Social CRM: Overhyped Fad or Transformational Solution

Last month, I wrote  “Unleashing the Value of Social CRM: Where to Find the Biggest Return”.

Towards the end of the article, I posed this question: “Which functional area do you think will be able to leverage Social Media and Social CRM the most, and provide the greatest impact to the profitability of an organization?”

The comments section and some referring posts provide some great discussion from some of the greatest minds in the world of CRM including Graham Hill, Natalie Petouhoff, Brent Leary, Esteban Kolsky, and a host of other minds much smarter than mine.

In the end, I walked away with the following conclusion: We collectively don’t know yet. Social Media and Social CRM are still in their relative infancy in delivering solid, proven value. However, there seems to be the strongest argument (and early data from companies like Helpstream, and Lithium) from those in customer service and support functions, and I can’t really argue with them.

In my closing blog comment, the last question I ended with was: “How do you justify the investment – time and money- in Social Media? Where do we have the greatest chance of success (profitability) starting out?”

Yesterday, Bill Band of Forrester Research asked a similar (and very important) question on Twitter: “CRM Evolution Conf. all about social phenom. But, my data shows less than 10% of companies have customer communities now. Too much hype?”

This, undoubtedly sprung from his recent research shared in his recent blog post: “The Extended CRM Application Ecosystem: Value, Risk and the Future of Social CRM”.

Band draws the following conclusions in his article:

“While “Social CRM” solutions have captured the imagination of decision-makers at many organizations, it is the tried-and-true technologies that offer the most certain return on investment.”

“The business value of social solutions is yet to be proven. Interest in “Social CRM” solutions is growing rapidly. But, mainstream companies are watching for evidence of success by the early adopters. Although enterprise feedback solutions, customer community platforms, and customer forums are viewed positively by the respondents in our survey, none of these three are considered “critical” to success. Therefore at this time, business value discounted for uncertainty is low.”

Many, at this point, recognize the potential for using Social Media to transform customer relationships, but the uncertainty factor still weighs heavily.

A study by Russell Herder and Ethos Business Law titled “Embracing the Opportunities: Averting the Risks” found that Social media  can be critical to company growth and sustainability.

• 81% believe social media can enhance relationships with customers/clients
• 81% agree it can build brand reputation
• 69% feel such networking can be valuable in recruitment
• 64% see it as a customer service tool
• 46% think it can be used to enhance employee morale

However, 51% percent of these executives fear social media could be detrimental to employee productivity, while 49% assert that using social media could damage company reputation.

Much of senior management’s direct experience with social media appears to be reactive versus proactive, concludes the report. 72% of executives say that they, personally, visit social media sites at least weekly:

• 52% to read what customers may be saying about their company
• 47% to routinely monitor a competitors’ use of social networking
• 36% to see what their employees are sharing
• 25% check the background of a prospective employee

There clearly needs to be much more education. That’s where those of us who regularly interact on Twitter following the #scrm hashtag come in.

Society is making a giant transitional shift because of Social Media. This “change” transcends the conversation of Social CRM and even business as a whole. The world is changing, and rapidly. For some staggering statistics that will make your brain spin, watch the video below:

For the enterprise and business community, things  are still really just beginning. Early adopters will (and some already have) capture the first mover advantage. However, they will also face the obvious risks of venturing into this new frontier first. InfusionSoft has literally saved millions by adopting a Social CRM strategy.

David Alston, Radian6’s VP of marketing and community said in a recent PR week interview:

“We are just scratching the surface in terms of how social media will transform the (PR) agency and the enterprise. The nature of social media – its accessibility, transparency, and its ability to build relationships – is challenging the processes and structures within companies, many that have become too rigid and siloed to react to the new Web 2.0-empowered consumer. I believe we are where CRM was 10 years ago.”

Change is upon us. The question is not whether Social Media and Social CRM will become an important strategy/tool/channel for your organization, but rather, when?

So what should you do now?

1. Learn as much as possible related to Social Media and Social CRM

2. Talk with your best customers, and most importantly, LISTEN

• What are they doing with Social Media?
• What do they wish you did better as an organization?
• What can you do to improve your value offering to them?

3. Begin to experiment with  Social Media for your business

• Blogs
• Wikis
• Twitter
• Community Platforms and Forums
• Social Networking (Facebook, LinkedIn, etc.)
• Social Media Monitoring

Perhaps best-selling author and Founder of the The Altimeter Group Charlene Li said it best:

“Mistakes in social media are inevitable – after all, you’re building relationships and what relationship is perfect?”

If you are remotely interested in Social CRM (formerly known as CRM 2.0)…

then be sure to check out the post by Paul Greenberg Time to put a stake in the ground on Social CRM.

The comments are equally valuable to the discussion.

Traditional CRM vs Social CRM: Expanded

Brent Leary, widely recognized expert on Social CRM, does a great job of summarizing the difference between Traditional CRM and Social CRM in the Inc. magazine Article below. I’ve added some of my additional thoughts.

Traditional CRM vs. Social CRM

By Brent Leary

Traditional customer relationship management’s strong suit has been improved operational effectiveness, easier access to data, and improved collaboration. Social media adds the dimension of connecting with potential customers.

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Brian here. I would add the following to Brent’s statements:

The first being that many companies are now looking towards “Traditional CRM” solutions not only because they are interested in improving their customer acquisition efforts, but because they have realized that customer retention efforts are their best bet in an environment where there are fewer new and existing customers in the marketplace. This desire to improve customer retention is currently next to impossible because they don’t really even know who their customers are, and which ones would be the most beneficial to keep. CRM can help with that.

SaaS (Software as a Service) offerings have been steadily gaining traction over the past several years, but the argument that it saves cost, time, and effort has been a hotly debated topic. For some small businesses a SaaS solution certainly makes the most sense, but a good percentage of companies still choose an on-premise solution because of 1. Security/Privacy Concerns, 2. Ease of Integration with other applications 3. Lower long term TCO (Total Cost of Ownership).

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site — what they refer to as “member communities.” The integration of social media into CR strategy — called Social CRM — differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need — the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action — starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

In addition to supporting and enabling marketing, lead generation, and customer acquisition efforts, Social Media and therefore Social CRM are also being leveraged by companies for customer service, brand monitoring, and customer retention efforts. The content production that Brent mentions is a great way of attracting eyeballs and filling the lead funnel, but companies are also integrating “listening” into their Social CRM strategy. Companies like Comcast have used Twitter to monitor negative comments about their brand and take a proactive approach at solving problems for disgruntled customers. Social Media and its integration with traditional CRM efforts have opened up new ways to turn an unhappy customer into a raving fan. Other companies like HelpStream and Lithium are pioneering new ground, using Social Technologies to build communities where customers and prospects interact with each other to solve problems and discuss ways to best leverage companies products and services.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation — on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact — both internally and on the customer — social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary

via Traditional CRM vs. Social CRM

Have additional thoughts or ideas related to the differences? Please share them below!

Social CRM – CRM 2.0 – CRM using Social – The Integration of Social Media with Customer Relationship Management Systems?

Honestly guys, can we please get back to important issues beyond semantics?

In case you missed it, a heated debate sprung up this week in the Twitter and Blogospheres, respectively. Read the following to get caught up to speed.

Esteban Kolsky’s Post
Prem Kumar Aparanji’s Post
Rob Schneider’s Post

In my humble opinion, those of us who regularly interact on the #scrm channel seem to have a pretty good understanding about the framework of what we are talking about. The healthy and spirited debate is great, and hopefully not only enriches our individual and collective understanding, but also that of the customers we serve.

What it is, and how we use it today and in the future, at the most basic level is still up for debate. Regardless of anybody’s claims, the reality is that we are very early on in integrating the world of social media with traditional CRM solutions. Those that have pioneered the space are just beginning to be able to quantify returns and metrics, and are discovering “unintended consequences”, both good and bad.

There is plenty of hype. I agree. But I believe there is also tremendous opportunity to harness the Groundswell (thanks Forrester, Charlene Li, and Josh Bernoff) that is taking place in the world around us for the tremendous benefit of CUSTOMERS through new and innovative Sales, Marketing, and Support interactions.

The question we are all attempting to answer is “How do companies leverage the emergence of Social Media to increase customer experience, customer acquisition, and customer retention?”

From my perspective, call it what you want – Social CRM, CRM 2.0, CRM using Social, or any other term. Truthfully, it doesn’t really matter. CRM is about a lot more than CUSTOMER RELATIONSHIP MANAGEMENT, but it provides a common term for discussion and innovation. SOCIAL CRM should be the same.

Let’s get back to meaningful conversation, and regardless of your view(s), I’ll be hanging out on the #scrm channel for more interesting interaction.

More on Social CRM: The evolution continues

Lots of conversation flying around about what Social CRM is, and what it isn’t. If you use Twitter and/or friend feed, I encourage you to join the conversation at #scrm.

Business and Sales have always been about relationships. People buy from people they like and from people who provide compelling value propositions for their problems.

These principles are timeless, well documented, and well proven.

Technology over the recent course of history, has provided the tools to enable this process to happen more quickly in a more efficient manner. Traditional CRM enables organizations to understand their customer bases better, and provides the backend framework to capture, organize, analyze customer data, and also provides the tools necessary for customer facing individuals to do their job more efficiently and effectively so that the customer experience is exceptional.

Social Media has birthed a new medium for traditional conversations to take place. The fundamentals are still the same. Customers will still buy from people they like and from people who provide compelling value propositions for their problems.

What is different is that an individual in Madrid can have a question pop into their head, and 2 minutes later can have an answer or be engaged with a total stranger in San Diego via the medium of Social Media.

Social Media is simply the next evolution of global internet communications. User Groups, Message Boards, Email have all been the precursors. Social media has just extended the reach and the increased the speed by which these communications happen.

Social CRM is the method of organizing, managing, and analyzing these conversations and interactions executed across the social networking landscape.  In my experience, these interactions are many times a precursor or a sample of what has previously been managed and tracked in traditional CRM systems. My Twitter, LinkedIn, and Facebook interactions sometimes morph into a conversation that justifies an entry into my traditional CRM system, whereby phone calls, activities, meetings, and opportunities are tracked. Social Media Interactions are “Real Interactions Lite”

They are not mutually exclusive, and Social CRM is not the answer for failed Traditional CRM. They are both blends of process, strategy, and supporting technology that enable us to collectively understand and meet the needs of our customers.  Social Media and Social CRM simply provide another component by which to understand, engage, and interact with our customers, partners, and prospects better.

Six (wait, Seven) Questions Every Company Should be asking themselves now related to Social Media

Guido Oswald, in his blog post, Are Facebook and Twitter just new channels? makes the assertion that Facebook and Twitter might revolutionize CRM as we know it.

I would argue that Social Networks are primarily another lead generation source, and is rapidly becoming THE MEDIUM by which customers prefer to use.

The fundamentals have been around for a long time. Customers want to have a conversation about what is important to them and will align themselves with individuals and companies that best meet their needs with a valuable solution. The technology has enabled this to happen as never before.

The statistics are staggering. The next chasm to cross is how to transition those social media conversations into the transactional based CRM (which by the way is important, too), and at what point?

Either way, the questions below are pertinent for all companies to ask themselves. I would add the the list – “How Can I get my customer base talking to each other, and then listen, learn, and/or engage or intercede at appropriate times?”

Adapting to the new consumer behavioral patterns leads us to what I call a CRM 2.0 strategy any other term will do as well as long as it has the same meaning and results.

New questions must be asked:

1. How can I have a meaningful conversation with my customers?

2. How can I engage customers to take an active part in this conversation?

3. How can I leverage the knowledge and willingness of customers?

4. Does my corporate culture allow meaningful conversations what changes are required?

5. Do I know the little aches and pains of my customers? Are they dealt with?

6. Who are my customers and where / whom do the talk about products and services?

Social computing set to impact CRM – 25 Feb 2009

How are you integrating social networking/selling into your CRM initiatives?

More than half of companies are likely to establish online communities to help them with their CRM initiatives by next year, but poor management may cause many of these projects to backfire.

According to a new report from Gartner Group, The Businss Impact of Social Computing on CRM – by 2010, more than 60% of Fortune 1,000 companies will have some form of online community deployed for CRM purposes. But if too many companies buy into the hype surrounding social networking and don’t take the necessary safeguards, then this could turn into a costly failure.

“Investments should focus primarily on the customer online buying process where it can offer a direct return on investment in terms of sales, awareness and customer loyalty.”

Adam Sarner, research director, Gartner

For example, Gartner recommends that organisations apply ground rules to install self-moderation, solicit feedback to make users feel appreciated, and assign an advocate to liaise with the community and represent it to the company.

“Social applications offer a great opportunity for CRM practitioners to improve customer experience and influence the customer, particularly in an economic downturn when companies are trying to keep customers and increase wallet share,” says Adam Sarner, research director at Gartner. “Investments should focus primarily on the customer online buying process where it can offer a direct return on investment in terms of sales, awareness and customer loyalty.”

via Social computing set to impact CRM.

Guest Blogger William Band: Six Trends That Will Drive CRM Decision-Making in 2009 – Think customers: The 1to1 Blog

In light of the recent sudden and dramatic deterioration of the economic climate, what are the key developments driving CRM strategies and the adoption of enabling technologies now? I recently recorded a podcast summing-up my take on the situation, based on Forrester’s latest research. Here’s what I know: Locking-in customer loyalty through deeper engagement and differentiated experiences will continue as critical priorities. Six trends will drive CRM decision-making in 2009.

via Guest Blogger William Band: Six Trends That Will Drive CRM Decision-Making in 2009 – Think customers: The 1to1 Blog .

The Twitter Debate Continued – Is it Social CRM or Not?

Social Media Influentials Jeremiah Owyang , Brian Solis, and Paul Greenberg weighed in today on what the future might hold for Twitter.

I agree most with Paul’s viewpoint. Conversations that happen across social media (including Twitter) could all be mapped into the defined intersections within what has become traditional CRM.

At the front end; for lead generation purposes, during post sale service activities; which feed into customer service and support efforts. Some are figuring out how to include the cloud sourcing activities into product and service development. I am sure there are many other examples.

A good example is the new release by Toucan for SalesForce, reportedly enables tracking of twitter posts for contacts contained within your CRM system.

I agree, that for Twitter and other social media platforms, the greatest opportunity as it relates to Social CRM, CRM 2.0, or whatever you want to call it, is to collaborate with the traditional CRM vendors to capture, analyze, and leverage the conversations happening in the cloud to deepen insight and therefore relationships with customers, prospects, vendors, partners, competitors, etc.

Jeremiah Owyang’s Article
Brian Solis’s Article
Paul Greenberg’s Article

Your thoughts?

Looking Forward: Social CRM Explained

A great introduction to Social CRM and how it differs from traditional CRM by Brent Leary

Social CRM: Not your father’s Customer Relationship Management