Thursday, July 2, 2009

On the applications of social crm - introduction

So what is social crm? Essentially Social CRM is using social media, such as facebook, twitter and wikipedia to start conversations with customers, or join conversations that have been started by your customers. Social CRM has also been called CRM 2.0. CRM 2.0 is defined as:

CRM 2.0 is a philosophy & a business strategy, supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It's the company's response to the customer's ownership of the conversation.

on the crm 2.0 wiki

The keywords in the above definition are collaborative conversation, mutually benificial value and in a trusted & transparant business environment.

So Social CRM is not a replacement of traditional crm, but a new way of communicating with customers, through new media, and allows companies to join in conversations that customers have started about your company or your products / services. I've read through numerous blogpost and articles describing that Social CRM is a hype and that Social CRM will never replace existing CRM or Customer Experience Management processes. Of course it won't and it's not intended to replace them, it's just a new way of communicating. Mike Schneider posted the following insights on Social CRM on his blog:
The fact is that there are applications for Social Media across the enterprise. Look. Social (essentially) means communication. Media is a medium of conveyance. So Social Media is a fancy name for a communication tool. The organization needs to communicate in order to succeed. Your team or functional area does not need to be the Superfriends of Social Media, locking down the technology at the Halls of Social Media Justice. It is one thing to be a trail blazer and another to construct a fortress around the perimeter of a trail to ensure that no one else can even see the trail.

His comment also highlights that your company's social media efforts need not be driven from either a special department within your customer services department, or by the IT guys because they know all about social media. I think that incorporating social media as a communication tool for marketing, sales or service should become an integral part of your CRM strategy, if you are in the Business 2 consumer market.

In the coming weeks I hope to be able to devote some time to post on the different elements of social CRM or CRM 2.0: the collaborative conversation, mutually benificial value and trust & transparancy.

Monday, June 15, 2009

Customer loyalty: are loyal customers really profitable?

I've been doing quite a bit of research into customer loyalty and customer loyalty programs for a paper I've written for the Executive Master of Information Management Programme I'm attending at TiasNimbas Business School. The literature on loyalty and loyal customers seems to suggest that investing in a loyalty management program does provide a company with a source of competitive advantage. In other words: loyal customers help to improve the performance of your company!

I've just stumbled upon an interesting blog post by Timothy Keiningham and Lerzan Aksoy over at Harvard's Conversation Starters blog. Timothy and Lerzan are working on a book on customer loyalty and outline why customer loyalty can also be a bad thing:

The fly in the ointment is that typically only 20% of a firm's customers are actually profitable. And many — often most — of a company's profitable customers are not loyal.

Timothy and Lerzan argue that in the current downturn companies focus too much on lowering prices in order to gain more customer loyalty.
But the simple solution to improving customer loyalty in a down market is to offer price deals. In fact, firms that track their customer loyalty can be guaranteed that loyalty scores will increase with each substantial decrease in price all things being equal.

But that's a bad loyalty strategy. No, this doesn't mean we should not find ways to be more efficient so that we can pass cost savings on to our customers. But price-driven loyalty is always the lowest form of loyalty. It means that we aren't offering differentiated value to our customers.

The key in their argument is the fact that truely loyal customers and profitable loyal customers are created by focussing on providing an added value and differentiated offer for your customers. Only then do you get a competitive advantage from loyalty management.

Be sure to check out Timothy and Lerzan's book Why Loyalty Matters and read their full blog post.

Sunday, January 25, 2009

Linkdump - CRM and the sustainable organisation

In december of last year I wrote a post about 2009, the year of sustainability and sustainable CRM. Yesterday I came across this article on, with an interesting quote on customer sustainability:

What makes a company sustainable?

Customer relationships can build an asset to provide a cushion against changes in the market, according to Kirkby - a kind of 'brand halo'. This is where a brand can reach market share peak, have very high salience and become a market leader, but also remain a market leader long after it doesn’t deserve to be any more simply because people remember its status and think it is still on top.

Doc Searls on VRM. My view on the challenges

I came across a nice post by Doc Searls on what he would like when it comes to CRM from the point of view of the customer, or VRM. I wonder how long it will take for the first VRM applications to be released.

One of the challenges I personally see with VRM is: who will we trust with our information? We already trust loads of companies with privacy related information, such as what we buy, what we subscribe to etc. but this information is dispersed over multiple vendors. I wouldn't want to trust Albert Heijn (a major dutch supermarket chain) with information on all my purchases and subscriptions. Perhaps this is something for a semi-governmental institution like a consumer authority that is regulated and that we can trust not to use our personal information for commercial gain.

Thursday, January 8, 2009

On end year credits - Top 20 CRM Bloggers

In 2007 I was added to the top CRM bloggers list of (great site, go check it out). On December 29, 2008 Chris Bucholz published an updated version of the list, update for 2008. The list is full of interesting CRM blogs everyone should check out, and fortunately for me I'm on the list once more, featured in a list that also contains the big minds in CRM such as Paul Greenberg, Brent Leary, Christopher Carfi and, Mr. VRM himself, Doc Searls. I hope I'll make the list again next year.

Sunday, December 28, 2008

Moving to wordpress

As of today my blog is also available on the following domain:

Just testing whether I like Wordpress better than Blogger.

On 2009 - the year of sustainability

The new year is approaching, 2008 is ending with some of us feeling the consequences of the credit crunch. It's time to look towards the future. Every new day and new year opens a wealth of new opportunities,  even in a crisis. 2008 ends with a starting recession, many business are facing tough times. I do not have a crystal ball and am not much of a fortune teller either, nonetheless I would like to offer my views on 2009, from a CRM perspective that is.

2009 - the year of sustainability
In 2007 and 2008 we've been able to see a new trend rise, sustainability and environmental awareness. We've come to realise that we need to use the earth scarce resources wisely. Sustainability can also be applied as an economic and not environment term however. Wikipedia lists the following for the term sustainability:

Sustainability, in a general sense, is the capacity to maintain a certain process or state indefinitely.


So sustainability can also be applied to your business as the capacity to remain operating and to remain in business. How could one survice the current economic crisis and what does sustainability in crisis mean?

  1. Sustainable operating model

  2. Sustainable customer base

  3. Sustainable investments

A sustainable operating model
The first thing companies focus on in a crisis is operational excellence. Reducing expenditure and increasing efficiency. Cut out unnecessary costs and focus on the core of your companies operation. This could mean divesting or closing retail outlets and changing your channel partner strategy. Perhaps others are better at selling and marketing your products than you are. Operation Excellence also marks a path to lower cost channels, such a self service internet channels as opposed to contact centers or an on-site repair man. In other words, I believe that 2009 will lead to companies employing self service more and more, as a means to both improve customer service (24/7 access) and reduce cost.

Sustainable customer base
During a boom companies typicall focus on Sales & Marketing when it comes to their CRM investments, trying to get a piece of an ever increasing pie. In a crisis the pie usually stays the same size or gets a bit smaller. Unless you provide an innovative product or service for which a whole new pie exists, you will try to have to make do with getting a bigger piece of the existing pie. The focus, in my view, should be to focus on preserving your existing customer base through excellent service, and gaining new market share through word-of-mouth marketing. Spending heavily on marketing campaigns for a .05 percent marketshare increase is nonsense if your existing customers are leaving. So keep your current customers, provide excellent service, preferably better than your competitors, and gain marketshare that way. After all, the cost of acquiring a new customer is 5 times higher than keeping your existing customers and convincing them to spend a bit more with your company.

Sustainable investments
Due to the credit crunch most companies are no longer able to draw unlimited financing from either the stock market, or the credit market, one has to invest wisely. Invest in improving your current products or services, products or services that are complimentary to your current portfolio and invest in customer service. Secondly make sure you invest in a way that is environmentally sustainable and use that as a marketing tool.

Sustainability and CRM?
So what does this mean for your CRM efforts. I feel that 2009 will see an increase in spending on improved customer service, through more possibilities for self service, increased spending on cost-efficient call centers (through products such as Oracle Contact Centre Anywhere) and increased spending on loyalty management applications. Loyalty management spending will be directed at keeping existing market share and growing the existing customer base through word-of-mouth marketing.

I'm looking forward to another interesting year in CRM, CRM Applications and IT.