accessing resources for social customer … resources for social customer relationship management :...
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Accessing Resources for
Social Customer Relationship Management :The critical role of social media in CRM
Kaede Sano
Ⅰ Introduction
Ⅱ The commercialization of social media
Ⅱ.1. The concept of social media
Ⅱ.2. Classification of social media
Ⅱ.3. The growth of social media marketing in academic world
Ⅱ.4. The important role of social media in service sectors
Ⅲ The growth of social CRM in service sector
Ⅲ.1. Approaching CRM from traditional perspective
Ⅲ.2. The innovation of CRM brought by social media
Ⅲ.3. The differences between traditional CRM and social CRM
Ⅳ The variables used to evaluate social CRM
Ⅳ.1. Social CRM and relationship strength
Ⅳ.2. Essential criterion of social CRM
Ⅳ.2.1. Trust and social CRM
Ⅳ.2.2. Friendship and social CRM
Ⅳ.2.3. Purchase intention and social CRM
Ⅳ.2.4. Share of purchase and social CRM
Ⅳ.2.5. Word of mouth and social CRM
Ⅳ.2.6. Commitment and social CRM
Ⅴ A perspective for social CRM strategy in service sector
Ⅴ.1. A conceptual framework for traditional CRM strategy
Ⅴ.1.1. Strategy development process
Ⅴ.1.2. Value creation process
Ⅴ.1.3. Multichannel integration process
Ⅴ.1.4. Information management process
Ⅴ.1.5. Performance assessment process
Ⅴ.2. A conceptual framework for social CRM strategy
Ⅴ.2.1. Strategy development process─Blur the lines between marketing and customer care
Ⅴ.2.2. Value creation process─Clarify why customers interact with companies via social media
Ⅴ.2.3. Multichannel integration process─Understanding the critical role of social media
Ⅴ.2.4. Information management process─Making effects in employees’ training programs
Ⅴ.2.5. Performance assessment process─Increasing ROI by analyzing social media networks
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Abstract
This present study aims to clarify the critical role that social media works on customer relationship
management (CRM). As more and more people are using social media as one of essential tools to
communicate and gain latest information, the commercialization of social media is an important task to
companies. Although social CRM is still in its early age, it is believed that social CRM is replacing
traditional CRM to build stable and long-term relationship between companies and customers. This study
seeks to build a conceptual framework of social CRM and shows some steps of building social CRM
strategy.
Ⅰ Introduction
Signifying a new version of the World Wide Web after the dot-com bubble burst of 2001,
Web 2.0 brought an unprecedented change to online users’ behavior (Chan and Guillet, 2011).
The Internet, which had been used mainly for promotion and publishing, with communication
limited to a small number of users, evolved into a communication tool through the onset of
social media, which allowed millions of internet users, not necessarily geographically related,
to communicate with each other. According to comScore (2008, 2009 a, 2009 b), social media
reached a penetration of 70.2%, 74.6%, and 60.6% in the United States, Europe, and Asia-
Pacific respectively as a percentage of the total number of internet users in 2008 (Chan and
Guillet, 2011). Today, social media is not only regarded as a convenient tool for
communicating, but is also seen as a new business opportunity because of its huge
communication potential. Social media tools cultivate internal discussion, improving quality,
lowering costs, and enabling the creation of customer and partner communities that offer new
opportunities for coordination, marketing, advertising, and customer support (Hansen et.al,
2011, pp.4).
Recent studies in customer relationship management (from now called ‘CRM’) stress the
role of networks in accessing resources for innovation (e.g. Greenberg, Paul. 2010). Social
media network is seemed as one of essential tools to enhance the innovation of CRM,
although social media does not have a long history. With the growing interests in social media
marketing (from now called ‘SMM’) which social media plays an important role in innovating
marketing environment, more and more companies began to considering how to practice social
media in building a good relationship with their customers, in other words, how to practice
social media in their CRM programs.
The idea of practicing social media into CRM programs can be traced from the rise of
SMM. SMM can be practiced in various ways. For example, companies will encourage their
customers to get involved in discussions about new product development or product
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improvement through social media, increasing their motivation to feel ‘part’ of the company.
In this respect, social media is being used as an essential tool to foster loyalty to companies,
particular products or brands. For this reason, the effect of social media is also felt in
customer relationship management, and numerous companies seek to build good relationships
with their customers through social media.
Social Customer Relationship Management (from now called ‘Social CRM’) is a new
concept which is becoming a subject of interest in both the business and academic world due
to the increasing importance of social media in recent years (Sano, K. 2014). Social CRM that
marries social media technology with customer relationship management is gaining traction as
a compelling approach to enhancing customer engagement (Baird and Parasnis, 2011).
Although social CRM is still in its early age of development, it has become more and more
important for businesses, and is also seen as a crucial tool for building and maintaining long-
term relationships between customers and companies (Sano, K. 2014). However, as social
CRM is still a new concept, practicing it in a real business environment is no easy matter. To
fully exploit the power of social media to connect with customers, companies need to move
beyond isolated projects and towards integrated programs that use Social CRM to reinvent the
customer relationship (Baird and Parasnis, 2011).
More specifically, the problems of previous research into social CRM can be stated as
follows : firstly, the reasons for customers using social media have not been clarified. There
has been criticism surrounding the gap between businesses and customers, claiming
companies’ ideas as to why customers choose to use social media are very different from
reality. Most previous research tends to focus solely on customers or companies, but seldom
considers both customers and companies at the same time. The ambivalence surrounding the
reasons for using social media is presents a barrier to companies if they are to build social
CRM with their customers. Secondly, with the development of social CRM still in its early
stages, little previous research has established and clarified a framework. With this in mind, it
can be indicated that social CRM’s process (in other words, how social CRM differs from
traditional CRM, how the effects of social CRM should be tested, and how social CRM
works) has not been clarified. A complete framework of social CRM is required.
This study aims to build such a framework for social CRM and clarify how social media
effects on CRM. This study firstly discusses the commercialization of social media which
touch on the rising of SMM. We will trace the development of SMM by reviewing some
previous studies. Service sector has been selected as the research object in this study because
high perceived risk bought by service’s intangibility can be greatly deceased by social media.
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For this reason, this study focus on service sector, especially for those services that are
believed company with high risk, to clarify the critical role social media plays on. We will
show this in section Ⅱ.
Secondly, this study compares traditional CRM with social CRM. We will review some
previous studies about traditional CRM (CRM 1.0 and CRM 2.0) and make it clear that how
traditional CRM is practiced to keep stable and long-term relationship with customer. Besides
approving of traditional CRM’s advantages, we will also point out some disadvantages. In this
state, those disadvantages which cannot be avoided by traditional CRM are believed to be
improved by social CRM greatly. Therefore, social CRM as a new generation of CRM will be
discussed in section Ⅲ.
Thirdly, this study explores the inter-relationship between social media effects and several
variables including perceived risk, perceived quality, customer satisfaction, positive word of
mouth (for now called WOM), re-purchase intention as well as commitment. Those variables
are used to calculate how well companies keep the relationship with their customers. We will
discuss those variables in section Ⅳ.
Lastly, this study will also show some steps of building social CRM strategy that are
encouraged to practice in the near future. As this study stops at theoretical exploration, future
studies are expected to analyze how social media effects on CRM by quantitative methods.
Moreover, as social CRM is still on its early stage, few companies practice it into real
business environment. One of purposes of this study is suggesting more and more companies
could apply social media in CRM programs. Those strategies will be showed in section Ⅴ.
Ⅱ The commercialization of social media
Ⅱ.1. The concept of social media
Social media refers to a set of online tools that supports social interaction between users. In
practice, it is a catchall phrase intended to describe the many novel online sociotechnical
systems that have emerged in recent years, including services lie email, discussion forums,
blogs, microblogs, texting, chat, social networking sites, wikis, photo and video sharing sites,
review sites, and multi-play gaming communities (Hansen. Derek L, et al., 2010, pp.12). The
effect of social media comes from social network system which emphasizes the
communications created by a certain group. The most critical role of social network system is
enhancing the communication which is not only within a certain group, but also among
different groups. Social network system helps the communication broaden and deepens the
Accessing Resources for Social Customer Relationship Management（Sano） （ 369 ）１９
communication among different groups. In this extent, social media plays as a tool which
enhances the role of social network systems. In other words, social media, such as Facebook,
twitter, blogs, accelerates the speed of communication and broaden the range of
communication that the traditional tools never achieved.
In the most social media systems, producers and consumers and drawn from the same set of
users. Users are producers one moment and consumers the next. However, differentiating
between those who produce and consume content can be useful in comparing social media
systems, even if the set of producers and consumers are not mutually exclusive (Hansen.
Derek L, et al., 2010, pp.13).
Ⅱ.2. Classification of social media
Hansen et al. (2010, pp.13) claimed that social media could be typified by size of consumer
population and size of producer population. They divided social media into 9 types by the two
axes─size of consumer population and size of producer population, and they suggested the
two axes could be approached by three levels─small, medium, and large (see Table 1). Table
1 provides some examples of social media systems, as well as some traditional media systems,
and where various actions related to them fall within the producer and consumer size
dimensions. Based on their study, personal messaging within Facebook is viewed as the
example which both size of consumer population and size of producer population are small,
however, YouTube video sharing is believed as the example which both size of consumer
population and size of producer population are large. In this case, the third axis─the deep of
communication should be considered. In other words, social media classification should not
neglect how users interact each other through social media. Although messaging within
Table 1 Examples of Social Media and Pre-digital Media Systems Organized by the Size of Producer andConsumer Populations (Hansen. Derek L, et al., 2010, pp.13)
Size ofConsumerPopulation
Size of Producer Population
Small Medium Large
Small Instant messagingPersonal messaging(e.g., within Facebook)Phone call
Twitter homepage showingtweets of people you follow
Professional services repotsfor decision makers
Medium Tweet sent to followersWall post on Facebook“Social” or family blog
Facebook groupNiche YouTube channels
Idea-generation sites
Large Popular Twitter user’s tweetPopular YouTube video
Wikipedia pageTelevision programPopular discussion forum
Large online marketplaces(e.g., eBay)YouTube video sharing
Note : this table has been revised by the author
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Facebook does not have an abroad range, this type of communication is deeper than others
and transmits more detail information. However, although YouTube video sharing does have a
great of range, this type of communication tends to be shallow.
This present study classifies main social media by two axis─frequency of interaction and
size of customer populations (see Table 2). Frequency of interaction refers the times of
interaction among customers and the times of interaction between customers and business
companies (for example, some official discussion platforms in a company’s website). Size of
customer populations refers the number of social media users. In Hansen’s et al. (2011)
research, the concept of size of producer populations was also mentioned. However, our study
is interested in how many customers use social media, rather than how large-scale the social
media is, so size of producer populations would not be considered.
Based on these two criteria and three extent (low, medium and high & small, medium and
large), social media could be classified into six categories. Each category has representative
examples. In the cell of low frequency of interaction with small size of customer populations,
personal messaging could be a good example because most of the messages are sent by one
person to another (and, it would appear, not very frequently). On the other hand, looking at
the cell of high frequency of interaction, with small size of customer populations, such as
Skype, it could be concluded that users connect with each other frequently (Hansen et al.
2011). However, although Wikipedia has a large customer population, the reviewers seldom
take part in compiling content (Underwood, 2009). This applies to traditional websites, where
reviewers tend to use the information they need, but are not actively involved in those
websites.
Conversely, popular Twitter users’ tweets attract a large number of people, and the
frequency of interaction on Twitter is obviously high. YouTube, Flicker, and large online
marketplaces such as eBay and Amazon can be classified into the cell of medium frequency of
interaction and large customer populations (Hanse et al. 2011). These famous examples of
social media hold large groups of customers because their reputations are sufficiently high.
Nevertheless, because of their design and other characteristics, the capacity of interaction on
these websites is limited. Users can post comments or word of mouth recommendations on
those sites, but is hard to interact immediately like on Twitter. Another famous example of
social media is Facebook, which has a medium-sized customer population with medium
interaction (Roberts, et al. 2009). Facebook is attracting more and more companies as a
replacement for the traditional discussion platforms on companies’ official websites.
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Ⅱ.3. The growth of social media marketing in academic world
Originally, social media is created as one of communication tools but not for business.
Nevertheless, more and more companies began to understand the importance of social media
practiced in marketing communication. Companies found social media could assist, and even
replace the traditional communication tools, such advertisement in newspapers to convey
important information about products or services.
The early stage of SMM is called e-marketing. The framework of e-marketing can be traced
to Kierzkowski et al. (1996). In their study, five elements─Relate, Attract, Engage, Retain
and Learn have been suggested as critical factors which can lead to success of digital
marketing. In detail, they suggested that companies should attract users and try to engage
users’ interest and participation. Furthermore, companies should retain users and ensure they
return to an application and learn about their preferences. Lastly, companies should relate back
to them to provide the sort of customized interactions that represent the true “value bubble” of
digital marketing. However, the five elements is not one-way direction which starts from
“Relate” and ends to “Learn”, but an endless circle. The most important contribution of
Kierzkowski et al. (1996)’s study is building clear framework of digital marketing and direct
how companies can manage and lead their customers. The framework of their study has been
practiced as a foundation in recent studies, such as Teo (2005) and Chan & Guillet (2011).
The most popular and widely used e-marketing frameworks are developed by Gloor (2000),
Chaffey (2004). Gloor (2000) proposed a roadmap that emphasized the critical source of e-
marketing including tools, people, techniques, and technologies. The e-marketing strategy
proposed by Chaffey (2004) integrates the e-marketing plan with other functions in the
organization such as corporate strategy, plans for different markets and brands, e-business
Table 2 Examples of Social Media organized by Frequency of Interaction and Size of Customer Populations(Sano. K, 2014)
Frequencyof
Interaction
Size of Customer Populations
Small Medium Large
Low Personal messaging(e.g. within Facebook),Gmail, Hotmail,MS outlook
Wikipedia page,Zoho, Eherpad
Wiki encyclopediaGoogle Dozs,Traditional web sites(e.g. Data.gov)
Medium Twitter homepage showingtweets of people you follow
World Press, Blogger YouTube video sharing,Flicker photo sharing,Large online marketplace(e.g. eBay)
High Skype, Gizmo, iChat,Window’s Live
Facebook groupMy space
Popular Twitter user’s tweet
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strategy, information technology (Chan and Guillet, 2011).
In Teo (2005)’s study, the extent of usage and perceived effectiveness of various online
marketing tools among business-to-consumer (B2C) firms in Singapore has been explored.
This study applied Kierzkowski et al. (1996)’s framework into empirical research and found
that there are some significant differences between the extent to which websites utilize the
various online marketing tools. However, this study only testified the five factor (attract,
engage, retain, learn, relate) from managers’ perspective, but not take customers’ perspective
into consideration.
Waters et al. (2009) explored how Facebook can play the role in engaging stakeholders
through social networking for nonprofit organizations. They analyzed 275 nonprofit
organization profiles on Facebook and examined how these new social networking sites are
being used by the organizations to advance their organization’s mission and programs. Results
from this study showed that nonprofits are beginning to experiment with different Facebook
offerings. They suggested that nonprofits will need to begin using more social networking
applications social networking to meet the growing needs and expectations of their
stakeholders.
Chan and Guillet (2011) also practiced Kiezkowski et al. (1996)’s framework into their
study. Compared with Teo (2005)’s empirical study, Chan and Guillet (2011) extended
Kiezkowski et al. (1996)’s framework into one industry─hospitality industry, and tried to
clarify how Hong Kong’s hotel can build and keep a good relationship with their customers
through social media. This study did not conduct quantitative analysis, but stopped at
theoretical exploration. However, even this study did not put it into real data analysis, it also
contributed the field of SMM, because it combined the digital marketing framework into the
real industry by analyzing different hotel’s SMM strategies.
Ⅱ.4. The important role of social media in service sectors
The most important character which service differs from product is intangibility. Because of
intangibility, customers perceive more risk before and during the service encounter. When the
presence of market information is not sufficient, customers tend to rely on other things, such
as rand reputation and word of mouth, to decrease the high perceived risk and increase
perceived value for money (Sano. K, 2014). In this regard, word of mouth on the internet
communication is attracting both customers and companies. For example, Chan and Guillet
(2011) showed that more than half of hotel users or visitors to Hong Kong accessed hotel
homepages and related word of mouth. This can be explained that perceived risk is too high,
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so customers have to rely on word of mouth to decrease it. Moreover, it has also been showed
that customers who have less service using experience tend to rely on extrinsic cues (for
instance, brand reputation or brand preference) to make their purchase decision than customers
who have more (Sano. K, 2011).
Social media is a powerful tool that can create many social network about a certain topic
which enhance the communication within the group. The effect of social media in service
sector is mainly believed about sharing opinions to a certain service which greatly helps
customers to decrease their high perceived risk. However, the effect of social media is not
only decreasing high perceived risk to service. A numerous studies have testified that the
relationship quality between customers and service companies is highly regarded with service
providers, in other words, service employees. If customers hold a positive attitude to service
providers, the relationship between customers and companies is comparatively stable and
strong ; whereas, if customers hold a negative attitude to service providers, the relationship
between customers and companies is seemed to be unstable and weak. In this case, service
providers’ effect on building a long-term relationship between customers and company is
significant.
In recent years, more and more service companies, for example, hotels, airline companies,
retails, restaurants, are practicing social media as a tool to build a good relationship with their
customers. Social media could be viewed as a service provider who can echo customers’
demand quickly and deal with customers’ troubles immediately. Therefore, applying social
media to CRM program is a critical task to most service companies.
Ⅲ The growth of social CRM in service sector
Ⅲ.1. Approaching CRM from traditional perspective
Over the past decades, CRM has proven to be a critical tool in increasing a firm’s
profitability by enabling it to identify the best customers and satisfy their needs, in order to
make them remain loyal to the firm’s activities (Thomas and Sullivan, 2005 ; Nguyen and
Mutum, 2012). According to Reichheld and Teal (1996), acquiring customers is much more
expensive than keeping them. Their suggestion has been testified by many empirical
researches and it implies how critical to keep existing customers, because pursuing long-term
relationships with customers, instead of a transaction-oriented approach, is more profitable for
firms (Jayachandran et al., 2005 ; Nguyen and Mutum, 2012).
The term of CRM emerged in the information technology (IT) vendor community and
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practitioner community in the mid-1990s (Payne and Frow, 2005). According to Payne and
Frow (2005), it is often used to describe technology-based customer solutions, such as sales
force automation (SFA). Many researchers (such as Minami et al. 2007, Ryals and Payne.
2001) suggest that CRM is more commonly used in the context of technology solutions and
the level of information technology development greatly influences CRM. In other words, the
more development of information technology, companies can manage their customers easier.
The definitions and descriptions of CRM that different authors and authorities use vary
considerably, signifying a variety of CRM viewpoints (Payne and Frow, 2005). Based on
different approaches about CRM, Payne and Frow (2005) suggested that CRM could be
defined from three different perspectives which include narrowly and tactically as a particular
technology solution, wide-ranging technology and customer centric (see Figure 1). In the first
perspective, CRM is purely treated as one of technologies which could help companies
manage the relationship with their customers. For example, companies can provide more
personal service or product to certain customers by analyzing customers’ data. In the second
perspective, CRM is used to refer to a wide range of customer-oriented IT and Internet
solutions. This perspective treats CRM not only a particular technology solution, but also a
business strategy. In this point, Payne and Frow (2005) arranged it into the middle position.
Furthermore, in the third perspective, it reflects a more strategic and holistic approach to CRM
that emphasizes the selective management of customer relationships to create shareholder
value.
Greenberg, P. once has defined CRM as a philosophy and a business strategy supported by
a system and a technology designed to improve human interactions in a business environment.
This present study applied for Payne and Frow (2005)’s third perspective which reflects a
more strategic and holistic approach and Greenberg, P. (2003)’s definition to CRM. In detail,
this study defines CRM as one of marketing strategies which is based on IT support.
Figure 1 The CRM Continuum (Payne and Frow, 2005)
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Ⅲ.2. The innovation of CRM brought by social media
Social media is first applied for communicating, in other words, social media was born by
social network which enhances numerous groups connect each other. However, as this study
mentioned before, social media is believed as one of powerful tools to strengthen the
relationship between customers and companies. For this reason, more and more companies are
considering how to apply social media in their CRM programs.
In Baird and Parasins (2011)’s study, they defined social CRM is a novel concept that
unites social media technology with customer relationship management and is gaining traction
as a compelling approach to enhancing customer engagement. As millions of people are using
social media (for example, Facebook, Twitter), more and more companies realize that social
media is a channel for customer engagement and social media can help companies shorten
their distance with customers.
Moreover, a part of researchers also found that social media can help companies know their
customers more. In detail, for instance, companies can know their customers’ interests by
analyzing the network from social media─which people they always touch with, or which
website they always access to. Those critical information are hardly received by traditional
CRM programs, although CRM itself is built based on a strong IT basis. Traditional CRM
programs make it possible for companies to create a long-term relationship with their
customers, but it is powerless when compares with social CRM, because social CRM has
more abroad range with more customers including existing ones and potential ones. The
application of social media in CRM is also indicated about the inter-action character which
greatly enhances the communication between companies and customers.
Ⅲ.3. The differences between traditional CRM and social CRM
Social media is powerful tool to help companies better understand their customers by
analyzing social interaction. Moreover, social media also helps companies consolidate
relationships with customers through internet-based dialoguing. Customers can post their
feelings or advice on a certain product or service by going onto companies’ social networks,
such as their official Facebook site. Additionally, companies can encourage and reward
customer involvement by gifting them coupons or discount cards through social media. The
critical aspect for companies is that practicing social CRM can foster customer commitment,
leading to a better understanding of how customers think by analyzing their social interaction
(Sano, K. 2014). Based on the researches of Baird & Parasnis (2011), Minami et al. (2007),
Payne et al. (2005), Sin et al. (2005), Ngai et al. (2005), the differences between traditional
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CRM and social CRM can be shown from seven aspects－main goal, time of introduction,
method, approach, object customers, effects, and customer relationships (see Table 3).
Firstly, the main goal of traditional CRM and social CRM is different (Sano. K, 2014).
Traditional CRM emphasizes “Customer Management”, as Greenberg (2010) pointed, whereas,
social CRM emphasizes “Customer Engagement”. Traditional CRM more tends to emphasize
how to build a good relationship with their customers based on an IT base which almost
conducts on one-way. However, social CRM, compared with traditional CRM, more tends to
take communication in an important position which conducts on two-way. Social CRM does
not emphasize the “Management”, but “Communication”.
Secondly, compared with traditional CRM, social CRM is still in its early stages and is
growing rapidly with the development of social media. If it could be claimed that traditional
CRM was born through the spread of information technology, then it can equally be said that
social CRM was born through the spread of social media (Sano. K, 2014). Although social
CRM is still in its early stages, it is expected to grow rapidly, as more and more customers
begin to use social media to communicate with each other. With the rapid development of
social media, companies believe social media is one of powerful tools to build the long-term
relationship with their customer. The new stage of CRM does not try to management
customers, but expects their customers engage into companies products or services. In other
words, companies aim to make their customers treat themselves as one part of companies, but
not only in the position of “Customer”.
Thirdly, traditional CRM is designed to manage customer relationships via traditional
channels, such as websites, call centers and so on. However, social CRM is more reliant on
social media to help companies know their customers better (Sano, K. 2014). Traditional
channels help companies know what their customers like and what their customers dislike.
Nevertheless, traditional channels are impossible to know the network which their customers
involve in. Traditional channels could cover customers’ complain by deal with it immediately,
however, it is impossible to catch up with customers’ demands in a real time.
Fourthly, traditional CRM is aimed at managing customer relationships through traditional
channels as stated above, compared with social CRM, which aims to manage customer
dialogue. The important thing is that social CRM manages the dialogue but not the customers
(Sano, K. 2014). Companies could lead customers’ dialogue through social media and then
build a high quality relationship with them, but not only manage the relationship itself.
Fifthly, ‘object customers’ in traditional CRM is specific and limited, because only related
customers can be accessed. However, object customers in social CRM is unspecific and
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unlimited, because social media makes it possible for companies to access not only individual
customers but also social communities in the social network environment (Sano, K. 2014).
In summary, according to Greenberg, P. (2010, pp.35), the underlying principle for social
CRM’s success is very different from its predecessor. As he suggested, traditional CRM is
based on an internal operational approach to manage customer relationships effectively,
whereas, social CRM is based on the ability of a company to meet the personal agendas of
their customers while at the same time meeting the objectives of their own business plan. It is
emphasized by Greenberg, P. (2010) that social media is aimed at customer engagement rather
than customer management. This point is supported by Baird and Parasins (2011).
Furthermore, Greenberg, P. (2010, pp.35) pointed that CRM technologies companies have
been used to, such as sales, marketing, and support applications, even the on-demand versions
of those, are not the technical capital of the 21st century’s “ear of the social customer”. The
customer is not just becoming the central repository for value, but wants to actively participate
in value creation with business. Therefore the consumer technologies and service offerings
adopted as platforms for individually meaningful “life choices” are where CRM technology
needs to be.
Greenberg, P. (2010, pp.35) also suggested that those companies, such as Oracle, Sage,
have to integrate the features of newer technologies that facilitate market conversations, social
networking, user communities. The traditional CRM systems which have been developed is
losing their charming as more and more people are beginning to use social network to
Table 3 The differences between Traditional CRM & Social CRM (Sano, K. 2014)
Traditional CRM Social CRM
Main goal Management solutions for dealing withcustomers and deriving optimum valuefrom the customer during the lifetime ofthe relationship
Encompasses dynamic community ofcustomers who communicate through socialmedia and ultimately aimed at customerengagement rather than customermanagement.
Time forintroduction
In the middle of 1990s with thedevelopment of IT.
In the last five years with the developmentof social media.
Method Websites, call centers, brick & mortarlocations, etc.
Social Media
Approach Does not address new social media, but isdesigned to manage the customerrelationship via traditional channels, usuallyfrom the company’s perspective.
Managing dialogue, not the customer. Fromboth the company’s and the customers’perspective.
Object customer Specific & Limited Unspecific & Unlimited
Effect Financial return Financial return and New models ofcustomer engagement.
Relationship withcustomers
Asynchronous and One-way Synchronous and Two-way
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communicate with each other. The “communication” I mentioned in here does not only mean
sharing private pictures, information with their friends and relatives, but also mean enhancing
the relationship with certain companies and finally increasing their loyalty or commitment to
certain companies by encouraging customer to engage into businesses. Therefore, in this point,
social CRM greatly exceeds traditional CRM, because social CRM does not manage customers
anymore, but take them into one part of business.
Ⅳ The variables used to evaluate social CRM
Ⅳ.1. Social CRM and relationship strength
In the literature of discussing how to evaluate social CRM, in other words, whether social
CRM is effective to companies, relationship strength should not be neglected. Relationship
strength is one essential criterion that could be practiced to evaluate social CRM, as the main
goal of social CRM is customer engagement (Sano, K. 2014). Relationship strength has been
broadly measured by previous researches. According to Donaldson and O’Toole (2000),
relationship strength construct is measured by an assessment of the belief and action
components inherent in a relationship. The belief components measure behavioral processes
and the action components measure economic content. Similarly, Storbacka et al. (1994)
suggest that relationship strength is measured both as purchase behavior and as
communication behavior (word of mouth, complaints). Antecedents and dimensions of
relationship strength in B2C service literature are shown in Table 4.
Based on the previous studies, some common dimensions used to measure relationship
strength were listed as “Trust”, “Friendship”, “Purchase intention”, “Share of purchase”,
“Word of mouth” and “Commitment”. Because relationship strength can be used to evaluate
the effectiveness of social CRM, the dimensions used to measure relationship strength will be
important to social CRM. Although social CRM is based on a unique environment (the
internet), the dimensions of relationship strength can still be practiced in this literature.
Ⅳ.2. Essential criterion of social CRM
Ⅳ.2.1. Trust and social CRM
“Trust” is an essential dimension to evaluate social CRM. High perceived risk in service
sectors is believed to be caused by service intangibility. Social communities formed on the
internet through various social media encourage customers to communicate with each other
and exchange important information. If service companies cannot build trust with customers,
Accessing Resources for Social Customer Relationship Management（Sano） （ 379 ）２９
they will lose the cornerstone of social CRM. Service companies can become positively
involved in social communities formed on the internet through social media and increase trust
using visible things (such as pictures, videos, etc.), timely correspondence, and so on. Only
when customers trust is built can social CRM be effective (Sano, K. 2014).
It is broadly pointed that the trust between companies and customers in the environment of
internet is significant lower than the environment of real service encounter. For example, some
customers tend to unlike to use internet bank or some services based on internet environment,
but tend to rely on the services which are provided in a physical environment. Therefore, in
this situation, social media could help service companies increase their reliability by
communicate with customers more frequently and then, reliability (or trust) is practiced as one
of critical criterion to evaluate how social CRM works.
Ⅳ.2.2. Friendship and social CRM
Building “Friendship” between companies and customers is one of the goals of relationship
marketing. It has been empirical proved that this type of relationship can greatly influence the
strength of the company/customer relationship and help form customer commitment as well as
loyalty to companies. As the advantages of social CRM are synchronous and two-way, social
CRM can enhance the interaction between service companies and customers. An effective
Table 4 Relationship strength dimensions in B2C service literature
Authors Relationship Strength Dimensions Context Approach Primary Orientation
Crosby et al.(1990)
Cooperative intentions, Mutual disclosure,Intensive follow up
Life insurance agent Empirical Social
Liljandaer andStrandvik (1993)
Repurchase intentions Restaurant service Empirical Social
Barnes. (1997) Volume or share of business given to serviceprovider, Intention to continue therelationship into the future, Likelihood ofrecommending service provider to others
The relationshipbetween customer andfinancial service
Empirical Social
Lee et al. (2001) Repurchase intentions, word of mouth Mobile phone service Empirical Social
Verhoef et al. (2001) Cross-buying Insurance industry Empirical Social & Economic
Sirdeshmukh et al.(2002)
Repurchase intentions Airline service andretail clothing
Empirical Social & Economic
Henning-Thurau etal. (2002)
Repurchase intentions, word of mouth Three differentservice categories
Empirical Social
Kim and Cha.(2002)
Repurchase intentions, Share of purchase,Word of mouth
Hospitality Empirical Social
Wang et al. (2004) Repurchase intentions, Share of purchase Chinese securitiesfirm
Empirical Social & Economic
Johnson andGrayson. (2005)
Share of purchases Financial advisoryservice firm
Empirical Social
Ward and Dagger.(2007)
Relationship attribute (trust, time to listen,understanding, thoughtfulness, commitment,loyalty, empathy, recognition, bonding,friendship, shared of purchase)
Doctors, hairdressers,electricity supplier,cinema and bank
Empirical Social & Economic
同志社商学 第６６巻 第２号（２０１４年９月）３０（ 380 ）
social CRM should contribute the formation of friendship (Sano, K. 2014).
As mentioned above, one of most important differences between traditional CRM and social
CRM, as social CRM aims customers’ engagement, but not tries to manage customers
anymore. Therefore, social media is playing role of a bridge built between customers and
companies. Numerous previous studies have testified that a long-term and stable relationship
could be built by friendship of customer and companies. In the literature of service, service
providers (or employees) seem to be very essential in build and keep friendship with
customers, as frontier employees’ performance greatly influences customer satisfaction and
customer loyalty. Introducing social media in CRM is believed to born and increase friendship
between customers and companies. Also, friendship is also believed as one of essential
criterion to social CRM.
Ⅳ.2.3. Purchase intention and social CRM
“Purchase intention” is related to high perceived quality, perceived value, customer
satisfaction, and is believed as one of the types of customer loyalty. However, it has been
stated that willingness to buy or repeat purchases cannot be defined as true loyalty. Only in
the case of high attitude can customers’ purchase behavior be called “Loyalty” (Dick and
Basu, 1994). An effective social CRM should not only attempt to encourage purchase
intention by reward programs (e.g. coupons), but should also aim at increasing attitude
through social media (for example, a network hive). In other words, a successful social CRM
should encourage “Customer involvement” before “Willingness to buy” (Sano, K. 2014).
Service repurchase intention is defined as customers’ intention to re-patronize their current
service provider (or company based on past experiences and future expectations) (Lee and
Cunninngham, 2001). The frequency of repurchase reflects how customers hold loyalty to a
certain company. Moreover, frequency of repurchase is the most significant criteria to evaluate
the effectiveness of social CRM, although it is hard to get conclusion that effective social
CRM certainly lead to repurchase intention. However, effective social CRM is still seemed as
one of reason of willing to buy.
Ⅳ.2.4. Share of purchase and social CRM
“Share of purchase” means “Crossing purchase” which refers to buying related products or
services. Social media has a powerful ability to introduce various services companies’
products. It is believed that high customer satisfaction can induce share of purchase. In this
case, whether a good relationship between customers and companies has been built can be
evaluated by seeing how many related products (or services) customers purchase (Sano, K.
2014).
Accessing Resources for Social Customer Relationship Management（Sano） （ 381 ）３１
In this case, “share of purchase” is also related to “purchase intention” which we have
discussed above. Some previous studies suggested that both share of purchase and purchase
intention are customer loyalty. Traditional CRM can approach what their customers like and
dislike, but it is hard to approach how their product or service shares the percent in customers’
total purchases. However, social media makes it possible. In other hand, share of purchase is
also used to evaluate how social media works and whether social media is effective. If
customers’ share of purchase to a certain product or service is higher than others, it means
that social media do conduct its effectiveness in influencing customers’ purchase behavior.
Ⅳ.2.5. Word of mouth and social CRM
“Word of mouth” is a critically important dimension to evaluate social CRM’s
effectiveness, as social media-based word of mouth can be spread rapidly and widely. For a
long time, both business managers and researchers thought that it was impossible for
companies to shape the dialogue in an internet social community. However, in recent years, it
has been found that companies can lead the dialogue among customers and shape word of
mouth through social media (Sano, K. 2014).
Based on the study of Sano, K. (2014), social CRM’s most significant feature, which differs
from traditional CRM, is based on social media, in other words, social CRM greatly relies on
the development of social media. As a result, how social CRM works effectively should be
evaluated based on the word of mouth spread by customers. “Best Buy”, a multinational
retailer of technology and entertainment products and services, is a good example of how
customers’ dialogue can be shaped through social media. It must also be emphasized that
word of mouth is more powerful for services than products, as a service cannot be grasped as
a tangible object.
Ⅳ.2.6. Commitment and social CRM
“Commitment” is also an essential dimension to evaluate whether social CRM is successful.
Social CRM has many more advantages than traditional CRM in forming customer
commitment, because it highlights customer engagement rather than customer management
(Baird and Parasnis, 2011). Therefore, how customers are willing to commit to companies
should be considered in designing a social CRM program. Effective social CRM must increase
customer involvement, or willingness to be a host, by frequently contacting them through
social media. For instance, a popular twitter user can play this role. Moreover, like the way
American Express launched “Small Business Saturday” (a program targeted at customers to
get them to patronize local small business and tapped into customers’ desire for discounts),
companies should encourage customers involvement through some reward programs (Sano, K.
同志社商学 第６６巻 第２号（２０１４年９月）３２（ 382 ）
2014).
In field of relationship marketing, commitment is believed as the final goal of companies.
Commitment and loyalty are different concept in relationship marketing, although the two
concepts have many more commons. Commitment means that a customer holds the positive
attitude to a certain company and is willing to make contribution to it. In this situation, the
customer does not keep purchasing the product or service from one company, but tries to
engage into the companies’ business. She or he does not treat herself or himself as a customer,
but feels as one part of the company, although this feeling sometimes is unconsciousness.
Social media has its advantage to raise customers’ commitment, as it always provides the
latest information and encourages customers’ engagement. Conversely, how commitment is
raised by social media is used to evaluate social CRM’s effectiveness.
Ⅴ A perspective for social CRM strategy in service sector
Social CRM is still a novel concept that a few companies begin to practice into build and
keep a good relationship with their customers, in other words, a few companies start to
consider instead traditional CRM by social CRM. This is not only because more and more
people begin to use i-phone and smart-phone which makes accessing social media, such as
Facebook, twitter easier than ever before, but also because social media greatly help
companies to keep in touch with their customers, and social media, in some extent, plays a
role of “Bridge” between companies and customers. It has been testified that most customers
tend to probe information, before they use the service. This means that social media plays
more important role in decreasing the perceived risk brought by service’s intangibility.
Nevertheless, understanding the critical role of social media playing in CRM innovation in
the literature of service is not enough. As social CRM is still in its young age, few more
companies practice it into marketing strategy. The tendency that social CRM is replacing the
position of traditional CRM forces companies to consider their new marketing strategy.
Ⅴ.1. A conceptual framework for traditional CRM strategy
Grabner-Kreauter and Moedritscher (2002) suggest that the absence of a strategic
framework for CRM from which to define success is one reason for the disappointing results
of many CRM initiatives. Based on Grabner-Kreauter and Moedritscher (2002)’s study, Payne
and Frow (2005) built a conceptual framework for CRM. Before introducing framework for
social CRM, we will firstly review Payne and Frow (2005)’s study.
Accessing Resources for Social Customer Relationship Management（Sano） （ 383 ）３３
Payne and Frow (2005) suggest CRM strategy should be built by four processes including
strategy development process, value creation process, multichannel integration process and
performance assessment process.
Ⅴ.1.1. Strategy development process
This process requires a dual focus on the organization’s business strategy and its customer
strategy. How well the two interrelate fundamentally affects the success of its CRM strategy
(Payne and Frow, 2005).
According to their study, the business strategy must be considered first to determine how
the customer strategy should be developed and how it should evolve over time. On the other
hand, customer strategy is typically the responsibility of the marketing department comparing
with business strategy which is usually the responsibility of the chief executive officer, the
board, and the strategy director. Moreover, business strategy includes business vision and
industry and competitive characteristics, however, customer strategy includes customer choice
and customer characteristics and segment granularity.
Ⅴ.1.2. Value creation process
The value creation process transforms the outputs of the strategy development process into
programs that both extract and deliver value (Payne and Frow, 2005). They pointed that three
key elements of the value creation process should be considered, which are (1) determining
what value the company can provide to its customer ; (2) determining what value the
company can receives from its customers ; (3) by successfully managing this value exchange,
which involves a process of co-creation or coproduction, maximizing the lifetime value of
desirable customer segment.
Ⅴ.1.3. Multichannel integration process
The multichannel integration process is arguably one of the most important processes in
CRM because it takes the outputs of the business strategy and value creation processes and
translates them into value-adding activities with customers (Payne and Frow, 2005).
They listed six channel options that are (1) sales force, including field account management,
service, and personal representation ; (2) outlets, including retail branches, stores, depots, and
kiosks ; (3) telephony, including traditional telephone, facsimile, telex, and call center
contact ; (4) direct marketing, including direct mail, radio, and traditional television ; (5)
electronic commerce (e-commerce), including e-mail, the internet, and interactive digital
television ; and (6) mobile commerce (m-commerce), including mobile telephony, short
message service and text messaging, wire-less application protocol, and 3 G mobile services.
Ⅴ.1.4. Information management process
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The information management process is concerned with the collection, collation, and use of
customer data and information from all customer contact points to generate customer insight
and appropriate marketing responses (Payne and Frow, 2005). In this process, technology is
emphasized. The technology mentioned in this process means data repository which includes
IT systems, analysis tools, front office applications and back office applications. This process
reflects the approach of CRM defined narrowly and tactically, in other words, it reflects the
basis which supports to CRM.
Ⅴ.1.5. Performance assessment process
The performance assessment process covers the essential task of ensuring that the
organization’s strategic aims in terms of CRM are being delivered to an appropriate and
acceptable standard and that a basis for future improvement is established (Payne and Frow,
2005). In their study, the performance assessment process is placed at the last process of CRM
strategy. They pointed that how to evaluate CRM strategy effect is greatly determined by two
aspects, which are shareholder results and performance monitoring.
Ⅴ.2. A conceptual framework for social CRM strategy
Payne and Frow (2005)’s study is applied as the most important foundation of this present
study. We follow Payne and Frow (2005)’s four processes but add some new content which is
believed the aspect that social CRM differs from traditional CRM. In Payne and Frow
(2005)’s framework, it more stresses on how companies manage their customers, however, in
our framework, it more lays on how companies help customers engage into their businesses.
Moreover, considering the character of social media, it makes the communication between
companies and customers conducted more frequently and more simultaneously.
Ⅴ.2.1. Strategy development process─Blur the lines between marketing and customer care
In Payne and Frow (2005)’s framework, they divided this process into two aspects─
business strategy and customer strategy. Nevertheless, we suggest that companies blur the
lines between marketing and customers care, because social CRM’s final goal is customer
engagement, but not customer management. If a company makes the line between company
and customers clearly, there will be a “Wall” which disturbs communication between company
and customers. Furthermore, it brings negative effect of forming their friendship which is
believed as one of criteria for evaluating social CRM.
Ⅴ.2.2. Value creation process─Clarify why customers interact with companies via social media
IBM institute once has conducted a research of why customers interact with them via social
media and presented the gap in their CRM study (2011). The result showed in this study is
Accessing Resources for Social Customer Relationship Management（Sano） （ 385 ）３５
that companies do not understand the real purpose of why customers use social media to
interact with them. When asked what customers do when they interact with businesses or
brands via social media, customers list “getting discounts or coupons” and “purchasing
products and services” as the top two activities. While, on the other hand, companies tend to
believe that customers use social media is because learning about new products or getting
general information.
This result is interesting. Payne and Frow (2005) pointed that companies should value what
customers receive and what they receive respectively. Based on IBM institute’s research, it
means that companies also should clarify why customers interact with companies via social
media before valuing customers and they receive. It is because customers and companies
evaluate the “Value” they receive differently.
Ⅴ.2.3. Multichannel integration process─Understanding the critical role of social media
Payne and Frow (2005) suggested that the multichannel integration process is arguably one
of the most important processes in CRM. In social CRM, this process is also believed as the
most essential position of applying social CRM strategy. As we discussed in 2.2
(Classification of social media), social media is classifying into several groups and each group
has significant common places.
Considering social CRM strategy, companies should understand the critical role of social
media and apply for various social media into their strategy. For example, setting the bottom
linking to Facebook could help companies increase their celebration, because when people
click the bottom of “good” in Facebook, the reading record will be reflected in people’s
Facebook homepage which other people also could read it. It is pointed that opinion leaders
could affect other people’ behaviors. Therefore, how to practice social media into CRM
strategy is critical task for companies.
Ⅴ.2.4. Information management process─Making effects in employees’ training programs
The fourth step showed in Payne and Frow (2005)’s study is main for technology. We
understand the importance of technology, but we do not agree that technology absolutely
relates to a good relationship with customers.
In the literature on service, the role of employees is regarded as very important because
during the service encounter employees’ performance greatly affects customer satisfaction. In
this respect, companies should establish a Center of Excellence to develop and facilitate
training in various levels of social media expertise, and should ensure all employees using
social media receive training on guidelines, policies, customer communications practices, and
processes for mitigating risk and escalating concerns (Baird and Parasnis, 2011). However, as
同志社商学 第６６巻 第２号（２０１４年９月）３６（ 386 ）
the development of social media is still in its early stages, training employees to contact
customers more efficiently and shape social media-based dialogue is not easy (Sano, K. 2014).
Ⅴ.2.5. Performance assessment process─Increasing ROI by analyzing social media networks
Payne and Frow (2005) built the last process from two aspects which are shareholder results
and performance monitoring. However, it is too simple to evaluate social CRM. According to
Baird and Parasnis (2011), social media challenges vary widely, but concern over ROI and
mitigating risk top the list. Based on the research results of the IBM Institute for Business
Value and analysis, although companies’ social media challenges are varied, establishing ROI
strategy is believed to be the most important factor in using social media (IBM CRM Study in
2011). Because most service users tend to rely mainly on information from the internet,
analyzing social media networks can be expected to increase ROI for companies. Customer
engagement management through social CRM is believed as a method of increasing ROI.
However, as social CRM is still a novel concept, there is no empirical research, using detailed
data, to show how social media increases ROI. Further studies should take social CRM’s
effect into account (Sano, K. 2014).
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