Social CRM Comes of Age by SupremeLord


									                      2009 White Paper

Social CRM Comes of Age

                    By Paul Greenberg,
                    Sponsored by Oracle
Social CRM Comes of Age, by Paul Greenberg

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

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

Social CRM Comes of Age, by Paul Greenberg

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
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.


There are several reasons, technological and societal.

Social CRM Comes of Age, by Paul Greenberg

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.

Social CRM Comes of Age, by Paul Greenberg

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

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.
Social CRM Comes of Age, by Paul Greenberg

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?

Social CRM Comes of Age, by Paul Greenberg

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

   •   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
Social CRM Comes of Age, by Paul Greenberg

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

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.
Social CRM Comes of Age, by Paul Greenberg

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              Definition: Social CRM is a philosophy & a
business strategy, supported by a                business strategy, supported by a system and a
system and a technology, designed to             technology, designed to engage the customer in
improve human interactions in a                  a collaborative interaction that provides
business environment                             mutually beneficial value in a trusted &
                                                 transparent business environment
Tactical and operational:                        Strategic: Customer strategy IS corporate
Customer strategy is part of corporate           strategy
Relationship between the company and             Relationship between the company and the
the customer was seen as enterprise              customer are seen as a collaborative effort. And
managing customer - parent to child to           yet, the company must still be an enterprise in
a large extent                                   all other aspects

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

Social CRM Comes of Age, by Paul Greenberg

The company seeks to lead and shape              The customer is seen as a partner from the
customer opinions about products,                beginning in the development and
services, and the company-customer               improvement of products, services, and the
relationship.                                    company-customer relationship
Business focus on products and                   Business focus on environments & experiences
services that satisfy customers                  that engage customer

Customer facing features - sales,                Customer facing both features and the people
marketing & support.                             who's in charge of developing and delivering
                                                 those features
Marketing focused on processes that              Marketing focused on building relationship
sent improved, targeted, highly specific         with customer - engaging customer in activity
corporate messages to customer                   and discussion, observing and re-directing
                                                 conversations and activities among customers

Intellectual Property protected with all         Intellectual property created and owned
legal might available                            together with the customer, partner, supplier,
                                                 problem solver

Insights and effectiveness were                  Insights are a considerably more dynamic issue
optimally achieved by the single view of         and are based on 1) customer data 2) customer
the customer (data) across all channels          personal profiles on the web and the social
by those who needed to know. Based on            characteristics associated with them 3)
"complete" customer record and data              customer participation in the activity
integration                                      acquisition of those insights
Resided in a customer-focused                    Resides in a customer ecosystem
business ecosystem
Technology focused around                        Technology focused on both the operational and
operational aspects of sales,                    social aspects of the interaction
marketing, support
Tools are associated with automating             Integrates social media tools into apps/services:
functions                                        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

Social CRM Comes of Age, by Paul Greenberg

                                                                       Case Study: Karmaloop
Social CRM’s customer strategy and associated business models
                                                                       Boston-based Karmaloop is a clothing
are those defined by customer engagement, not customer                 site that sells name brand clothes and
management. While traditional CRM used data to track                   accessories skewed toward 2o-
transactions with the customer - be it sales data such as purchases    somethings. These more traditional
or service data such as trouble tickets and the outcome - the holy     product lines are infused with a healthy
                                                                       mix of independent designer creations.
grail was the 360° view of that customer. That means a single
                                                                       Their business model is based on the
customer record with all data pertaining to that customer -            encouragement of the growth of a
regardless of department - that is made available to all those who     community- now some 800,000 strong -
need to see it. But while that was considered the optimal              who buy their clothes, design their indie
achievement of a traditional CRM deployment, it is now a pre-          lines and sell their clothes as members of
                                                                       “street teams.” The company encourages
requisite for a truly successful CRM effort - though only 38% of       community members to upload their
companies claim to have it.                                            creative designs, if they are inclined to do
                                                                       so, and then have the community
But Social CRM has a different holy grail. Rather than one that is     comment on them and rank them. The
transaction-friendly and data driven, the new grail is “a company      best of the indie designers are highlighted
like me.” This fits with a strategy for customer engagement.           with profiles in an e-zine. There is a web-
                                                                       based TV show that discusses youth
What it means is that each customer has the products, tools,           fashion trends. They have an upcoming
services, and experiences he or she needs to sculpt an individual      social network that is by invitation-only
interactive relationship with the company in a way that satisfies      to trendsetters.
each of their personal agendas. It means that the company is
                                                                       But the crown jewel for Karmaloop is
willing to be transparent enough and honest enough (goes by the        their street teams. This is roughly one
term “authentic” nowadays) to be trusted by that customer. So          percent of their total community - 8000
the company becomes a “company like me.” The experience that           members who go and sell the clothes and
the customer has with the company is positive enough to make           accessories offered online. They are given
                                                                       a wide range of creative options and are
that customer into at least loyal and at best, an advocate.
                                                                       encouraged to upload the fruits of their
                                                                       efforts to move the clothes with videos
When a customer engagement strategy is effective, with the             and photos - and, of course, the
successful support of social CRM tools and processes, there is a       community is encouraged to rank and
mutually derived benefit planned from the beginning. That              rate and comment away on how they see
success is characterized by a fundamental shift in the relationship    each street team doing.
between the company and the customer from producer-client to           The street teams are rewarded for two
partners. This is not a small effort. This is a major cultural and     things - sales and community
behavioral change in how the customers interact with a company.        participation. It matters if they (or any
If they see themselves as partners, they feel that they have a stake   member of the community in fact) recruit
                                                                       to the community. It isn’t just an
in the success of the company. They commit to the company in
                                                                       ordinary affiliates program. In return,
ways that go well beyond customer satisfaction. They become            they get cash, clothes and credits to buy
advocates for the company. As you can see in the Karmaloop case        “stuff.”
study (see sidebar), they can engage in community building and
                                                                       Karmaloop’s ROI? Not only community
can even operate as an extension of the sales team for the
                                                                       growth, but that one percent drives
company.                                                               fifteen percent of the company’s sales.

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
Social CRM Comes of Age, by Paul Greenberg

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

Social CRM Comes of Age, by Paul Greenberg

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.

Social CRM Comes of Age, by Paul Greenberg

          Transaction                            Intersection                      Interaction
         (Operational)                                                              (External)

                                          •   Blogs and podcasts
                                          •   Wikis
   •   Salesforce                         •   Communities                   •   Blogs and podcasts
       automation (e.g.                   •   User generated                •   Twitter/IM
       opportunity                            content (employee             •   Social networks/
       management)                            ratings, rankings,                communities
   •   Marketing automation                   comments)                     •   Forums/threaded
       (e.g. campaign                     •   Enterprise                        discussions
       management)                            widgets/gadgets               •   User generated
   •   Customer service                   •   Internal messaging                content – video
       (call center)                      •   Text/web behavior                 upload, comment,
   •   Dashboards                             analysis                          ratings, rankings
   •   Features and                       •   Social sales tools            •   Social tags and
       functions                              (e.g. opportunity                 social bookmarks
   •   Business intelligence                  optimization)                 •   Features, functions,
                                          •   Social marketing                  characteristics
                                              tools (e.g. social
                                              network outreach)
                                          •   Customer service
                                              2.0 tools (e.g. Twitter
                                              service issues

                               Enterprise SOA: web services (or REST/WOA)
                                     Master Data Management (MDM)
                                           Business rules engine
                                     RSS Feeds/Subscription services

                 Traditional                                                Social

  Figure 1: Social CRM Tools and Foundation

Social CRM Comes of Age, by Paul Greenberg

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              Social Marketing Metrics
      external unstructured data that is pulled not only from
                                                                        Social Marketing implies a whole new set
      the traditional Reuters/Hoovers corporate information,            of metrics. The percentage of responses of
      but non-traditional sources such as Jigsaw or profile             a customer to a compaign are no longer
      information from LinkedIn or Facebook. This is then               sufficient. Metrics will have to weigh the
      analyzed and compiled into a much richer, more                    emotional and behavioral responses of
                                                                        individual customers and take the
      comprehensive view of the opportunity and the factors             temperature of entire communities. While
      that might affect it - including the individuals and their        still nascent, PricewaterhouseCoopers
      profiles.                                                         (PwC) came up with some that present a
   2. Rather than the more traditional guesswork involved in            useful start, what they call, “hearing
      identifying which presentations and which documents are
      best when dealing with a particular client, a combination             1.   Volume –The amount
      of algorithms and user generated content - meaning the                     something is mentioned v. its
      rankings, ratings and comments from the other internal                     historic pattern.
      sales professional - and perhaps the marketing staff, give            2.   Tone – Is it positive, negative,
      a much better idea of the appropriate choice of                            neutral?
      presentation or document.
                                                                            3.   Coverage -The number of
   3. Collaboration via wiki on a response to a request for
                                                                                 sources generating a particular
      proposal (RFP) and then the generation of that RFP                         conversation
      response once the final result is signed off on, so that it is
      ready for delivery.                                                   4.   Authoritativeness – A
                                                                                 qualitative ranking of the
                                                                                 source’s reputation
Social Marketing
Social Marketing tools are still in their early incarnations.
                                                                        Source - “How Consumer Conversation
                                                                        Will Transform Business” – PwC, 2007
   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 CRM Comes of Age, by Paul Greenberg

       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

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

Social CRM Comes of Age, by Paul Greenberg

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.

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

Social CRM Comes of Age, by Paul Greenberg

      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.

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.

Social CRM Comes of Age, by Paul Greenberg

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

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?
Social CRM Comes of Age, by Paul Greenberg

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

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?


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