How can businesses track customers effectively in today's fragmented communications world?
From email to mobile apps and social media — today's customer or client is absorbing and broadcasting information all day long, creating headaches for companies trying to keep tabs on customer data and relationships.
For many of these companies, large and small, the heart of their efforts is a piece of technology known as Customer Relationship Management, or the CRM.
But traditional CRM software, organized around a database of emails, addresses, and phone numbers, doesn't always keep up with today's communications habits, particularly when it comes to social media and mobile.
That's why customer relationship management is refocusing on social media. It is also becoming more flexible, fast-paced, and interested in customer opinions.
We'll refer to this sea change as social customer relationship management (SCRM).
In some ways, SCRM and CRM are the same. Both aim to produce as much lifetime value as possible from every customer and sales lead. But there are three important differences.
CRM is largely defined by stand-alone technologies and products like Salesforce and its competitors, while social customer relationship is a strategy. It's an effort to tie together different streams of customer data and transform these into actionable insights.
While traditional CRM tries to control customer relationships, in SCRM the customer is at the center of the relationship, and decisions are often informed by ongoing customer feedback.
A traditional CRM is mainly for the sales team. A true social customer management program cuts across company functions, including customer service, marketing, and sales.
Social CRM offers huge potential. But because it is a strategic stance rather than something that comes out of a box like brand-name CRM software, it has often fallen on deaf ears. It doesn't help that the marketplace for SCRM-flavored solutions is confusing, mostly because of vendors who have latched onto the acronym but are not really offering anything new.
Nonetheless, as we'll detail in this report, a small number of brands and industries are pioneering a gradual but clear shift toward social customer relationship management.
We will not be covering specific vendors (lists of top social CRM tools are widely available). Instead, we will offer a broad rationale for social customer service and relationship management, along with examples of successful strategies. Here's what we'll discuss:
Why it is critical for brands to adopt a social customer strategy, especially as social media and mobile apps begin to mediate more and more customer feedback, purchase decisions, commerce transactions.
The four necessary ingredients of a successful social customer strategy, and mini case studies of businesses that have paved the way for holistic approaches such as SCRM.
We'll answer frequently asked questions about social customer relationship management and what defines it.
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From CRM To Social Customer Relationship Management
There are three reasons why social CRM will become the cutting-edge approach within the CRM ecosystem in years to come.
To begin with, there's the simple fact that customers expect companies to be there for them on social media. (See chart, right.)
Reach: Customers and prospects alike are using social media in large numbers, and often. Clear majorities within key demographics, even older age groups, are present on social media. A Pew study on U.S. social media found that as of December 2012, 83% of 18- to 29-year-old Internet users were active on social media. Plus, 77% of 30- to 49-year-olds used social networking, followed by 52% of 50- to 64-year-olds.
In addition, Nielsen reports that social media accounts for 20% of time spent on the Internet on laptops. That number climbs to 30% when the Internet is accessed using a mobile device.
Customer expectations: Like it or not, customers expect brands to respond to their problems and feedback on social media. A 2013 survey by J.D. Power and Associates of over 23,000 online consumers found that 67% had used a company’s social media site for customer service.
Further, 67% of organizations did not have systems in place to measure what is being said.
Effectiveness and data quality: This is probably the single most important number in this report: the lead-to-customer close percentage for SCRM is about 4%, while for traditional CRM it is 2%. SCRM drives more effective sales funnels.
Perhaps the key driver of SCRM’s rise is that the data it produces is often more valuable than that which is collected through traditional CRM. This isn't necessarily because social data is inherently more valuable, but because if it's used in conjunction with traditional customer data, the combined data trove is far more rich in insights.
The real key to understanding social media's potential role in CRM, and especially in data collection, is to understand how your customers acquire information and opinions in today's social network-mediated world and how they recirculate their knowledge.
Understandably, consumers and buyers of business-to-business services tend to distrust information about products delivered by the company that sells those products.
They rely more heavily on information from their peers, and turn to social media to get it. In other words, social media is an arena for candid conversations about products and brands.
By the same token, very few customers with negative or positive feedback about a brand or its products will email or phone the brand itself. Even if it's passionate feedback, they're unlikely to reach out directly.
They're much more likely to broadcast their opinions spontaneously on social media.
That said, customer service accounts on Twitter and Facebook — if they're well maintained by brands and businesses — can also serve as portals through which customers can express their opinions, both positive and negative.
However, most brands take a woefully long time to respond to customer service queries on social media. A large percentage of companies do not respond to customer feedback on social media at all.
Satmetrix, a net promoter, polled 1,180 executives worldwide and found that 55% of companies ignore customer feedback online. Response times have actually been worsening, from five hours in late 2012 to well over six hours earlier this year. (See chart, right.)
That doesn't just result in an extra-disgruntled customer. It's also a lost opportunity to maintain a fluid communication channel. There's real value to be mined from a social media support account, if customers feel their concerns will be addressed. If they feel like they're speaking into a void, they won't participate and the insights will also dry up.
Insights gleaned from listening in to candid conversations and opinionated outbursts on social media can be applied to marketing campaigns, customer service, public relations, and product development.
Building A Successful Social-Customer Strategy
Socialbakers recently began ranking industries and brands according to their respective levels of “social devotion,” and the companies that rank high share several characteristics: they have open lines of communication, and they respond in a timely fashion to large volumes of customer questions.
Currently, the most “socially devoted” industries globally are airlines and telecoms, according to Socialbakers. In terms of brands, T-Mobile and AirAsia top this list.
In this section, we'll look at what other social CRM leaders are doing, and how it impacts important customer management metrics.
The social analytics company, Attensity, has broken social CRM into four types of activities: listening, analyzing, relating, and acting.
The quantity of resources an organization ought to devote to each of these activities depends on what the organization is trying to accomplish, but the framework itself holds for achieving most objectives. Improving social customer management is a goal that should cut across marketing and IT departments.
1. Social Listening
As hinted above, every SCRM strategy starts with listening.
Social listening is about finding out where customers are having conversations relevant to an organization and gathering data on what is being said.
An oft-cited example of listening excellence is Dell. The computer technology corporation was an early adopter of SCRM and in 2010, Dell opened up its social media command center with the joint goals of monitoring relevant conversations in real-time and giving every employee in the company the ability to listen in, regardless of their function.
By 2011, Dell had trained over 25,000 employees for social listening. These employees now monitor over 25,000 mentions daily in 11 different languages.
This means insights gleaned from social media are spread throughout the organization rather than being “hoarded,” or remaining undigested in one department.
Dell currently offers a consulting service to teach organizations how to listen effectively.
2. Human-Driven Analysis
Analyzing is about producing substantive, actionable content from the data collected during the listening phase.
One of the questions surrounding this stage of the SCRM process is how to handle all the data gathered. Should analysis be automated and machine-driven? Or should humans sift through the data and make sense of it?
While automation may be tempting from a resource standpoint, it overlooks the value of SCRM.
SCRM involves a great deal of subjectively-colored data. A computer can't handle nuance and subtlety, no matter how refined the data-parsing algorithms it has “under the hood.”
Zappos' PinPointing app illustrates this problem.
The online shoe retailer’s app leverages customer intent data pulled from the pins and boards of Pinterest users in order to make user-relevant recommendations.
The goal of the app is to make it easy to shop for products inspired by Pinterest posts.
While the app’s recommendations may improve with more data, they are still sorely lacking. The difficulty is that Pinterest users rarely include relevant information like product names or the name of retailers in their pins. They simply click on something they like and pin away, and as a result there's a scarcity of metadata and tags, which a computer needs to classify and organize these posts.
Humans can easily understand the context and meaning of a pin with visual cues and other contextual information, but automated systems will stumble.
SCRM analysis and resulting applications typically require deliberate human mediation to be effective.
3. Relating
Effective SCRM does not take place in a vacuum.
It applies to a wide range of business units within an organization, including sales, marketing, advertising, customer support, product development, and public relations.
Increasingly, marketing departments are getting involved not just in social media, but in CRM management and monitoring incoming leads (see chart, right).
A focus on the social customer can help marketing departments integrate with the rest of an organization.
Relating is about taking insights drawn from an analysis and integrating those into the mission and structure of the organization itself, and most importantly, communications and relationships with customers.
Best Buy has accomplished this, perhaps somewhat inadvertently, when it unrolled a Twitter-focused customer care initiative. The electronics retailer developed a marketing and customer service strategy built around “Twelpforce,” a system the company created to allow thousands of employees across departments to receive and respond to customer queries via Twitter.
While Twelpforce has been a great success externally, it also gave employees a channel and an incentive to collaborate internally (in order to handle customer requests it was often necessary to gather information from other employees.)
The initiative has led to information-sharing across Best Buy, which has helped to eliminate the practice of putting social media functions into corporate silos. The expanded communication also boosted employee morale.
IBM estimates that the initiative has resulted in $5 million in deflected call center costs.
4. Acting Proactively
Acting is about reacting to social conversations in a way that provides tangible value to the people involved, while remaining consistent with the organization's goals. Domino’s Pizza Turnaround campaign is a great example of a company taking effective action with insights gained from SCRM.
After a disastrous video was posted on YouTube in 2009 showing two Domino’s employees mishandling a pizza, the company launched a massive SCRM-driven campaign to rebrand the pizza franchise.
The campaign began with listening and analyzing public opinion across all social media platforms. After receiving mostly negative feedback, Domino’s made company-wide changes including altering their pizza recipe, developing a number of social tools to engage their audience, and launching a marketing campaign acknowledging the company's mistakes and promising a better product.
Domino’s saw a 14% increase in sales the quarter immediately following the campaign.
Social Customer Tools
Social network-mediated customer relationships take place across multiple social networks, blogs, and online communities. These are fluid relationships and conversations. Their mood and tone can change in a flash. They need to be managed in real-time.
Without technology to manage these relationships, social customer management would be impossible.
An in-depth discussion of social CRM products goes beyond the scope of this report, but since a social strategy potentially involves patching together many different solutions, it's worth taking a peek at the landscape.
Most companies that are longtime players in the CRM space have noticed the demand for social media-integrated add-ons.
Salesforce is perhaps the biggest name to expand into social strategies for customer management. The company has made numerous acquisitions in an effort to make social a key element of its cloud-based tools. The major downside to the Salesforce Marketing Cloud and related products is the price tag. (Starting at $5,000 per month, the price puts the platform out of reach for the one-fifth of smaller U.S. businesses who use CRM systems.)
But there are other options. Hootsuite can provide a far more inexpensive and effective alternative, at least for social media listening and management.
Though not an integrated customer relationship technology, Hootsuite allows users to plug into conversations across social media platforms and easily respond to individuals and communities.
Its ease of use and low cost has attracted big names like HBO, Virgin, and Mashable.
THE BOTTOM LINE
Traditional customer management is organized around a stand-alone piece of CRM software. In social customer management, the technology is less important than a strategy for collecting feedback from online, social and mobile channels and sharing it across an organization.
Data shows that a social customer strategy leads to a higher probability of sales and will differentiate companies from the pack, which is still woefully bad at responding to customers on social media.
Boosting leads and customer lifetime value are two aims of social customer management, but a broader goal is to bring customers' concerns deeper into the company's decision-making.
Click here to download the charts and data associated with this report in Excel→
Click here to download the PDF version of this report→
Click here to read more BII coverage on social customer service→
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