Originally appeared in the July 2010 issue of Customer Inter@ction Solutions
The customers have stormed the corporate palaces and are now taking charge of their customer relationships. Armed with information from the Web, backed by “do not contact” and privacy laws that had been obtained in appeasement attempts and mobilized through social channels, customers are sweeping aside the “Mad Men” (and women) and are suppressing the fire from public relations flaks.
Instead of customers serving the companies, the companies are now being forced to serve them. If these outfits fail to do so, and/or not meet customers’ satisfaction they will be locked in the stocks or for the most serious offenders by dragged into the guillotines in the virtual public squares.
Product/service commoditization and virtualization i.e. hardware now as software, software hosted instead of premise-licensed, along with global R&D and sourcing enabled by near-instant information and knowledge delivery, and aided by deregulation, portability and open platforms have made this revolution possible. Customers can switch suppliers more readily than ever before. Brand loyalty is now earned by results gained by buyers and their peers; it can no longer be manufactured, developed and maintained through advertising, marketing and PR.
In the social CRM revolution, it is the customers who are now directly driving product and service creation, saying they need X and want to know how are companies going to provide this rather than the traditional approach of firms making X and saying customers need it, reports Martin Schneider, senior director of communications at SugarCRM (News - Alert).
Consequently, firms are now learning to build products based on meeting unmet needs through such engagement with customers, he says. This is a potentially more efficient and profitable manner in an increasingly resource-scarce world by creating what customers say they want rather than educated guesswork by senior management and tools such as focus groups.
“The balance is shifting in product and service development, branding, marketing and PR from the company to the customer,” says Schneider. “The customer is in control of the conversation and the brand. That is frightening to many firms. Yet it also poses opportunities because if you give customers good products, services and information and involve them they become your marketers and public relations people and they are believable and relevant compared with traditional advertising, marketing and PR.”
To create or, for most firms, revise their existing CRM strategies with the social CRM revolution, there needs to be an understanding of the social channel’s key distinguishing characteristics from the other interaction methods: voice, one-on-one chat, e-mail, IM and SMS and in-person.The first marker is that the social channel provides synchronicity and speed to one-to-many (i.e. customer to peer, company to customers) exchanges via web sites’ comments sections and specialized site postings, explains Paul Greenberg, president, The 56 Group and author of “CRM at the Speed of Light.” There is near-immediate bidirectional communication to and with the audience universe that exponentially adds to the impact of the information being communicated, whether a complaint, comment or recommendation about a company, product or service or employee.“If I need to converse with a peer I can go into the social channel and get a response and a response to a response where in a more traditional mold, such as e-mail or IM I send an e-mail or IM, I wait, you send response, you wait,” Greenberg points out. “With the social channel therefore you’re not just communicating with a single individual but you’re also communicating with a group of individuals who can then communicate with other groups of individuals, which you don’t have that as much as in other channels.”
The second and arguably the most unique and important characteristic of the social channel is that it changes the customers’ value to enterprises. It forces them to analyze and monetize one of the most important, long-known and very effective but often set aside facets of customers, and that is their ability and power to influence other customers.Greenberg cites the work of Vita Kumar, professor at the Business School at Georgia State University, who devised a new metric, customer referral value (CRV) that extends traditional customer lifetime or net present value to assess this added worth. CRV is defined by four questions: (1) would you recommend this company to someone you know; (2) did you recommend this company to someone you know; (3) did they become a customer; and (4) are they a profitable customer.“The traditional CRM metric is net present value, which is a history of repurchasing,” explains Greenberg. “Now because the social customer is out there and communicates with other customers they have a value that goes beyond just repurchasing. If they are your advocates, they can have an indirect impact on revenue.”One of the strengths of the advocacy approach, Greenberg points out is that it taps into the power of customers’ emotions. This advocacy model is powerful and proven. He points to the example Karmaloop, which uses “virtual community retailing.” Its active evangelists, organized into “street teams,” comprise close to one percent of its roughly one-million-strong network of customers. Yet this group which participates in Karmaloop’s clothing sales and community activities generate 15 percent of its revenues.“The referral model says the way we understand and view our customers is quite different in a social CRM strategy; it is ‘we want to get these customers to be advocates as opposed to telling the customers what channels they can come to and to get the customers to simply like us or at best not to lose them,” Greenberg points out. “It is the idea that we have to move from managing customers to engaging customers, on the practical level i.e. value of product and service but also on the emotional level which changes again what companies must do as part of their business strategy.”
Anthony Lye, senior vice president, Oracle (News - Alert) CRM, says listening to brand conversations via the social channel provides an opportunity for organizations to capture information that is relevant to marketing and sales (for example, qualification of a lead) earlier in the process. Customer conversations provide insight into what customers want in new products and enhancements that can be fed into product development process.Moreover, conversations online are documented and typically can be accessed for long periods of time. With search capabilities on the Web, these conversations can be viewed repeatedly by growing audiences. People, and organizations, can follow the conversation threads and gain access to broader answers to their inquiries.By listening to these social conversations firms can also identify key influencers and advocates that will help them prioritize their replies appropriately to ensure that they maximize positive impacts with their responses. Prior to the advent of the social channel was difficult if not impossible to accurately identify influential customers.
The social channel also poses opportunities for companies to drive customer interactions to lower-cost channels such as self service. For example, customers requiring support can find and share information with their peers and dynamic chat or web sessions (these should be monitored to ensure advice accuracy and avoid more problems) that avoids costly help desk calls or field service visits. “People trust comments, ratings and solutions from ‘people like them’ who provide this content,” Lye points out.
Social CRM Challenges and Solutions
When rolling forward in the social CRM revolution there are obstacles and ways to meet them either head-on or around them. The most fundamental is ensuring and maintaining customers’ control to keep their loyalty. There must be cross-channel integration so that companies receive customers’ inputs at or close to real-time as possible so that they can present individualized offers. There has to be engaging social channel experiences, such as contest participation, communities and forums that encourage customer problem solutions or interactions with executives and other company employees, or countless other possibilities. “For customers to stay loyal you have to create not just products and services which has been the historic pattern but also products, services and tools and consumable experiences that gives the customers more control over their experience with a company,” says Greenberg.
Another key challenge with the social channel is avoiding the temptation to focus only on the “influentials” identified by social channel monitoring tools. For the actual power of individual buyers may go far beyond what they say online; they still use “offline” channels to interact with each other and their peers.
There is a risk from the brand sentiment and support perspectives in listening only to the squeaky wheels: those individuals who are being proactive and identifying themselves on social channels.
“For if you think this is the average attitude and sentiment you’re probably wrong,” says Schneider.
Savvy customers also know what to say or not to say online. For example those who have political or religious involvements, or have outside activities that are non-conventional may keep that information off the social channel if they feel revealing this could hurt their careers and businesses. Yet these customers often interact with and influence many others.
“You never really know who your customers are,” Schneider points out. “So rather than spending resources trying to find those squeaky wheels, and fumble over trying to get on their good terms, treat every customer who calls in if they have 20,000 followers on Twitter and they had a blog read by 10,000 people a day. And assume everyone is an advocate and influencer and that way the contact center agents are going to be on their best behavior and provided policies and processes and give them top-quality service and support.”
Another key issue with the social channel is that the information accessed by these means often has limited shelf life. An individual’s LinkedIn profile and what they are doing on Facebook and Twitter is as only as relevant until the next post. Yet traditional CRM customer data analysis methodologies take months before they can adjust customers’ values and recommend attractive and optimal offers Joe Hughes, senior executive in Accenture’s (News - Alert) Global Systems Integration practice.Instead, firms need to make social site snapshots via feeding tools from firms including Alterian (formerly Techrigy) or Radian6 to capture these developments, score them and deliver offers rapidly: ideally on the next interactions. Social channel-obtained information can be appended to customers’ files in real time with technologies such as from Attivio. While in doing so organizations risk having imprecise data such as news feeds on the company based on a set of sales-relevant keywords like “cost cutting” the benefits outweigh the downsides.“While enterprises do not want to lose fidelity in a complete customer data analysis, they have to deal with speed to obtain maximum value even at the price of a little imprecision on the way,” says Hughes (News - Alert). “After all, would you rather have incomplete actionable snapshot or wait until get 360 degree view in a relational database in two years?”
The social channel also pumps out a lot of data “noise”, Oracle’s Lye points out. With so much data and most being not relevant, reliably identifying content that should be pushed through a business process is a key requirement. Using natural language processing and analytics to intelligently categorize content and classify it in the context of organization’s business provide insight into opportunity to serve customers better. Integration with CRM can provide auto-routing of relevant content from social channels to appropriate people who can manage the request in the context of the CRM process. For example, if an issue related to a product is detected from customer conversations, this information can be automatically routed to contact center agents with proper classification and context so that service personnel can be more productive and respond with proper actions. “Learning from the content and the outcomes of business processes will add real value in streamlining the process and reducing the overhead,” says Lye.
Firms must also integrate the social channel with the others and with their work processes to obtain and act on having a complete view of customers (more about that in the September Multimedia Contact Center feature). Doing so creates an opportunity for “the social workplace.” If customers can chat with other about companies, companies can do likewise internally about them e.g. between customer service, sales, retail outlets, engineering and billing.That is one of the key benefits of new collaboration tools such as Salesforce.com’s Chatter. It enables employees and others on the teams such as consultants to follow key information such as customers’ purchase, delivery support and payment histories: much like friends on social networking sites so they receive updates when status changes.
Such real-time information sharing helps sales reps stay on top of critical information and can post a status update before calling customers to find out more about open service cases or account issues. Being on the same page through Chatter helps employees work with the most accurate, holistic view into critical business information whether it’s around customers, suppliers or partners.Chatter also permits document sharing; teams can work collaboratively on documents such as RFPs and purchase and service contracts. With it, employees can follow that document so they are alerted in their Chatter feed of any status changes whether it happens weeks or months later, all from a secure browser, so they’re collaborating around the most current version and using the most accurate information. It also enables them to bring in insights from Facebook and Twitter for monitoring the social channel from a unified, real-time Chatter feed (see cover story).
When implementing a social CRM program be cognizant of the differences between integrating a CRM strategy with a social network such as Twitter, Facebook and LinkedIn versus that of a collaboration platform e.g. Jive, SharePoint, Yammer, Salesforce.com Chatter says Eryc Branham, managing director of Acumen Solutions.
Social networks are by definition, peer-to-peer interactions across a very broad range of topics, from personal to business and everything in between. Companies who tap into social networks generally want to provide a superior customer support experience or extend their marketing presence.
In contrast, collaboration platforms are broadly focused on enhancing employee productivity via document, wiki, and idea sharing. It has long been considered a company best practice to break down the “firewall” and extend these collaboration activities to their customers as well, via customer forums, communities, etc., which begins to look like a specialized social network.
“The business objectives and benefits between these two social CRM approaches is very different and requires a different set of strategies, processes, integration approaches and even governance,” Branham points out.
The most important challenge in enabling social CRM, argues Greenberg is institutional; unfortunately, most companies don’t have that sophisticated a view of it. He recommends creating customer advisory boards to help generate social CRM strategies, programs and policies, getting executive buy-in and to map customers’ experiences. With these boards firms can find out what processes and interaction points may need to be modified.“Most firms really don’t have social CRM strategy,” Greenberg points out. “What they’re developing is a CRM strategy to run their sales, marketing and customer service operations and incorporate some social features in consideration of that strategy. Consideration doesn’t mean they have a fully-integrated highly mature look at how they change the business model. All they have is guidelines. Yet they have to fully understand the power of the social channel and how it can help them positively impact their organizations because their customers are social.”
Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.
Edited by Stefania Viscusi