to customize their SFA/CRM tool to match unique business processes.

There are a number of factors that contribute to the success (or failure) of an SFA/CRM initiative: employee adoption, solution training, organizational resources and processes, and the content contained within. Oftentimes, these challenges are more pronounced by Software as a Service (SaaS) solutions; after all, it is so easy and quick to get a SaaS solution up and running that companies often sacrifice the necessary planning beforehand. Those companies evaluating SFA, CRM, or sales intelligence providers must be sure to refine organizational expectations and processes to ensure a higher return from investment.

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After co-founding Netscape, Marc Andreessen later co-founded his second enterprise, Loudcloud, with Ben Horowitz (formerly an unheralded product strategist at Netscape) and made him the CEO. Andreessen has since invested — often with Horowitz, sometimes alone — his own money in dozens of tech companies, including Silicon Valley’s star of the moment, Twitter.

Now Horowitz and Andreessen are turning their hobby into a full-time gig, with other people’s money: On July 6, armed with $300 million, they officially launched a new venture capital firm that aims to reinvent the way money is doled out in Silicon Valley while reflecting the founders’ obsessively Net-centric world view. The firm’s name: Andreessen Horowitz.

Over the past two years Andreessen has emerged as the most connected, prescient, right-place-right-time force in Silicon Valley. In addition to his Twitter stake, he sits on Facebook’s board and advises the CEOs at both companies. He is co-founder and chairman of Ning, a service that lets people create their own niche social networks, like 50 Cent’s ThisIs50.com. Ning, co-founded with CEO Gina Bianchini, adds 2.5 million members a month. Andreessen owns stakes in Digg, LinkedIn, and Will Ferrell’s Funny or Die comedy site. He recently joined the board of eBay to help that company turn around, and he is the author of a hugely influential blog that went on hiatus in August 2008. By the time this story appears, he promises, the blog will be back with a new design.

Entrepreneurs and investors seek him out for his blunt advice and because he’s experienced the ups and especially the downs of life in the Valley…

Just five years ago Andreessen’s image was more that of a smart, amiable billionaire playboy who dabbled ineffectually at technology’s fringes. He seemed more Paul Allen than Bill Gates. “Marc is like a rock star who had his first album hit big, and then the next ones were not quite the same,” says Steve Case, who ran AOL when it bought Netscape in 1999 and made Andreessen AOL’s chief technology officer. “There’s a lot of respect for the fact that he persevered. He evolved a couple of times and ultimately succeeded.”

Could Andreessen end up becoming the next great tech investor? He certainly is taking a great leap: There’s a huge difference between dabbling in startups with your own pocket change and investing big slugs of institutional money. Expectations for Andreessen’s venture may be especially high. Venture capitalists are always on the lookout for the “next Netscape,” a game-changing company that can produce off-the-charts financial returns for its initial investors; now imagine the pressure the co-founder of the original Netscape faces. Sure, Andreessen has been on a roll of late, but can he maintain his startup-picking hot streak? And so, at the ripe old age (by Silicon Valley standards) of 38, Andreessen is once again having to prove that he still has not only tech chops, but financial and management savvy too.

Andreessen’s faith in the power of the web isn’t terribly surprising, given his front-row seat at the outset of the Internet revolution. But Andreessen is an online absolutist.  Andreessen’s unwavering view is that the Internet will soon take over all aspects of our lives. Online services won’t merely supplement your TV viewing or newspaper reading, but will replace those activities altogether. Amazon’s Kindle is okay, but it would be so much better with access to the Net.

In some ways Andreessen has already put his money where his mouth is. He invested in LinkedIn partly because he believes employees won’t be hired through jobs listings and résumés but through myriad connections. He built Ning because he feels people will move narrow aspects of their social lives onto the Net, convening online in groups specifically for, say, beagle owners.

He tells me Facebook “will be bigger than Apple” and declares that the social-networking company will become the mass-market window to the web, much as Google has been for the past six or seven years. Twitter, so far criticized for having no way to make real money, will get advertisers to pay to reach people as they are sending messages about the sponsor’s products.

His vision of an all-online world extends to corporations; he believes most applications are going to be delivered over the Internet. Companies such as Salesforce.com and Netsuite already offer “software as a service,” but Andreessen thinks the applications online today are just a start; even hard-core business tools will move to the so-called Internet cloud. He has personally invested in AppNexus, which aims to deliver the capabilities of an entire data center via the web, and in Good Data, which serves up data analytics.

He is, above all, bullish on Silicon Valley, where he sees the recessionary fog lifting. His new fund still has a chance to invest while valuations are low. Even better, a generation of entrepreneurs burned by the dotcom crash is being replaced by a generation that doesn’t remember the dotcom crash. Facebook CEO Mark Zuckerberg recently asked Andreessen what exactly Netscape did, then had to remind the mock-outraged Andreessen that at the time, Zuckerberg was still in junior high. The Valley’s fearlessness is coming back, Andreessen tells me.

Andreessen started the fund because he saw a chance to exploit a shift in the startup milieu. As he explains it, technology and software tools have driven down the cost of starting a tech company by more than 100 times compared with a couple of decades ago, when modern venture capital structures were put in place. A company that needed $20 million to get a product out the door in the late 1980s now needs just $200,000. If most cool tech startups today need six-figure investments or less, traditional venture funds can’t join in. Their rules allow them to invest only bigger amounts — usually in the millions — either to fund expensive first-stage companies or to get in on later stages.

The Andreessen Horowitz strategy of investing in a menagerie of startups could pose hazards. “If I were one of the guys whose company stumbles, will [Andreessen and Horowitz] be there to help me, or will they have time?” says Paul Holland, general partner at Foundation Capital, a Silicon Valley venture firm. “Where the pain part of it comes in is when you get up to those 60 or 70 investments. It will be an interesting chore to keep track of all that.” Adds another investor, who doesn’t want to be quoted and risk alienating Andreessen: “Marc is so good and persuasive, he should pick six companies and have a concentrated focus.”

The strategy will also lead to conflicts. It has happened already. When Andreessen invested in Twitter, no one thought it would turn into a Facebook competitor. Increasingly, though, that’s happening, and Andreessen is trying to straddle both companies. Ning, which allows organizations to create their own mini Facebooks, obviously could bump up against Facebook and Twitter. Andreessen says he doesn’t see a problem as long as he discloses his conflicts and guards confidential information.

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By now, most organizations have used some sort of a SaaS application, so there’s familiarity with the basics of hosted software. But CRM applications are by their nature much more likely to be integrated with other business-critical applications, either behind your firewall or in hosted data centers, so they present some new challenges. Furthermore, applications with really rich web-services APIs (such as Salesforce CRM) can surface operational, policy, and process issues in your IT organization.

Given all this change, where should you as CIO concentrate after rollout? Here’s some practical advice. While much of this article applies to any SaaS CRM system, we’ve focused here on the specifics of Salesforce.com…

1. IT Team’s Level of Engagement - In many early parts of a Salesforce CRM project, there isn’t that much for many parts of the IT team to actually do.  After the first year, however, your team is likely to become more involved, particularly if the system is a big success. There will be demands to extend the application’s footprint (particularly towards your web site) and internal integration (generally in the direction of engineering’s support system and finance’s order management and accounting packages). This is natural as the users start working with the system as a full fledged CRM system, rather than just an SFA tool.

2. Integration and Extension - The biggest effort related to a new SaaS CRM system won’t be implementation or customization: it’ll be data and integration.  Don’t be surprised if cleaning up data and integrating with your existing systems costs more than your first-year license fees.

3. Performance and Business Continuity - In many respects, with a SaaS CRM system, the vendor is ultimately responsible for delivering on the SLA. Salesforce.com has a very good record indeed of operational continuity, and the company provides several weeks’ notice for planned downtime.  In most cases, however, the perceived performance of SFDC in your headquarters buildings will likely be somewhat slower than with an on-premises application; conversely, it will be perceived as much faster in remote offices (particularly those located outside the United States).

4. Access Control and Security - Of course, your team needs to configure the access control and security model, but it’s the vendor that is ultimately responsible for enforcement. Salesforce.com has a pretty thorough role and profile-based security model, and it can be configured for access hours, network address, and other access controls.

5. Data Quality -  As with any large system, data pollution is an inevitability. Business analysts and others will discover corrupted or duplicate data creeping into the system over time. Reports run for executives will start to show contradictory or confusing results. This is poisonous to a CRM system’s credibility.  Whether you use temporary coders, data-entry clerks, or overtime hours of internal people, set aside some budget for a health check and cleanup cycle at least once a year.  You’ll also want to devote quality time (from your team or specialized consultants) to identify the source of the data pollution problems, rectify them, and programmatically clean up the data.

6. IT Team Skills - Some of your staff will take System Administrator or Developer classes to become proficient with the details of the CRM package, of course. However, your team may also need some new lessons at a project management level, especially IT staffers dealing directly with business users who don’t know or care much about technology. As more IT pros play roles akin to business analysts, listening and counseling skills will be important.

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In helping a client understand how to reframe their internal conversations to support delivering customer experiences, we shared with them the following framework that has helped our thinking.

Systems: Companies have core systems that serve as the foundation for their efforts. The most obvious example are IT systems—ERP, accounting, CRM, and the like. Perhaps less obvious, but in certain cases quite crucial, would be facilities—such as real estate, architecture, and infrastructure.

Procedures: The policies, processes, and business rules that provide the “logic” for how the business is run. Some of this is embedded in the systems, some of this is taught to employees.

Touchpoints: The liminal spaces where engagement with customers occurs. Typically considered through channels such as in-store, call center, postal mail, or online.

Interactions: The activities in which customers engage. Any business supports dozens, if not hundreds of interactions. With a bank, you can deposit money, withdraw money, write a check, pay a bill, move money between accounts, open or close accounts, apply for a loan, etc. etc.

Experiences: The sum of what the customer takes away from the interactions they’ve had with you.

Many companies don’t intentionally plan their customer experiences, and as such, design from the inside-out.

This is particularly true when companies consider CRM initiatives. One would hope that something focused on “customer relationships” would take the customer to heart when being developed. Instead, as Edmund Tribue points out…

“Most companies have concentrated on automating processes for their internal users…But what about the customer? This mindset is perfectly illustrated by the most common CRM objectives: increase sales, drive cross-selling, minimize resources, reduce ancillary expenses, and lower the number of costly channel interactions. Those objectives indicate an inside-out view that implicitly treats the processes and internal metrics as more important than the customer.”

Customers have no idea what’s going on in those layers below “interactions”, and just end up feeling insulted and abused by these mercenary mindsets.

Instead, companies need to identify what makes for a delightful customer experience, and coordinate their interactions, touchpoints, procedures, and systems to support that.

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Far too many small and medium-sized businesses (SMBs) that take the leap and invest in CRM software fail to realize the full potential of what today’s CRM products have to offer. Here are three primary steps to maximizing CRM functionality at SMBs:

1. Critique current customer management issues.
2. Configure the CRM product so that it is quick and easy to use.
3. Make sure management views CRM as a process, not a project.

Let’s take a look at each of these three related suggestions in a little more detail and explore how they affect CRM technology usage in many SMBs.  Click here to go to the complete article.

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A Customer Relationship Management (CRM) system can boost sales, strengthen client relationships, and increase customer satisfaction-but only if end-users are on board and using the system properly.

There are two possible scenarios when implementing a CRM system: Users are excited to save time and increase their productivity with the new technology; or users are skeptical and even resistant to change, especially if a previous system was a complete disaster. Fortunately, there are best practices that can help managers win over even the most resistant end-users and help keep them committed to the technology over the long term.

Those best practices are…

1. Do your homework - Sometimes it’s prudent to hire an expert to run the implementation. The right consultant can help build consensus and buy-in from all the parties involved in the implementation, most important, the end-users. They can also send the message to the end-users that management is serious about the success of the project.

2. Set up a pilot project - A pilot project allows end-users to experience firsthand the impact that the CRM solution can have on them and gives them the opportunity to share their experience with others prior to the official implementation.

3. Ensure proper training - Proper training is the best way to reinforce good habits and regular use of the CRM system. It is also one of the most effective means through which end-users willingly adopt a CRM system or any customer-centric technology solution. The right implementation partner will have a methodology for training that matches the skill level of the individual participants within your company.

4. Lead by Example - If the CEO and the management team understand and use the technology on a regular basis, the rest of your employees will follow suit. Supportive, well-trained management and IT teams also show employees that your company cares about their success and the relationships they are building with clients.

From my experience, the best way to get end-user buy-in for a new CRM system is to include them in the CRM system selection process.  Several key end-users from the departments that will be expected to use the new system should be placed on the software selection tiger team.  In that role, they will be involved from beginning to end in the selection process.

When the 2-3 CRM solution finalists have been selected, as many of the expected users as possible should be invited to attend each vendors’ final demonstration of their solution.  It is expected that each of the CRM solution finalists have all the needed functionality, so the focus of the demo should shift to determining which solution the users would most like to use and why?  Accordingly, each end-user attending the demos should be asked to rate and comment on the usability of each solution alternative.  Having the end-users involved in selecting the solution they would like to use will certainly increase the likelihood that they will use it.

Of course if the solution selected is not the one that the users liked the best, then there better be a good reason and the four suggestions outlined earlier in this article should come into play.

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Customer support VPs may have to manage a range of customer-facing functions such as order-taking, shipment expediting, installation and field service appointments, as well as technical or warranty support. Each of these functions should have direct access to the Customer Relationship Management (CRM) system, but the specific information needed (and transactions performed) are quite different across these Customer Service (CS) roles.

If you’re using salesforce.com (SFDC), what decisions will you have to make? How should you measure success? Here are some customer support executive guidelines for the first few months of system usage. While much of this article applies to any modern CRM system, we’ve focused here on the specifics of salesforce.com.

Integration is a key success factor…

Unlike traditional call center packages that “grew out of” advanced telephony gear (PBXs, ACDs, etc.), salesforce.com was not designed to center on telephone conversations. Indeed, many of their customers use web, e-mail, and IM extensively for customer support interactions. So if your CS operation is highly dependent on the phone, job one will be obtaining an AppExchange CTI plug-in for your telephony system. Fortunately, there are several of these available (and some are free).

Evaluate the plug-ins for their depth of integration and the amount of data they automatically insert into SFDC records with each call. The larger and more distributed your call center, the more you’ll appreciate the automation provided by the better CTI plug-ins.

Depending on the function of your customer support reps (CSRs), they’ll need access to information that’s outside the purview of SFDC. You will need to access the Force.com platform APIs to facilitate integration with external systems.

You can probably get away with a periodic batch update in most cases. However, probably 10 percent of the data changes frequently, so some real-time integration will be required. While SFDC’s APIs and 3rd-party integration connectors fully support closed-loop integration, there are implementation and maintenance costs involved. The depth of integration you use is really a business decision, and most of our clients choose their integration approach on a screen-by-screen basis.

Customer Self-Service is King

It’s ironic that in some industries, a well-executed customer self-service portal can achieve higher customer satisfaction scores than “more people on the phone.” While this may not make CS professionals feel all warm and fuzzy, the cost savings and time efficiencies cannot be ignored.

A well-executed customer portal lowers the company’s costs, gives customers 24 × 365 access to the information they need, and reduces the error rate associated with support information.

SFDC’s Customer Self Service portal (part of their Service Cloud offering) is a great foundation for this, but it can’t just be a “click and run” proposition. You need to spend some time to really integrate it into the rest of your website and your business processes. It’s critical that you get customers directly involved to test and refine portal usability. Skimp on this step, and you’ll miss a huge opportunity for improving customer satisfaction at virtually zero incremental cost.

Although high-tech customers become very comfortable interacting with portals, do not implement a self-service portal as a “slash cut” that removes phone support. Introduce the idea gradually, letting customers naturally drift over to the customer self-service portal. As more of the support volume shifts to the portal, you’ll get suggestions for refinements to make it even easier and faster for customers (and in the long run, cheaper for you). Once 80 percent of your “call volume” is handled through the portal, you can provide some incentives (such as lower costs or better service levels) to cement the customer behavior.

Measure the Right Things

Installing a CRM system across all your CS functions provides a range of measurement capabilities that can be overwhelming. Don’t let yourself get caught in information overload, or worse, detail that leads to micromanaging behavior.

With the right AppExchange plug-ins for system integration, reporting, and dashboards, you can focus on the things that measure customer satisfaction and loyalty — the things that really matter to the business.

Focus on measuring the customer experience — and how that effects their satisfaction. Extend salesforce.com to bake in as many measurement points of the customer’s behavior as you can. Click-path analysis in the customer self service portal tells you a lot about things to improve in your operation. Online surveys (keep them short!) at the end of every customer interaction help you develop a wholistic picture of your customer relationships as they evolve.

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Like many users of technology today, I have developed an essentially dysfunctional approach when things don’t work properly: I do whatever it takes to avoid fixing it. I wait to see if it ‘fixes itself’. I make a workaround. I live with it till the next upgrade. Or I just use something else. It’s only when I absolutely can’t function without resolving the problem that I take a deep breath, grit my teeth, and embark on the quest to find a solution.

My worst nightmare is to find myself in the kind of situation frequently described in anguished blog posts by victims of Google, Amazon or eBay glitches and terminations.

As is the norm when these mass-market automated online services fail, the victims discover there’s no information to be found anywhere as to what was the cause, when normal service would be restored, or what actions they can take to resolve the problem.

The common theme with all these stories is a fundamental flaw with the business model of cloud services, which is predicated on fully automated systems — fine when everything works as expected, but not fine when the failure is unexpected, unbudgeted or involves parameters the developer didn’t think of when the system was designed.

At least with cloud services, you can often hope that an operational problem will indeed ‘fix itself’, because the cloud provider may well be working behind the scenes to correct the fault. In that respect, it’s better than when I have a recurring problem on my own PC, where the only resolution to expect is that it will cascade to a worse fault that I can’t put off fixing (in which case I’ll end up stuck in an automated support purgatory at Microsoft or HP’s website). But if the cloud problem is a mission critical fault like a lost RSS feed or a failed payment service, then you can’t afford to wait — and if the root cause is an account problem rather than something in the infrastructure, that’s where the cloud model really falls down.

What these web giants need is an automated customer response system that acknowledges the possibility of exceptions. Instead of setting out to eliminate all human contact, they should explicitly allow for human interaction to investigate and resolve those problems that the system’s designers haven’t allowed for. Each problem resolved should then be analyzed to see how it can be eliminated by enhancing the automation — thus the human intervention becomes part of an iterative self-healing process through which the automation adapts to experience. It’ll cost more in the short-term, but long-term, it’ll enhance customer satisfaction and sales.

Another way to keep costs down is to do a better job of integrating online and community help systems — and being open about their capabilities and limitations. I know from my own experience that I’m often reluctant to investigate a problem online because I’m not familiar with the online process, which breeds mistrust. How long will it take to get a response? Will it answer my question? What do I do if it doesn’t? I was impressed earlier this year with a briefing from community help platform provider Helpstream, which allows vendors to set business rules so that, for example, a question posed to the community can be converted into a case for resolution by an agent if it hasn’t been answered within two hours, or if the originator isn’t satisfied with the response. It is also working on processes that automatically monitor community response and its effectiveness, for example by measuring satisfaction levels for specific pieces of advice.

More than any of these acts, though, the most constructive change would be to get rid of the mindset that leads these Web giants to belittle the circumstances of its ‘consumers’. Is it unreasonable of us to expect to be notified if our account is being cancelled, or to want to know how long you think is acceptable for us to have to wait for a satisfactory answer to a support request? We are individuals — many of us with serious business dependencies relying on our usage of your services — and if you don’t treat us with respect then sooner or later we’ll take our patronage elsewhere.

Anthony Nemelka, of HelpStream chimes in on the subject by noting the following in his blog post, It’s Time to Move From the Email Era to the Facebook Era:

In his book, The Effective Executive lauded by The Wall Street Journal as perhaps the best business book ever written, Peter Drucker explores this concept of “automation” and its counter balance, “exception handling”. As Drucker puts it, “[organizations] solve generic situations through rule and policy …. [but need a] way to test whether the assumptions on which a decision had been made are still valid or whether they are becoming obsolete and need to be thought through again…. Failure to go out and look is the typical reason for persisting in a course of action long after it has ceased to be appropriate or even rational.”

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