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2010: Year of Social CRM 

Harish Kotadia, Ph.D. | Jan 2, 2010 3,438 views 14 Comments

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Internet users are flocking to Social Networking sites because of almost hysterical following sites like Facebook and Twitter have generated. Not only number of users, but average amount of time spent by each user on social networking sites has climbed substantially in the past one year. So it is not surprising that TechCrunch has named Social CRM as one of the top ten technologies that will rock 2010!

So what is Social CRM and why those in Social Media and CRM talk passionately about it.

What is Social CRM and why it is important:

Social Networking sites have seen a phenomenal growth in number of users in the last one year. Brian Solis has estimated that for August 2009, Facebook recorded 110 M unique visitors from US and 370 M globally. Similarly, Twitter registered 24 M unique visitors from US and 66 M worldwide.

This offers a unique opportunity to marketers for engaging their customers through Social media channels. Social CRM is the business strategy of engaging customers through Social Media for building trust and brand loyalty. Research has shown strong evidence that Social Media Engagement correlates to Financial Performance (see report on world’s most valuable brands – Who’s most engaged?). According to this study “Engagement via social media IS important — and we CAN quantify it. There is statistically significant correlation between social media engagement and the two most meaningful financial performance metrics – revenue and profit”. This study further emphasizes quality of customer engagement through social media by concluding:

  • It pays to engage meaningfully in social media. Emphasize quality, not just quantity.
  • Engagement is more than just setting up a blog or Facebook profile and letting viewers post comments, it’s keeping your content fresh and replying to comments; it’s building your friends network and updating your profile status.
  • Engagement can’t be skin-deep, nor is it a campaign that can be turned on and off. True engagement means full engagement in the channels where you choose to invest.
  • To scale engagement, make social media part of everyone’s job. You must do something, else risk falling far behind other brands, not only in your industry, but across your customers’ general online experience.

This clearly illustrates importance of Social CRM – engaging customers via Social Media for building trust and loyalty towards the brand.

Why NOW is the time to invest in Social CRM:

There has been lot of discussion on whether Social Media revolution is for real or is it some passing fad that will die down eventually. Well, those who have any doubt should read findings of a recent survey by Forrester. In this survey of 204 marketing executives across industries, it was found that recession is accelerating shift to interactive, mobile and social media.

Marketers were most optimistic about social media, online video, SEO, mobile, paid placement in social media, email and paid search, in descending order. Near the bottom were outdoor, telemarketing, radio and newspapers. As per Forrester’s Interactive Marketing forecast, Interactive marketing will approach $55 billion in marketing spend in 2014 benefiting from search, social media and mobile marketing.

It is important to note that in the past two years, time spent by consumers online has grown from 29% to 34%, but advertisers spend only 12% of their budget on Internet marketing. Forrester predicts that by 2014, spend will increase to 21% of budget. Forrester further predicts that both social and mobile will have the biggest compound annual growth rate (CAGR) — 34% and 27%, respectively through 2014.

So, there you have it! Consumers are spending more time online, interacting with their friends and contacts through Social Networks. TV and Print Media have seen their Viewership/Readership fall significantly. This is the right time to allocate (or should I say “shift”) resources for investment from “traditional” media to “new” media and engage customers through Social Media for building trust and loyalty.

Related posts:

  1. Why NOW is the time to invest in Social CRM
  2. What is Social CRM and why it is important
  3. Dear CMOs, Wake up to Social Media challenge

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14 Responses to 2010: Year of Social CRM

  1. Wim Rampen January 3, 2010 at 3:11 am (76 comments) #

    Hello Harish,

    I admire how well you write and how you are continuously advocating Social CRM as the business strategy of choice. We are on the same path.

    I do think though that your statement that “Social CRM is the business strategy of engaging customers through Social Media for building trust and brand loyalty” is too narrow.

    I believe the emphasis of Social CRM should not be on engaging Customers, but on being engaged with your Customers. Social Media provides great opportunities to be engaged with your Customers and to provide your Customers with the ability to engage with you, if they desire to do so.

    Furthermore adding Social to CRM to me is about listening to Customer feedback, direct or indirect, structured and unstructured. Listening with a clear aim to improve how the Company is able to meet Customer needs or desired outcomes.

    More on what I think “A Social CRM Strategy is all about”.

    What do you think?

  2. Esteban Kolsky January 3, 2010 at 3:31 am (55 comments) #

    Harish,

    Nicely written – but I think you are confusing two different things here:

    Social Media (used to engage customers and to listen to them, maybe even act without impacting the biz operations).

    Social CRM (as Wim said, about using the feedback to improve operations, impact the business, change the relationship).

    The relationship between these two and loyalty is also telling. Social media can, and usually does, affects short-term, rational loyalty. It does not, however, have much impact in long-term loyalty and it does not do much for the biz (other than good PR). It does set a precedent, so the biz has to be constantly on its toes to perform similarly across the interactions. As you can see, if the biz was not changed to accommodate the necessary changes to process, it may (and probably will) falter at a later time — which will destroy the rational loyalty.

    Social CRM, on the other hand, impacts the long-term loyalty. You are making changes to your processes, to your business, and creating a historical-based two-way conversation with your customers. These are the basic elements of building a long-term loyalty with them. This is what I don’t see addressed in the write-up you did above, and what concerns me a little.

    Social CRM is a long-term strategy that while it leverages Social Media does not depend on it. It is more closely tied to a Social Business strategy and the impact on the business goes beyond 2010 — even 2012 probably. Sure, you can adopt the idea and begin the planning and deployment this year, but the truth value of the implementation won’t show for a couple of iterations (similar to what we experienced with regular CRM). It could be shorter – if you leverage you existing CRM investment… but that is another discussion.

    Anyways, too much rambling already… nice write-up, just hoping you can add the distinctions in your thinking as we move forward (or correct me if I am wrong).

    Thanks
    Esteban

  3. James Hipkin January 3, 2010 at 11:56 am (1 comment) #

    Social Media is important, you make the case very well and I agree, it is important, but I have to question whether or not it’s a strategy.

    When viewed as a strategy, “Social CRM is the business strategy…,” implementation will happen in parallel with other marketing communication activities, which limits the impact of all. When Social Media is viewed as a media channel it becomes another conduit to successfully execute the marketing strategy.

    Social Media is a tactic that can improve the effectiveness of marketing communication and CRM. It should be incorporated into the marketing plan so consumers who participate in Social Media can gain incremental value from brands through the channel.

  4. Bob Thompson January 3, 2010 at 10:51 pm (875 comments) #

    I find it interesting that TechCrunch presents “Social CRM” as a tool, not as a business strategy. Is there anything in the following that would suggest that Social CRM is about customer engagement?

    This year, those modes of realtime communication will find their way deeper into the enterprise. Salesforce.com is set to launch Chatter, it’s realtime stream of enterprise data which interfaces with Twitter and Facebook and turn them into business tools. Startups like Yammer and Bantam Live are also making business more social.

    In fact, Chatter, Yammer and Batam Live are really Enterprise 2.0 applications, designed for internal workforce collaboration.

    Not to diminish the importance of tools, but this is the same fate that befell CRM. While consultants called CRM a strategy, the vendors and media talked it up as a tool. It’s no wonder that CRM=technology became the dominant thinking.

    Further reading: Social CRM: Strategy, Technology or Passing Fad?.

  5. Harish Kotadia, Ph.D. January 4, 2010 at 8:01 pm (43 comments) #

    Hello Wim:

    Thanks for your kind words, much appreciated!

    You are correct in emphasizing the importance of listening to Customer feedback, direct or indirect, structured and unstructured. That is a great starting point for any organization when they start using Social Media.

    After the initial phase, you will have a good understanding of how your customers are using Social Media. As a result, you can move much beyond “listening” and extend your Social Media efforts to include Learning and Engagning besides Listening. For example, involving customers in product co-creation or design/modification of product. See following links for good examples:

    1) Co-creation of New Products: Del Monte http://hkotadia.com/archives/979

    2) Service Improvement: Southwest Airlines http://hkotadia.com/archives/745

    3) Product Improvement and Sales: Dell http://hkotadia.com/archives/1163

    As examples quoted above illustrate, we can involve customer in product co-creation and product improvement, understand what is important to customers and through value engineering, design a product/service mix that offers the best value for money for each segment. Social Media offers the right tools for this kind of engagement. Note here, you are engaging your customers, not the other way around.

    Those organizations that realize the potential of Social Media and Social CRM early will gain an edge over their competitors. As Michael Dell is quoted in video referred above (#3), “Our customers are talking about us on Social Media, why are we not talking to them”. Success of Dell’s Social Media strategy can be highlighted in three words: “Listen, Learn, Engage”. Hope other organizations learn from early adopters like Dell as they begin to engage their customers through Social Media.

    Thanks again for your comments,

    Harish Kotadia
    http://hkotadia.com/

  6. Harish Kotadia, Ph.D. January 5, 2010 at 2:47 am (43 comments) #

    Hi Ekolsky:

    Thanks for your comments and compliments. Much appreciated!

    You are right in saying that Social CRM is a long-term strategy. It is a sub-set of overall CRM framework of any organization and it involves using Social Media to build relationship with customers.

    What sets it apart from “Traditional” CRM is the “Social” aspect. Customers are discussing about your brand and company on Social Media channel, better be part of that conversation and “engage” customers to derive business benefits. Dell is a great example of “Listen, Learn, Engage” approach.

    Social Media is the channel, building Trust and Loyalty the objective of Social CRM initiative.

    Hope this helps. Some great examples of how Social Media can be leveraged are given below:

    1) Co-creation of New Products: Del Monte http://hkotadia.com/archives/979

    2) Product Improvement and Sales: Dell http://hkotadia.com/archives/1163

    Thanks again for your comments,

    Harish Kotadia
    http://hkotadia.com/

  7. Esteban Kolsky January 5, 2010 at 5:58 am (55 comments) #

    I am very conflicted with the “jump in and listen, then figure out what to do” message you are spousing.

    Without knowing why, how, or what to listen to all short-term gains will be erased and reversed so quickly that it would be detrimental to the business.

    I only wish that people will not follow that advice of just listening to see what’s going on… they already know they have problems, they need to figure out what to do with the message they listen to — not just listen.

    I can find dozens of “got lucky” case studies to cite, but if you look deeper at the ones with more staying power they all share the strategy before the tactics. And they endure.

    That was the message I was trying to convey in my comment before, but am not sure it got through.

    Bottom line: social media is a short-term band-aid to a long-term problem. We should be looking at the long-term problem.

  8. Harish Kotadia, Ph.D. January 5, 2010 at 9:57 pm (43 comments) #

    Hello James Hipkin:

    Thanks for your comment. Social CRM is a business strategy and is tied to overall CRM strategy of the organization, so that CRM/Marketing campaigns through Social and “Regular” media complement each other and can run in parallel. For example, a company can launch a campaign through direct mail, phone, print and Social Media in parallel. This should not be an issue since Social CRM strategy is part of overall CRM strategy of the organization.

    Social CRM is the business strategy, Social Media the channel and provides necessary tools. Objective is to build customer trust and loyalty. You can break-down the overall objective of building trust and loyalty in operational terms, but the final goal is to win customer’s mind-share and their loyalty.

    Hope this helps,

    Thanks again for your comments,

    Harish Kotadia
    http://hkotadia.com/

  9. Harish Kotadia, Ph.D. January 5, 2010 at 10:14 pm (43 comments) #

    Hi Bob Thompson:

    Thanks for your comment. I agree with you on the sad fate that befell CRM when CRM=technology became the dominant thinking.

    It is worth reiterating that Social CRM is a Business Strategy, Social Media the channel and provides necessary tools. Objective is to build customer trust and loyalty through Engagement.

    Harish Kotadia
    http://hkotadia.com/

  10. Harish Kotadia, Ph.D. January 7, 2010 at 2:58 am (43 comments) #

    Hi Ekolsky:

    Thanks for your comment. It is not “Jump in and listen, then figure out what to do” as you put it. If you refer to my definition of Social CRM, it states “Social CRM is the business strategy of engaging customers through Social Media for building trust and brand loyalty”

    So you start with a strategy (your sCRM strategy in this case), you listen to what customers are saying about you, learn from the discussion and then go on to engage them with the objective of building trust and loyalty. All your actions involving social media will be as per your sCRM strategy, which is part of your overall CRM framework.

    Also, if a brand manager knows what the problem is, they can get a better understanding of the issues if they listen to what customers are saying on Social Media channels. Remember, not only the customers – but potential customers are listening too – if the problem is not fixed or if the brand manager appears to be disinterested in fixing the problem, business will lose customers (we all know about the famous guitar case study!). So better listen to customers – to gain better understanding of the problem/issues, learn from what they have to say and may be crowdsource the solution (Engagement). Social Media offers excellent tools for that.

    Just because a company feels that they know what the problem is, so no need to listen to customers on Social Media channels is not a valid excuse not to listen. They have to have a sCRM strategy in place, then Listen, Learn and Engage.

    Hope this helps and as always I respect your views and opinion and admire your thought leadership on this subject.

    Regards,

    Harish Kotadia
    http://hkotadia.com/

  11. Wim Rampen January 7, 2010 at 3:37 pm (76 comments) #

    Harish,

    What I, and Esteban I think, are trying to explain here is that Social CRM is not about Social Media per se. Your definition of Social CRM is too narrow in that sense..

    As per the definition of Paul Greenberg, Social CRM is the answer to the Customers’ control of the conversation. The conversation takes place on-line and off-line. Listening should therefor not only be done on-line, but off-line as well. The same goes for engaging etc etc.. Social CRM is way more than adding social media to CRM. Really!

    Furthermore, and this is a major point: it strikes me as if you see Social CRM as a sub-set strategy of CRM. This is not the case. Social CRM is its successor.. and it is the Customer facing part of a Social Business Strategy..

    I would love to get into the discussion of the goals of an SCRM strategy too, but don’t think it makes sense, without having a mutual understanding of where it sits..

    You are not declaring 2010 the year of Social CRM. You are declaring 2010 being the year to start listening and engaging with Customers through Social Media.. No harm in that but, like Esteban, I suggest you put a sound strategy in place first. And doing that goes beyond what you are writing here.

    Wim

  12. Andy Schultz May 18, 2010 at 9:47 am (1 comment) #

    Hi Harish,

    I must say I agree with you with regards to the debate that occurred at the beginning here – social crm is about engaging, not being engaged with. The misunderstanding in making the assertion that social crm is about being engaged with customers is a misunderstanding of the “crm” part of the term. CRM is not simply about managing relationships with existing customers, some of its main functions are to proactively engage potential customers. Social CRM must fulfill this purpose as well.

    An understanding of the different markets that SCRM will serve is also essential. I feel that the two dissenting readers look at SCRM in terms only of a large company with a commodity offering that would actually be widely spoken of on a social network – something like Walmart of Amazon.com. Contrary to the claims they made, their own view is the narrow one. Many companies who will need to use SCRM to drive business won’t have anything to “listen” to on the social networks regarding their company or their offerings (or maybe very little to listen to). They will need to be proactively engaging customers, rather than “being engaged” with the customers who are already actively speaking.

  13. JB June 5, 2010 at 3:55 pm (2 comments) #

    Enjoying the debate.

    I agree with Wim and Esteban; listening to the social stream is just one way that business’ traditional silos and boundaries are breaking. Listening; enabling interactivity around that channel (fix an identified problem, for example); conversing internally about not just a customer but also a prospect (e.g. Chatter); collaborating on an ad hoc basis to get work done with both internal and external constituents in real time, via any device — is where we’re headed. Everything has become ‘social’ — s-crm, s-bpm, s-product development, s-supply chain… collaboration will just be an always-on dimension available to work.

  14. Harish Kotadia, Ph.D. June 17, 2010 at 9:14 pm (43 comments) #

    JB: Thanks for your insightful comment. Much appreciated!

    Harish Kotadia, Ph.D.
    http://hkotadia.com/

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