social crm comes of age

2009 White Paper

Social CRM Comes of Age

By Paul Greenberg,

Sponsored by Oracle

Social CRM Comes of Age, by Paul Greenberg

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Overview

Since 2003, there has been a revolution in communications that impacts every institution.

Social, political, economic, leisure and business organizations have been affected by a

transformation that not only changes how people interact with the institutions they care to be

involved with, but also changes what it takes to do business - everywhere.

This is a transformation driven by the Internet. It gave unknown U.S. Senator from Illinois,

Barack Obama the presidency of the United States. Obama and his staff understood that the

Web was not just a place to exhibit information, but instead was a vital integrated

communications framework one that could and did drive volunteerism and donations to record

levels -e.g. in one month, $55 million raised via the Web. They understood the power of

interaction in an era where people were emboldened by their ability to communicate in real time

with their peers in ways that could move organizations, entire industries or even the political

process.

The change is a social change that affects all institutions including business. Unlike the past,

business has no substantial or even marginal advantage over any social, political, economic,

government, or other form of institution. In fact, business may be the least equipped to handle

the transformation as of 2009.

Over the past decade or more, Customer Relationship Management (CRM) has been the

strategic approach that most companies had taken in trying to figure out how to supervise their

customers’ behavior. Typically, it was via technology and processes and analytic algorithms that

were tied to an often amorphous management strategy. Gathering data about the customer and

tracking all customer transactions were the way that CRM was used to ascertain the individual

customer’s thinking. Hopefully, the insight it provided about the customer and the effectiveness

of the processes put into place led to some kind of increased level of purchasing or decreased

costs. Additionally, CRM was (and is) used for making some sales and service processes more

effective and for sales and service management tracking the customer facing activities ranging

from qualifying a lead to closing a deal to servicing an order to solving an issue. The strategies,

technologies, processes and workflows are all operational -focused on the enterprise tracking the

customer and capturing data.

But that is CRM 1.0 - traditional CRM.

Since 2003, the impact of the social communications makeover has shifted ownership of the

customer/company relationship to control in the hands of the customer - which changes how

businesses must respond to that customer. Discussions of the value of the company moved

outside the company’s walls to the enclaves of the customer who publicly chatted about the

company without participation of the company in any way. The customer’s conversations were

no longer in control of any company. Additionally, the customer simply did not believe what


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marketing departments told them. As social media favorite book “The Cluetrain Manifesto”

(2001) put it:

• “These networked conversations are enabling powerful new forms of social organization

and knowledge exchange to emerge.

• As a result, markets are getting smarter, more informed, more organized. Participation

in a networked market changes people fundamentally.

• People in networked markets have figured out that they get far better information and

support from one another than from vendors. So much for corporate rhetoric about

adding value to commoditized products.”

As a result of the growth of this thinking among contemporary customers, review sites like Yelp

or Epinions became their communities of choice. Customers went there to get information from

their peers who had experience with the company. The customers were the ones who actually

used the products and services, far more frequently than the companies that provided them.

Consequently, those who hung out at the review sites were deemed more trustworthy than the

marketers who were seen simply as corporate shills pushing a company line.

Who is this “social customer”? What strategies and tools does the new breed of CRM provide to

do something about this? Let’s go find out.

The Era of the Social Customer: The Customer Rules the

Ecosystem

If this were 2003, you could easily make the case that the enterprise still owned the customer

experience. The company remained the center of the business ecosystem. In 2003, the

Edelman Trust Barometer, the venerable trusted annual survey on trust, pretty much said the

same thing it had been saying for years previous. Experts with no vested interest in corporations

remained the most trusted source and, after that, academics. This had been the status quo for

many years. “Someone like me” -a person with similar interests to you - had the trust of only

22% of the respondents surveyed.

But in 2005, something changed. That year, in contrast to 2003, “a person like me” rose to 56%

of the respondents - taking a dramatic leap into a more dramatic lead as the most trusted

source. Outside experts and corporate leaders fell precipitously. What did all that mean? It

meant that the trust that the customers had for anyone outside their peers had been reduced to

insignificance in the space of two years. More importantly, people who had similar ideas and

interests adhered to each other in ways that created what is now an unshakeable bond. The “go

to” source for trust became a peer.

Why?

There are several reasons, technological and societal.


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Technology Advances Communication Multiple technologies advanced over the first decade of the millennium and dramatically

impacted how people communicated with each other and how they were able to navigate that

vast storehouse of the so-called “worldwide web.”

By no means underestimate the importance of Google in this transformation. The exponential

growth of Internet search, with Google alone reaching nearly 500 million unique visitors in just

the month of November 2007, was a significant driver of change. How we accessed information

changed forever. The searcher could now get what they looked for in less than a second. This

eliminated the need for what had been expensive search products whose cost rose

commensurately with the functional power of the search - often to thousands of dollars for

corporations and typically beyond the reach of the ordinary consumer. Google’s ability to find

something from unstructured data became a powerful tool in the hands of anyone who chose to

use it - and at no cost for the product. The paradigm for search was no longer hours and even

days of indexing time behind a corporate firewall and no apparent way to do much with

unstructured data on the web. Anyone had access to incredible amounts of information at

anytime at their fingertips in a format that, while not sexy, was easy to understand.

In conjunction with that we saw significant advances in the use of mobile devices such as the

Blackberry - the first truly enterprise-strength mobile device. Mobile devices became more than

cell phones. They handled email, SMS (text messaging) and internet access. This revolutionized

the way that Generation Y in particular communicated. No longer did you have to call someone

via the phone. You could email them or receive one - and most importantly send and receive text

messages. For the first time, a person could operate in a day to day way carrying out much of

their communications untied to a desk or a home. They were free to move. Additionally, with

SMS text messaging they could communicate directly without directly speaking with the other

party - and it was quick, easy and pretty cool.

But these are just two of the technology tendrils. There are many more germane to the rise of the

social customer such as the growth of web based communities, the explosion of threaded

discussions on forums and the mainstreaming of the blogosphere - all of which fit neatly into the

Web 2.0 category. But search and mobility triggered much of the Web 2.0 growth. The societal

changes were equally and perhaps even more important reasons for the evolution of the social

customer that businesses are dealing with today.

Irreversible Social Change If one had to point to two social factors that are responsible for the way that people now interact

with each other and institutions, they would be:

1. Corporate and financial scandals of 2001-2008

2. The entrance of Gen Y into the workforce.


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While probably needless to say, there are many more worthy of consideration, but these two

have had a major impact on what business faces and what Social CRM can resolve.

If Under 30, Never Trust Anything Worth More than a Billion Dollars

The type of corporate financial scandals that were associated with the 2001 collapse of Enron, in

combination with the more recent collapse of many of the formerly revered, now reviled, Wall

Street financial services institutions, destroyed trust in companies and their leadership in a

matter of a few short years. I won’t dwell on the details here because this is beyond the scope of

this white paper, but what is relevant is that customers began to look elsewhere for who they

trusted when it came to business relationships. In fact, the 2008 Edelman Trust Barometer

found that when it came to information from the CEO of a company, only 23% of its U.S.

respondents trusted the CEO. Not much better, 41% trusted product marketing or advertising

materials.

This came with the simultaneous entrance of Generation Y, also called the Millennials, into the

workforce. These were the children of the baby boomers who were born in the very early 1980s.

What makes this significant is that they are the first generation who grew up communicating via

the Internet and were as comfortable with its use as their parents were with a telephone. Also,

they were 76 million strong - one of the largest generations in history.

Gen Y was also a proactive generation. One that would do what it took to communicate in the

form that they saw as “theirs” - regardless of the rules. Studies done by multiple organizations

found that even within the workplace, 59% of Gen Y communicated with their own tools -

ranging from SMS to social media - regardless of corporate rules.

This isn’t just technology-savvy. Millennials actively use technology for their day-to-day,

ordinary communication and personal productivity - typically mobile - without reservation or

concern (See Table 1 for their communications skills).

Gen Y Use of The Internet

97% own a computer

94% own a cell phone

76% use Instant Messaging.

15% of IM users are logged on 24 hours a day/7 days a week

34% use websites as their primary source of news

28% author a blog and 44% read blogs

49% download music using peer-to-peer file sharing

75% of college students have a Facebook account

60% own some type of portable music and/or video device such as an iPod Table 1 - How Generation Y uses the Web (Source: Connecting to the Net.Generation: What higher education professionals need to know about today's students, by Reynol Junco and Jeanna Mastrodicasa NASPA; 2007)

A key word here is ordinary. Unlike the often awestruck older generations, this is just what the

Gen Yers do. It doesn’t stand out. Its how they live - which means it needs to be reckoned with

by businesses - because that very “ordinariness” is impacting every other customer out there.


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For example, how often have you read about the impact of social media or text messaging or

Web 2.0 on marketing departments or PR firms, who are scrambling to understand this so-

called phenomenon or on mainstream media like newspapers or network TV? NBC Universal,

in October 2006, laid off 750 employees and was forced to slash $750 million from its budget

due to what the Washington Post called “the impact of YouTube, social networks, video games

and other upstart media” on traditional networks.

This is also a generation with different expectations. They expect to get what they need. They’ve

been raised to think they will. More often than not, they do.

Bruce Tulgan, author of Managing Generation Y, put it well in an interview with USA Today on

Gen Y’s expectations at the workplace:

“This is a generation of multitaskers, and they can juggle e-mail on their

BlackBerrys while talking on cell phones while trolling online.

"They're like Generation X on steroids," Tulgan says. "They walk in with

high expectations for themselves, their employer, their boss. If you

thought you saw a clash when Generation X came into the workplace -

that was the fake punch. The haymaker is coming now."

The Social Customer Arrives This combination of factors transformed the way that the customer thought about doing

business - not just how they did business.

These social customers didn’t have to rely on corporate literature and self-interested sales

people any longer. They could rely on the web and each other for information on their potential

purchases and for deeper knowledge about their common interests - work or play.

Take a review site such as Yelp as an example. These sites are easily available to the users of

products, services, or visitors to institutions and they provided a means for those who wanted to

participate to rate, usually 1 to 5 stars and comment on the products that they used so that there

was all in all an unvarnished idea of:

• How good was the product?

• Did it meet the expectations the buyers had of it?

• What did it do right? Wrong?


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• Did the manufacturer or retailer product provide appropriate service around the

product?

• How did the company handle the order, shipping and, if need be customer service?

These aren’t formal reviews with rigid specifications or review criteria. They are informal and

their language is conversational. Certainly there are agendas being met by some of the reviewers

- some are shills for the companies that made or sold the products; others have a personal

agenda - usually a vendetta. But when taken as a whole and read granularly, each of the product

reviews and the picture painted of the product affects whether or not someone reading the

review would purchase the product. A study done by BigResearch in 2007 found that the most

powerful form of influence is word of mouth (42% of respondents) - once again, conversation

among those who are “someone like me.” A 2007 study done by Doubleclick found that the

Internet was the most influential medium among influencers (#1 at 39%) and non-influencers

(#1 at 28%) alike.

Even putting this data together in a linear way, you can come up with the most powerful source

for any business in how and where it engages its customers. A good guess would be word of

mouth via the Internet.

Translate that in pragmatic terms. What enterprises see is that social networks that are

primarily review sites like Yelp or are customer feedback and action sites like Planetfeedback

have become a primary source for the conversations among customer - out of the hands of the

company. Continue to translate and you find that the use of blogs, text messaging, participation

in threaded discussions on forums, comments on the social sites, even satirical videos, are part

of the mix of tools they use to communicate their thinking - about those very same businesses.

But a smart company, using similar tools, can use all this as a valuable place to learn from and

engage with those same active customers.

By themselves, CRM’s traditional tools don’t really provide the functionality to handle customer

engagement in ways beneficial to the company but the addition of social functionality gives CRM

a powerful new incarnation - Social CRM. It is Social CRM that provides the enterprises with

what they need to intersect all this independent activity. If having customers matters to you,

using Social CRM helps you keep and even acquire them - in good or bad economic times.

CRM Morphs from the Traditional: What Differs?

Just to be clear from the start, Social CRM does not substitute for traditional CRM - it extends

traditional CRM. Businesses still need to use technology, run processes, develop operational

strategies, apply business rules, assign roles and responsibilities for those roles and develop the

appropriate routing and workflow for their particular efforts. That hasn’t and will not change.

Social CRM takes that traditional CRM set of functions and capabilities applicable to sales,

marketing and customer support and extends it by integrating the social tools for

communication with the customers - and to allow you to capture even richer knowledge of that


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particular customer or that deal opportunity. This additional capability not only provides the

means to deeper customer insights but allows the customer to participate in the life of the

company in ways that are mutually beneficial.

To understand that, a quick look at the differences between traditional CRM and Social CRM-

which are there - are in order.

The Definitions Here’s the original definition of CRM as presented in CRM Magazine, October 2003 in a Reality

Check column by the author.

“CRM is a philosophy and a strategy supported by a system and a technology, designed to

improve human interactions in a business environment.”

Traditional CRM has been an operational, transactional approach to customer management that

was focused around the customer facing departments - sales, marketing and customer service.

How do process modification, culture change, automation through technology and the use of

data for customer insight support the management of customers. Typically, the objectives for

traditional CRM might include increases in revenue or profitability, an increase in “selling time”,

or campaign effectiveness, improved use of a sales process, or if you’re into customer service in

particular, reduction in call queuing time - as examples.

Once you develop a CRM strategy and are able to plan appropriate programs, applying the newly

defined or redefined processes and a well chosen technology would support your ability to

manage those relationships. The customer’s benefit is better service, attention and support from

the company. The more sophisticated companies use CRM to gain insight into particular

customers.

In theory, it was great and in practice, despite notable failures, as it matured and the thinking

about it became clearer and the tools better, the success rates increased. The numbers

supported that. But it didn’t start out that way. In 2002, when CRM was immature and still

trying to find its legs, Gartner found that failure rates were apparently between 55% and 70%.

Over the years the success rates have exceeded 50% - befitting a mature CRM market.

The kinds of solid ROI that many companies saw, sometimes spectacularly so, keeps CRM as an

incredibly popular strategic option for most companies. In fact, despite all the initial glitches, it’s

become something of a business requirement. In July 2008, AMR Research released their "The

Customer Management Market Sizing Report, 2007-2012.” Their estimate just for the CRM

software revenues in 2007 alone topped $14 billion, a 12 percent jump over 2006 revenues.

They didn’t have the final numbers at the time they released the report. More amazing was the

prospects - again this is just for software. They projected a market size of more than $22 billion

in 2012, a 36% growth rate - with a poor economic outlook floating everywhere. If nothing else,

this shows you the enthusiasm that CRM engenders - even the traditional operational side.


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Slightly less optimistic but still staggering were the Gartner July 2008 numbers which said that

the 2007 CRM software license revenues were $8.8 billion and projected to be $13.3 billion by

2012. These numbers are being revised downward due to the recession, but still remain, from

all reports, substantial.

But Social CRM, often called CRM 2.0, grew from the changes in the empowerment of the

customer. Thus, it differs with traditional CRM:

“Social CRM is a philosophy & a business strategy, supported by a technology platform,

business rules, processes and social characteristics, designed to engage the customer in 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.”

This isn’t meaningless journalist’s wordsmithing. The need for a revamped CRM, Social CRM,

implies the existence of a fundamentally different customer paradigm. It means that not only do

the historic operational and transaction-based capabilities of CRM have to come into play - but

so do the social features, functions, processes, and characteristics that address the interactions

between the customer and his or her peers and the customer and the company with its suppliers

and partners. Everything, including the associated technologies and systems, has to support the

strategies that companies need to address when it comes to customers and their recent bequest

of empowerment.

Rather than go through a series of convoluted paragraphs on CRM 1.0 and 2.0 distinctions,

here’s Table 2, which gives you a quick comparative look at the granular differences between

traditional CRM and Social CRM.

Traditional CRM Features/Functions Social CRM Features/Functions

Definition: CRM is a philosophy & a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment

Definition: Social CRM is a philosophy & a business strategy, supported by a system and a technology, designed to engage the customer in a collaborative interaction that provides mutually beneficial value in a trusted & transparent business environment

Tactical and operational: Customer strategy is part of corporate strategy

Strategic: Customer strategy IS corporate strategy

Relationship between the company and the customer was seen as enterprise managing customer - parent to child to a large extent

Relationship between the company and the customer are seen as a collaborative effort. And yet, the company must still be an enterprise in all other aspects

Focus on Company <> Customer Relationship

Focus on all iterations of the relationships (among company, business partners, customers) and specifically focus on identifying, engaging and enabling the "influential" nodes


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The company seeks to lead and shape customer opinions about products, services, and the company-customer relationship.

The customer is seen as a partner from the beginning in the development and improvement of products, services, and the company-customer relationship

Business focus on products and services that satisfy customers

Business focus on environments & experiences that engage customer

Customer facing features - sales, marketing & support.

Customer facing both features and the people who's in charge of developing and delivering those features

Marketing focused on processes that sent improved, targeted, highly specific corporate messages to customer

Marketing focused on building relationship with customer - engaging customer in activity and discussion, observing and re-directing conversations and activities among customers

Intellectual Property protected with all legal might available

Intellectual property created and owned together with the customer, partner, supplier, problem solver

Insights and effectiveness were optimally achieved by the single view of the customer (data) across all channels by those who needed to know. Based on "complete" customer record and data integration

Insights are a considerably more dynamic issue and are based on 1) customer data 2) customer personal profiles on the web and the social characteristics associated with them 3) customer participation in the activity acquisition of those insights

Resided in a customer-focused business ecosystem

Resides in a customer ecosystem

Technology focused around operational aspects of sales, marketing, support

Technology focused on both the operational and social aspects of the interaction

Tools are associated with automating functions

Integrates social media tools into apps/services: blogs, wikis, podcasts, social networking tools, content sharing tools, user communities

Utilitarian, functional, operational style and design also matter

mostly uni-directional always bi-directional Table 2 - Quick Look at Traditional CRM v. Social CRM (source: CRM 2.0 Wiki)

Those are the functional differences between the two. Before we look at the tools and benefits,

its important to understand the strategy.

Social CRM Strategy


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Social CRM’s customer strategy and associated business models

are those defined by customer engagement, not customer

management. While traditional CRM used data to track

transactions with the customer - be it sales data such as purchases

or service data such as trouble tickets and the outcome - the holy

grail was the 360° view of that customer. That means a single

customer record with all data pertaining to that customer -

regardless of department - that is made available to all those who

need to see it. But while that was considered the optimal

achievement of a traditional CRM deployment, it is now a pre-

requisite for a truly successful CRM effort - though only 38% of

companies claim to have it.

But Social CRM has a different holy grail. Rather than one that is

transaction-friendly and data driven, the new grail is “a company

like me.” This fits with a strategy for customer engagement.

What it means is that each customer has the products, tools,

services, and experiences he or she needs to sculpt an individual

interactive relationship with the company in a way that satisfies

each of their personal agendas. It means that the company is

willing to be transparent enough and honest enough (goes by the

term “authentic” nowadays) to be trusted by that customer. So

the company becomes a “company like me.” The experience that

the customer has with the company is positive enough to make

that customer into at least loyal and at best, an advocate.

When a customer engagement strategy is effective, with the

successful support of social CRM tools and processes, there is a

mutually derived benefit planned from the beginning. That

success is characterized by a fundamental shift in the relationship

between the company and the customer from producer-client to

partners. This is not a small effort. This is a major cultural and

behavioral change in how the customers interact with a company.

If they see themselves as partners, they feel that they have a stake

in the success of the company. They commit to the company in

ways that go well beyond customer satisfaction. They become

advocates for the company. As you can see in the Karmaloop case

study (see sidebar), they can engage in community building and

can even operate as an extension of the sales team for the

company.

But these engaged customers expect a return. They expect that

they will have some visibility into the workings of the company so

that they can make smart decisions. They expect that they will

Case Study: Karmaloop

Boston-based Karmaloop is a clothing

site that sells name brand clothes and

accessories skewed toward 2o-

somethings. These more traditional

product lines are infused with a healthy

mix of independent designer creations.

Their business model is based on the

encouragement of the growth of a

community- now some 800,000 strong -

who buy their clothes, design their indie

lines and sell their clothes as members of

“street teams.” The company encourages

community members to upload their

creative designs, if they are inclined to do

so, and then have the community

comment on them and rank them. The

best of the indie designers are highlighted

with profiles in an e-zine. There is a web-

based TV show that discusses youth

fashion trends. They have an upcoming

social network that is by invitation-only

to trendsetters.

But the crown jewel for Karmaloop is

their street teams. This is roughly one

percent of their total community - 8000

members who go and sell the clothes and

accessories offered online. They are given

a wide range of creative options and are

encouraged to upload the fruits of their

efforts to move the clothes with videos

and photos - and, of course, the

community is encouraged to rank and

rate and comment away on how they see

each street team doing.

The street teams are rewarded for two

things - sales and community

participation. It matters if they (or any

member of the community in fact) recruit

to the community. It isn’t just an

ordinary affiliates program. In return,

they get cash, clothes and credits to buy

“stuff.”

Karmaloop’s ROI? Not only community

growth, but that one percent drives

fifteen percent of the company’s sales.


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have privileged and personalized treatment. That could take the form of greater discounts,

loyalty program points, some other form of recognition; even access to management isn’t out of

the question. They expect honesty also and while that may seem easy - it isn’t easy for most

companies - and they know it. As we roil through 2009, corporate senior management doesn’t

even think they know their customer or that they deserve their customer’s loyalty.

Strativity, a customer experience consulting firm run by industry luminary Lior Arussy, does an

annual survey on how senior management thinks about its customers. The findings are so

frequently shocking that they are no longer shocking.

The 2008 study found the traditional bit of lip service to CRM strategy with 80% of the surveyed

executives saying that customer strategy is more important to their success than ever before.

But what is not surprising, given the year over year results is the following from 2008:

• 43.9% believe that their companies deserve their customers' loyalty.

• 42.6% responded that their companies' products and services are NOT worth the price

they charge.

• 43.7% said their companies will take any customer that is willing to pay

This outlook implies something rather disturbing, though not shocking - something that

reinforces the distrust of CEOs and marketing departments, outlined earlier.

A huge percentage of senior executives doesn’t believe in their own efforts enough to think that

they deserve a commitment from their customers and are desperate enough to say and do

anything to get a paying customer.

Harsh words, but the survey supports the contention. Add this to the already existing customer

distrust and you can see the obstacles here. This is why creating a transparent and authentic or,

if you’d rather, open and honest, interactive relationship between a company and a customer is

not an easy thing to do. Given the above, how can you?

Ah. This is where Social CRM shines. We’ve discussed the strategy - now for the tools.

The Social Tools

To fully engage customers and to increase the chances of success with those either business to

business (B2B) or business to consumer (B2C) customers, both the customers and the

employees feel that the tools are integral to the effort. Oddly, where customers do trust the

company is if they use social tools.

Two studies that came out in mid and late 2008 confirm this seemingly peculiar notion. Cone

released a study on “Business in Social Media” that found that 34% of Americans think that

companies should have a social media presence. Even more telling, 56% of the total respondents


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felt a stronger connection to the company and its brand when they could use social media tools

to interact with that company and 57% of them felt “better served.”

Contrast that to the Strativity study mentioned a short bit ago. If executives truly mean that

customer strategy is more important than ever before and a huge amount of those executives

think that they aren’t doing much for customer’s commitment - then, given what the customers

are saying, it would seem to be a no brainer to provide those tools to deepen the commitment

and serve them better.

Social CRM Tools Benefit the Enterprise But because there is so much more than just brand commitment and even customer loyalty that

a business has to consider, the combination of traditional CRM and integrated social tools is

where the real benefits begin to show themselves. Figure 1 shows the types of tools that we’re

talking about for social CRM and the infrastructure and technology platform that it needs to sit

on. It combines the operational strengths of traditional CRM tools with the power to reach out

and capture external customer interaction - and directly connect with customers. But Social

CRM tools add an additional strength.

If you focus on the middle pillar you’ll note that the traditional sales force automation,

marketing automation and customer service tools (viewable on the left pillar) are replaced by

social sales, social marketing, and customer service 2.0 tools. Replaced might not be the right

word here - enhanced is perhaps better. The mid-pillar tools are geared toward optimizing the

successes for varying enterprise departments.


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Transaction (Operational)

Interaction (External)

• Salesforce automation (e.g. opportunity management)

• Marketing automation (e.g. campaign management)

• Customer service (call center)

• Dashboards

• Features and functions

• Business intelligence

• Blogs and podcasts

• Wikis

• Communities

• User generated content (employee ratings, rankings, comments)

• Enterprise widgets/gadgets

• Internal messaging

• Text/web behavior analysis

• Social sales tools (e.g. opportunity optimization)

• Social marketing tools (e.g. social network outreach)

• Customer service 2.0 tools (e.g. Twitter service issues analyzed)

• Blogs and podcasts

• Twitter/IM

• Social networks/ communities

• Forums/threaded discussions

• User generated content – video upload, comment, ratings, rankings

• Social tags and social bookmarks

• Features, functions, characteristics

Enterprise SOA: web services (or REST/WOA)

Integration/APIs Master Data Management (MDM)

Business rules engine Workflow

RSS Feeds/Subscription services

Traditional Social

Figure 1: Social CRM Tools and Foundation

Feed

Intersection


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Social Sales

The traditional sales force automation tool has been a tracking tool. Typically, it tracked

accounts, leads, contacts, opportunity and gave sales management a view of each and all of the

sales pipelines that were out there, and depending on the sales methodology used, the chances

of success. But these were pat formulas that were built into the methodology as often as not -

and based on what steps you had achieved. Social sales tools far exceed that. They are designed

to optimize the rate of success for deal closure by doing a number of things that will give you a

better “best guess” than ever before. So they involve for example:

1. The combination of internal histories with customers that

can define similar deals and how they succeeded with

external unstructured data that is pulled not only from

the traditional Reuters/Hoovers corporate information,

but non-traditional sources such as Jigsaw or profile

information from LinkedIn or Facebook. This is then

analyzed and compiled into a much richer, more

comprehensive view of the opportunity and the factors

that might affect it - including the individuals and their

profiles.

2. Rather than the more traditional guesswork involved in

identifying which presentations and which documents are

best when dealing with a particular client, a combination

of algorithms and user generated content - meaning the

rankings, ratings and comments from the other internal

sales professional - and perhaps the marketing staff, give

a much better idea of the appropriate choice of

presentation or document.

3. Collaboration via wiki on a response to a request for

proposal (RFP) and then the generation of that RFP

response once the final result is signed off on, so that it is

ready for delivery.

Social Marketing

Social Marketing tools are still in their early incarnations.

1. Outreach - These tools are designed to interact with

Facebook or MySpace and similar huge membership,

high activity volume social networks. The tools are

focused on offer optimization that are based on how they

interpret not just the activity of the individual on the

social network, but the data in his or her profile.

2. Mobility - this is the one with incredible promise.

Imagine giving your prospective customers access to the

Social Marketing Metrics

Social Marketing implies a whole new set

of metrics. The percentage of responses of

a customer to a compaign are no longer

sufficient. Metrics will have to weigh the

emotional and behavioral responses of

individual customers and take the

temperature of entire communities. While

still nascent, PricewaterhouseCoopers

(PwC) came up with some that present a

useful start, what they call, “hearing

whispers.”

1. Volume –The amount

something is mentioned v. its

historic pattern.

2. Tone – Is it positive, negative,

neutral?

3. Coverage -The number of

sources generating a particular

conversation

4. Authoritativeness – A

qualitative ranking of the

source’s reputation

Source - “How Consumer Conversation

Will Transform Business” – PwC, 2007


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catalog of goods and services offered by your retail operation via their iPhone or

Blackberry or whichever phone they use (anytime, anywhere on any device). Not only

will they have access to the comments and ratings of other customers for each item and

can add theirs, but their real time activity is tracked and an optimized offer is texted to

them, based on their histories and their real time activity. This all takes place on a mobile

device.

Customer Service 2.0

Traditional customer service is easy to spot. It starts with a complaint to a customer service

representative via a phone call to a call center rife with automated menu functions or via the

Internet. While the problem may be eventually solved, the customer is usually more disgruntled

than when they filed the complaint. It could be that the automated system was an impediment

rather than a benefit or the person they spoke with was inadequately trained. One of the

traditional ways of dealing with this CRM problem is to reduce the amount of time in call

queues. But customer service 2.0 tools are based on a markedly different archetype:

1. Services that scan communities that range from Facebook and Planetfeedback to Twitter

to find customer complaints and then using analytic tools, determine the emotional

depth - good or bad - of the complaint. Based on business rules and workflows that are

embedded into the service application, the outcome triggers an alert sent to the

appropriate person in the chain of command.

2. If a customer has an issue and is willing to allow the community of other customers to

help solve the problem, the trouble ticket is opened up for the community as one of the

solution providers. If an answer is found, it becomes part of the company customer

service knowledgebase.

What is remarkable about social sales, marketing and customer service 2.0 is that none of the

tools and their benefits are scenarios or future wishes. Each one exists now. Some in public

beta, some complete product - all functional and all with customers. Social CRM tools in

combination with traditional CRM tools literally are the link between you and your customer

from here forward.

The Social CRM Value Proposition

If you have a successful CRM strategy and use the right tools to support the strategy, then the

value derived can be potentially remarkable. But, in order to actually extract the value that you

might be looking for, it is important to understand what the benefits might be - and what they

won’t be.

Social CRM provides you with the tools for true insight into customers that can be used to

facilitate successful sales and better relationships with customers. It also provides the


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capabilities for the customer to interact with you in a more effective way which transforms how

the customer sees you and what the customer wants to do with you.

Insight True insight into your individual customer has been an elusive goal for as long as CRM has been

around. What normally was called “insight” was actually the accumulation of customer

transaction data into a single record - the 360° view of the customer - and was seen as an end

unto itself. This is coherent with the value proposition of traditional CRM - a data-driven,

process driven methodology, strategy, and business model. But, somewhere along the way, this

single customer record became a substitute for insight.

Social CRM provides you with what you need to get true customer insight -which means insight

into an individual, an account or into the combination of activities and objects needed to make

an opportunity into a successful deal. It draws on history using internal and external

knowledgebases, but also involves the intelligence of the others at the company. This is done

typically through the use of tools like wikis, or what is universally called user generated content

(UGC) which takes the form of comments, ratings and rankings more often than not. So not

only is valuable data parsed but then the emotional and behavioral characteristics expressed

through the UGC are taken into account, given a much richer picture of the subject matter in

question. Typically there are three or possibly four pieces to gaining the level of insight needed

to deal with the contemporary customer successfully.

1. Data – This includes the now standard information that the company can gather

through the transactions of the customer with the company. That means purchase

histories, returns, visits to ecommerce or website and time spent on different pages;

marketing response to campaigns and customer service inquiries and problems, among

many others. This can also be data gathered from external sources about the

company/prospect. So not only would data from Reuters be captured on the financial

status of a company, but data about the company from threaded discussions, and social

networks and user communities would also be parsed to add a much more important

dimension to the more static transaction data and pure corporate information.

2. Profiles – This is the “personal” information that is now so important in gaining

customer insights into how a customer wants to interact with the company. This could be

their movie and literary interests, their hobbies, their “style” likes and dislikes. It means

their unstructured text comments in a community or social network e.g. Yelp for a

restaurant or a geographically based retailer. With the growing interest in micro

segmentation – the deep dive into the customer’s lives (without being intrusive) to

understand their style and selection choices for predicting future sometimes apparently

unrelated behaviors, profiles become essential for finding differentiable information

about the customer you need.

3. Customer Experience Maps - Customer experience mapping fosters the insight into

the customer because it overcomes the usually incorrect knowledge about the customer’s

thinking. Typically, if you ask a marketing department about the customer, they can tell


17

you what the customer is thinking. However, their “insight” is more often wrong than

not, because it’s based on presumptions about the customer - either due to some

generalized demographic or because of some survey that was taken in an environment

that has nothing to do with either the natural interactions of the customer and the

company at any one of a number of touchpoints or the actual thinking of the customer on

the interactions themselves. They presume for the customer. However, customer

experience mapping examines the granular interaction of individual customers in

multiple environments at multiple touchpoints. It also looks at the expectations of the

actual customers; the results of the interaction based on the expectations and the actual

weight the customer places on the individual results. In other words, what the customer

actually think.

4. Social Network Analysis - This is the breakdown of who is in a decision making

position and who is influential and how they interact. A look at the interactions among

social groups and individuals sometimes reveals influencers who otherwise wouldn’t be

obvious, yet may be key to closing a deal. The visualization of this is called the social

graph. This is particularly valuable in B2B environments.

5. User Generated Content - UGC is perhaps the newest piece in the insight puzzle. The

deep store of comments, ratings, rankings and even rich media content that gives you

further knowledge about your prospect or opportunity has been one of the untapped

founts of invaluable wisdom that supports the other required components for insight.

Social CRM tools provide the means to capture the data, the profiles and to create the

experience maps which in turn help develop the real insights into customers that provide what is

a genuinely personalized and delineable experience for individual customers. Historically, CRM

couldn’t do this. It could gather all the transactional data - but the emotional and behavioral

knowledge of the customer that the profiles and the experience maps supply weren’t part of

CRM’s value proposition - until now.

If used well, the insights gained, will support what a sales person in particular but also staff

member interacting with a customer in general, craves. That would be an increase in positive

reputation, which can lead to an increase in influence, which then can allow the newly reputable

and influential salesperson to be more persuasive - because they are more trusted.

Interaction

Enhanced insight is only one of the two active improvements that social CRM provides. Aside

from its solo value, it plays a valuable role in the propagation of the other improvement -

customer/company interaction. Enhanced insight leads to trust which leads to the customer’s

desire for either further or deeper (or both) interaction. But there is more to it than that.


18

Two of the guiding characteristics of social customer strategy are corporate transparency and

authenticity. Customers require greater visibility into both the day-to-day workings of the

companies they have an interest in and in acquiring the information they need to make

intelligent decisions about their dealings with the company. They also require the capacity to

honestly interact with the corporate leaders and appropriate parties without a lot of bureaucratic

interference.

While there are certainly nearly countless ways to do this, Social CRM provides a framework for

interaction that allows not only the customer what they are looking for but also gives the

company actionable data in return - which of course provides for greater insight.

The kind of interactions that customers are looking for are those that give them what they need

to achieve their particular personal agendas. This goes beyond the normal utilitarian

transactions where customers come to buy a product or service. These will still exist, but they

don’t often provide enough interactions and relationship to create the optimal customer - an

advocate who will speak for you.

Customer engagement strategies serve the need of customers who choose to interact with a

company and expect that in return, they will get the products, services, tools and experiences

they need to achieve their agenda. That agenda could be momentary - to buy something with a

particular configuration at a certain price that they would receive within a certain timeframe. it

could be an ongoing subscription-based service such as on demand salesforce automation that

might grow to multiple modules including customer service or marketing within a year or so.

But these interaction strategies also serve the need of the sales person who is looking to turn a

lead into an opportunity or an opportunity into a deal.

It also serves the needs of customer service when the quick and accurate resolution of trouble

tickets and real world problems of their customer become paramount, not just to maintain the

customer but to sustain the good reputation of the company. Because it is easier than ever for

one person either accidentally or deliberately to damage the reputation of the company as well.

Just ask United Airlines. In September 2008, an erroneous Google search led to Bloomberg

publishing a story that United had filed for bankruptcy. While true, this Google search had

found a 2002 Chicago Tribune story and it was listed as current. Within hours, United’s stock

price dropped 75%. Highly damaging to a company already damaged.

However, trusted relationships, while perhaps not able to stop the error, go a long way to

mitigating problems and overcoming issues - in addition to propagating the good about a

company. Continued interactions with customers that have great outcomes will reduce the bad

and increase the good between company and customers.

Concrete Benefits Are Alive and Well - Now Okay all of this is good, but isn’t it hypothetical? There are clear cut benefits derived through

the use of Social CRM tools. But is 2009 a point where a look back will see benefits from Social

CRM outcomes?


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Apparently it is.

Coleman Parkes Research, in a study released by Avanade in 2008 called “CRM and Social

Media: Creating Deeper Customer Relationships” found that companies were seeing real world

benefits even a mere three years into the existence of Social CRM.

Look at these numbers:

• 78% found that integrating CRM and social media led to improved feedback

• 75% found that it created a perception of the company as forward-looking

• 71% found that it led to a reduction in time to resolution for support issues

• 66% found it led to greater customer satisfaction

• 64% found it led improved market reputation

• 40% found that they could see specific improvements and increases in sales

Social CRM is not mature yet but it is evolved enough to give you the understanding of the social

customer, the strategies you need to engage that social customer and the tools that will allow

you to optimize your successes with that customer - in healthy economic times or during a

recession.

Summary

This is it. End of story - this white paper’s story that is. The story of Social CRM is just

beginning as customers continue their fast-paced jog on their road to owning their own

relationships with companies. Social CRM gives the companies the strategies and tools to

respond to those customers. You ready?

social crm comes of age

Business

user generated content

real time activity

social crm tools

text messaging

social network

social media

paul greenberg

marketing departments