Social networking for Customer Contact — Frost & Sullivan


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Social networking for Customer Contact — Frost & Sullivan

  1. 1. Social Networking for Customer Contact—Market Insight Market Overview Introduction Social networking has been and continues to be a cultural phenomenon. It is quickly also becoming a business phenomenon. Increasingly, current and prospective customers are using social networking to communicate about the products and services they buy or intend to buy. These peer-to-peer or customer-to-customer communications are sometimes happening instead of contacting the companies who offer the products and services. Leading enterprises have recognized the importance of tapping into these customer-to-customer communications and are following a number of paths to learn, participate, support their customers and in other ways leverage these social conversations for their business' benefits. Various departments in enterprises see opportunities with social networking, including sales for lead-gen, public relations for brand promotion/defense, and product management for product feedback and ideas. Leading enterprises are also addressing social networking for the purpose of customer service. Customers helping each other on social networks could be viewed as a value add by enterprises—"they are answering each others questions and it is not costing us anything". But, most are viewing this activity as a disruptive force in customer service or as a proof point for the movement or power shift from the enterprise to the customer —"they are not coming to us directly because we have lost their trust or failed them in some other ways". Early adopter enterprises are engaging social networking for customer service in three primary areas. One is establishing customer communities or forums which support on-line virtual customer communities where customers and enthusiasts can ask each other questions and share experiences with the enterprise's products and services. Another is through the use of listening platforms, which are applications for monitoring social conversations on the Internet and elsewhere. Through monitoring social conversations an enterprise can get an early warning about customer service issues. And the third is building contact center applica- tion support for processing inbound and outbound customer contacts via social media, such as Twitter messages. #9857-76 © 2010 Frost & Sullivan 1
  2. 2. The business cases for these social networking activities in support of customer contact are just emerging. Actual costs for establishing and supporting a customer community vary greatly. Likewise, benefits for customer communities vary, but primarily based on calls deflected (answered in the forum) most enterprises are realizing a payback within 12 months. Business cases for monitoring of social conversations are less clear. But, with or without clear business cases support for social networking has become a high priority for early adopter enterprises, particularly large B2C enterprises. Scope and Methodology This research service presents a picture of the use of social networking for customer contact in North America in 2010. This research service also outlines the key trends, drivers, chal- lenges and restraints observed in the social networking for customer contact market during 2010, along with the Frost & Sullivan strategic recommendations for growth initiatives. The following research methodology was employed for this research service: Frost & Sullivan primary interviews—Frost & Sullivan conducted extensive interviews with the key market participants in the North American social networking for customer contact market to understand key dynamics and other information required for a comprehensive market analysis. Secondary research—Secondary research consisted of extensive reviews of press releases issued by market participants, industry publications, SEC filings, as well as Frost & Sullivan's in-house databases. Definitions Call Deflection—direct—the avoidance of customer telephone calls to an enterprise's contact center—resulting from potential callers posting question/receiving answers on customer community/forum—indirect—the avoidance of customer telephone calls to an enterprise's contact center—resulting from potential callers finding answers to questions on customer community/forum or web site without asking question; also referred to as savings from search. Customer Communities and Forums—on-line virtual community where customers and enthu- siasts can interact with each other including: search for information, post questions, answer questions, offer advice, share experiences. Example forum application vendors: Lithium Technologies, Get Satisfaction, Consona, and RightNow Technologies. #9857-76 © 2010 Frost & Sullivan 2
  3. 3. Listening Platforms—applications capable of mining a wide variety of on-line sources, such as social networking websites and blogs, to extract enterprise brand and product references. Example listening platform vendors: Radian6, Nielsen BuzzMetrics, and Visible Technologies. Sentiment Analysis—language processing and text mining to determine the attitude of a speaker or a writer with respect to a topic; also referred to as opinion mining Social CRM—the intersection of social networking and customer relationship management Market Trends Explosive growth in the use of social networking Over the past several years there has been gradual and since 2009 an explosive growth in the use of social networking on the Internet. This is part due to the advertising-funded model many of the most popular social networking sites operate on. Some recent statistics about the leading social sites are: Facebook 300 million active users 50% log on everyday fastest growing demographic—over 35 years old supports 69 languages 70% of users —outside the United States Twitter 50 million tweets/day 75 million users 20% contain product or brand references LinkedIn 48 million over 200 countries; 1 joins each second 50% of members—outside the United States executives from all Fortune 500 companies are members #9857-76 © 2010 Frost & Sullivan 3
  4. 4. YouTube serving 1 billion videos per day every minute, 20 hours of video uploaded Increasing relevance of social networking for enterprises Some social networking activities are clearly business-focused, such as participating in LinkedIn for maintaining/growing business contacts. However, most appear to be purely-social—meeting new people, reconnecting with old friends, and sharing experiences with other like-minded people. While the purely-social use of social networking continues unabated, increasingly so people are using social networking to ask each other questions and share experiences about the products and services they buy and are interested in. Various groups within enterprises, particularly large B2C enterprises are beginning to see opportuni- ties for their activities from social networking. Sales groups see the opportunity to find new customers, public relations groups see the opportunities for brand promotion, product devel- opment groups see the opportunity to get product feedback and new ideas, and customer service groups see both the cost savings values of customers answering each others questions and the imperative to connect with this peer-to-peer customer support activity. Centers of excellence for social networking are emerging in leading adopter enterprises. The location of these centers of excellence varies by industry and by company, but are often centered in the public relations and marketing groups with customer service as a key participant. Growing availability of SNCC solutions There is a growing availability of customer service-related social networking solutions. In broad categories there are: a) forums for supporting online virtual customer communities b) listening platforms for monitoring social conversations on the Internet and elsewhere c) applications for processing inbound and outbound customer contacts via social media, such as Twitter messages. Surrounding the broad categories are a number of other related applications such as knowl- edge bases for containing the knowledge created in customer communities, analysis tools for processing the content of social conversations and determining customer values and senti- ment, and reporting/dashboard tools for monitoring social activities. At this point, many of the social networking applications for customer contact are only available as hosted or SaaS-based service offerings. These would include customer forums and social conversation listening applications. #9857-76 © 2010 Frost & Sullivan 4
  5. 5. Market Challenges Non-business Perception of Social Networking There is a wide-spread perception that social networking is a cultural phenomenon engaged in primarily by young people and has little or nothing to do with business. Social networking is also viewed to be an employee time-wasting activity and a potential security risk for company confidential information. (Source: recent Frost & Sullivan survey of C-level executives) Unclear Business Case for Social Conversations Monitoring Even as business cases for supporting customer communities and forums are very good, the business cases for the monitoring of social conversations are not as clear. Most social conversation monitoring business cases seem to be based on difficult-to-quantify intangibles, such as the avoidance of low-probability, but very high-cost brand damaging incidents, or the feedback value of product/services social commentary. While this justification is sufficient for an increasing number of enterprise public relations groups to engage in monitoring it has not been sufficient for most customer service organizations. Enterprises' Lack of Social Strategies It is still early days for social networking and its value for business. In a great many enter- prises the awareness of the potential of social network and the imperative to engage with it are just emerging. Departments within enterprises view the opportunities differently. For example, sales sees lead-gen opportunities, public relations see brand promotion and defense, product management sees crowd-sourcing product/service feedback and ideas, and customer service sees another channel for support. Very few enterprises have pulled together these departmental views/opportunities to create enterprise social networking strategies or programs. Economic Conditions The current down economy in which both enterprises' capital budgets are tight and credit hard to get makes investments in new technologies and applications particularly challenging. #9857-76 © 2010 Frost & Sullivan 5
  6. 6. SMB Market Segment Challenges Selling customer contact solutions to SMBs has its own challenges, including products/serv- ices must contain SMB-appropriate levels of functionality, must be easy-to-use, low-cost to support, priced competitively, and sold/serviced by local-to-the-SMB suppliers. Most, certainly not all, of the currently-available customer service-related social networking solu- tions have been designed for large enterprises and are being sold and serviced directly by the vendors. In addition, these solutions often require significant professional services engage- ments to configure them to the enterprises' requirements. This last issue is not untypical of a new technology or application, but nevertheless is an affordability challenge for SMBs. Market Drivers G row i ng Awa r e n e s s o f S o c i a l Ne t wo rk i n g ' s P ow e r To some extent the awareness of social networking's relevance to business has been fueled by some very well-publicized public relations disasters, such as negative videos posted on YouTube. But, increasingly social networking's positive impacts are in the news and as the use of social networking grows more and more business people are becoming personally aware of its possibilities for business-related communications. In addition, there is a growing library of well-documented business success stories for the support of customer communities and forums which document both hard-dollar cost savings and many other less-tangible benefits. Customer Retention One important justification for enterprises' investments in social networking programs is the desire to better support customer retention initiatives. Providing excellent customer support across customer interaction channels, including social networking, is one aspect of enter- prises' customer retention strategy. Competitive Advantage Increasingly enterprises, particularly those in the most mature and globalized industries, are relying on excellent customer service for competitive advantage. These competitive strategies are driving investments in social networking for customer service programs and functionality. #9857-76 © 2010 Frost & Sullivan 6
  7. 7. Customer Experiences As with the customer retention and competitive advantage drivers, many enterprises are increasing their focus on tracking and providing excellent customer experiences for their customers and prospects. Support for social networking and its seamless linkage with other customer interaction channels is a natural extension of a comprehensive customer experience program. Pro-Active Customer Contact Leading companies are discovering the strategic business value of comprehensive approaches to pro-active customer contact. Again, pro-actively addressing customer questions and issues which are expressed in social networking settings is a natural extension of a comprehensive pro-active customer contact program. Market Restraints Common View of Contact Center as Cost Center The mission of most contact centers is customer service, not revenue generation. These customer service-focused centers are typically operated as cost centers. The perception that social networking has more to do with lead-gen, and brand promotion/defense than customer service is one restraint. But, even for those who see customers searching for answers on social sites rather than contacting customer service, the business case for reaching out in the social world to address those questions/issues is a hard one to make. This is particularly true for cost-focused organizations which have spent years trying to reduce incoming calls, such as by deflecting them to self-service. Enterprises which don't see the value of being pro-active with their customers won't see the value in reaching out to address customers in the social world. S N C C P o i n t S o l u t i o n s N o t Pa rt o f Fo r m a l C u s to m e r Service Most social networking for customer contact solutions available today are point solutions, such as for customer communities, or social conversation monitoring/analysis. These point solutions are being integrated with early adopter enterprises' contact center applications, but are not yet generally available as pre-integrated contact center solutions. #9857-76 © 2010 Frost & Sullivan 7
  8. 8. Reluctance to Add New Customer Interaction Channels Almost all enterprises support customer contact via telephone calls. About three-fourths also support customer contacts via email and about half support Web collaboration. Far fewer support other channels of customer interaction, such as video, and text. No doubt some enterprises' contact centers will add support for social media, such as inbound and outbound Twitter messages, but most will not—at least for the foreseeable future. The reasoning for not supporting Twitter messages is a bit like the "chicken and egg" parable—can't justify supporting Twitter messages because we don't get many vs. we don't get many Twitter messages because we don't support that channel. As unlikely as it seems today with the explosive growth of social networking, some might wonder if it is a fad which will decline over the next few years. End User Budget Constraints End-user budget constraints will continue to be a significant restraint for investments in social networking support. This is particularly true for enterprises which do not view their customer service as strategic to the business. Lack of Understanding of or Focus on Customer Service Requirements Many of today's social networking support vendors have limited knowledge or experience with customer service. This is the result of them being recent startups with a primary focus on other uses of their applications, such as brand promotion/defense, lead-gen, customer loyalty, and internal enterprise uses of social networking such as collaboration. Business Case for Customer Communities Customer Community Benefits Customer communities or forums support customer-to-customer communications.The bene- fits for the participants include: Receive answers to questions from knowledgeable customers Receive answers about 3rd-party and off-label uses of products Learn from other customers' experiences Share experiences Help other customers – gain status in customer group #9857-76 © 2010 Frost & Sullivan 8
  9. 9. The benefits for the enterprise supporting the customer community include: Reduce support costs (customers help each other) Grow/strengthen knowledge base Promote customer loyalty, and Receive feedback on products/services. Customer Community Costs Actual costs for establishing and supporting a customer community varies greatly, depending upon many factors including: the functionality supported, the size of the community, whether it is integrated with the enterprises other business applications. The categories of costs for a customer community can include the following: Start-up Costs community web design community integration with enterprise's customer service and other business applications community integration with knowledge base training project management community manager IT support community launch activities, and community planning/policy-setting On-going Costs subscription fees for forum hosting vendor community manager community monitors community KB manager IT support #9857-76 © 2010 Frost & Sullivan 9
  10. 10. Strategic Considerations End User Recommendations For enterprises not already supporting social networking for customer service, some recom- mended beginning steps to take: Investigate your enterprises current social activity by conducting a trial of one of the listening/monitoring social conversations services. The results will provide input to your next decisions on what to do and how urgently. – How many of your customers/target prospects use social sites? – What are they saying about your products and services? – How much of these conversations are customer service-related? – Track competitors' social conversations—look at the same topics, notice how actively your competitors are engaging in social conversations. – Analyze patterns (growth rates, types and frequency of references…) Ask your contact center vendors about their plans to support social networking Find out which other departments have or are planning social support? Consider business cases for adding social networking support Consider listening to social conversations as part of your overall "voice of the customer" initiatives #9857-76 © 2010 Frost & Sullivan 17