What is key to the success of (social) CRM?

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Inspired by a blog post by Dr. Harish Kotadia I started to rethink about what the real key success factors for a social CRM strategy are. Harish used Walmart as an example, based upon their introduction of the “local” Walmart on Facebook. Walmart, being a retailer with more than 3,500 stores is surely a company for which the concept of (physical) proximity is important.

From the outset I contradicted him (how dare I 😉 ). My point was, and is, that companies like Amazon, Dell, even Apple, arguably have a social CRM strategy but are not exactly local (there is not even a single Apple Retail Store in NZ …). They all manage without being physically local. Some brick and mortar retailers are even able and willing to bring their store to their customers by various technical means (e.g. Tesco but also others). So, I argue that proximity is more defined by ease of access, availability, interaction, rather than physical distance. This, in turn, means that physical proximity is not necessarily a key concept. This is especially true as being close, physically or otherwise, but irrelevant doesn’t bring a company anywhere, except into bankruptcy. So, relevance seems to be key.

What is relevance?

Relevance is the ability and willingness of companies to create value together with their customers. This goes beyond the mere transaction – giving money in exchange for a product or a service. Value for the company is not created by a single transaction, nor does the product itself create value for a customer.

Value for the company is created by sustainable business. Sustainable business is not achieved by hitting a customer but by placing and keeping the customer’s interest at the core of the business i.e., by creating value together with the customer.

The customer participates in the creation of value by using the products/services to fulfill her needs. The value comes out of the usage, not the product itself.

Now, what is correct?

To get to a result we need to be clear about what social CRM is. For this I will use Paul Greenberg’s definition as it is the most widely accepted one.

Social “CRM is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.”

Personally, I currently define social CRM as an extension to CRM that leverages the power of social media to continually engage in a mutually beneficial conversation with customers and prospects. I am aware that this is a little short but I also do not want to stretch the current limits of companies as well. What is ultimately behind this definition is an ability to create value for customers with customers, using an environment in which they are willing to invest limited efforts to get better value from companies.

Wikipedia describes the term “social” as referring “to a characteristic of living organisms that always refers to their interaction and to their collective coexistence, irrespective of whether they are aware of it or not, and irrespective of whether the interaction is voluntary or involuntary. It refers to attitudes, orientations, or behaviors, which take the interests, intentions, or needs of other people into account.

Combining these two definitions we are not anywhere close to a concept of “being local”.

But, on the other hand, making an offer to us Christchurch people that is available in Auckland doesn’t make much sense either. But then: This is not exactly social CRM but plain ole segmentation with – non-deniably – an aspect of locality.

So, where does this leave us?

As I have stated before, implementing a CRM – and a social CRM – is predominantly about people and strategy. Repeat: (Social) CRM is a strategy, not a technology! It is key to have the right people and the right (business) strategy. Technology (and channel) comes at the very end of implementation; and is often also depending on an IT strategy (I mean, there is no point in implementing an SAP system if the corporate strategy relies on Oracle – or vice versa. SFDC is of course an interesting phenomenon rewarding an own blog as they are trying to disrupt corporate strategies).

Well, back to the topic: Technology and channel are consequences of the chosen strategy. I actually would consider both as being tactics rather than strategies.

These consequences (technology, channel) are of increasing importance but still not sufficient if they are not used with an end in mind.

And this end is serving customer interests. So, the key is centering all activities of the company around customer interests. Proximity then comes as a necessary conclusion.

Am I off the mark here? What do you think?

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