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.