2009 White PaperSocial CRM Comes of Age                    By Paul Greenberg,                    Sponsored by Oracle
Social CRM Comes of Age, by Paul GreenbergOverviewSince 2003, there has been a revolution in communications that impacts e...
Social CRM Comes of Age, by Paul Greenbergmarketing departments told them. As social media favorite book “The Cluetrain Ma...
Social CRM Comes of Age, by Paul GreenbergTechnology Advances CommunicationMultiple technologies advanced over the first d...
Social CRM Comes of Age, by Paul GreenbergWhile probably needless to say, there are many more worthy of consideration, but...
Social CRM Comes of Age, by Paul GreenbergFor example, how often have you read about the impact of social media or text me...
Social CRM Comes of Age, by Paul Greenberg   •   Did the manufacturer or retailer product provide appropriate service arou...
Social CRM Comes of Age, by Paul Greenbergparticular customer or that deal opportunity. This additional capability not onl...
Social CRM Comes of Age, by Paul GreenbergSlightly less optimistic but still staggering were the Gartner July 2008 numbers...
Social CRM Comes of Age, by Paul GreenbergThe company seeks to lead and shape              The customer is seen as a partn...
Social CRM Comes of Age, by Paul Greenberg                                                                       Case Stud...
Social CRM Comes of Age, by Paul Greenberghave privileged and personalized treatment. That could take the form of greater ...
Social CRM Comes of Age, by Paul Greenbergfelt a stronger connection to the company and its brand when they could use soci...
Social CRM Comes of Age, by Paul Greenberg          Transaction                            Intersection                   ...
Social CRM Comes of Age, by Paul GreenbergSocial SalesThe traditional sales force automation tool has been a tracking tool...
Social CRM Comes of Age, by Paul Greenberg       catalog of goods and services offered by your retail operation via their ...
Social CRM Comes of Age, by Paul Greenbergcapabilities for the customer to interact with you in a more effective way which...
Social CRM Comes of Age, by Paul Greenberg      you what the customer is thinking. However, their “insight” is more often ...
Social CRM Comes of Age, by Paul GreenbergTwo of the guiding characteristics of social customer strategy are corporate tra...
Social CRM Comes of Age, by Paul GreenbergApparently it is.Coleman Parkes Research, in a study released by Avanade in 2008...
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Social crm comes of age

  1. 1. 2009 White PaperSocial CRM Comes of Age By Paul Greenberg, Sponsored by Oracle
  2. 2. Social CRM Comes of Age, by Paul GreenbergOverviewSince 2003, there has been a revolution in communications that impacts every institution.Social, political, economic, leisure and business organizations have been affected by atransformation that not only changes how people interact with the institutions they care to beinvolved with, but also changes what it takes to do business - everywhere.This is a transformation driven by the Internet. It gave unknown U.S. Senator from Illinois,Barack Obama the presidency of the United States. Obama and his staff understood that theWeb was not just a place to exhibit information, but instead was a vital integratedcommunications framework one that could and did drive volunteerism and donations to recordlevels -e.g. in one month, $55 million raised via the Web. They understood the power ofinteraction in an era where people were emboldened by their ability to communicate in real timewith their peers in ways that could move organizations, entire industries or even the politicalprocess.The change is a social change that affects all institutions including business. Unlike the past,business has no substantial or even marginal advantage over any social, political, economic,government, or other form of institution. In fact, business may be the least equipped to handlethe transformation as of 2009.Over the past decade or more, Customer Relationship Management (CRM) has been thestrategic approach that most companies had taken in trying to figure out how to supervise theircustomers’ behavior. Typically, it was via technology and processes and analytic algorithms thatwere tied to an often amorphous management strategy. Gathering data about the customer andtracking all customer transactions were the way that CRM was used to ascertain the individualcustomer’s thinking. Hopefully, the insight it provided about the customer and the effectivenessof the processes put into place led to some kind of increased level of purchasing or decreasedcosts. Additionally, CRM was (and is) used for making some sales and service processes moreeffective and for sales and service management tracking the customer facing activities rangingfrom qualifying a lead to closing a deal to servicing an order to solving an issue. The strategies,technologies, processes and workflows are all operational -focused on the enterprise tracking thecustomer and capturing data.But that is CRM 1.0 - traditional CRM.Since 2003, the impact of the social communications makeover has shifted ownership of thecustomer/company relationship to control in the hands of the customer - which changes howbusinesses must respond to that customer. Discussions of the value of the company movedoutside the company’s walls to the enclaves of the customer who publicly chatted about thecompany without participation of the company in any way. The customer’s conversations wereno longer in control of any company. Additionally, the customer simply did not believe what 1
  3. 3. Social CRM Comes of Age, by Paul Greenbergmarketing departments told them. As social media favorite book “The Cluetrain Manifesto”(2001) put it: • “These networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge. • As a result, markets are getting smarter, more informed, more organized. Participation in a networked market changes people fundamentally. • People in networked markets have figured out that they get far better information and support from one another than from vendors. So much for corporate rhetoric about adding value to commoditized products.”As a result of the growth of this thinking among contemporary customers, review sites like Yelpor Epinions became their communities of choice. Customers went there to get information fromtheir peers who had experience with the company. The customers were the ones who actuallyused the products and services, far more frequently than the companies that provided them.Consequently, those who hung out at the review sites were deemed more trustworthy than themarketers who were seen simply as corporate shills pushing a company line.Who is this “social customer”? What strategies and tools does the new breed of CRM provide todo something about this? Let’s go find out.The Era of the Social Customer: The Customer Rules theEcosystemIf this were 2003, you could easily make the case that the enterprise still owned the customerexperience. The company remained the center of the business ecosystem. In 2003, theEdelman Trust Barometer, the venerable trusted annual survey on trust, pretty much said thesame thing it had been saying for years previous. Experts with no vested interest in corporationsremained the most trusted source and, after that, academics. This had been the status quo formany years. “Someone like me” -a person with similar interests to you - had the trust of only22% of the respondents surveyed.But in 2005, something changed. That year, in contrast to 2003, “a person like me” rose to 56%of the respondents - taking a dramatic leap into a more dramatic lead as the most trustedsource. Outside experts and corporate leaders fell precipitously. What did all that mean? Itmeant that the trust that the customers had for anyone outside their peers had been reduced toinsignificance in the space of two years. More importantly, people who had similar ideas andinterests adhered to each other in ways that created what is now an unshakeable bond. The “goto” source for trust became a peer.Why?There are several reasons, technological and societal. 2
  4. 4. Social CRM Comes of Age, by Paul GreenbergTechnology Advances CommunicationMultiple technologies advanced over the first decade of the millennium and dramaticallyimpacted how people communicated with each other and how they were able to navigate thatvast storehouse of the so-called “worldwide web.”By no means underestimate the importance of Google in this transformation. The exponentialgrowth of Internet search, with Google alone reaching nearly 500 million unique visitors in justthe month of November 2007, was a significant driver of change. How we accessed informationchanged forever. The searcher could now get what they looked for in less than a second. Thiseliminated the need for what had been expensive search products whose cost rosecommensurately with the functional power of the search - often to thousands of dollars forcorporations and typically beyond the reach of the ordinary consumer. Google’s ability to findsomething from unstructured data became a powerful tool in the hands of anyone who chose touse it - and at no cost for the product. The paradigm for search was no longer hours and evendays of indexing time behind a corporate firewall and no apparent way to do much withunstructured data on the web. Anyone had access to incredible amounts of information atanytime at their fingertips in a format that, while not sexy, was easy to understand.In conjunction with that we saw significant advances in the use of mobile devices such as theBlackberry - the first truly enterprise-strength mobile device. Mobile devices became more thancell phones. They handled email, SMS (text messaging) and internet access. This revolutionizedthe way that Generation Y in particular communicated. No longer did you have to call someonevia the phone. You could email them or receive one - and most importantly send and receive textmessages. For the first time, a person could operate in a day to day way carrying out much oftheir communications untied to a desk or a home. They were free to move. Additionally, withSMS text messaging they could communicate directly without directly speaking with the otherparty - and it was quick, easy and pretty cool.But these are just two of the technology tendrils. There are many more germane to the rise of thesocial customer such as the growth of web based communities, the explosion of threadeddiscussions on forums and the mainstreaming of the blogosphere - all of which fit neatly into theWeb 2.0 category. But search and mobility triggered much of the Web 2.0 growth. The societalchanges were equally and perhaps even more important reasons for the evolution of the socialcustomer that businesses are dealing with today.Irreversible Social ChangeIf one had to point to two social factors that are responsible for the way that people now interactwith each other and institutions, they would be: 1. Corporate and financial scandals of 2001-2008 2. The entrance of Gen Y into the workforce. 3
  5. 5. Social CRM Comes of Age, by Paul GreenbergWhile probably needless to say, there are many more worthy of consideration, but these twohave had a major impact on what business faces and what Social CRM can resolve.If Under 30, Never Trust Anything Worth More than a Billion DollarsThe type of corporate financial scandals that were associated with the 2001 collapse of Enron, incombination with the more recent collapse of many of the formerly revered, now reviled, WallStreet financial services institutions, destroyed trust in companies and their leadership in amatter of a few short years. I won’t dwell on the details here because this is beyond the scope ofthis white paper, but what is relevant is that customers began to look elsewhere for who theytrusted when it came to business relationships. In fact, the 2008 Edelman Trust Barometerfound that when it came to information from the CEO of a company, only 23% of its U.S.respondents trusted the CEO. Not much better, 41% trusted product marketing or advertisingmaterials.This came with the simultaneous entrance of Generation Y, also called the Millennials, into theworkforce. These were the children of the baby boomers who were born in the very early 1980s.What makes this significant is that they are the first generation who grew up communicating viathe Internet and were as comfortable with its use as their parents were with a telephone. Also,they were 76 million strong - one of the largest generations in history.Gen Y was also a proactive generation. One that would do what it took to communicate in theform that they saw as “theirs” - regardless of the rules. Studies done by multiple organizationsfound that even within the workplace, 59% of Gen Y communicated with their own tools -ranging from SMS to social media - regardless of corporate rules.This isn’t just technology-savvy. Millennials actively use technology for their day-to-day,ordinary communication and personal productivity - typically mobile - without reservation orconcern (See Table 1 for their communications skills).Gen Y Use of The Internet97% own a computer94% own a cell phone76% use Instant Messaging.15% of IM users are logged on 24 hours a day/7 days a week34% use websites as their primary source of news28% author a blog and 44% read blogs49% download music using peer-to-peer file sharing75% of college students have a Facebook account60% own some type of portable music and/or video device such as an iPodTable 1 - How Generation Y uses the Web (Source: Connecting to the Net.Generation: What highereducation professionals need to know about todays students, by Reynol Junco and JeannaMastrodicasa NASPA; 2007)A key word here is ordinary. Unlike the often awestruck older generations, this is just what theGen Yers do. It doesn’t stand out. Its how they live - which means it needs to be reckoned withby businesses - because that very “ordinariness” is impacting every other customer out there. 4
  6. 6. Social CRM Comes of Age, by Paul GreenbergFor example, how often have you read about the impact of social media or text messaging orWeb 2.0 on marketing departments or PR firms, who are scrambling to understand this so-called phenomenon or on mainstream media like newspapers or network TV? NBC Universal,in October 2006, laid off 750 employees and was forced to slash $750 million from its budgetdue to what the Washington Post called “the impact of YouTube, social networks, video gamesand other upstart media” on traditional networks.This is also a generation with different expectations. They expect to get what they need. They’vebeen raised to think they will. More often than not, they do.Bruce Tulgan, author of Managing Generation Y, put it well in an interview with USA Today onGen Y’s expectations at the workplace: “This is a generation of multitaskers, and they can juggle e-mail on their BlackBerrys while talking on cell phones while trolling online. "Theyre like Generation X on steroids," Tulgan says. "They walk in with high expectations for themselves, their employer, their boss. If you thought you saw a clash when Generation X came into the workplace - that was the fake punch. The haymaker is coming now."The Social Customer ArrivesThis combination of factors transformed the way that the customer thought about doingbusiness - not just how they did business.These social customers didn’t have to rely on corporate literature and self-interested salespeople any longer. They could rely on the web and each other for information on their potentialpurchases and for deeper knowledge about their common interests - work or play.Take a review site such as Yelp as an example. These sites are easily available to the users ofproducts, services, or visitors to institutions and they provided a means for those who wanted toparticipate to rate, usually 1 to 5 stars and comment on the products that they used so that therewas all in all an unvarnished idea of: • How good was the product? • Did it meet the expectations the buyers had of it? • What did it do right? Wrong? 5
  7. 7. Social CRM Comes of Age, by Paul Greenberg • Did the manufacturer or retailer product provide appropriate service around the product? • How did the company handle the order, shipping and, if need be customer service?These aren’t formal reviews with rigid specifications or review criteria. They are informal andtheir language is conversational. Certainly there are agendas being met by some of the reviewers- some are shills for the companies that made or sold the products; others have a personalagenda - usually a vendetta. But when taken as a whole and read granularly, each of the productreviews and the picture painted of the product affects whether or not someone reading thereview would purchase the product. A study done by BigResearch in 2007 found that the mostpowerful form of influence is word of mouth (42% of respondents) - once again, conversationamong those who are “someone like me.” A 2007 study done by Doubleclick found that theInternet was the most influential medium among influencers (#1 at 39%) and non-influencers(#1 at 28%) alike.Even putting this data together in a linear way, you can come up with the most powerful sourcefor any business in how and where it engages its customers. A good guess would be word ofmouth via the Internet.Translate that in pragmatic terms. What enterprises see is that social networks that areprimarily review sites like Yelp or are customer feedback and action sites like Planetfeedbackhave become a primary source for the conversations among customer - out of the hands of thecompany. Continue to translate and you find that the use of blogs, text messaging, participationin threaded discussions on forums, comments on the social sites, even satirical videos, are partof the mix of tools they use to communicate their thinking - about those very same businesses.But a smart company, using similar tools, can use all this as a valuable place to learn from andengage with those same active customers.By themselves, CRM’s traditional tools don’t really provide the functionality to handle customerengagement in ways beneficial to the company but the addition of social functionality gives CRMa powerful new incarnation - Social CRM. It is Social CRM that provides the enterprises withwhat they need to intersect all this independent activity. If having customers matters to you,using Social CRM helps you keep and even acquire them - in good or bad economic times.CRM Morphs from the Traditional: What Differs?Just to be clear from the start, Social CRM does not substitute for traditional CRM - it extendstraditional CRM. Businesses still need to use technology, run processes, develop operationalstrategies, apply business rules, assign roles and responsibilities for those roles and develop theappropriate routing and workflow for their particular efforts. That hasn’t and will not change.Social CRM takes that traditional CRM set of functions and capabilities applicable to sales,marketing and customer support and extends it by integrating the social tools forcommunication with the customers - and to allow you to capture even richer knowledge of that 6
  8. 8. Social CRM Comes of Age, by Paul Greenbergparticular customer or that deal opportunity. This additional capability not only provides themeans to deeper customer insights but allows the customer to participate in the life of thecompany in ways that are mutually beneficial.To understand that, a quick look at the differences between traditional CRM and Social CRM-which are there - are in order.The DefinitionsHere’s the original definition of CRM as presented in CRM Magazine, October 2003 in a RealityCheck column by the author.“CRM is a philosophy and a strategy supported by a system and a technology, designed toimprove human interactions in a business environment.”Traditional CRM has been an operational, transactional approach to customer management thatwas focused around the customer facing departments - sales, marketing and customer service.How do process modification, culture change, automation through technology and the use ofdata for customer insight support the management of customers. Typically, the objectives fortraditional CRM might include increases in revenue or profitability, an increase in “selling time”,or campaign effectiveness, improved use of a sales process, or if you’re into customer service inparticular, reduction in call queuing time - as examples.Once you develop a CRM strategy and are able to plan appropriate programs, applying the newlydefined or redefined processes and a well chosen technology would support your ability tomanage those relationships. The customer’s benefit is better service, attention and support fromthe company. The more sophisticated companies use CRM to gain insight into particularcustomers.In theory, it was great and in practice, despite notable failures, as it matured and the thinkingabout it became clearer and the tools better, the success rates increased. The numberssupported that. But it didn’t start out that way. In 2002, when CRM was immature and stilltrying to find its legs, Gartner found that failure rates were apparently between 55% and 70%.Over the years the success rates have exceeded 50% - befitting a mature CRM market.The kinds of solid ROI that many companies saw, sometimes spectacularly so, keeps CRM as anincredibly popular strategic option for most companies. In fact, despite all the initial glitches, it’sbecome something of a business requirement. In July 2008, AMR Research released their "TheCustomer Management Market Sizing Report, 2007-2012.” Their estimate just for the CRMsoftware revenues in 2007 alone topped $14 billion, a 12 percent jump over 2006 revenues.They didn’t have the final numbers at the time they released the report. More amazing was theprospects - again this is just for software. They projected a market size of more than $22 billionin 2012, a 36% growth rate - with a poor economic outlook floating everywhere. If nothing else,this shows you the enthusiasm that CRM engenders - even the traditional operational side. 7
  9. 9. Social CRM Comes of Age, by Paul GreenbergSlightly less optimistic but still staggering were the Gartner July 2008 numbers which said thatthe 2007 CRM software license revenues were $8.8 billion and projected to be $13.3 billion by2012. These numbers are being revised downward due to the recession, but still remain, fromall reports, substantial.But Social CRM, often called CRM 2.0, grew from the changes in the empowerment of thecustomer. Thus, it differs with traditional CRM:“Social CRM is a philosophy & a business strategy, supported by a technology platform,business rules, processes and social characteristics, designed to engage the customer in acollaborative conversation in order to provide mutually beneficial value in a trusted &transparent business environment. Its the companys response to the customers ownership ofthe conversation.”This isn’t meaningless journalist’s wordsmithing. The need for a revamped CRM, Social CRM,implies the existence of a fundamentally different customer paradigm. It means that not only dothe historic operational and transaction-based capabilities of CRM have to come into play - butso do the social features, functions, processes, and characteristics that address the interactionsbetween the customer and his or her peers and the customer and the company with its suppliersand partners. Everything, including the associated technologies and systems, has to support thestrategies that companies need to address when it comes to customers and their recent bequestof empowerment.Rather than go through a series of convoluted paragraphs on CRM 1.0 and 2.0 distinctions,here’s Table 2, which gives you a quick comparative look at the granular differences betweentraditional CRM and Social CRM.Traditional CRM Features/Functions Social CRM Features/FunctionsDefinition: CRM is a philosophy & a Definition: Social CRM is a philosophy & abusiness strategy, supported by a business strategy, supported by a system and asystem and a technology, designed to technology, designed to engage the customer inimprove human interactions in a a collaborative interaction that providesbusiness environment mutually beneficial value in a trusted & transparent business environmentTactical and operational: Strategic: Customer strategy IS corporateCustomer strategy is part of corporate strategystrategyRelationship between the company and Relationship between the company and thethe customer was seen as enterprise customer are seen as a collaborative effort. Andmanaging customer - parent to child to yet, the company must still be an enterprise ina large extent all other aspectsFocus on Company <> Customer Focus on all iterations of the relationshipsRelationship (among company, business partners, customers) and specifically focus on identifying, engaging and enabling the "influential" nodes 8
  10. 10. Social CRM Comes of Age, by Paul GreenbergThe company seeks to lead and shape The customer is seen as a partner from thecustomer opinions about products, beginning in the development andservices, and the company-customer improvement of products, services, and therelationship. company-customer relationshipBusiness focus on products and Business focus on environments & experiencesservices that satisfy customers that engage customerCustomer facing features - sales, Customer facing both features and the peoplemarketing & support. whos in charge of developing and delivering those featuresMarketing focused on processes that Marketing focused on building relationshipsent improved, targeted, highly specific with customer - engaging customer in activitycorporate messages to customer and discussion, observing and re-directing conversations and activities among customersIntellectual Property protected with all Intellectual property created and ownedlegal might available together with the customer, partner, supplier, problem solverInsights and effectiveness were Insights are a considerably more dynamic issueoptimally achieved by the single view of and are based on 1) customer data 2) customerthe customer (data) across all channels personal profiles on the web and the socialby those who needed to know. Based on characteristics associated with them 3)"complete" customer record and data customer participation in the activityintegration acquisition of those insightsResided in a customer-focused Resides in a customer ecosystembusiness ecosystemTechnology focused around Technology focused on both the operational andoperational aspects of sales, social aspects of the interactionmarketing, supportTools are associated with automating Integrates social media tools into apps/services:functions blogs, wikis, podcasts, social networking tools, content sharing tools, user communitiesUtilitarian, functional, operational style and design also mattermostly uni-directional always bi-directionalTable 2 - Quick Look at Traditional CRM v. Social CRM (source: CRM 2.0 Wiki)Those are the functional differences between the two. Before we look at the tools and benefits,its important to understand the strategy.Social CRM Strategy 9
  11. 11. Social CRM Comes of Age, by Paul Greenberg Case Study: KarmaloopSocial CRM’s customer strategy and associated business models Boston-based Karmaloop is a clothingare those defined by customer engagement, not customer site that sells name brand clothes andmanagement. While traditional CRM used data to track accessories skewed toward 2o-transactions with the customer - be it sales data such as purchases somethings. These more traditionalor service data such as trouble tickets and the outcome - the holy product lines are infused with a healthy mix of independent designer creations.grail was the 360° view of that customer. That means a single Their business model is based on thecustomer record with all data pertaining to that customer - encouragement of the growth of aregardless of department - that is made available to all those who community- now some 800,000 strong -need to see it. But while that was considered the optimal who buy their clothes, design their indieachievement of a traditional CRM deployment, it is now a pre- lines and sell their clothes as members of “street teams.” The company encouragesrequisite for a truly successful CRM effort - though only 38% of community members to upload theircompanies claim to have it. creative designs, if they are inclined to do so, and then have the communityBut Social CRM has a different holy grail. Rather than one that is comment on them and rank them. Thetransaction-friendly and data driven, the new grail is “a company best of the indie designers are highlightedlike me.” This fits with a strategy for customer engagement. with profiles in an e-zine. There is a web- based TV show that discusses youthWhat it means is that each customer has the products, tools, fashion trends. They have an upcomingservices, and experiences he or she needs to sculpt an individual social network that is by invitation-onlyinteractive relationship with the company in a way that satisfies to trendsetters.each of their personal agendas. It means that the company is But the crown jewel for Karmaloop iswilling to be transparent enough and honest enough (goes by the their street teams. This is roughly oneterm “authentic” nowadays) to be trusted by that customer. So percent of their total community - 8000the company becomes a “company like me.” The experience that members who go and sell the clothes andthe customer has with the company is positive enough to make accessories offered online. They are given a wide range of creative options and arethat customer into at least loyal and at best, an advocate. encouraged to upload the fruits of their efforts to move the clothes with videosWhen a customer engagement strategy is effective, with the and photos - and, of course, thesuccessful support of social CRM tools and processes, there is a community is encouraged to rank andmutually derived benefit planned from the beginning. That rate and comment away on how they seesuccess is characterized by a fundamental shift in the relationship each street team doing.between the company and the customer from producer-client to The street teams are rewarded for twopartners. This is not a small effort. This is a major cultural and things - sales and communitybehavioral change in how the customers interact with a company. participation. It matters if they (or anyIf they see themselves as partners, they feel that they have a stake member of the community in fact) recruit to the community. It isn’t just anin the success of the company. They commit to the company in ordinary affiliates program. In return,ways that go well beyond customer satisfaction. They become they get cash, clothes and credits to buyadvocates for the company. As you can see in the Karmaloop case “stuff.”study (see sidebar), they can engage in community building and Karmaloop’s ROI? Not only communitycan even operate as an extension of the sales team for the growth, but that one percent drivescompany. fifteen percent of the company’s sales.But these engaged customers expect a return. They expect thatthey will have some visibility into the workings of the company sothat they can make smart decisions. They expect that they will 10
  12. 12. Social CRM Comes of Age, by Paul Greenberghave privileged and personalized treatment. That could take the form of greater discounts,loyalty program points, some other form of recognition; even access to management isn’t out ofthe question. They expect honesty also and while that may seem easy - it isn’t easy for mostcompanies - and they know it. As we roil through 2009, corporate senior management doesn’teven think they know their customer or that they deserve their customer’s loyalty.Strativity, a customer experience consulting firm run by industry luminary Lior Arussy, does anannual survey on how senior management thinks about its customers. The findings are sofrequently shocking that they are no longer shocking.The 2008 study found the traditional bit of lip service to CRM strategy with 80% of the surveyedexecutives saying that customer strategy is more important to their success than ever before.But what is not surprising, given the year over year results is the following from 2008: • 43.9% believe that their companies deserve their customers loyalty. • 42.6% responded that their companies products and services are NOT worth the price they charge. • 43.7% said their companies will take any customer that is willing to payThis outlook implies something rather disturbing, though not shocking - something thatreinforces the distrust of CEOs and marketing departments, outlined earlier.A huge percentage of senior executives doesn’t believe in their own efforts enough to think thatthey deserve a commitment from their customers and are desperate enough to say and doanything to get a paying customer.Harsh words, but the survey supports the contention. Add this to the already existing customerdistrust and you can see the obstacles here. This is why creating a transparent and authentic or,if you’d rather, open and honest, interactive relationship between a company and a customer isnot an easy thing to do. Given the above, how can you?Ah. This is where Social CRM shines. We’ve discussed the strategy - now for the tools.The Social ToolsTo fully engage customers and to increase the chances of success with those either business tobusiness (B2B) or business to consumer (B2C) customers, both the customers and theemployees feel that the tools are integral to the effort. Oddly, where customers do trust thecompany is if they use social tools.Two studies that came out in mid and late 2008 confirm this seemingly peculiar notion. Conereleased a study on “Business in Social Media” that found that 34% of Americans think thatcompanies should have a social media presence. Even more telling, 56% of the total respondents 11
  13. 13. Social CRM Comes of Age, by Paul Greenbergfelt a stronger connection to the company and its brand when they could use social media toolsto interact with that company and 57% of them felt “better served.”Contrast that to the Strativity study mentioned a short bit ago. If executives truly mean thatcustomer strategy is more important than ever before and a huge amount of those executivesthink that they aren’t doing much for customer’s commitment - then, given what the customersare saying, it would seem to be a no brainer to provide those tools to deepen the commitmentand serve them better.Social CRM Tools Benefit the EnterpriseBut because there is so much more than just brand commitment and even customer loyalty thata business has to consider, the combination of traditional CRM and integrated social tools iswhere the real benefits begin to show themselves. Figure 1 shows the types of tools that we’retalking about for social CRM and the infrastructure and technology platform that it needs to siton. It combines the operational strengths of traditional CRM tools with the power to reach outand capture external customer interaction - and directly connect with customers. But SocialCRM tools add an additional strength.If you focus on the middle pillar you’ll note that the traditional sales force automation,marketing automation and customer service tools (viewable on the left pillar) are replaced bysocial sales, social marketing, and customer service 2.0 tools. Replaced might not be the rightword here - enhanced is perhaps better. The mid-pillar tools are geared toward optimizing thesuccesses for varying enterprise departments. 12
  14. 14. Social CRM Comes of Age, by Paul Greenberg Transaction Intersection Interaction (Operational) (External) Feed • Blogs and podcasts • Wikis • Salesforce • Communities • Blogs and podcasts automation (e.g. • User generated • Twitter/IM opportunity content (employee • Social networks/ management) ratings, rankings, communities • Marketing automation comments) • Forums/threaded (e.g. campaign • Enterprise discussions management) widgets/gadgets • User generated • Customer service • Internal messaging content – video (call center) • Text/web behavior upload, comment, • Dashboards analysis ratings, rankings • Features and • Social sales tools • Social tags and functions (e.g. opportunity social bookmarks • Business intelligence optimization) • Features, functions, • Social marketing characteristics tools (e.g. social network outreach) • Customer service 2.0 tools (e.g. Twitter service issues analyzed) Enterprise SOA: web services (or REST/WOA) Integration/APIs Master Data Management (MDM) Business rules engine Workflow RSS Feeds/Subscription services Traditional Social Figure 1: Social CRM Tools and Foundation 13
  15. 15. Social CRM Comes of Age, by Paul GreenbergSocial SalesThe traditional sales force automation tool has been a tracking tool. Typically, it trackedaccounts, leads, contacts, opportunity and gave sales management a view of each and all of thesales pipelines that were out there, and depending on the sales methodology used, the chancesof success. But these were pat formulas that were built into the methodology as often as not -and based on what steps you had achieved. Social sales tools far exceed that. They are designedto optimize the rate of success for deal closure by doing a number of things that will give you abetter “best guess” than ever before. So they involve for example: 1. The combination of internal histories with customers that can define similar deals and how they succeeded with Social Marketing Metrics external unstructured data that is pulled not only from Social Marketing implies a whole new set the traditional Reuters/Hoovers corporate information, of metrics. The percentage of responses of but non-traditional sources such as Jigsaw or profile a customer to a compaign are no longer information from LinkedIn or Facebook. This is then sufficient. Metrics will have to weigh the analyzed and compiled into a much richer, more emotional and behavioral responses of individual customers and take the comprehensive view of the opportunity and the factors temperature of entire communities. While that might affect it - including the individuals and their still nascent, PricewaterhouseCoopers profiles. (PwC) came up with some that present a 2. Rather than the more traditional guesswork involved in useful start, what they call, “hearing whispers.” identifying which presentations and which documents are best when dealing with a particular client, a combination 1. Volume –The amount of algorithms and user generated content - meaning the something is mentioned v. its rankings, ratings and comments from the other internal historic pattern. sales professional - and perhaps the marketing staff, give 2. Tone – Is it positive, negative, a much better idea of the appropriate choice of neutral? presentation or document. 3. Coverage -The number of 3. Collaboration via wiki on a response to a request for sources generating a particular proposal (RFP) and then the generation of that RFP conversation response once the final result is signed off on, so that it is ready for delivery. 4. Authoritativeness – A qualitative ranking of the source’s reputationSocial MarketingSocial Marketing tools are still in their early incarnations. Source - “How Consumer Conversation Will Transform Business” – PwC, 2007 1. Outreach - These tools are designed to interact with Facebook or MySpace and similar huge membership, high activity volume social networks. The tools are focused on offer optimization that are based on how they interpret not just the activity of the individual on the social network, but the data in his or her profile. 2. Mobility - this is the one with incredible promise. Imagine giving your prospective customers access to the 14
  16. 16. Social CRM Comes of Age, by Paul Greenberg catalog of goods and services offered by your retail operation via their iPhone or Blackberry or whichever phone they use (anytime, anywhere on any device). Not only will they have access to the comments and ratings of other customers for each item and can add theirs, but their real time activity is tracked and an optimized offer is texted to them, based on their histories and their real time activity. This all takes place on a mobile device.Customer Service 2.0Traditional customer service is easy to spot. It starts with a complaint to a customer servicerepresentative via a phone call to a call center rife with automated menu functions or via theInternet. While the problem may be eventually solved, the customer is usually more disgruntledthan when they filed the complaint. It could be that the automated system was an impedimentrather than a benefit or the person they spoke with was inadequately trained. One of thetraditional ways of dealing with this CRM problem is to reduce the amount of time in callqueues. But customer service 2.0 tools are based on a markedly different archetype: 1. Services that scan communities that range from Facebook and Planetfeedback to Twitter to find customer complaints and then using analytic tools, determine the emotional depth - good or bad - of the complaint. Based on business rules and workflows that are embedded into the service application, the outcome triggers an alert sent to the appropriate person in the chain of command. 2. If a customer has an issue and is willing to allow the community of other customers to help solve the problem, the trouble ticket is opened up for the community as one of the solution providers. If an answer is found, it becomes part of the company customer service knowledgebase.What is remarkable about social sales, marketing and customer service 2.0 is that none of thetools and their benefits are scenarios or future wishes. Each one exists now. Some in publicbeta, some complete product - all functional and all with customers. Social CRM tools incombination with traditional CRM tools literally are the link between you and your customerfrom here forward.The Social CRM Value PropositionIf you have a successful CRM strategy and use the right tools to support the strategy, then thevalue derived can be potentially remarkable. But, in order to actually extract the value that youmight be looking for, it is important to understand what the benefits might be - and what theywon’t be.Social CRM provides you with the tools for true insight into customers that can be used tofacilitate successful sales and better relationships with customers. It also provides the 15
  17. 17. Social CRM Comes of Age, by Paul Greenbergcapabilities for the customer to interact with you in a more effective way which transforms howthe customer sees you and what the customer wants to do with you.InsightTrue insight into your individual customer has been an elusive goal for as long as CRM has beenaround. What normally was called “insight” was actually the accumulation of customertransaction data into a single record - the 360° view of the customer - and was seen as an endunto itself. This is coherent with the value proposition of traditional CRM - a data-driven,process driven methodology, strategy, and business model. But, somewhere along the way, thissingle customer record became a substitute for insight.Social CRM provides you with what you need to get true customer insight -which means insightinto an individual, an account or into the combination of activities and objects needed to makean opportunity into a successful deal. It draws on history using internal and externalknowledgebases, but also involves the intelligence of the others at the company. This is donetypically through the use of tools like wikis, or what is universally called user generated content(UGC) which takes the form of comments, ratings and rankings more often than not. So notonly is valuable data parsed but then the emotional and behavioral characteristics expressedthrough the UGC are taken into account, given a much richer picture of the subject matter inquestion. Typically there are three or possibly four pieces to gaining the level of insight neededto deal with the contemporary customer successfully. 1. Data – This includes the now standard information that the company can gather through the transactions of the customer with the company. That means purchase histories, returns, visits to ecommerce or website and time spent on different pages; marketing response to campaigns and customer service inquiries and problems, among many others. This can also be data gathered from external sources about the company/prospect. So not only would data from Reuters be captured on the financial status of a company, but data about the company from threaded discussions, and social networks and user communities would also be parsed to add a much more important dimension to the more static transaction data and pure corporate information. 2. Profiles – This is the “personal” information that is now so important in gaining customer insights into how a customer wants to interact with the company. This could be their movie and literary interests, their hobbies, their “style” likes and dislikes. It means their unstructured text comments in a community or social network e.g. Yelp for a restaurant or a geographically based retailer. With the growing interest in micro segmentation – the deep dive into the customer’s lives (without being intrusive) to understand their style and selection choices for predicting future sometimes apparently unrelated behaviors, profiles become essential for finding differentiable information about the customer you need. 3. Customer Experience Maps - Customer experience mapping fosters the insight into the customer because it overcomes the usually incorrect knowledge about the customer’s thinking. Typically, if you ask a marketing department about the customer, they can tell 16
  18. 18. Social CRM Comes of Age, by Paul Greenberg you what the customer is thinking. However, their “insight” is more often wrong than not, because it’s based on presumptions about the customer - either due to some generalized demographic or because of some survey that was taken in an environment that has nothing to do with either the natural interactions of the customer and the company at any one of a number of touchpoints or the actual thinking of the customer on the interactions themselves. They presume for the customer. However, customer experience mapping examines the granular interaction of individual customers in multiple environments at multiple touchpoints. It also looks at the expectations of the actual customers; the results of the interaction based on the expectations and the actual weight the customer places on the individual results. In other words, what the customer actually think. 4. Social Network Analysis - This is the breakdown of who is in a decision making position and who is influential and how they interact. A look at the interactions among social groups and individuals sometimes reveals influencers who otherwise wouldn’t be obvious, yet may be key to closing a deal. The visualization of this is called the social graph. This is particularly valuable in B2B environments. 5. User Generated Content - UGC is perhaps the newest piece in the insight puzzle. The deep store of comments, ratings, rankings and even rich media content that gives you further knowledge about your prospect or opportunity has been one of the untapped founts of invaluable wisdom that supports the other required components for insight.Social CRM tools provide the means to capture the data, the profiles and to create theexperience maps which in turn help develop the real insights into customers that provide what isa genuinely personalized and delineable experience for individual customers. Historically, CRMcouldn’t do this. It could gather all the transactional data - but the emotional and behavioralknowledge of the customer that the profiles and the experience maps supply weren’t part ofCRM’s value proposition - until now.If used well, the insights gained, will support what a sales person in particular but also staffmember interacting with a customer in general, craves. That would be an increase in positivereputation, which can lead to an increase in influence, which then can allow the newly reputableand influential salesperson to be more persuasive - because they are more trusted.InteractionEnhanced insight is only one of the two active improvements that social CRM provides. Asidefrom its solo value, it plays a valuable role in the propagation of the other improvement -customer/company interaction. Enhanced insight leads to trust which leads to the customer’sdesire for either further or deeper (or both) interaction. But there is more to it than that. 17
  19. 19. Social CRM Comes of Age, by Paul GreenbergTwo of the guiding characteristics of social customer strategy are corporate transparency andauthenticity. Customers require greater visibility into both the day-to-day workings of thecompanies they have an interest in and in acquiring the information they need to makeintelligent decisions about their dealings with the company. They also require the capacity tohonestly interact with the corporate leaders and appropriate parties without a lot of bureaucraticinterference.While there are certainly nearly countless ways to do this, Social CRM provides a framework forinteraction that allows not only the customer what they are looking for but also gives thecompany actionable data in return - which of course provides for greater insight.The kind of interactions that customers are looking for are those that give them what they needto achieve their particular personal agendas. This goes beyond the normal utilitariantransactions where customers come to buy a product or service. These will still exist, but theydon’t often provide enough interactions and relationship to create the optimal customer - anadvocate who will speak for you.Customer engagement strategies serve the need of customers who choose to interact with acompany and expect that in return, they will get the products, services, tools and experiencesthey need to achieve their agenda. That agenda could be momentary - to buy something with aparticular configuration at a certain price that they would receive within a certain timeframe. itcould be an ongoing subscription-based service such as on demand salesforce automation thatmight grow to multiple modules including customer service or marketing within a year or so.But these interaction strategies also serve the need of the sales person who is looking to turn alead into an opportunity or an opportunity into a deal.It also serves the needs of customer service when the quick and accurate resolution of troubletickets and real world problems of their customer become paramount, not just to maintain thecustomer but to sustain the good reputation of the company. Because it is easier than ever forone person either accidentally or deliberately to damage the reputation of the company as well.Just ask United Airlines. In September 2008, an erroneous Google search led to Bloombergpublishing a story that United had filed for bankruptcy. While true, this Google search hadfound a 2002 Chicago Tribune story and it was listed as current. Within hours, United’s stockprice dropped 75%. Highly damaging to a company already damaged.However, trusted relationships, while perhaps not able to stop the error, go a long way tomitigating problems and overcoming issues - in addition to propagating the good about acompany. Continued interactions with customers that have great outcomes will reduce the badand increase the good between company and customers.Concrete Benefits Are Alive and Well - NowOkay all of this is good, but isn’t it hypothetical? There are clear cut benefits derived throughthe use of Social CRM tools. But is 2009 a point where a look back will see benefits from SocialCRM outcomes? 18
  20. 20. Social CRM Comes of Age, by Paul GreenbergApparently it is.Coleman Parkes Research, in a study released by Avanade in 2008 called “CRM and SocialMedia: Creating Deeper Customer Relationships” found that companies were seeing real worldbenefits even a mere three years into the existence of Social CRM.Look at these numbers: • 78% found that integrating CRM and social media led to improved feedback • 75% found that it created a perception of the company as forward-looking • 71% found that it led to a reduction in time to resolution for support issues • 66% found it led to greater customer satisfaction • 64% found it led improved market reputation • 40% found that they could see specific improvements and increases in salesSocial CRM is not mature yet but it is evolved enough to give you the understanding of the socialcustomer, the strategies you need to engage that social customer and the tools that will allowyou to optimize your successes with that customer - in healthy economic times or during arecession.SummaryThis is it. End of story - this white paper’s story that is. The story of Social CRM is justbeginning as customers continue their fast-paced jog on their road to owning their ownrelationships with companies. Social CRM gives the companies the strategies and tools torespond to those customers. You ready? 19

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