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.

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.

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 MyCustomer.com, 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.

On end year credits - Top 20 CRM Bloggers

In 2007 I was added to the top CRM bloggers list of InsideCRM.com (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.

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.

(src: http://en.wikipedia.org/wiki/Sustainability)

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.

On solving the customer service puzzle (or CRM is a business strategy, NOT software!)

Or atleast, one view on how the pieces of the puzzle can be made to fit. Drew stevens recently wrote an article on the customer service puzzle, which was brought to my attention
by Jim Berkowitz . The focal points of Drew's article are ensuring the whole company focusses on providing an excellent service or product to your customer and ensuring you regularly interact with your customers. Something we can all agree with.

Drew also outlines one point I disagree with: 'refrain from CRM'. Like many others Drew mistakenly views CRM as 'software systems'. CRM is not a piece of software or a system, but a business strategy. The business strategy that should force companies to focus on providing added value to customers. In other words, CRM is the 'focus on the customer throughout the whole company' that Drew is referring to. Paul Greenberg's definition of CRM systems says it best:

"CRM is a philosophy & a business strategy, supported by a system and a
technology, designed to improve human interactions in a business environment".

CRM systems, like Oracle's Siebel CRM, SAP CRM and salesforce.com are valuable enablers to help companies achieve their customer focussed business goals, if implemented in the right manner. CRM and CRM software implementation should be about your business goals,
and not because some IT guy wants to try out a new piece of fancy software. So Drew, I agree with your points, but I think that implementing a CRM application with your other points in mind will only help a company to solve the customer service puzzle.

On the rise of IP based Contact Centers

A few interesting points from a recent article on CRM daily: IP Systems have come of age. The need for truly integrated call centers, lower cost infrastructure and the lower costs of IP based systems are leading to a rise in the implementation of IP based Contact Center systems. Fully integrated systems that can handle multiple channels (Voice, Chat, E-mail and Fax) in a single queue and over different locations, instead of the loosely integrated, old, copperwire based PBX and TDM systems.

some interesting quotes from this article.

"That cut-over to having a majority of contact center seats IP-enabled could occur in the next few years. This trend, say analysts and suppliers, is being driven by legacy switch replacement cycles, adoption of IP by small/midsized contact centers, new sites, remote agents and informal contact centers, and by customer migration to text and e-mail from voice."

These IP based systems are not always implemented as a replacement for TDM based systems, but sometimes serve as an addition, enabeling quick deployment of new call and contact centers.

"Raun Kilgo, Director of Product Management, Aspect reports that while there has been increased IP adoption among his firm's customers it has not been, in most instances, as replacements for TDM. "

"Most of our customers have already invested in and are comfortable with TDM applications for their mission-critical inbound and outbound work and would need
a compelling event to rip and replace their existing infrastructure ," reports
Kilgo. "Alternatively, IP is the ideal solution for companies implementing new
contact centers or deploying remote or at-home agents."

Remote agents or the possibility to quickly scale up a call center in the event of an adverse event are benefits an IP based solution offers.

"Another advantage IP provides is reduced facilities and IT expenses through less wiring and no need for separate phone rooms: calls are increasingly handled via integrated, centralized and often off-site data centers. That also means faster, easier, and less costly expansion. New contact centers can be up and running in weeks, with no more sometimes lengthy waits for the telcos to install the lines."

The real advantage of having an IP based solution, in my view, is something which could be dubbed the pervasive contact center. All your employees can virtually become part of the call center, so that experts are able to answer your customers inquiries, when an agent is not able to. Providing a correct and direct answer to a question, without the hated call back request is something should enable you to quickly increase customer satisfaction.

Call escalations, especially support calls to outside experts at regional or head offices or who are mobile or at home are easier to set up and have greater functionality with IP, provided it is coupled with unified communications.

In other words, IP based contact center systems hold a lot of promise for the present and the future, when combined with On Premise or On Demand based CRM applications can enable you to better serve your customers and achieve higher levels of customer satisfaction.

On Paul Greenberg's CRM State of the Union

Paul Greenberg, CRM Guru and author of CRM at the speed of light recently published his CRM state of the union for 2008. His presentation details the history and evolution of CRM into CRM 2.0 and outlines a number of developments for the future. You can find the on Paul's blog here

On Robert Scoble at SalesForce.com

Robert Scoble, blogger and technology journalist recently visited SalesForce.com. He was there to interview Mark Benioff and took some time to talk about SFDC and Google with Kraig Swensrud. Check his interview with Kraig here at SalesForceWatch. Robert recently twittered that his interview with Mark Benioff will be online later this week.

Update: The interview with Mark is up and can be viewed here

Linkdump - CRM Buzzword cheatsheet

Want to impress people at the next CRM event you're attending? Read the CRM Buzzword cheatsheet. Also useful to brush up on / refresh your knowledge of what and who is hot in CRM today. 

On CRM, VRM and CRM 2.0 - check InsideCRM

Paul Greenberg, one of the worlds biggest experts on CRM, has written an article on how CRM and VRM are / can be combined into CRM 2.0. Worth checking out. Read it here.

On Gartner's CRM Handbook

Just found the new Gartner CRM Handbook on CustomerThink, sponsored by Salesforce.com and providing information on the keys to On Demand / CRM success. The document seems to be a bit of a celebrations of the fact that SFDC has joined Siebel as a leader in the Sales Force Automation Magic Quadrant, but also offers some insights to CRM newcomers.

On the future of social networks

One of the most interesting Web 2.0 trends, the advent of social networking, will certainly also impact the CRM, CRM 2.0 and most probably the VRM field. Charlene Li, from Forrester Research, recently held a presentation on the future of Social Networks at the Social Graph 2008 event in San Francisco

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Worthwhile to click through for a bit. (Via Marketingfacts)

On Gartner's 7 initiatives to improve the customer experience

Jim Berkowitz has created a post that summarizes / outlines a number of recent Gartner publications on Customer Experience Management. Check it out.

On CRM Vendor Selection and Requirements Analysis

Richard Boardman, of Mareeba CRM Consulting has posted an article on CRM Requirements analysis and how this can help control costs when a company lays down clear requirements, before starting vendor selection for a new CRM system.

I agree with Richard that laying down a clear set of requirements is certainly necessary before selecting a CRM vendor and that some companies overlook their actual needs and the functionality of the selected product, which sometimes leads to challenges when undertaking the actual implementation of a CRM system.

I do feel however that one does not necessarily need to create a full blueprint of the CRM processes merely for vendor selection purposes. A high level specification, together with knowledgable evaluators of vendor's propositions or products should also go a long way. The full blueprint can than be created, taken the functionality of the selected CRM package into account and ensuring that the COTS functionality purchased is leveraged in the right way.

On Single Tenant CRM On Demand

Software-as-a-Service, but not sharing it with other users. Oracle has announced Single Tenant, Enterprise Edition, CRM on Demand. Read this article on CRM Daily

On justification for CRM investments

I've just read through an interesting article by Scott Santucci on CustomerThink. I do not neccessarily agree with his views, but the premise of his post is interesting however. What would you say if your CEO asked you "What did I get for my CRM Investment?". It's probably impossible for most CRM consultants, Sales or Services Process Owners, CIO's or IT Managers to answer that question. Why? Because most companies implementing a CRM solution "forget" to define key success factors or CRM success KPI's at the outset of their process improvement or application implementation projects or programs.

It's hard to say what the best measure of success of a CRM process improvement or CRM application implementation is, because every companies situation is more or less unique and an analysis of the current CRM environment must be made before one embarks on re-engineering processes or applications. Scott's has a point when he says a company needs to figure out what makes it's sales force tick, before embarking on a large investment in CRM technology. But this applies to every investment:

1. define a Key Performance Indicator, or metric (number of calls, conversion rate of opportunities, quality of customer data) of what you would like to improve that is measurable.
   
2. Measure continously during your project and also during the lifecycle of your new process or application.

Perhaps the best advise is to not be afraid to kill a project or discontinue an investment when it fails to yield the results you had expected at the onset. It is better to stop spending time and money on a failed initiative than to keep on investing because of a promise that an application or project would run for X number of years.

On predictions for 2008

Much like the end of the year, everyone seems to be publishing predictions, trends and the future as a year begins. A little bit later than I had anticipated, I'd like to put in my two cents as well, from a European, or perhaps more specifically, from a Dutch perspective.

CRM Process
Service instead of sales Increasing focus is being put on improving service and ensuring customer service meets the expectations of customers. It seems however that most companies now use optimal sales processes and support these processes with an up to date crm system. Companies are starting to realise that making a sale is only one interaction, whereas service interactions occur more frequently and have a significant impact on the probability a customer will renew their contract. 2008 will see an increased focus on Customer Experience Management and Word of Mouth Marketing. The Net Promoter Score will remain an important metric for companies, even though it has been receiving some bad press.

Making your customer his own service representative
A second trend in CRM in 2008 is derived from increased pressure on cost efficient customer service. Not all products are sold at such a price that warrants service representatives making a service visit, or a call centre that provides simple services such as adjusting a cellphone price plan. Customers aren't stupid and aren't willing to pay a premium for activities they can perform themselves through a web based or voice response system. I expect that self service applications found within the Internet domain and are used by Internet Service Providers, will quickly make their way to cell phone, SaaS and other subscription based services in 2008.

Citizen Relationship Management
In other countries, like the UK, local and national governments have already hopped on the CRM train. Increasingly Dutch National and Local Governmental institutions are seeing the benefits of standardized CRM solutions for case management and customer interaction management. By gathering dispersed information in a single system, local governments are able to provide better service to it's citizens or inhabitants by providing a single point of contact that is used to answer a multitude of questions in an efficient way, reducing frustration and the feeling of being caught in a bureaucratic trap. Larger municipalities like Amsterdam, Rotterdam and Almere have implemented typical customer or citizen relationship management processes and systems and other cities and national government institutions will probably follow suit in 2008.

CRM Solutions
Continuing rise of analytical CRM Within the Netherlands the CRM boom of the end of the last century has been followed by a rise in analytical CRM applications starting in 2004. Most companies are using analytical CRM applications to make the most out of their operational CRM data and leverage that data within their marketing efforts. Some companies are lagging behind in utilising effective data warehouses and analysis tools that provide a better insight into customer value, and these companies will continue to invest in implementing analytical CRM systems. In other words, a lot of effort has been spent in gathering customer interaction data and customer profile data, let's use that data to sell more and provide better service! Replacing early CRM boom systems ('90's-'04) with new ones
Companies are continuously in the process of upgrading their CRM systems to new versions. With the Rise of SOA, Web 2.0 and CRM 2.0, I expect that companies will take a more radical move, by replacing their CRM systems with new systems and rethinking their existing CRM functionality, and revamping their CRM processes. As indicated earlier in this post, the focus will be on improving the customer experience. Social Customer Networks / Media

An excellent example of a company utilising social media to improve it's reputation is UPC, a large cable TV operator active all over Europe. UPC had (and for the most part still is) been suffering from a bad reputation, as a company that provides below average service, and started a number of initiatives to turn that image around. Beside revamping their service desk, UPC also created a webcare team, dealing with search engine reputation management, or responding to negative customer stories on the web, taking action and trying to resolve the issue as quickly as possible. The UPC Webcare team uses TechnoRati, Google, and monitors several forums to find negative customer reactions or issues. A number of companies have already started with Webcare teams themselves and I trust more companies in the B2C field that are struggling with their reputation, such as Energy and Utility Companies, TelCo's and other Cable companies will follow suit. Check this story (in Dutch) for more information on UPC's Webcare teams.

On CRM and User Adoption (2)

A little while ago I posted about the difficulty in getting Sales Representatives to use CRM applications, as opposed to Service Reps. A recent survey in California, by the Sales Lead Management Association, shows some interesting results, as quoted in this Chris Bucholtz article on Inside CRM. Chris quotes the survey's somewhat suprising results:

"83 percent of the respondents don’t track ROI on investments in lead generation. Just 5 percent tracked ROI on SFA. How do these companies know whether their systems are helping or if they’re just making busy work for consultants or IT people?"

One could arrive at a number of conclusions based on this survey, such as:

1. SFA Solutions are implemented for the simple reason that everybody's doing it.
2. It's still difficult to measure ROI for CRM implementations.

I believe the main reason for not tracking ROI on SFA investments is the latter. Most companies simply do not know how to measure return, because the benefits of an SFA application are not always tangible and realized immediately after implementation. A series of blog postings on ITToolbox contains observations with regard to measuring CRM ROI, and can provide interesting insights for those who are struggling with the issue of CRM ROI.