Social CRM - Analyst Studies

This is the first in a 2-part series on social CRM. These discourses (if I may dare to call them that) mirror the presentations I have been making at my workplace on this topic. In this part, I will focus on defining it, elaborating its importance, how it fits into an organization’s overall CRM roadmap strategy, its related industry trends and the key issues & challenges faced during social CRM adoption. In part 2, I will attempt to do a product and talk in detail on various use cases that have been successfully implemented by the industry in general in this area.

Social CRM has become such a popular buzzword today and in a way its popularity has lead to an overall misunderstanding and misuse of the concept. Various definitions of the concept exist. Forrester and Gartner have simply expanded the traditional definition of CRM (business processes supporting sales, marketing and customer service) to include the concepts of collaboration and communities to come up with their definitions on the social CRM. The one that is most popular and most commonly referred to today is the one by Paul Greenberg: social CRM is the company’s response to the customer’s ownership of the conversation.

This graphic by the Chess Media Group nicely represents the circle of social CRM evolution (though it has more detail on the listening aspect than on targeting and analysis aspects).

The importance of social CRM is often highlighted using the following: improved customer service, new market segment exploration, improved communication efficiency, improved customer targeting, decreased sales & service cost and increased R&D and innovation. Various statistics have been citied to draw attention to this concept:

1. 30% of Google search results on the world's top 20 brands provide links to Social Media on the 1st page*
2. The internet accounts for only 10% of total sales, but Social Networks influence > 40% of all offline sales*
3. 85% of the students currently enrolled in U.S. colleges and universities have profile pages on Facebook*
4. By 2012, spending on social software to help sales, marketing and customer service processes will exceed $1 billion worldwide**

References: *HBS Social Media Report, Edelman Customer Index Report
                      **Gartner - Social CRM: The Next Generation of Customer Innovation. March 30-April 1, 2011

Strengthening relationships with customers, enhancing brand awareness and establishing interactive relationships with customers were given as the top 3 reasons by CxOs for investing in social media in Gartner survey conducted this year.

If one were to study the use of social CRM within the larger CRM operating framework, then there has been various innovation use cases put to good use. Within marketing, Ford Fiesta has my top vote (see http://media.ford.com/article_display.cfm?article_id=30158) and the MyStarbucks idea finishes as a close second (http://mystarbucksidea.force.com/). Drugstore.com has won several awards for its use of social media towards delivering customer service (http://www.rightnow.com/blog/client-success/taking-home-the-gold). As a social CRM, e-commerce social shopping application Groupon is an easy winner and doesn’t even need explaining. There are many other examples of companies having deployed social media successfully. A bigger list is here, courtesy a Gartner study (Google them to find out more):

Social CRM is not without its list of challenges. Most organizations do not have a social CRM strategy or definition in place and nor have they defined the metrics about current social CRM capabilities that would service as a baseline for improvement. Secondly, there is inherent difficulty in establishing a social CRM strategy in the face of fierce hype from industry magazines and software and service vendors. Expectations for social CRM today clearly exceed the measurable benefits. In Gartner’s technology hype cycle report last year (for sales force automation), social CRM is expected at least 5-10 years away from mainstream adoption and per their study is in a phase of inflated expectations. Thirdly, poor organizational readiness for self-service has emerged as the biggest stumbling block in the increasing drive toward a more cost-effective self-service offering. While there are those who are ready to use social media as a business strategy, they have simply not changed enough themselves to be actually in a position to best use it. Fourthly, most organizations have 3 or more social CRM initiatives running in parallel, often only loosely coordinated. There is no dominant trend as to which department within an enterprise will eventually run a social CRM program. Today that department is definitely for sure not the IT department. There are other technological limitations as well. For one, language complexity and content sources can be an obstacle. Social conversations are often unstructured and include text, images, videos, emails, blogs, tweets and other types of data types that are not part of a database. Separating noise from an authentic social signal, a critical aspect to helping a company better understand their clients is also a challenge today and this can get past the listening tools as well. Seamlessness is yet another issue. Social consumers channel hop during conversations, and companies need to be able to efficiently and effectively follow their conversation and pick up where they left off. Deep integration with the web and with contact center experiences is required to pull this off.

Despite all the challenges and issues around it, social CRM is here to stay. Large investments are unneeded to begin social CRM unlike its enterprise CRM counterpart; social CRM applications are installed and used by organizations of all sizes, including companies with only five employees, though social CRM by itself can’t be a company’s entire CRM strategy. A huge adoption has already taken place these industries: high tech, media, consumer goods and retail. This is particularly true for the NA geography. The next wave is in the telecommunications, education, banking, insurance, pharmaceuticals and automotive industries.

More on the products and use cases in the next fortnight's blog.

An Introduction to Business Transformation

Management and technology’s tools and techniques are only a means to achieve a higher goal of business success and competitive positioning. These tools keep changing over time, but the end results must be achieved successfully all the times. Business Transformation fits exactly there. It’s a management sponsored (or at least a closely-backed by management) activity to do with aligning of an organization’s programs relating to people, process and technology more directly with its business strategy and vision. This initiative moves towards an outcome-based end-state such as a dramatic improvement in customer services or a drastic increase in company profits.

The focus in Business Transformation is on discovering new ways to perform business innovatively and not on finding ways to refining or automating existing business processes.  Therefore this is a more radical re-thinking initiative than a mere business improvising exercise.  Business Transformation assessments therefore start with answering the most fundamental questions:  “Is our mission relevant in today’s world? Are business benefits of our programs aligned with that of the company’s strategy and vision?”

Business Transformation as earlier mentioned has 3 aspects to it: people, processes and technology. Leavitt's famous diamond actually went to refine this and a modified version of it actually goes on to add a 4th aspect which is strategy. The key-takeaway to this framework is that every element in each of these aspects affects every other. Business strategy is the primary driver in this framework and the other 3 aspects are governed by this 4th aspect’s encompassing role. Processes represent the mechanics of the organization, its structure and the governing systems.  The people dimension deals with elements such as organizational culture, education, training, motivation and reward systems. The third aspect, technology is to do with the use of computer systems and other forms of communication technology in the business.

The use of information technology is a major contributing factor towards achieving Business Transformation objectives. It helps enable all the other aspects of a Business Transformation initiative. In fact, several disruptive technologies are actually changing the way work is being performed. Social media, cloud computing and Web 2.0 are today’s examples and ERP systems and wireless communication were major disruptive forces of yester years.

The two biggest hurdles to executing a Business Transformation program effectively are:
1. Lack of/No Change Management: Poor setting and handling of expectations. No support from the senior management for such exercises.
2. Executing it as one-off project: No strategy alignment or long-term perspective planning and execution. No change in management thinking.

Business Transformation was an extremely popular initiative around the mid-nineties. The majority of Fortune 500 companies were then either doing a Business Transformation program or in the process of initiating one. However, it become apparent very soon that the programs executed were much less radical in nature than what was originally proposed for in the framework and that more often than not, Business Transformation became a mere way of justifying downsizing and increase managerial control. The interest in Business Transformation began to wane then and then started giving way to Business Process Management (BPM), an initiative more to do with process optimization.

Business Transformation is still a huge market today, somewhat fragmented with multiple players and growing at a fast pace. Accenture leads the pack in terms of market share and the other consulting biggies have a considerable large footprint in this space. India’s large services players are trying very hard to get into this space (as well as into products and platforms) given that shrinking margins and rising costs is killing the cost arbitrage advantages that they had. They now need to understand how to get into value arbitrage model.