Social CRM: Towards Enhanced Customer Relationship Management


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Social CRM is the connection between social media and a company’s internal and external communication systems. The question for companies is no longer whether to engage with social media, but rather how to engage with it.

Companies that have already started implementing Social CRM strategies rapidly see the impact on their internal processes. Social CRM aims to solve the fundamental dilemma of how to make human-scale marketing “scalable”.

The combined expertise of Atos Consulting and MSLGROUP sheds a new light on Social CRM strategy implementation and its impacts.

Published in: Business, Technology

Social CRM: Towards Enhanced Customer Relationship Management

  1. 1. Social CRMSocial CRM Towards enhanced Customer Relationship Management
  2. 2. Social CRM 55
  3. 3. Table of contentsForeword 4Executive summary 5Introduction 6B Social CRM: a reality today, an imperative for tomorrow 81.1 A fundamental trend 81.2 A necessity 101.3 A threat? 11C Social CRM: an opportunity for companies 122.1 Companies must play an active role in the debate, not just be a part of the ecosystem 122.2 The virality principle affects every department within a company 13D Revolutions sparked by Social CRM 183.1 Augmented customer knowledge 18 3.1.1 Information ownership policies 18 3.1.2 n endless flow of information – using it will be complex A but not impossible! 193.2 Social influence as a factor in listening to the customer 203.3 Social influence as a factor in augmented customer segmentation 22 3.3.1 Participation: a social influence criterion 22 3.3.2 Social influence: a new segmentation criterion 23E Getting to grips with Social CRM 284.1 Understanding the change in Customer Relationship Management processes 284.2 In-depth modeling of the organization of your company 294.3 Evaluating the effectiveness of Social CRM 34 4.3.1 Who still talks about ROI? 34 4.3.2 Delivering the right information to different audiences 35 4.3.3 eturn on objective (ROO) and key performance indicators (KPI) R as tools to measure “Social ROI” 36F Social CRM technologies are mature 405.1 The challenge: intelligent integration of Social CRM and traditional CRM 405.2 Overview of existing technologies 42G Essential elements of a Social CRM strategy 446.1 The 5 fundamentals of Social CRM 44 6.1.1 Reciprocity 44 6.1.2 Reactivity 44 6.1.3 Consistency 45 6.1.4 Transparency 45 6.1.5 Engagement in a true corporate approach 456.2 The truth about a few Social CRM myths 466.3 Some strategic advice to get you started 47H Social CRM tomorrow 487.1 The challenge of identifying customers 487.2 “Your products are social” 487.3 “Your staff is social” 49 Conclusion 50 About 51 Acknowledgements 52
  4. 4. Foreword “Markets are conversations” was the prophecy of the Cluetrain manifesto1 at the end of the last century. In this forward-looking book on marketing, published when the Internet was in its infancy, the authors were already highlighting the inexorable move towards a rebalancing of the power struggle between a company and its customers.DIGITAL IDENTITY Ten years later Paul Greenberg, regarded as one of the pioneers of CRM, defined the emer-Stanislas Magniant, gence of Social CRM as “the company’s response to customers seizing power and domina-Head of Digital, EMEA ting the conversation”. We have come full circle: consumers have taken control. Brands areMSLGroup the subject of thousands of simultaneous conversations and must fight to make themselves heard. Twitter account In the extremely fluid and unstable world of social media, Social CRM is not the latest marke- ting “trend” or simply an elevation of traditional CRM, kitted out with a fashionable adjective.@ msl_group It is the adaption of companies’ organization and brands’ communication to a new Customer Relationship Management landscape. E-reputation and community management – still very Mail new and evolving disciplines – are generally perceived as communication-related and activities. Social CRM goes further: it has made its way into the heart of current thinking in Commercial Management, Customer Services, Communications, IT, etc. Sites Social CRM aims to solve the fundamental dilemma of how to make human-scale marketing “scalable Social CRM is changing the scale and perspective of brand involvement in social media. What was once a Communications department issue is now becoming an organizational challenge for any company that claims to be “customer-centric”. Social CRM is the connec- tion between social media and a company’s internal and external communication systems. The question for companies is no longer whether to engage with social media, but rather howDIGITAL IDENTITY to engage with it. Companies that have already started implementing Social CRM strategies rapidly see the impact on their internal processes.Eric Lévy-Bencheton, Social CRM aims to solve the fundamental dilemma of how to make human-scale marketingPartner, Sale Marketing / Customer “scalable”.Relationship Management practice, The combined expertise of Atos Consulting and MSLGroup in Communications and Manage-Atos Consulting ment Consultancy sheds a new light on Social CRM strategy implementation and its impacts. Compte Twitter Stanislas Magniant, Head of Digital, EMEA, MSLGroup Eric Lévy Bencheton, Partner, Practice Sales Marketing / Customer Relation Management,@scrm_elb Atos Consulting Mail White paper translated from the French “Social CRM : vers la Relation Client augmentée”, published Nov. 2011. Sites 1 2 “Once a company designs how it will engage with customers, it needs the organizational capabilities to deliver: adding staff, building a social-media network infrastructure, retooling customer care operations, or altering reporting structures” (McKinsey Quarterly Social CRM
  5. 5. Executive summaryThe recent explosion in social media usage, combined with the transformation of the consumer into a“consum’activist”, has permanently changed the relationship between a company and its customers.These days, the customer experience is often made public: “consum’activists” no longer hesitate to usesocial media to voice their views. Their views have a major impact on the purchasing decisions of otherswithin their social circle and companies are unable to control them.This loss of control means that companies must change in order to stay in touch with their customers – thequestion is not whether they should change, but how.Following the example set by customers, companies have positioned themselves on the social medialandscape. This is creating a large number of access points for consumers, who do not hesitate to makethemselves heard.There is a very small window to adapt: we are facing a tidal wave that is moving much faster than previousCustomer Relationship Management evolutions during the 1990s or the more recent emergence of the Web.You only have two to three years to act.We are facing a huge new phenomenon, but also new opportunities: when the social media virality principleis utilized to its full extent, what you lose in terms of control, you gain in terms of quality and frequency of therelationship.Who has not dreamt of obtaining better information, improving customer segmentation according topersonal influence, and working on the effectiveness of Communications strategies?Who has not dreamt of continuously securing business opportunities, and more qualified ones? Who hasnot dreamt of improving their customer service handling by capitalizing on new social channels?In order to survive the rapid upheavals created by social media and to capitalize on these opportunities,companies must ask themselves serious questions and update their technology accordingly to ensure theyare ready for this new revolution - Social CRM. Social CRM 5
  6. 6. INTRODUCTION More and more companies are taking a stand on Social CRM. There is a proliferation of press articles and blog postings on the subject1. But it is still difficult to find a definition of Social CRM that everybody can agree on. This is no doubt the nature of great changes: we experiment before we theorize. The document you are now reading is intended to be practical rather than academic. To delineate the subject more clearly, we offer a frequently-used definition of Social CRM to make it easier to understand the initiatives in this area and how to get the most of it. It is Paul Greenberg’s2 definition, a recognized authority, speaker and experienced practitioner in the field of CRM3: “Social CRM is a philosophy and a business strategy supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to pro- vide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.”4 No trace of the words “Web”, “social network”, “blog” or “2.0” in this definition. But Social CRM is unequivocally linked to the explosion in content production by Internet users and to the relationships established between them via social media. It has merely detonated an inevitable phenomenon: markets have become conversations and, in the future, conducting a relationship with customers will mean entering this realm in order to engage in a dialogue with them. Beyond the “communication” dimension, Social CRM revitalizes the entire relationship between companies and their customers. This is based on a deep-seated change in brand attitude (highlighting transparency, sincerity and even a certain form of modesty) and on new types of relationship that place particular emphasis on this idea of a conversation. A company that wants its engagement with Social CRM to succeed must first ask itself some searching questions about processes, organization, technology, and financial and human resources. This is the “philosophy and strategy” element of Paul Greenberg’s definition. There is no room for improvisation: just as there are firmly established methods and processes for managing telephone calls or incoming e-mails, there must be methods and processes for Social CRM. Augmented Customer Relationship Management does not mean having a Facebook page or Twitter account purely for one-way communication, or to imitate competitors. This document uses analyses of flagship initiatives to highlight the innovative nature of Social CRM by demonstrating how it can transform or complement other CRM channels. First we will see that Social CRM is already a reality, done by some companies on a daily basis. We will explore the reasons that motivate companies to enter into these new conversations with their customers. This will enable us, as a second step, to understand what Social CRM is changing in terms of the practice of Customer Relationship Manage- ment. Finally, we will discuss the various best practices that are beginning to emerge in this field and the traps to avoid. In the course of our analysis, we will strengthen this overview of Social CRM by including the views of SCRM experts and practitioners, companies, tool editors, consultants, academics, etc. Together they will provide, if not the keys to the door, then at least the tools for reflection so that your organization too can successfully engage in fruitful conversations with customers. The term “Social CRM” has been identified as a trend in searches carried out on Google since April 2010: 1 2 3 Author of “CRM at the speed of light, Social CRM 2.0 Strategies, Tools, and Techniques for Engaging Your Customers”, McGraw-Hill, 2009 (4th edition). 4 «CRM is a philosophy a business strategy, supported by a technology platform, business rules, workflow, processes social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.» 6 Social CRM
  7. 7. What is the difference between social mediaand social networks?Before discussing Social CRM in more details, it is important to point out the difference betweensocial media and social networks.Social media are tools which facilitate interactions, collaboration and sharing of contentbetween Internet users. Social networks focus in particular on relationships between an indivi-dual and his or her contacts.They are a sub-component of the large toolkit represented by social media. THE MAIN TYPES OF SOCIAL MEDIA SOCIAL MEDIA Social Multimedia Blogs Forums sharing Collaborationnetworks tools platformsFacebook, Youtube, Quora, Wordpress, Twitter, PhpBB, Dailymotion, Yahoo Answers, Tumblr, Google+, Bbgraph, Vimeo, Wiki-Answers, Blogger, ...Linkedln, LastFM, Wikipedia, Posterous, Viadeo, ... Flickr, Delicious, ... ... ... Social CRM 7
  8. 8. 1 Social CRM a reality today, an imperative for tomorrow 1.1/ A fundamental trend there are plenty indicators that quantify a company’s use media presence and most use social media for Customer of social crm. According to a survey conducted by IBM Relationship Management purposes. in October 2010*, nearly 80 % of companies have a social WHAT IS YOUR COMPANY DOING WITH SOCIAL MEDIA TODAY ?** Communicate with customers 74% Respond to customer questions 65% Promote events 60% Generate sales leads 52% Sell products / services 50% Solicit customer reviews 48% Capture customer data 46% Brand monitoring 46% Customer research 43% Recruit employees 43% Employee-to-employee interactions 41% Solicit customer ideas 40% Provide support 40% Expert insights/thought leadership 38% Training/education 37% Customer-to-customer interactions 35% Vendor or partner communications 27% Social media usage by companies* Survey questioned 351 executives from 8 large industrialized This survey of 351 business leaders from the major deve- would be perceived as “disconnected” if it did not engage and emerging countries (USA, UK, France, loped and emerging countries also gives some idea of with social media, while half of respondents said Germany, India, China, how working with social media is perceived. Nearly 70% that their organization reaches customers better Brazil, Australia). of the executives who took part said that their company thanks to social media.** ote : N n-351. Not shown in figure. “I don’t know” - 9 percent and “Others” - 2 percent. Source : IBM Institute for Business Value analysis. CRM Study 2011 8 Social CRM
  9. 9. Percentage of companies with a profile on a social site* 79% Social networking sites 79% 18% 3% Media sharing sites 55% 37% 8% Microblogging sites 52% 41% 7% Wikis 48% 45% 7% Blogging sites 45% 45% 10% Social review sites 36% 52% 12% Social bookmarking sites 31% 55% 14% Have a profile/presence Do not have a profile/presence Don’t know Penetration of social media usage in companies Nevertheless, social media presence and activity do not CRM. So there is real scope for improvement … The mean true integration with the overall company’s CRM SugarCRM1 study conducted in January 2011 goes even process. Many studies demonstrate this, including the further, pointing out that only 26% of companies integrate study by the Brand Science Institute (European study, information retrieved from social media with their existing 2010) which reveals that only 7% of companies have CRM data. They are aware of this gap as 72% said that really understood the value of social media for they plan to do this within the next year.1 The professional view: accelerating CRM trends “The first CRM evolution centered on the widespread use of call centers and sales force automation (SFA) lasted 10 years. The second evolution, based on the Internet and more globally, on multichannel marketing, took 5 years. We believe that the current Social CRM revolution will take a maximum of 2 to 3 years to become a practice used by the majority of companies.” Eric Lévy-Bencheton – Partner, Practice Sales Marketing / Customer Relationship Management, Atos Consulting * Note : Numbers rounded to equal 100 percent. Source : IBM Institute for Business Value analysis. CRM Study 2011 Social CRM 9
  10. 10. 1 1.2/ A necessity It is easy to explain a company’s keen interest in social processes without delay, simply because they need to be media, whether this is expressed through true integration where their customers are. This universal catchment area is with CRM or, as is most commonly the case to date, by increasingly located in social media. The figures below are a desire to achieve this. Whether they like it or not, it is highly persuasive: in the interest of all companies to engage in Social CRM Facebook has 750 million active members worldwide 80% of French Internet users use at least one social network (uniform distribution across socio-professional categories and age profiles) 80% of consumers want a dialogue with brands on the Internet 78% of Internet users trust recommendations posted on social media by their peers (compared with just 14% for advertisements) 74% of Internet users have a more positive image of brands that engage in conversations on social media Sources : and “The Comscore 2010 Europe Digital Year” and Médiamétrie Social media, a mass phenomenon for customers Companies are faced with the challenge of adapting and It is not only social networks that influence purchasing evolving to meet the needs and demands of these new decisions: for example, 21% of Internet users decide to “social” customers. buy a product after reading a blog.* If we know that 33% of French people consult blogs at least once a month**, we can measure the commercial impact of this social medium. The expert view: don’t forget good old discussion forums “Forums are not dead – in fact, they are much more effective. Conversations in social networks are light, but are much longer and go into far more depth in forums. There, you ask questions and get answers. This doesn’t happen in social media, where people express themselves without necessarily expecting a reaction.” Frédéric Cavazza, * Source : emarketer 2009 * * Source : Médiamétrie 2009 10 Social CRM
  11. 11. 1.3/ A threat? When companies start to take an interest in Social CRM The most important thing is to listen actively and to res- they often wonder how they can use social media to open pond: companies must abandon the fantasy of controlling up a new channel of communication and exchange about conversations about their brand. Nowadays, consumers their brand. They do not realize that customers have not themselves decide which platforms they want to use to waited for them: they have already started the conversa- voice their comments. These platforms come in various tion on the new open forum - social media. If companies forms, as the diagram below shows. and brands do not answer, there is a danger that they will simply be excluded from discussions that affect them more than anything else. OVERVIEW OF SOCIAL MEDIA Overview of social media by field of use, 2011 (by Frédéric Cavazza) Several striking facts emerge from this breakdown of social At one time, people would first approach a company’s custo- media into 7 families: mer services department if they had a problem or question. Today, this behavior has changed. When customers expe- F acebook and Google are present on all the usage fields rience a product for the first time or make their first purchase, listed and dominate the social media ecosystem their instinct is increasingly to approach community platforms P latforms which are extremely popular one day may quickly on the Internet to share that experience and ask for help or disappoint if they do not meet the expectations of the social advice. Customers are gradually becoming accustomed customer, while new players are constantly appearing* to using Facebook or Twitter to get support or register a T he social medium itself is not important – the important complaint. Not taking this into account could be fatal for thing is the usage potential (i.e. the opportunities) it offers. companies1. Companies can no longer channel discussion and must implement tools and processes that enable them to be in direct contact with consumers so they can react accordin- gly. The rules of the game have changed: where Customer Relationship Management is concerned, companies offer their products, customers call the shots. * For example, Rupert Murdoch bought MySpace for nearly 600 million dollars in 2005 but it was sold for barely 35 million in June 2011. Facebook tops the social networks these Want Customer Service? Complain on Twitter : days, but will Google +1 change the landscape? Social CRM 11
  12. 12. 2 Social CRM: an opportunity for companies 2.1/ ompanies must play an active role in the debate, C not just be a part of the ecosystem Social CRM is a response to the behavior of “consum’ac- The challenge for companies is to reconstruct relationships tivists”. It puts the customer back at the heart of corporate within the ecosystem created by consumers, and to strategy, using social media as the vector to this new become a proactive player in the conversational network approach. It goes much further than Social Marketing. It of social media. no longer encourages loyalty purely through transactions or marketing, but also through relationships and conversa- tions. This new approach rests on four pillars: engagement, conversation, participation and content distribution. CHANGES IN CUSTOMER/COMPANY RELATIONSHIPS From transactional... • uality of Customer Relationship Q Personalized Management often measured as marketing the operational quality of the transaction • ntermittent contact with customers I Company Mass Brand ... to relational and conversational Marketing • uality of Customer Relationship Management Q measured throughout the life cycle • ontinuous contact C • ncrease in the number of relationships I maintained by the brand Push Collaborative interactive 12 Social CRM
  13. 13. 2.2/ he virality principle affects T every department within a companyThe intrinsic characteristics of social media, such as 7 4% of Internet users say they are influenced by theparticipation, freedom of expression and accessibility, opinion of a peer in a forum or on-line discussion, moremean that customers are free to voice their opinions inde- than by a straightforward promotion in the form of top-pendently of the sales pitch. down communication 3 8% of consumers say they have changed their mindThe figures* below illustrate the power of the link between after reading a negative opinion on social mediacustomers created by this new channel: Customers no longer hesitate to use social media before 78% of Internet users say that they trust recommenda- any other channel in order to obtain information, express tions from consumers that are published on social media and disseminate their opinions, both positive and nega- (compared with 14% for conventional advertisements) tive, to the entire community. Satisfied customers tell three friends, angry customers tell 3,000 Pete Blackshaw, author of the book of the same name**We should not believe that controversy originates in social improvement, this viral propagation principle is just onemedia: they are more likely to be the sounding board. of several fantastic opportunities that can be exploitedThe most damaging, sensitive or simply amusing pieces through Social CRM.of information will experience the most consistent virality.This revolution in conventional customer interaction chan- • Effective handling of customer dissatisfactionnels must be seen as a real opportunity to reinforce thecustomer/company relationship. The information made A dissatisfied customer who is not dealt with by a com-available through these new channels is far richer and pany will stimulate churn within the community.more immediate, due, without doubt, to the inherent vira-lity effect of social media. It represents an enormous pool By contrast, a dissatisfied customer who is helped byof opportunities for all functions within a company. the company as part of an effective conversational rela- tionship will produce the opposite effect by talking aboutWhatever the business process, from effective handling his or her experience. This may therefore prompt someof customer dissatisfaction to increasing customer loyalty, dissatisfied customers to return as satisfied or even loyalcontent distribution or sales strategies effectiveness customers. CORRELATION BETWEEN CUSTOMER SATISFACTION AND CHURN RATESatisfaction index * Sources: Nielsen Trust and Social customer Advertising Global Traditional customer Report and Médiamétrie Fevad * * Satisfied Customers Tell Three Friends, Churn rate (%) Angry Customers Tell 3,000, Crown Business, 2008 Social CRM 13