Innovative Customer Relationship Management for the Emerging Social Business

Abstract
Business organizations are facing unprecedented competition. Never before have these organizations faced such stiff competition locally and globally. But the organizations are able to get close to their customers and engage with them in timely and relevant manner. Armed with customer relationship management, Social Media can deliver financial benefits to companies in any sector. The benefits are centered around increasing 'customer satisfaction and involvement' which are not peripheral but fundamental to driving business performance. Financial benefits apply across the customer life cycle, in acquisition, retention, value development and managing cost to serve. In addition, social CRM can deliver insight which will help drive real customer centric innovation. Finally, the knowledge gained on customer behavior, attitudes and mood will help drive benefits throughout the value chain. New innovations in Social CRM is changing the trend benefiting the business. How the business uses these innovative Social CRM to survive and thrive is of prime interest to the global market. At the end of it all, social CRM is about people and relationships and demands a customer focus like never before. Forget that and the business organizations have little chance of success. This article is in three parts:

Part 1: Social Media and CRM Part 2: Social CRM and Innovation

Part 1: Social Media and CRM

There is a lot of discussion going about social media and its rising importance in engaging customers. A consumer's engagement with a brand can be measured along a continuum - from no awareness, through to early engagement. Like any relationship, the strength of feeling will develop and vary over time and, as in any healthy relationship, both parties should be aware of feelings so they can react accordingly. We know that consumers are much more trusting of friends and colleagues than they are of TV advertising or corporate communications. We also know consumers talk to each other through a multitude of social channels. Social media contains conversations. Like any conversation, in a cafe or bar the content varies. Some conversations are serious and some are fun, some are short and some long, some happy and some angry and intense. Thoughts, opinions, ideas, jokes, confidences, experiences, photos and videos are shared by individuals to small networks and can be rapidly amplified into larger networks of people, within a location, nationally or globally. Consumers' experiences are naturally part of this conversation and brand and service experiences are discussed openly and frankly whether organizations are involved in the conversation or not. In this way, consumers are becoming more powerful. Opinions can be amplified very quickly and brand performance will be impacted. The locus of control in the brand--consumer relationship is shifting from brands to consumers. Brand marketing is becoming less about pushing messages out to consumers within a static relationship, and more about the brand being part of the dynamic conversation, listening, serving relevant content/experiences to earn the trust of consumers. Clearly monitoring the buzz and intervening, when appropriate, has advantages to brand managers in any b2b or b2c environment. This monitoring can lead to a better understanding of consumer behavior and feelings the mood in the market. It can lead to changes in strategy, services, products, promotions, pricing channels and so on. But brands are using social media in ways other than listening and innovating. Consumers of all ages interact with social media content on

mobile devices, PCs, kiosks, at home, at play, at events, at work, on holiday or when travelling - in just about any situation - in much greater, and ever increasing numbers than before. In a survey of 1,700 U.S. Internet users, Nielsen Online found that 73% engaged in social media at least once per week. Engagement was defined as reading a blog, visiting a social network or reading (and/or commenting on) a message board1. The research estimates the total U.S. social media audience at 127 million. Brands who really understand how their consumers behave on and off line are taking advantage of an unprecedented opportunity to engage with their target consumers, sometimes in small groups, through content and online brand experiences. The currently accepted rule is that 90% social media users just view content while 9% edit it i.e. provide a comment or review and 1% create brand new content. This % profile is very different in some segments of the population.

If the content engages the consumer, the consumer may do nothing, buy the product directly or interact in some way. The interaction may be via a comment on Facebook which may not require a response or it may lead to a 1:1 exchange with the organization, through whatever channels are right for the exchange. Traditional advertising combined with social media content and other response vehicles will generate interactions which can be managed through a combination of social media and, for some consumers at some times, communications through more traditional CRM channels. Early pioneers have called this combination of Social Media and CRM, Social CRM or SCRM.

SCRM Transaction Pyramid About Social CRM Paul Greenburg defines Social CRM as "the business strategy of engaging customers through Social Media with the goal of building trust and brand loyalty"

Some important points to consider when thinking about Social CRM: Social CRM is first a strategy that is often supported by various tools and technologies. The strategy is based around customer engagement and interactions, with transactions being a byproduct. Social CRM is still about CRM, but evolved, meaning a back-end process and system for managing customer relationships and data in an efficient and process-centric way. Social CRM will mean different things to different organizations. The key is being able to understand the business challenge you are looking to solve, and then solving it.

Social CRM is one component of developing a social or collaborative business, both internally and externally.

Understanding CRM

Traditional Customer

Sales
C U S T O M E R

Marketing Service & Support

CRM has traditionally consisted of one-way communication between a brand and the customer. CRM is comprised of Sales, Marketing and Service/Support-based functions whose purpose was to move the customer through a pipeline with the goal of keeping the customer coming back to buy more and more. Traditional CRM was very much based on data and information that brands could collect on their customers, all of which would go into a CRM system that then allowed the company to better target various customers.

Understanding Social CRM

Sales, Marketing &PR and Service & Support

Advocacy and Experience

Customer

PR now has a very active role in Social CRM. In fact PR typically owns budgetary control and authority of social initiatives ahead of every other department. In most organizations, PR departments manage the social presence of brands and handle the customer engagement. The next change we can see is the advocacy and experience are crucial components of Social CRM which will revolve around the customer. In the first image we can see that the customer is not really a part of the CRM., there is no collaboration, there is no relationship. In Social CRM this has completely changed. The customer is actually the focal point of how an organization operates. Instead of marketing or pushing messages to customers, brands now talk to and collaborate with customers to solve business problems, empower customers to shape their own experiences and build customer relationships, which will hopefully turn into customer advocates. It is important to keep in mind that Social CRM does not replace CRM but it is simple an evolution of CRM.

Evolution of CRM to Social CRM

CRM

Social CRM

Special Departments

Who

Everyone

Company Defined Process

What

Customer Defined Process

Customer sets the Hours

Business Hours

When

Many researches were carried out in USA about Social CRM and its relevance. Some of the interesting findings are: 1. Out of those surveyed 93% want brands to have a presence on social media sites - Cone Business in Social Media Study, 2008 2. About 60% of Americans regularly interact with companies on a social media site - Cone Business in Social Media Study, 2008 3. About 41% of customers believe that companies should use social media to solicit feedback on products and services - Cone Business in Social Media Study, 2008 4. Only 7% of organizations understand the CRM value of Social media - Brand Science Institute, European Perspective, August 2010

Part 2: Social CRM and Innovation

Though there are a number of potential uses for Social CRM all of them do not provide a high value to the organization. But one that does provide high value to the organization is Innovation. There are many ways Social CRM can be applied. Usually they are classic CRM sales & marketing stuff: social campaign tracking, rapid response to flare-ups on social media, rapid social sales response, presenting a consistent face to the customer, etc. Customer-friendly CRM systems are built around the customers shopping and buying process, not the companys selling process. Some of the observations on SCRM has some bearing on the emerging field of open innovation: Open innovation is the two-way engagement with external parties to source, co-create and develop ideas that benefit the market and the company. Voice of the Customers programs have been around for a while. Social CRM as applied to innovation appears to be a new channel for that. The three things that a company must know to generate breakthrough innovations from a VOC are:

1. What jobs the customer is trying to get done 2. The outcomes the customer is trying to achieve when performing these jobs in a variety of contexts 3. The problems and constraints that stand in the way of adoption of a new product or service A tweet about your company may not go this deep. But it is more information than you had, a new opportunity for engagement and a chance to plum the deeper needs after the initial tweet of Facebook page post. Creating a home court environment dedicated to capturing and engaging on these ideas and insights certainly sets up a stronger base for innovation. The larger point is that external feedback is critical to understanding what needs your companys products are

fulfilling, and designing products and businesses accordingly. Procter & Gamble is a trailblazer in this regard. The companys open innovation initiative Connect + Develop has delivered these results:

In 2000, the success rate of new products was 15-20%. By 2008, the new product success rate rose to between 50 60%.

R&D investment as a percentage of sales is down from 4.8% in 2000 to 3.4% in 2006.

The company attributes its success to its open innovation model. And the advantage continues. Diversified, globally-based P&Gs stock price is up 11% over the past 5 years, while the diversified, globally-based businesses of the S&P 500 are down 5%. Thats a 16 percentage point spread.

There are some technological trends that are driving evolution of CRM into next generation Social CRM systems. Some of them are: 1) Cloud Computing/SaaS CRM: Social Media channels (like Twitter and Facebook) generate tremendous volume of user generated content created by millions of users. Not possible for CRM system to import/store the data locally. This is unlike traditional CRM, where data was generated by few users and stored in local database. SaaS Model makes it possible to store information in the cloud (shared space) and access it from (Social) CRM application on-demand Social Media space is changing and evolving rapidly. Very difficult, if not impossible, for any CRM vendor to incorporate all new channels and feeds locally for every installation of CRM

system. Under the SaaS model, it is not difficult to add new Social Media channels/feeds to the hosted (Social) CRM application and make it available to users on-demand 2) Service Oriented Architecture (SOA): Service Oriented Architecture and Cloud Computing not only make it easy to integrate applications, but also facilitate plug and play modules and add-ons that can dramatically reduce time and cost involved in extending functionality of the application. SOA design is of great help in Social CRM as new social media tools and functionality can be added without expensive customization or upgrades as was the case in traditional CRM systems. 3) Real Time In Process Analytics: Predictive analytics has made it possible not only to analyze past customer behavior, but predict future behavior too based on statistical models. Predictive analytics logic/modules can be embedded in Social CRM work-flows to analyze and predict customer behavior from realtime social network data feed and take corrective action by triggering appropriate work-flows based on pre-defined business rules. For example, if a customer or a group of customers tweet about their dissatisfaction with a product or service, predictive analytics can help in identifying who among them are most likely to defect so that company can take corrective action before it is too late. Better still, if they happen to be customer(s) of a competitor, company can make an attractive offer and win them over. And thanks to SaaS model and SOA, this level of real-time In Process analytics functionality is available to small and medium sized companies with no large scale investment requirements upfront. 4) Smart Phones and Tablet PCs:

Mobile phones have evolved from simple telephones to mobile multi-media communication hub connected to internet via always on wireless broadband connection. This is going to be one of the big stories over the next couple of years that will fuel exponential increase in Social Networking Sites and their user base. It is estimated that currently more than 650 million people worldwide, or 13.4% of mobile subscribers, use the Web via a mobile device at least once a month. This number is all set to skyrocket as inexpensive smart phones continue to flood the market. Similarly, Tablet PCs, given their large hi-resolution screen with multi-touch input, Accelerometer sensor for UI, touch-sensitive controls and high speed internet access via 3G/4G or Wifi/WiMax have the potential to change the way we use Social Media tools and take Social Networking to a whole new level. Current Social Media tools such as Twitter or Facebook are text or web-page UI based. NextGen Social Media tools will leverage full range of functionality available in Tablet PCs and make media consumption for information & entertainment or playing online games a truly Social experience. 5) Enterprise Application and Data Mashups: In any large or medium enterprise, we have a diverse range of applications such as on premise CRM or SaaS CRM, BPM, MDM, ERP etc. to name just a few. Adding Social Networks to Enterprise Application landscape increases complexity of integrating and managing all the applications exponentially not only because of amount of data generated by users on Social Networks but also the need to monitor and respond in real time. Enterprise Application and

Data Mashups can solve this problem by combining data or functionality from multiple applications and presenting information in the required format in a seamless manner. In a Social CRM system for example, Enterprise Application and Data Mashups can be used to combine data/functionality from multiple applications such as CRM, MDM, ERP etc. and new services can be created on the fly or specific work-flows can be triggered based on pre-defined business rules in a user friendly way. All the five tech trends discussed above, namely Cloud Computing/SaaS CRM, Service Oriented Architecture (SOA), Real Time In Process Analytics, Smart Phones/Tablet PCs and Enterprise Application/Data Mashups are now converging and are set to transform how marketers engage their customers through social media with goal of building trust and brand loyalty! In the early 90s when WWW was adopted broadly by the general public. Every company rushed to have a presence, to the point it became literally impossible to find the right information on the Web. Thats when yahoo and Google where born and helped us find the most relevant information by just typing simple keywords. Then came Web 1.0 & 2.0 Youtube, Flickr, myspace, Facebook, Twitter and countless others have turned everyday people into content producers, influencers and experts.

There is a need for a portal to provide a quick and intelligent decision for both the consumer and the enterprise about their online connections. A Platform to Help us to Distinguish Our Quality vs. Quantity Friends, Fans, Followers, and Companies. Facebook, Twitter, LinkedIn, Youtube, Flickr and others have been doing a decent job of providing additional marketing exposure and even in some cases, additional revenue. However, as more and more social networking sites pop up, the task of picking the right channel getting more challenging.

Recommendations:

Organizations need to carefully consider how they can create a social media experience that is unique to their brand, offer customer value and exploit the power of social community.

Companies should consider the following to lay the foundation for a successful social media program that will help them reinvent their customer relationships:

1. Recognize social media is a game changer In the future, for many companies, social media will become the gateway, if not the primary, communications channel to connect with customers. As companies design their social media programs, they need to think of their customers holistically and consider their social media interactions in the context of other customer touch points with the company.

2. Be clear on the differences between social media and other channels

Social CRM is about enabling engagement with the customer for the mutual benefit of the customer and the business. The traditional model of managing the customer relationship needs to adapt to the reality that the customer is now in control

3. Make the customer experience seamless - across social media and other channels

If you know your customer in one channel, you need to know him/her on other channels as well. This means the social solution should not be devised as an isolated stand alone program, but needs to be thoughtfully integrated with other customer facing initiatives

4. Start thinking like a customer

Instead of asking why your company should engage in social media, ask why a customer would choose to interact with your company in a social platform. Recast social interaction strategies to focus on giving customers the value they seed and the customer intimacy will come

5. Monetize social media if that is what the customers want

Make it easy and quick for customers to transact directly within a social media experience. Develop social commerce campaigns that target a specific customer need with time-sensitive offers or discounts that motivate customers to act. For people to engage and keep coming back, content should be fresh and relevant. Provide incentives for people to share content with friends to capitalize on the viral benefits a community platform offers.