It is a well-known fact that CRM implementations have had a relatively high rate of disappointing results. While still trying to address these poor results, marketing and strategy planners now have to address a new set of challenges: the rise of social media, which has radically altered the relationships between businesses and consumers. Social media have enabled consumers to communicate among themselves and greatly curtailed marketers’ ability to control the messages and information about their brands and products.
Why CRM Must Go Social
Consumers can now produce and share their views and creative content, and connect with one other online with ease. Social media give them a mighty megaphone with which to tell the world their experience with product X or brand Y. As a result, the influence from traditional marketing communication channels has become increasingly negligible. Consumers can educate themselves over the Internet through their connections in social networks, blogs, discussion forums, chat and more. Consumer-to-consumer communication becomes frictionless such that it is no longer one-to-one, but rather many-to-many. Messages, good or bad, can spread so widely and so fast just like viral infection. All of these take place on Twitter, Facebook, YouTube and other social media that lie completely outside any company’s control.
CRM, as we knew it, is ill-equipped to utilize social media for building and managing customer relationships.
- CRM was conceived and developed in an era of information asymmetry. Communication followed a one-to-many pattern. Companies were able to tightly control the information and image about themselves, their products, brands and services as they could use their communication channels to simply broadcast their marketing monologues.
- The mindset underlying CRM implementation was “command and control” – customers would interact directly with the company in a controlled manner across multiple, well-managed touch points. Much of the information available to consumers was marketing messages (e.g., advertisements, product brochures and web-page content) being produced by the company.
- CRM therefore optimizes relationships around the company, not its customers. Although the goal of CRM is to provide a single view of individual customers and manage one-to-one relationships with them, its implementation in the Web 1.0 era often focused on automation of front-office tasks. At its most basic level, CRM is a fancy contact database. It lets sales representatives view “profiles” of their accounts, capture deal information, track performance, communicate with contacts, and share information internally with sales managers and other members of their account team.
In this social media era, the term CRM (“customer relationship management”) has become a misnomer, argues Maria Ognewa (2010), Director of Social Media at Attensity. After all, the company no longer controls or manages the relationship; the customer does. To remain effective, marketing must become engaging and conversational, and CRM (or any other term you prefer) must get social.
Social CRM Defined
Social CRM, also known as CRM 2.0, capitalizes on technology and utilizes social media tools. However, it is none of these. Rather, as described by leading CRM expert Paul Greenberg (2009), it is “a philosophy and a business strategy, supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It is the company’s response to the customer’s ownership of the conversation” (emphasis added). Or more briefly (as in a “tweetable” definition), it is “the company’s response to the customer’s control of the conversation.”
Social CRM vs. Traditional CRM
Social CRM does not replace traditional CRM, but augments it instead. Customers can still interact with the company through conventional media (e.g., phone, postal and electronic mail). Social CRM extends traditional CRM capabilities with social networking capabilities – marrying the company’s existing systems and customer touch points with data provided by user-contributed content and communities. It taps social media to first understand consumers’ perceptions and then takes actions within those outlets to improve the standing of the company and its products. Consider online sales, for example. They account for only 10 percent of total retail sales; the remaining 90 percent still remains offline. Yet social networks influence more than 40 percent of all offline sales. The challenge for marketers is to determine how best to leverage the collective intelligence inherent in social networks and effectively evangelize the company’s products, services and/or brand propositions through social media. These media are like traditional touch points such as call centers, sales organizations, partner portals and marketing applications. There is one key difference, however. With social media, the company must engage and join in ongoing conversations as participants, not as overseers.
Differences between social and traditional CRM have been widely discussed (see “Notes” below). I highlight a few of them here.
- Specific-department responsibilities vs. enterprise-wide engagement. The responsibilities for building and managing relationships under traditional CRM implementation reside with specific departments. By contrast, customer engagement under social CRM must be enterprise-wide. That means empowering employees, especially those facing customers, to engage customers and prospects on social media channels within well-defined usage guidelines.
- Company-defined channels vs. customer-driven channels. Under traditional CRM implementation, the firm selects and manages the contact points (e.g., company’s website, customer help desks, email) through which it interacts with its customers. Its single view of each customer is built upon the data collected from such interactions. Under social CRM, the number of possible channels for engaging with its customers has multiplied many folds (e.g., traditional contact points, plus online social networks, blogs, tweets, video sharing, etc.). Few of them can be defined and managed by the company. Instead, many of them are determined by customers, organized on the ground up and/or managed by third parties. They can easily move on to other channels when feeling such engagement lacks authenticity.
- Operationally-focused vs. people/community-focused. Businesses typically turn to CRM to improve communication between sales and marketing operations, and to improve data-access so as to positively impact decision-making. Toward this goal, traditional CRM focuses on operational effectiveness and its impact, both internally and on the customer, whereas social CRM is all about people and community – joining conversations with consumers on relevant online communities and build the kind of reputation needed to maintain credibility and trust.
- Data-driven vs. content-driven. Traditional CRM grew out of the need to store, track, and report on contact data and other critical information about customers and prospects. Social CRM is growing out of a need to attract the attention of those using the Internet to find answers to their problems by providing right content, and just enough of it, in formats that are easy for them, whether blog posts, podcasts, YouTube videos, or Webinars. Offering compelling content is a key pillar of social CRM strategy. The aims are to convert content into conversations, extend these conversations into collaborative experiences, then to transform these experiences into relationships.
- Process-centric vs. conversation-centric. Traditional CRM focuses on implementing and automating processes to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences. Although processes are still essential for a successful social CRM strategy, conversations with consumers looking for help in solving their challenges are at the heart of it. The goal is making it easy for consumers to find the company (through its content – a comment left on a blog post or following the company on Twitter) and invite it into a conversation on their terms.
Social or Traditional, It’s CRM
It is quite easy to get carried away by all the talks about how different social CRM is from traditional CRM and how much things will have to change. Let us not forget that social CRM is supposed to bring together the company’s CRM and social media capabilities. Customer information and insights from social media engagement must be brought together with customer data from traditional CRM system into a single view of the customer. Likewise, social media initiatives must be integrated with traditional customer service and support to be effective. Leading vendors of CRM systems and services such as SAP and Salesforce.com seem to understand this. They are investing in integrating CRM with networking platforms such as LinkedIn, Facebook, and Twitter. Hopefully, we will once again talk about CRM, not social vs. traditional CRM.
- Paul Greenberg, “Time to put a stake in the ground on Social CRM”, PGreenblog, (July 06, 2009), URL: http://the56group.typepad.com/pgreenblog/2009/07/time-to-put-a-stake-in-the-ground-on-social-crm.html
- Dion Hinchcliffe “Using social software to reinvent the customer relationship”, Enterprise Web 2.0 Blog, (August 18, 2009), URL: http://www.zdnet.com/blog/hinchcliffe/using-social-software-to-reinvent-the-customer-relationship/699?tag=mantle_skin;content
- Brent Leary, “Traditional CRM vs. Social CRM”, (June 2009), URL: http://technology.inc.com/software/articles/200906/leary.html
- R. Wang and J. Owyang, “Social CRM: the New Rules of Relationship Management”, Altimeter, (March 5, 2010), URL: http://www.slideshare.net/jeremiah_owyang/social-crm-the-new-rules-of-relationship-management
- Bob Warfield, “A social CRM Manifesto: How to Succeed with the Social CRM Virtuous Cycle”, Helpstream, URL: http://www.slideshare.net/Helpstream/a-social-crm-manifesto-how-to-succeed-with-the-social-crm-virtuous-cycle