Master Interviews: Sanjay Dholakia, Lithium CMO, on Communities


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I first wrote about collaborative service in 2002 when few Forums vendors existed.

We have seen since the launch of very large and very successful communities, a fair amount of them using Lithium, one the leading vendors for communities.  They use a deployment model that helps their customers leverage reputation and analytics.  I asked Sanjay to explain in as few words as a marketer can what is the difference between their offer and others.  Below are his answers

(note: the embedded links will take you to material in Lithium’s website that complements the answers.  They are provided as optional add-on information)

1. Lithium has been running an incredible rate of growth in the last months – what do you see as the basis for the heavy demand from customers?

The revolution in social technologies – and the generational change associated with that — has fundamentally altered the way customers want to interact with businesses and each other.  And, for every business, their  customers are their company.  Increasingly companies are realizing that they can’t take a chance with their customers – they are realizing that if they don’t create a social customer network of their customers and prospects, those customers and prospects will go to competitors that offer the engagement model they want.  Customers are now in control of the conversation.  But, this can create opportunity.  Savvy companies are realizing that creating this customer network  allows them to unlock millions of dollars in value by allowing customers to innovate, promote, and support on behalf of the company.

This video illustrates the point  This story in the New York Times about Verizon shows the benefit in practice.

That last article probably illustrates why Lithium in particular is experiencing such dramatic growth ahead of the industry – mainly because we have been demonstrating real, hard ROI with our customers.  Most other companies are still at the theoretical stage of the discussion.  And, in this economy, real results and ROI matter – particularly when you’re talking about a company’s customers.  Our customers have been showing that Social CRM — where online customer communities are integrated with the broader social web and traditional CRM systems — is already producing tangible, measurable results for companies that do it well. USA Today recently published an article highlighting the value for Lithium customers like myFICO, Lenovo, and Sage Software — myFICO documents over 40% increase in customer spend; Lenovo sees a 20% reduction in call center activity; and Sage has seen an increase of 20 points in its NPS score.  Our growth rate is being driven by the success of our customers.

2. What do you see as the biggest challenge for Social CRM?

I would say that the biggest challenge to Social CRM is underestimating what it takes to succeed.  As mentioned, if done right, there are huge returns to be had.  However, many companies do not succeed (one report said that 75% of all customer communities fail to reach 1000 users).  Our communities on the other hand are doing about 2 billion page views per month today.  We believe the challenges for most lie in two specific areas.  First, many companies underestimate the importance of Reputation Management in the underlying Social CRM technology.  Social CRM is fundamentally different from any other enterprise software initiative in that customers must WANT to engage – they cannot be mandated to participate or use applications like employees can.  Reputation Management is critical in the software to drive the behavior that drives success.  The second area that creates challenge for companies is in change management – this is a fundamentally new mode of interacting with customers and requires a strategic shift in some organizations.  We have been collecting best practices for over 10 years and sharing them with our customers to ensure that they have the highest chances of success.  Lois Townsend from our customer HP recently discussed how she was able to gain internal sponsorship for Social CRM and how she recommends gong about the change management process.

3. How can communities and other channels, like Twitter or social networking sites, integrate to provide a better picture of the Social Customer?

It has always been important to get as good a picture as possible of one’s customer.  Traditionally, that has meant understanding ‘characteristics’ and ‘buying behavior’.  However, customer communities and Social CRM offer something powerful in addition – specifically, “what are my customers thinking and saying?” By integrating views of customers across social networks, companies can now better understand customer behavior, their preferences, their influence, and their networks. This integrated view allows companies to efficiently gather requirements, effectively market to customers, and better serve their customers. We take our view of the possibilities even one step further – this integration can not only give companies a better picture of the Social Customer, but, done properly, it can actually EMPOWER the Social Customer to advocate on behalf of the company.  For example, Lithium’s twitter integration and Social Web Connect allows the customer community and network to answer questions directly or promote community conversations to their networks.  Company employees and agents are no longer the gating factor – this allows companies to take true advantage of the scale advantages of the social web.  Too many companies are still thinking about the social web as one more ‘channel’ that their employees have to listen to and monitor – that doesn’t scale – it just makes the company’s life harder, when the goal was to make it better.  If they actually integrate the social networks and communities such that their customer network is carrying the load, now they have created real value.

4.  Lithium has a scientist on staff who does a lot of research in how to do communities and social CRM better, has that helped you grow the awareness in the market?

For sure.  Because we are the only Enterprise SaaS provider in the Social CRM and customer community market, we have the advantage of sitting on top of billions of bits of interaction data across hundreds of communities.  Our chief scientist, Michael Wu, leads our efforts to discover new insights daily.  This research and enablement of Social CRM is absolutely critical to our business.  We have found that there is a deep hunger in the market for data on measurement of social behavior and impact to the business.  One of the things that made a big splash earlier this year was our announcement of the Community Health Index – or “CHI”.  Michael and his team were able to devise a formula that captured the health of customer communities in a single number, in the same way that FICO sophisticated algorithm captures credit risk in a single number or score.  We published that formula as an open standard because we felt that helped the entire market – we’ve since seen it show up in places like business school curriculum lists!  It really has helped raise awareness and give the market confidence overall.  The other thing that Michael and team have been able to offer our customers is a unique Benchmark analysis  We are able to compare the behavioral and statistical data of a customer’s community to aggregated benchmarks of similar communities so that we can offer advice on best practice and specific actions to improve their Social CRM efforts.  This ability to compare to best practice benchmarks has really captured the imagination of many in the market and, again, has helped raise awareness both for Social CRM and Lithium in particular.

5.  I am fascinated by the fact that you track over 100 metrics of usage for each customer.  How do you use all that data?

Doing the work that we just discussed with the Community Health Index and Lifecycle Benchmark analysis requires capturing all of this data – without this level of tracking, you can’t do this analysis – it is a significant differentiator for Lithium since no one else in the Social CRM space tracks as many details.  In addition to the things we discussed above, the data helps us deliver the most vibrant communities in the industry.  Let me use and example to illustrate the point.  One of the things we track is which messages a user has actually read – and making that visible to them.  Imagine if every time you came back to your email application, it showed all of your messages as “marked read” regardless of what the reality was – that would be pretty useless as an email application, not to mention annoying.  That’s how other customer community and Social CRM applications work.  Lithium, on the other hand, because we track those 100+ usage metrics, can provide a much more satisfying user experience that keeps people coming back.  With a vibrant community, the data then helps our customers drive tangible business value by identifying – based on behavioral data –  key influencers and advocates of today and tomorrow.

6.  What is the future for Lithium and for Social CRM?

Given the value that enterprises have been seeing with Social CRM and customer communities, we think the future is clear. Many of the drivers and trends have been laid out in this Social CRM whitepaper .  While the industry is in its early days, the dramatic growth and adoption rates signal to us that customer communities and Social CRM are rapidly approaching “must-have, mission-critical” status.  If your competitors have a customer community and are engaging in these Social CRM practices and you are not, you will be at a competitive disadvantage.  Today, a company – of any size – isn’t can’t really be in business without a website.  Tomorrow, a company  won’t really be able to be in business without a customer community and Social CRM infrastructure.

Disclosure: I did not take payment for this write up nor do I have an ongoing partnership or business relationship with Lithium.  I don’t expect to get any business from them because of this post, nor do I expect any other sort of compensation from them or anyone else for writing this.  My interviews don’t indicate endorsement for a product or vendor, just an interesting person in the world of Customer Strategies.  You are hereby admonished to do your own Due Diligence before deciding to invest or acquire this tool or enter into an agreement with this vendor.  I am not liable for your decisions to adopt or implement this or any other product or vendor reviewed – you are on your own making your decisions.  The opinions of Sanjay Dholakia are his and his only, I just respect them.

Esteban Kolsky
ThinkJar, LLC
Esteban Kolsky is the founder of CRM intelligence & strategy where he works with vendors to create go-to market strategies for Customer Service and CRM and with end-users leveraging his results-driven, dynamic Customer Experience Management methodology to earn and retain loyal customers. Previously he was a well-known Gartner analyst and created a strategic consulting practice at eVergance.


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