Social CRM: How Companies Can Link into the Social Web of Consumers
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Social CRM: How Companies Can Link into the Social Web of Consumers

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Social networking and other new technologies have given rise to the “social consumer.” Navigating this new world requires a new way of approaching customer relationship management, commonly called......

Social networking and other new technologies have given rise to the “social consumer.” Navigating this new world requires a new way of approaching customer relationship management, commonly called social CRM. In addition to their traditional CRM tools and processes, companies must rethink their product, channel, and customer strategies in order to build an entirely new relationship with their customers through greater transparency.

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  • 1. Perspective Olaf Acker Florian Gröne Rami Yazbek Fares AkkadSocial CRMHow Companies CanLink into the SocialWeb of Consumers
  • 2. Contact InformationBeirut Delhi London São PauloRamez Shehadi Suvojoy Sengupta Hugo Trépant Jorge LionelPartner Partner Partner Principal+961-1-336433 +44-20-7393-3314 +44-20-7393-3230 +55-11-5501-6200ramez.shehadi@booz.com suvojoy.sengupta@booz.com hugo.trepant@booz.com jorge.lionel@booz.comRaymond Khoury Dubai Rami Mourtada ShanghaiPrincipal Fares Akkad Principal Andrew Cainey+961-1-336433 Senior Associate +44-20-7393-3444 Partnerraymond.khoury@booz.com +971-4-390-0260 rami.mourtada@booz.com +86-21-2327-9800 fares.akkad@booz.com andrew.cainey@booz.com Berlin Saibal ChakrabortyDr. Florian Gröne Rami Yazbek Senior Associate SydneySenior Associate Associate +44-20-7393-3540 Peter Burns+49-30-88705-844 +971-4-390-0260 saibal.chakraborty@booz.com Partnerflorian.groene@booz.com rami.yazbek@booz.com +61-2-9321-1974 Milan peter.burns@booz.com Canberra Frankfurt Enrico StradaDavid Batrouney Stefan Stroh PartnerPrincipal Partner +39-02-72-50-93-00+61-2-6279-1235 +49-69-97167-423 enrico.strada@booz.comdavid.batrouney@booz.com stefan.stroh@booz.com New YorkChicago Olaf Acker Jeffrey TuckerEduardo Alvarez Partner PartnerPartner +49-69-97167-453 +1-212-551-6653+1-312-578-4774 olaf.acker@booz.com jeffrey.tucker@booz.comeduardo.alvarez@booz.comMike CookePartner+1-312-578-4639mike.cooke@booz.com Ramez Shehadi and Florian Poetscher also contributed to this Perspective. Booz & Company
  • 3. EXECUTIVE Social networking and other new technologies have given rise to the “social consumer,” who now has the means to shareSUMMARY reviews and opinions about virtually every kind of product and service. As a result, the days of the one-to-one relationship between companies and their customers are over. Now companies must contend with the huge and growing social web, where customer experiences and opinions are shared on a massive scale, and corporate reputations can be ruined almost instantaneously. Navigating this new world requires a new way of approaching customer relationship management, commonly called social CRM. In addition to their traditional CRM tools and processes, companies must rethink their product, channel, and customer strategies in order to build an entirely new relationship with their customers through greater transparency. This new relationship will have two goals: to develop the credibility needed in the social web and to use this web to boost sales. This effort will require a major shift in the corporate mind-set toward collaboration and transparency. But if it is done right, the resulting benefits in terms of reputation and a more valuable relationship with customers can be significant. Companies should begin simply by listening to the social web to get a better sense of where they stand in this world, and building a team of employees who are familiar with how this world works. This will serve as a basis on which to build true social CRM capabilities, including the ability to manage the company’s reputation, increase sales, and monitor the results.Booz & Company 1
  • 4. THE SOCIAL all bloggers post their opinions about products and brands. If companies are to adapt and respond successfully to this new reality,CONSUMER they must develop a new corporate New publishing, collaboration, and mind-set that goes far beyond the social networking platforms let con- traditional one-sided, product-centric, sumers compare, discuss, review, and transactional thinking. Companies comment on products and services must now be much more transpar- with ease. Nearly 600 million people ent in their dealings with consumers,The traditional one-to-one relationship around the world now actively use understanding that by creating anbetween companies and their custom- Facebook, with the means to broad- ongoing conversation with customersers is rapidly evolving. Consumers cast their thoughts and opinions far they can build a better, longer-lasting,now have a wide variety of new and wide. As a result, consumers are ultimately more valuable relationshiptechnologies at their disposal, with shifting their trust away from corpo- with them. However, if companiesubiquitous access to massive amounts rate marketers and brands and instead are to generate and manage this moreof information, giving them near talking and listening to their fellow complex relationship—and capture thecomplete transparency into every com- consumers. Their opinions about prod- resulting business value—they mustpany’s products, services, and pricing ucts and services are being shaped by encourage their marketing, sales, anddata. Almost three-quarters of online the information they get from fellow customer service teams to collaborateadults in the U.S. read blogs, watch consumers offering their experiences, in responding to social consumers, andonline videos, listen to podcasts, post thoughts, and feelings over Web 2.0 to develop an entirely new set of capa-to forums, and write reviews. Almost collaboration technologies such as bilities and tools, commonly calleda quarter of them create their own blogs, product reviews, and rankings— social CRM, to manage their responsecontent, publishing blogs and upload- especially when their experiences have (see Exhibit 1).ing videos and audios to sites such as been bad. The newly empoweredYouTube. And more than a third of “social consumer” is here to stay.Exhibit 1Managing the Social Web Requires a New Corporate Mind-Set of Collaboration, Transparency, and anOngoing Conversation with Consumers CHANGE IN THE ENTERPRISE MIND-SET Traditional Mind-Set New Mind-Set One-Sided Opaque Transactional Collaborative Transparent Conversational Sales Employee Sales Team Customer Customer Service Customer Service Employee Marketing Employee Marketing Team Corporate Ecosystem Customer EcosystemSource: Booz & Company analysis2 Booz & Company
  • 5. DRIVING must adapt, augment, and rethink their product, channel, and customer CRM strategies and processes to a company’s entire extended social CUSTOMER strategies as well as their attendant network—a dynamic, constantly VALUE delivery processes, tools, people skills, incentive systems—indeed, the entire evolving organism that encompasses its customers and suppliers. As with corporate culture. Social CRM is every major business effort, all the not a “soft” addition to traditional processes associated with social CRM goals and processes; there are CRM, whether they are designed real costs involved in generating the to actively generate customer Social CRM should be seen not required capabilities, and the return involvement in some way, or to react as a replacement for traditional on investment should be clearly to it, should either boost the top line, operational and analytical CRM understood and measured. protect the bottom line, or both. processes and tools, but as an And the processes involved must be extension of them. Companies seeking The key to a successful social CRM consistently monitored to determine to build new social CRM capabilities effort lies in extending traditional their ongoing success (see Exhibit 2). Exhibit 2 Social CRM Involves Both Proactive Marketing, Sales, and Service and Reactive Preemption and Mitigation - Monitor & analyze Reactive Proactive CRM - Act on defined CRM business rules Protect Bottom Line Grow Top Line PR Crisis & Bad Publicity Reaction Social Web Lead Generation & Social Sales Complaints Management Social Marketing & Promotions Social Support Brand & Product Awarenessontent Market & Product Insights Protect Bottom Loyalty & VIP Customer Treatment Line ast & Africa ific Grow Top Linemerica Source: Booz & Company analysis Booz & Company 3
  • 6. SOCIAL CRM IN THE REAL WORLD How does social CRM work in the real world? The following three case studies will illustrate both the real benefits of creating relationships with social consumers and the potential costs when the power of those con- sumers is not handled well. Dell Boosts Social SalesProtecting the bottom line is most by social media, often in the form of Thanks to such tools as price com-typically linked to reactive CRM word-of-mouth marketing. Critically, parison engines and social networks,activities such as monitoring these social techniques for boosting consumers have gained the upper handcomplaints that may emerge from revenue are even more dependent on in e-commerce, and companies arethe social web and managing events credible positioning in the social web finding it harder and harder to distin-such as bad publicity. No company than reactive efforts are. Moreover, guish themselves from the pack and tocan completely anticipate or control proactive and reactive efforts must convert visitors to their websites intosuch events, but it is critical that every be considered in tandem: Social sales paying customers. In hopes of engag-company build the capabilities needed requires social marketing to generate ing potential buyers throughout theto manage them when they occur, and attention, but that attention depends lead generation and buying process,to develop the “social web credibility” on the social support needed to gain computer maker Dell turned to Twitterthat will be needed in times of crisis. a reputation as a credible force in the as a new channel for pushing specialCompanies that launch such efforts social web. promotions to its followers. In part-after disaster strikes will face little nership with Intel, Dell devised a mar-probability of success. The recent Gulf Many of the results of the activities keting program called “Dell Swarm”of Mexico oil spill severely affected discussed above—such as social sales that applied the “letsbuyit.com”BP’s reputation, yet the company only and social marketing campaigns—can concept to create an online promo-made it worse through such amateur be measured and quantified through tion with a group-buy logic: The moreglitches as the obviously edited photos traditional ROI analysis. Yet the people who join a “swarm” throughof BP’s “situation room,” which highly interactive nature of social invitations over social networks, thequickly eliminated any credibility the CRM will also bring with it secondary lower the price for the entire swarm.company might have gained in its benefits that are in many cases evensocial web. more significant, if much harder to While the initial program remains at measure. The goodwill gained from a small scale, the results were impres-The most successful way to grow the the increased transparency offered by sive: Dell sold out the inventoriestop line through social CRM involves social CRM, for instance, is hard togenerating social sales—gains in measure in isolation, but no less real.e-commerce revenues that are drivenThe goodwill gained from theincreased transparency offered bysocial CRM is hard to measure inisolation, but no less real.4 Booz & Company
  • 7. allotted to the campaign, taking in In 2009, Best Buy’s online commu- In February 2010, a professionalmore than US$6.5 million in incremen- nity boasted 2.5 million visitors, who trainer at SeaWorld was killed intal revenues. More than 200 blogs and viewed more than 80 million messages front of a live audience by a killer500 tweets applauded the program, and posted almost 80,000 times. Just 5 whale. The bad publicity could haveboosting positive views of the Dell percent of consumers’ questions had to had disastrous consequences for thebrand significantly. Prequalified leads be answered by Best Buy staffers; the theme park, but SeaWorld acted fast.jumped 15 percent, and 80 percent of rest were answered by the community. It tweeted about the incident almostpeople participating in the campaign As a result, complaints to Best Buy immediately, and then acknowledgedopted in for further communications. were reduced by 20 percent. And the the trainer’s death on its FacebookClearly, such trials demonstrate that iPhone FAQ page was viewed 84,000 page. Hours later, SeaWorld’s CEOsocial sales can create real revenue. times, saving untold numbers of call posted plans to investigate the incidentStill, companies embarking on such center calls. Altogether, Best Buy esti- on the company’s blog, and left theefforts must tightly integrate tradi- mates that its social media activities blog open for comments. The next day,tional sales and social sales channels in have saved it $5 million. SeaWorld suspended the faux Twitterorder to provide a seamless transac- account of Shamu, another killertion experience all the way from the There is no intrinsic reason that such whale at the park, and users werepromotional tweet to online checkout, self-help communities can’t become redirected to the park’s main Twitterwhile keeping an eye on any potential equally successful in industries other account. Meanwhile, emotional videocannibalization effects. than consumer electronics. For any tributes to the trainer were posted on company, reducing the number of calls YouTube. A rising tide of commentsBest Buy Gains Social Support to call centers can lower the cost per on Facebook advocating the closing ofComplex products such as comput- contact by 75 percent or more while the theme park and freeing the whalesers and consumer electronics typi- enabling the organization to focus on was countered primarily by thousandscally require a great deal of customer more complex problems and concen- of SeaWorld’s Facebook fans. At pres-support, most of it done via costly call trate on driving sales. ent, thanks to its rapid and sympa-centers. At the same time, more and thetic response, SeaWorld’s theme parkmore consumers are using the Internet Crisis Management at SeaWorld operations are continuing normally.as a support channel, by searching More people now get their news fromfor solutions to their problems online, the Internet than from either news- Managing incidents such as this oneoften generating random results. In papers or radio—only TV still ranks depends greatly on developing ahopes of leveraging the Internet’s “col- higher. Three-quarters of consum- strategic framework for respondinglective intelligence,” embodied in other ers of online news say they get news quickly to potential online crises. Thatconsumers, Best Buy created an online forwarded to them through e-mail or framework should include a systematiccommunity forum where consumers posts on social networking sites, and effort to develop the processes, tools,can post questions and get answers more than half say they share links and people needed to monitor socialfrom other consumers. Questions not to news with others via these means. networks constantly, “keeping an earanswered by consumers are picked up The resulting speed at which news to the ground.” Finally, the use ofby Best Buy employees, all 114,000 and publicity—especially when it’s social media to manage crises shouldof whom have access to the system. negative—can spread far and wide is not be an entirely reactive measure toThe company also creates FAQ pages astonishing, frequently allowing public a potential threat; instead, companiesbefore the launch of major new relations crises to develop within hours must use social networks to developproducts such as the iPhone, allowing and even minutes. Only by responding permanent relationships with theirconsumers to get answers to questions just as quickly can companies combat customers and other consumers.in advance. these negative impressions.Booz & Company 5
  • 8. BUILDING • Assess and analyze: Consider care- fully the results of your monitoring, • Review: Reassess embedded activi- ties regularly to improve, extend,CAPABILITIES and rigorously map those areas of or suspend them, as needed. And both opportunity and threat pre- remember that the social web is a sented by the social web that can in dynamic environment, so be pre- turn be addressed by social CRM. pared to adapt with it, continuously evolving your response to it. • Strategize and structure: DevelopThe case studies above demonstrate a clear and workable social CRM This framework provides the generala common truth about all social value proposition, and then struc- guidelines for building a successfulCRM efforts. They are not primarily ture your response, including the social CRM presence, but getting thetechnology problems requiring channel or platform mix—social details right is critical. At each step oftechnology-driven solutions. networks, blogs, apps, social the framework, specific capabilitiesInstead, all social CRM activities bookmarks—as well as the tools must be acquired in three areas inmust be driven as part of the entire and practices needed, along with a particular: business functions fromcorporate culture if they are to have go-to-market road map. innovation to marketing to sales tothe credibility to be effective. We service; organizational structures,recommend taking what we call the • Test: Begin by testing your strategy including the people and skills“MASTER” approach to building the on a small, controllable scale in needed—and an incentive structurecapabilities needed for a successful order to determine if your initial designed to promote them—as wellsocial CRM effort—monitor, assess, assumptions and your set of tools as a plan for developing a corporatestrategize, test, embed, and review. and practices work—and calculate culture that encourages thinking and the ROI. working in terms of transparency• Monitor: Listen to what the social and collaboration, both requirements web has to say. Systematically • Embed: Once you have decided on for social CRM; and technology gather insights, data, and experi- a set of successful activities, put platforms, including social CRM– ence in order to understand your them into practice by defining their specific tools and systems, as well target consumer community and respective processes, installing the as the broader integration of social its dynamics, codes, and unwritten necessary social campaigning sys- CRM processes into the end-to-end rules. This is often best done by tems and tools, and determining the IT architecture. Exhibit 3 offers a participating in the social web just required roles and responsibilities, breakdown of those specific capability like any customer would. And pay employee incentives, and business requirements, both at the initial stage attention to competitors as well. targets. of the social CRM effort and in its mature phase.6 Booz & Company
  • 9. Exhibit 3 Embedding Social CRM into Business Functions, the Organization as a Whole, and Technology G SOCIAL CRM Initial Stage Mature Stage 1 Business Functions a - Develop product insights from external social - Crowdsource research and development to accelerate Product Innovation networks, leveraging the service as well as marketing product to market and improve the chance of product insights adoption 3 - Develop marketing insights from external social - In near real time, monitor chatter on social networks, Social Marketing & networks including overall sentiment monitoring Public Relations - Create one main blog, usually by the CEO’s office or - Manage the organization‘s events other upper management - Promote cross-department blogging and social customer interactions - Develop sales insights from external social networks - Develop leads and sales opportunities from social - Provide social customers with product information communities Social Sales through social media - Use peer-to-peer lead generation through social A - Develop internal networks to collaborate on sales recommendations, referrals, and customer testimonials - opportunities and leads - - Develop service insights from external social networks - Develop rapid service response to issues raised on social LEast & Africa - Develop internal networks to collaborate on the networks by proactive monitoring and establishing in-house - Social Service response to customer issues and service requests social support structure -cific - Harness the collective expertise of customers to develop a peer-to-peer social service Lmerica L Organizational Structures - Create isolated social programs typically focused on - Dedicate a team, decentralized or centralized based on N one department company size, to coordinate social CRM programs across all P People & Skills - Leverage select existing employees to interact with departments o customers on social networks - Develop internal specialized skills to write, develop, and f publish social media content such as blogs, podcasts, and T multimedia A - Encourage employees to view social CRM program - Integrate social CRM into the business with a clear mission, as a positive new experiment ROI, and KPIs Culture - Harness an active and empowered change management program to help customer-centricity, collaboration, and transparency pervade the company‘s culture Technology Platforms - Leverage public and mostly free social media - Invest in social CRM platforms that are becoming platforms available on the Web with no or minimal increasingly available in the market with specialization in Tools & Systems investment in hardware or software social sales, social service, or social marketing - Do not have to integrate program with in-house - Integrate the social CRM platforms with operational platforms Integration platforms such as CRM or business intelligence Source: Booz & Company analysis 3 columns width 2 columns width Booz & Company 7
  • 10. KEY HIGHLIGHTS • Every company is now enmeshed in the social web of consumers publishing their thoughts, opinions, and reviews of every kind of product and service. • Social CRM involves the tools and processes companies need to manage their ever-changing relationship with the social web, increase sales through direct contact with “social consumers,” and handleTHE CORPORATE • Start monitoring the social net- works for mentions of your brand crises.SOCIAL WEB and company name. This is a • Recent examples critical first step in building reactive demonstrate that the social CRM capabilities. beneficial results of a strong social CRM program are real • Decide whether you are ready and quantifiable.The rise of the social customer to use social CRM as a tool forhas embedded every company in a proactive communication withcomplex web of relationships among customers. Doing so will require acustomers, consumers, tastemakers, conscious change in the company’sand employees. This social web con- culture.tains many risks and threats—frommuch greater transparency into prices • Follow the MASTER framework,and customer opinions to the instant while forming a small team of dedi-proliferation of bad news. In response, cated employees who are alreadysocial CRM offers a whole range active in social networks so thatof new and powerful ways to build you can leverage their know-howloyalty, market, sell, and otherwise and networks for early trials of theinfluence every member of that web. system and to begin building your social reputation.Still, it is critical to remember thatthe social web functions according to Ultimately, truly successful socialan entirely new set of rules that are CRM will require long-term think-always changing, and changing fast. ing and investment. It is not a one-offUnderstanding these new rules will be project, but rather a major capabilitya challenge for most companies—until that will take time to build properly.they succeed in embedding the neces- If done right, however, it will gener-sary spirit of transparency and col- ate significant financial rewards andlaboration in their corporate culture reputational benefits.and everyday business practices. Asa guide to meeting this challenge, weoffer three initial steps every companyshould take:8 Booz & Company
  • 11. ResourcesMichael Peterson, Volkmar Koch, Florian Gröne, and Kiet Vo, “OnlineCustomers, Digital Marketing: The CMO–CIO Connection,” Booz &Company, 2009. www.booz.com/media/uploads/Online_Customer_Digital_Marketing.pdfMichael Peterson, Florian Gröne, Karsten Kammer, and JuliusKirscheneder, “Multi-Channel Customer Management: DelightingConsumers, Driving Efficiency,” Booz & Company, 2009. www.booz.com/media/uploads/Multi-Channel_Customer_Management.pdfAbout the AuthorsOlaf Acker is a partner in Dr. Florian Gröne is aBooz & Company’s Frankfurt Booz & Company seniorand Dubai offices. He focuses associate based in Berlin. Heon business technology works with communications,strategy and transformation media, and technology industryprograms for global companies players to define their go-to-in the telecommunications, market strategies and operatingmedia, and high technology models, and transformindustries. customer-facing processes. He leads the firm’s CRM Center ofFares Akkad is a Excellence in Europe.Booz & Company seniorassociate based in Dubai. He Rami Yazbek is aspecializes in Technology and Booz & Company associateCommunications projects, based in Dubai. He specializesassisting companies both in in technology-enabledpublic and private sectors transformation in governmentwith their digital media and the private sector. Overand technology enabled the last decade, Rami hasinitiatives. Fares has helped numerous clients acrossassisted clients on strategic multiple industries define andprojects in the Technology, implement their CRM strategies.Telecommunication, Media and He is a member of the firm’sPublic sectors. CRM Center of Excellence in the Middle East.Booz & Company 9
  • 12. The most recent Worldwide Officeslist of our officesand affiliates, with Asia Bangkok Helsinki Middle East Florham Parkaddresses and Beijing Brisbane Istanbul Abu Dhabi Houstontelephone numbers, Delhi Canberra London Beirut Los Angelescan be found on Hong Kong Jakarta Madrid Cairo Mexico Cityour website, Mumbai Kuala Lumpur Milan Doha New York Citywww.booz.com. Seoul Melbourne Moscow Dubai Parsippany Shanghai Sydney Munich Riyadh San Francisco Taipei Oslo Tokyo Europe Paris North America South America Amsterdam Rome Atlanta Buenos Aires Australia, Berlin Stockholm Chicago Rio de Janeiro New Zealand & Copenhagen Stuttgart Cleveland Santiago Southeast Asia Dublin Vienna Dallas São Paulo Adelaide Düsseldorf Warsaw DC Auckland Frankfurt Zurich DetroitBooz & Company is a leading global managementconsulting firm, helping the world’s top businesses,governments, and organizations. Our founder,Edwin Booz, defined the profession when he estab-lished the first management consulting firm in 1914.Today, with more than 3,300 people in 61 officesaround the world, we bring foresight and knowledge,deep functional expertise, and a practical approachto building capabilities and delivering real impact.We work closely with our clients to create and deliveressential advantage. The independent White Spacereport ranked Booz & Company #1 among consultingfirms for “the best thought leadership” in 2010.For our management magazine strategy+business, visitwww.strategy-business.com.Visit www.booz.com to learn more aboutBooz & Company.©2010 Booz & Company Inc.