Blue Ocean Strategy and CRM: Stay Clear of Market Competition

Nowadays, market competition is as vigorous as it has ever been, forcing many businesses to turn to aggressive methods. In an attempt to leap ahead of the opponents they utilize various marketing tricks and fight viciously for a bigger share of the marketplace. All of this creates the so-called “red ocean” conditions, where the task of each company is to outperform its rivals within the existing industry boundaries.

Such an approach, however, proves to be less and less effective and tough to succeed with in today’s crowded markets. Luckily, there is an alternative - the Blue Ocean Strategy (BOS), developed by W. Chan Kim and Renee Mauborgne of Harvard Business Review Press. According to this innovative method, instead of engaging in a cutthroat fight, organizations should go beyond the confines of existing markets and create the whole new business segments, where competition becomes irrelevant. Such an approach is very attractive, for it allows to capture the new demand and creates opportunities for rapid growth.

Another benefit is that those companies, creating blue ocean environments, get a chance to remain uncontested for quite some time since the strategy brings with it substantial barriers to imitation.

To illustrate the point, let’s look at a well-known example from the CRM industry -  Salesforce.com, a company that has adopted the Blue Ocean Strategy since its outset. While the competitors were offering on-premise CRM software technologies that dominated the enterprise market, Salesforce.com has developed an on-demand customer relationship management solution, that was much cheaper, easier to use and accessible to a large pool of small and medium sized businesses. Thanks to such an approach Salesforce.com has managed to become a leader in the CRM market.     

Now, that the advantages of Blue Ocean Strategy are quite clear, the only question remaining is the methods of its implementation. How does one discover the opportunities to create a new market segment? Is it possible to facilitate the process?             

While, of course, each case is unique and there is no magic formula that will create an uncontested business niche for you, we would like to argue that a CRM system, if used properly, can be very helpful in finding the trails to Blue Ocean Strategy. The theory itself is grounded in data and extensive research of various business cases. Similarly, when searching for a way to reconstruct market boundaries and reshape their business models, companies should rely on data. One way or other organizations receive massive amounts of information provided by their customers, leads, partners, suppliers, etc. Very often a lot of this valuable content is unstructured and subsequently gets lost. This is where CRM solutions come to rescue. They can help organize scattered pieces of information, outline patterns and analyze trends, enabling businesses to spot alternative ways of developing their products, and finding new customers - all being potential trails to Blue Ocean Strategy.

Moreover, using a CRM can be of great help in creating value innovation, which is also one of the crucial principles of Blue Ocean Strategy. Value innovation is the idea of breaking the value-cost tradeoff, namely accomplishing both differentiation and low cost. Improved customer experience and increased efficiency are among the main recognized benefits of CRM systems, which contributes to the precept in question.  

All in all, major CRM capabilities, such as empowering businesses to effectively gather and analyze data, advance customer service, keep track of competitors, etc. establish a perfect ground for Blue Ocean Strategy implementation and sustainable execution.

Don’t get stuck in a red ocean trap, use your CRM solution to help you join the global phenomenon of Blue Ocean Strategy and create a business that will be beneficial both for you and your clients.