Twitter, Facebook and other social media are changing the face of traditional CRM, putting customers in the driving seat. Janine Milne finds out how companies should capitalise on this new era of transparency.
With social media, there’s nowhere to hide. Your company, warts and all, is laid bare for all to see. And whether or not your organisation actively participates in social media initiatives, your customers will be using the likes of Twitter, Facebook and forums to praise or damn your products, strategy and customer service.
The choice is when, not if, to start using social media in your business. One area where it is having a huge impact is in customer relationship management (CRM). Firms are increasingly using social media tools to augment and inform their established CRM activities, as they open up a powerful new channel of communication with customers.
“Leading companies around the world, such as Virgin Media, HP and Intel, are investing deeply. They are taking it quite seriously because they realise they don’t really have a choice. Conversations are happening and if they don’t invest, they will have lost control,” points out Sanjay Dholakia, chief marketing officer at social media firm Lithium Technologies, which is seeing rapid adoption of its online communities.
A September salesforce.com/YouGov survey found that Google or other search engines were the first pit stop for 49% of consumers looking to solve their customer service issues, while social networking was already the first port of call for 17% of people.
“The ‘Google Effect’ is rippling into social networking so instead of asking Google, I can ask friends on Facebook or the world on Twitter. Almost any company will find someone talking about it somewhere,” says Tim Barker, head of salesforce.com’s EMEA product marketing.
A new breed
Social CRM is a very different beast from traditional CRM. For one thing, it is external rather than internal. The customer is in control of the conversation, not the organisation. Traditional CRM empowers companies to understand the intricacies of their relationship with customers. It is about companies making internal operational efficiencies and analysing data to provide customer information to sales and support staff.
With social CRM, the power shifts to the customer. It’s not simply a technology (though it is enabled by technology); it’s a whole different approach. It helps businesses transform the nature of their customer relationships from one-to-one to many-to-many.
“Social CRM provides more power to organisations to understand what customers are doing beyond the transaction,” says Craig Sullivan, VP international products at cloud CRM firm NetSuite.
Just as importantly, the information flow is two-way. Customers get to understand more about the vendor and how other customers view the vendor. Organisations get to hear exactly what their customers think.
“It holds business to a higher standard in many ways because so much become transparent,” expands Sullivan. “Social CRM is a philosophy more than just tools. It’s an approach to how you face the market and how you do business. That could be done offline by getting people in a room at a cocktail party, but tools allow that philosophy to be taken to broader number of people.”
Eventually, the social CRM moniker will disappear, as the social media tools and approach become so embedded in normal work practices that they are a key component in a company’s CRM arsenal.
“I think it’s inevitable that best practices in CRM will become those that incorporate customer and other relationships you manage with partner and vendors. They will incorporate much more actively and communicate more directly and collaborate with them in addressing their needs and help address yours. That’s what happens in our ‘real’ lives as well. Facebook, Twitter, Instant Messaging… these have all been enabled by the web and will become more and more part of the way we do business,” says Sullivan.
Established CRM vendors are incorporating social media into their offerings to help customers take advantage of this powerful new customer communication media. Sullivan points out that for those CRM providers such as NetSuite and salesforce.com that live and breathe in the cloud, it’s much easier to integrate with social media.
“If CRM isn’t connected to your customer, it’s yesterday’s technology,” says Barker.
Ultimately, the potential of social CRM will eclipse that of CRM itself. “CRM is built on the notion of what can you do to your customer, but social CRM is what can I do with my customer,” explains Dholakia. “CRM is a $13bn market. This is $100bn.”
The benefits of using social media are potentially huge. Lithium is seeing its online communities used in three key areas: marketing, as companies use it to sell and build brands; customer support, where calls deflected away from the call centre or solved on the first call can shave vast amounts from costs, and lastly, products. Companies are using social media to ‘crowd source’ ideas which can be incorporated into future product releases and services. In effect, customers become part of the innovation team.
“Ultimately, companies care about speed, cost and sales,” says Dholakia. “With crowd sourcing, the information from the market that would take months and come at a high cost can now be done in days and weeks and at a fraction of the cost. You can also do it at tremendous scale. It used to be data from 10–20 people, now it’s thousands.”
One customer, iRobot which makes robot vacuum cleaners, launched a community and found that people talked about their vacuum cleaners as if they were pets. So the company came up with the idea of producing four different product skins to fit over the vacuum cleaners and personalise them. By listening to their customers, the company discovered a $50m new market opportunity.
The argument for social networking’s place in support is just as strong. When the photocopier is having a bad day, people rarely call support staff straight off, instead they’ll ask the bloke down the corridor who knows the idiosyncrasies of that particular beast. People prefer to talk to peers rather than experts.
Social media enables the same effect online. Someone in the community will have experienced the same problem and can sort it out for you. No need to ring the call centre. And their information is often better than that from the organisation itself, because they are coming at the problem from the same starting point as a customer, not as a someone in a call centre with a manual.
Some people spend a lot of time in these communities and become what Lithium calls customer advocates or super-users. “It’s the 99:1 rule. One to 10% of people in social networks create 60-70% of content. Super-users do it because they like it and they do it for reputation and rank,” says Dholakia.
These super-users are passionate about a product or service and want to share their enthusiasm with others, just as they would with their friends or colleagues.
“If you see someone fall over in the street you want to help them get back on their feet and it’s the same philosophy,” says Sullivan. “If you are passionate about a product, service or TV show people tend to talk about it whether it’s in the pub, with co-workers or public media such as Twitter,” says Sullivan.
Dholakia estimates there are thousands of super-users who will spend 20 hours a week or more in communities. They aren’t being paid by the company, but they are doing a terrific job in support and sales and marketing. He estimates that a super-user could be easily worth upwards of $50,000 to an organisation a year.
Another great attribute of social media is that it’s a great leveler. It’s not a just a big business phenomenon, small companies can use it just as effectively to communicate with their user base. Brand is based on reputation, whether you’re a one-man band or global powerhouse.
So, the evidence is compelling. Social media is the future, but how can you get there?
“Start somewhere,” states Barker. It’s an obvious answer, but an important one. If you’re not doing anything yet, then it’s time to make your move, however humble. Start by listening to what the Internet drums are saying about you.
“In our own organisation, we started to put our own employees on the web, but you need to agree what the boundaries are. You want them to have authentic, open conversations, but if you’re a public company, for example, you are limited in what you can say,” explains Barker. “So we crafted a plan to sway when we can join conversations and what the purpose was for us. Our focus was to solve problems.”
“Internally in an organisation it’s good to have someone who’s the voice of the customer and to have some internal agreement about what the voice of the company and what your company engagement with them is and what are no-go areas,” adds Barker. “If you have got customers that are unhappy and asking the company to change, create a place for them to come in and tell you. We do that with IdeaExchange.”
So you could start by setting up a user group for customers to interact with each other. “These things are very simple to do and can have an enormous effect on building service and can engender strong loyalty to your brand as a result of being open and transparent,” says Barker.
By monitoring what’s going on in your customer base with things like Twitter and Facebook, you can glean a powerful amount of information. But remember that this transparency works both ways. While social media enables companies to gain greater insight into their customers and to get the information fast, it also has its evil twin.
“The immediacy of this communication channel is both a huge benefit and a potential pitfall. Saying or doing something wrong in the way you interact with your customers can have an enormous impact on your business overall,” says Sullivan.
It can also be tough to hear negative comments without reacting defensively. Dholakia warns that in those first days and weeks of setting up a community, companies may have a strong urge to turn it off or stop certain conversations.
“If you do that, all you’re doing is dumping gasoline on it,” says Dholakia. “You need to be transparent and authentic and we’ve seen it work to great rewards.”
If you do hear bad things, then you have to acknowledge your shortcomings. Solving the problem quickly and efficiently will earning your company huge reputational brownie points in the process.
As car maker Toyota has painfully discovered, a bad situation can be made ten times worse if it is not responded to openly and swiftly. News, good or bad, can spread very fast in a connected, online world.
It’s early days, so many companies have yet to take a coordinated approach to social media and there’s a danger information gleaned from Twitter, Facebook and communities will be siloed. True benefits come when these are all integrated together into a homogenous customer network with one central knowledge base of information.
“You can think of it as another channel to engage with customers, but you need one place for all this information. From a technology perspective, one integrated solution brings together the different channels and saves information into one knowledge base,” says Barker.
And it’s no good embarking on a social CRM initiative without a clear goal of what you want to achieve. “You need to start with a good understanding of what your purpose is. If it is ‘I want to reduce call centre volumes and support cost, then that means you will attack the problem a certain way.
“If you’re a retailer, your needs may be different,” says Dholakia. FutureShop, a Canadian ecommerce company had a high rate of cart abandonment, but now has e-commerce that’s integrated its community in to the buying process. They found that not only did conversion rates go up but the size of transactions went up.”
Whether it’s for marketing, product development or support, social media has a key role to play in business. At the very least, anything that cuts down the need to ring a call centre has to be a good thing: reducing costs for the organisation and lowering blood pressure for the customer.