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Is the customer always right?

February 12, 2013 by Leave a Comment

If we truly believe in customer “relationships”, then the concept that the customer is always right is unfortunately flawed, because very few people are ALWAYS right. Customers can be irrational, selfish, irresponsible, and even unprofitable.

As in any relationship, sometimes there is mis-alignment of expectations and lack of a compelling value proposition for both sides. The opportunity for value exchange changes and evolves over time. The duty of an organization is to continually listen, show empathy, gain a deeper understanding of needs and jobs, and provide a product or service offering that provides significant value for their customers, or better yet, provide a platform for customers to co-create their own products and services, and support each other in their mutual journeys and jobs to be done.

To fail to recognize that some customers are simply unprofitable is to deny the truth. In some cases, it may make sense for the organization, in their best interest and in duty to their shareholders to first attempt to re-establish relational guidelines in order to achieve a better balance for both parties, or in some cases, even “fire customers”.

Understand that the context I am speaking of is one of an endless and tireless pursuit to create value, to delight customers, and to create a community of engaged, happy, and enthusiastic customers. The reality is that each of our respective organizations won’t be a fit for some customers.

In service to those who are engaged, it may make sense to re-allocate human capital away from those who are unprofitable for the organization towards better servicing those who are.

Before anyone screams at me about how customers are about more than profits for the organization, I agree. The challenge is that profits today are only measured in monetary currency. These current limitations ignore things like referral value, or recommendation value.

In short, it’s important to listen, serve, and respect customers. However, not all relationships are equal nor mutually beneficial.

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How Social Technologies Contribute to a Better Customer Experience

June 13, 2012 by 9 Comments
CustomerExperience_WatermarkConsulting

This post is on behalf of the CIO Collaboration Network and Avaya

During each interaction with a brand, organization, or institution, the person on the other end of the interaction has a perception of how things went. Over time, the accumulation of these touch points deepen the customer’s perception of the organization. These perceptions influence actions (to engage, to buy, to defect, to complain, to share the experience with others…). These actions and interactions establish the long term relational value between organizations and their customers.

For these reasons, a growing focus amongst companies of all sizes is being placed on enhancing customer experience. The argument is that in a world where the journey towards products and services commoditization is brief, one of the last remaining competitive advantages is the customer experience. It is the one thing that is nearly impossible to duplicate.

Customers have confirmed its importance in multiple surveys.

A recent study by RightNow concluded that 86% of consumers would pay more for a better customer experience, and 89% of consumers began doing business with a competitor following a poor customer experience.

Each year, Forrester Research compiles their Customer Experience Index, where consumers are asked about their preferences and experiences with brands. Companies are then ranked and categorized. Over the past several years, Customer Experience consulting firm, Watermark Consulting has been comparing the financial performance of the Leaders and Laggards from the Customer Experience Index. The results make a strong case that a better customer experience leads to better performance and profitability of organizations.

Customer Experience Leaders outperform by 22.5% while laggards underperform by 46.3%.

However, it’s important to remember that correlation is not always causation. It’s a data point, and a potentially valuable one.

Other research suggests that growing numbers of senior executives and boards are placing customer experience as a top strategic priority. According to surveys done by customer experience firm Beyond Philosophy:

  • 95% of senior business leaders say that the Customer Experience is the next competitive battle ground.
  • 85% of senior business leaders say that differentiating on traditional dimensions is no longer a sustainable competitive strategy.

Gartner, in its latest CIO survey, found that:

CIOs ranked customer relationship management (CRM) as their No. 8 technology priority for 2012, according to a global survey of CIOs by Gartner, Inc.’s Executive Programs. CRM moved up from the No. 18-ranked technology in 2011.

Additionally, Gartner’s 2012 CEO Survey found that CEOs cited CRM as their most important area of investment to improve their business over the next five years.

Customer Experience vendors are benefiting from the increased mandate to improve the customer experience. In a recent survey by the Temkin group, more than eight out of 10 vendors expect their 2012 revenues to outpace 2011 by at least 25% and one-fifth of the vendors expect an increase of more than 75%.

An Explosion of Channels, Interactions, and Touchpoints

Complicating matters of orchestrating improved customer experiences is the proliferation of channels and digital interactions. Not only do customers now interact with organizations on many more channels than they did a decade ago, they also interact with peers, industry analysts, mainstream media, and citizen journalists on multiple channels as well. Each of these interactions contribute to the perception of the company or brand in the mind of the customer.

Customers are increasingly expecting organizations to respond quickly on their preferred channel in alignment with their increasing expectations. At each stage of their journey, there is a certain set of expectations. Depending on the stage in the customer’s journey, expectations might include more information, a resolved customer service issue, a technical problem solved, a purchase transaction, and then everything that happens while the product or service is put to use.

At the simplest level, a study by Bain & Co., found that customers who engage with companies over social media spend 20% to 40% more money with those companies than other customers.

There’s more to social than just gathering likes and follows.

As the interactions between organizations and their customers become more fragmented and dynamic, Social and Collaborative technologies can play a key role in helping organizations differentiate themselves.

(1) Listen across a wide spectrum of digital channels –> Deeper customer insights – enhanced Voice of the Customer (VOC) feedback
(2) Offer a wide array of preferred channels for customers to choose from, including real time unified communications –> Customer preference wins
(3) Creating and cultivating customer communities to foster interaction, and engagement through depth of resources –> Customer self service, value co-creation, open innovation
(4) Cultivating internal collaboration facilitates more nimble and accurate customer responses. –> Speedy access to people and information who can serve customer needs best
(5) Analytics across digital channels provides clues for customer journeys and expectations at each stage –> Deeper customer understanding paves the way for better product and service design, better marketing messaging and segmentation, and the crafting of a better customer experience.

How are you using or planning to use social and collaborative technology to enhance your customers’ experience? Would love to feature your stories here.

This post is on behalf of the CIO Collaboration Network and Avaya

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Optimizing the Full Spectrum of Customer Interactions

April 4, 2012 by 10 Comments
Customer Journey

This post is on behalf of the CIO Collaboration Network and Avaya

Last weekend I had the pleasure of introducing a movie for the first time to my 5 year old son – a movie that incidentally, I first saw when I was 5 years old.

In it, an iconic message was communicated via a channel that hasn’t quite been brought to the mainstream yet (though it seems we’re getting close).

The clip is below.

http://youtu.be/jLx0BCjtxx8

Considering the explosion of channels we have available to us now, I began to wonder “How would things have played out differently if she would have sent an email, a text, placed an intergalactic phone call, did a quick video conference, or simply waited to communicate in person?”

How would things have been different if she simply posted this message on her facebook page?
Would the response have been different on facebook if it was a video vs. text?

We could stop there, and simply consider the options, and their effect on the plot of the movie, but in the interest of time, let’s move on.

The multifaceted spectrum of human interaction

As technology advances, and communication channels expand, decision makers continue to wrestle not only with how to best leverage each channel, respectively, but how to optimize communications with their customers and prospects across an ever complicated blend of channels.

In a world where an increasing array of richer channels will become available, how will we optimize the exchange of information for the proper channel, taking into consideration the stage of the buying process, the preferences of the individual, and the desired intent, complexity, and nature of the content?

While many of us still gain comfort by placing confidence in the traditional marketing funnel, tell our sales reps to stick to the “sales process”, and check a box in our CRM system for our contact’s preferred method of communication, the reality is that human dynamics are far from linear and static. Technological advancements towards real time access to information and individuals across synchronous and asynchronous channels continue to complicate the matter even further. The line also continues to blur between our personal and professional interactions and habits.

From Joseph Walther in “The Handbook of Interpersonal Communication”

“Lore aside, technology sequences and their relational significance deserve an update: If a man takes an interest in a woman he sees in a class, he may want to scan the Web for information about her. If that search suggests potential reward, he may talk to her to establish a minimal basis of familiarity so that he can request access to her social network profile and be able to see how many friends she has, what they look like, what their comments have to say about her, and how she interacts with them in turn. If results are encouraging, a face-to-face conversation may come next, followed by a reinforcing e-mail or social network posting. Do increases in channel access signify relational escalation? Do we meet new partners’ Flickr family photo collection before we meet the parents, and why? Rather than resign ourselves to undifferentiated, massive multimodality, future research may begin to contemplate the strategic and interpersonal signification possibilities it presents as its users exploit the vast relational potentials of CMC (Computer Mediated Communication).”

This multi-channel, non-linear journey mimics how consumers and business buyers also court vendors today. What actions and interactions can be perceived as buying signals? Loyalty signals? Advocate signals? Detractor signals?

Below is a representation of a customer who makes two appliance purchases over four years, and twice shares content about it:


Image Source: MarketingProfs

While many organizations are venturing into the world of defining their customer journey and optimizing the experience by providing the relevant content for the appropriate stage, I believe these efforts can be further enhanced by beginning to overlay channel preference data across each stage in the customer journey, personalized for each recipient.

Savvy companies will be able to optimize interactions not only by providing the right content, but providing it in the most appropriate context and channel of choice for the intended audience. In other words, if fully optimized, the same content might be published to differentiated audience segments across multiple channels for optimized reach.

Make no mistake, the research and analytics to undertake such an effort would be significant. However, an unmatched customer experience leads to armies of customer advocates. Benefits associated with this type of loyalty and advocacy experience amplifier effects in a networked world.

This post is on behalf of the CIO Collaboration Network and Avaya

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Trust: It matters (more than you think)

January 25, 2012 by 44 Comments
Build Trust

“Organizations are no longer built on force, but on trust” – Peter Drucker

“Technique and technology are important, but adding trust is the issue of the decade” – Tom Peters

“Mistrust doubles the cost of doing business” – Professor John Whitney, Columbia Business School

“As you go to work, your top responsibility should be to build trust” – Robert Eckert, CEO, Mattel

“Transcendant values like trust and integrity literally translate into revenue, profits and prosperity” – Patricia Aburdene, Author of Megatrends 2010

————————————————————-

The quotes above were pulled from the book “The Speed of Trust: The One thing that changes everything”.

In the book, Steven M.R. Covey makes the argument with significant validation that establishing trust is the quickest path to success.

The economics of trust are simple

“Trust always affects two outcomes – speed and cost. When trust goes down, speed will also go down and costs will go up. When trust goes up, speed will also go up and costs will go down.”

Ponder that for a minute. In any relationship, personal or business, progress ultimately hinges on this one simple thing. When the presentation is over, when the proposal is offered, when all the due diligence and negotiations have been performed, doesn’t it ultimately rest on whether each side trusts each other to honor their stated obligations?

One could make a strong argument that the maturing customer revolt; the change in customer behavior that is driving the emergence and growth of Social CRM and Social Business has been birthed out of a general distrust of organizations, and institutions in general, for that matter.

Who the world trusts

Since the customer has lost trust in what marketers and sales people say, and since they can’t trust customer service to actually help them in a meaningful and timely way, they have moved instead to solicit 3rd party opinions about the organizations that may have a solution for them. They look to industry experts and peers for opinions, insights, and answers they can trust. This trend is expanding quickly. According to a study from Shopper Sciences, in association with Google “the average shopper used 10.4 sources of information to make a (purchasing) decision, up from just 5.3 sources in 2010.”

Edelman, one of the world’s largest and well recognized global PR firms has produced something called the “Edelman Trust Barometer” for the last several years.

In the 2012 edition, released this week, we see who the general population views as credible spokespeople – people they can trust. We see that ‘Academic or Expert’, ‘Technical expert in the company’, and ‘A person like yourself’ are bunched together in the Top 3. You’ll notice that CEOs and government officials absorbed significant hits to their collective reputation this year.

Another key finding is that social media grew significantly as a trusted information source, gaining ground on traditional media sources.

And in general, customer expectations are woefully short of being met. You’ll see in the graphic below a huge gap between what customers consider as important and how companies are performing in areas like:

  • Listens to Customer Needs and Feedback
  • Offers High Quality Products or Services
  • Places Customers ahead of Profits
  • Takes Responsible Actions to Address an Issue or Crisis

Where do we go from here?

The quick take is that TRUST MATTERS. It matters more than we think. As executives, as marketers, as sales people, as customer experience architects, and as customer service personnel, at the core of our job to create trust. Trust is the lubricant that speeds relationships and success, with people, and with organizations.

The key observations are:

- There is a significant trust void between customers and organizations
- People primarily trust experts and people like them
- People solicit lots of different opinions and tap lots of different sources when considering vendors

In the graphic below, survey participants have given us clues on how we can continue to build and deepen trust with our prospects and customers.

How do we do this?

The good folks at 1to1 Media summed it up with this tweet yesterday.

Is it just that simple?

There are a myriad of ways that organizations can respond to create trust. Content marketing, coupled with listening to and engaging customers through social channels are certainly a start. Organizations who do a great job of positioning themselves (and their employees) as experts in their field, and deeply embedding themselves within their respective communities and consistently adding value stand a great chance to do well in this shifting market.

Hiring the right folks, while establishing and nurturing a customer focused culture, and evolving internal and external communication channels and structures are all part of the equation.

The widening customer expectation gap and the pervasiveness of distrust presents a GREAT opportunity for those organizations who are able to respond in a way that resonates with their audience, as they will truly standout.

More resources

(1) Here’s a recent article by Don Peppers titled “The Only Lasting Competitive Advantage is Extreme Trust”

(2) Embedded below is the full 2012 Edelman Trust Barometer Slide Deck

2012 Edelman Trust Barometer: Global Deck
View more presentations from Edelman Insights

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Six Things Customers Want

January 18, 2012 by 24 Comments
Six things Customers Want: Know Me

Often, when asked a question by media, existing customers, or prospective customers, I find myself answering with some version of “It depends.”

What’s the biggest priority in 2012?
Should we begin a Social CRM initiative?
What’s the first thing we should do?
Which software solution should we buy and implement?
Where should we spend our marketing dollars?

Inputs like organizational competence, customer jobs to be done, organizational goals and strategies, cost structures, industry trends, the competitive landscape all influence answers to questions such as these. In other words, the proper direction as it relates to defining and executing organizational or customer strategies are highly contextual, and depend on a comprehensive analysis to determine the right course of action.

However, in speaking with and working with lots of organizations spanning industries from service to manufacturing to distribution in both B2B and B2C environments, there are some common things that customers want. If these were to be front and center on the mind of every senior executive, and every customer facing individual, the customer experience would be improved, and the organization would benefit.

The levers and weighting of each of these things may vary by industry and company, but odds are your organization would benefit from adopting these 6 tenets into the fabric of your organizational culture and DNA.

What else would you add to this list?

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Customer Relationship Innovation for the Emergent Social Business

December 2, 2011 by 19 Comments
The Social Customer Profile

Speaking at an event hosted by SugarCRM and IBM Social Business this week, I informally polled the audience.

“How many of you are NOT on facebook?” No hands were raised.
“How many of you have a twitter account?” Most of the room raised their hands.
“LinkedIn?” Most of the room again raised their hands.

I repeated the same questions, referencing the people in the room’s businesses, and a slightly smaller number of folks raised their hands, but more than half still did.

I then asked – “How many of you know what to do with them?” Giggles. Laughter. Very few hands.

This is where we collectively find ourselves. It’s representative of a number of organizations that I have the opportunity to work with and speak to.

I didn’t even think of asking if any organizations in the room had created a tactical plan to listen and engage with customers and create a seamless (and amazing) experience across multiple channels and domains. Most companies are still trying to get the fundamentals right (as Filiberto Selvas pointed out here)

It’s easy to join a social network. It’s harder to engage. What should I say? What will they think? Do I have permission?

It’s even harder to engage with a coordinated strategy and accurately measure the results of your efforts. Blend activities on the social web with what’s happening in the rest of the organization…across departments…across silos?

If we’re not even on the same page internally, how can we communicate a unified message to the world that hasn’t been careful crafted by our marketing team and the agencies that they work with?

My anecdotal observation is that many companies get here and then acknowledge that it’s just too big of a challenge to tackle…at least for now.

“If you’ve got to start somewhere, why not here? If you got to start sometime, why not now?” – Toby Mac

New landscape.
New customer.
New roles.
New communication mediums.
New expectations.
New corporate culture.
New Focus.
New Critical Success Factors.

It’s quite a bit to digest when people are trying to keep their jobs and help keep the company profitable, when they’ve already just absorbed the jobs of 1-2 people who were laid off over the past few years. However, only focusing simply on the here and now is the path to extinction.

Those who understand how these new changes are affecting their marketplace (which in most cases is larger, more complicated, and more diverse than it was just a few years ago) will be hyper-rewarded. Those who fail to admit, understand, and adjust to these rapidly evolving new realities will be destroyed, or more likely die a long, slow, painful death.

Below are a few highlights from the presentation.

B2B Buyers

FOUR THINGS TO FOCUS ON NOW

While there’s no notes or audio to the full deck, I’ve provided it below. Hopefully it provides value, and helps to stimulate some interesting conversations on the social web and for you in your respective organization(s). Interestingly, Mike Fauscette touched on many of the same themes in his blog post “Customer Service – the new Marketing in the era of the Social Customer”. It’s definitely worth a read.

Customer Relationship Innovation for the Emergent Social Business

One other final fascinating tidbit from the event was that I met and had a good chat with a Director of Marketing from a Silicon Valley startup. I meet and talk with plenty of Directors of Marketing. What was interesting about this one was that she said that she was actually a social anthropologist. My ears perked up. Seems like someone is paying attention. While the roles of social anthropologist and Director of Marketing may seem to be world’s apart, they’re not. Here’s a link to an article I wrote highlighting why it might be the perfect fit.

It’s fun to be part of the greatest transformation since the industrial revolution? Are you in?

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Networks, Signals, Reputation and Delight

April 20, 2011 by 1 Comment
Networks, Signals, Reputation, and Delight

The era of mass marketing, sales driven information gathering and sharing, and being “just good enough to win” is being shattered by the rapid emergence of a smart, networked, and increasingly demanding generation of empowered customers. In the fragmented and fast moving world of concepts, buzzwords, technologies, and applications, most executives are looking for looking for answers to a few basic questions:

- What matters?
- What’s different?
- How can I and or my organization benefit?
- Where is the opportunity?
- What should I do now?

As I survey the evolving landscape, there are four primary things that stand out as emerging keys to sales and marketing success in an always on, attention scarce, information rich world.

  • Growing your network
  • Sending signals that are valuable
  • Building a glowing reputation
  • Focusing on delighting your customers

None of these are new tactics. They’ve all stood the test of time and have been employed by folks over the last several hundred years. However, the speed and access to people and information has made each of them exponentially more important. Take a look at the stats in the image below.

*** TAKEAWAY ***: When buyers want something, they’ll turn to search and their network to look for answers. Make sure you are there.

Why reputation and ranking is important

A great “human digitization” is taking place. Hordes of people and content are flooding into the web. Search engines and other content and people filters have to come up with a scoring mechanism to make results meaningful. Google, Bing, Facebook, and others are merging “people rank” with “page rank”. Search results are now being presented taking into account the “influence” and “reputation” of the messengers who are sharing it.

*** TAKEAWAY ***: Position yourself and your organization as a voice that matters (among those who know you, AND those who have yet to discover you)

Messenger as Important as the Message

*** How do you do this? ***

  • Build your network(s).
  • Send valuable signals – these could be blog posts, tweets, white papers, videos, comments, etc.
  • Focus on delighting your customers, prospects, partners, employees, suppliers, etc. It matters. It stands out. It breeds enthusiasm, loyalty, and word of mouth.
  • As your networks and signals expand their reach with positive sentiment, your reputation will increase.
  • As your reach and reputation grows, it provides an even greater platform to create moments of “delight”
  • Congratulations! An exponential and continuous feedback loop has been created.

Networks, Signals, Reputation, and Delight

For more on the concept(s), feel free to download/view the entire presentation below, or simply contact me directly.

[slideshare id=7541190&doc=networkssignalsreputationanddelight-110406175312-phpapp01]

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In pursuit of True Relationship Value

June 22, 2010 by 10 Comments

Value Exchange

Relationships. How do we measure the value of a relationship?

It’s not an easy question to answer.

Customer Relationships. How do we measure the value of customer relationships?

We have an answer. But I think it’s the wrong one, or at the very least an incomplete one.

If we were all in a room together, many of you likely would have shouted out words like “profitability!”, or “revenue!”. Maybe some of the more advanced thinkers would throw out “CLV!” (Customer Lifetime Value).

The problem with this lies within the root of my first question: “How do we measure the value of a relationship?”

THE MEASUREMENT OF CURRENCIES AND CAPITAL

As companies measure the value of customers, we typically only look at Dollars, or Euros, or Yen, or whatever the local currency is. We limit our evaluation and ranking of our customers to how much capital they have contributed to our organization in the denomination of monetary currency. But aren’t there other forms of capital?

You’ve heard the terms: Relational capital, Social capital, Human capital, etc.

Identifying relational value should include all the components of the value created by that relationship, but today’s CRM systems typically only include monetary measures in identifying how much a customer is worth to the company.

What about those companies or individuals who have created value for the firm by:

(1) Talking positively about them
(2) Referring potential customers
(3) Referring potential employees
(4) Providing recommendations and/or being references
(5) Introducing them to new networks
(6) Adding value in other “hard to measure” ways

There is a whole set of value being generated and given to us by not just our customers, but many members in our relationship ecosystem. The problem is that we are not measuring it. Since we are not measuring it, we don’t know what to do with it, and are likely missing opportunities to create more opportunities of value exchange.

If people are only interested in money, we call them “golddiggers”. Shouldn’t our systems enable and empower richer professional relationships than this?

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Three New Required Roles for your company: (#2) Social Anthropologist

March 9, 2010 by 16 Comments
African Tribe

In the first post of this series, we talked about listening for what people are saying about you, your brand, your market, your products and services, or market needs that your organization has an answer for. I intentionally didn’t dig into all the things you can do with that data – some are passive and some are active. The important part was listening. Turning that data into actionable insight is where the real magic can happen, but that’s a post for a different day. ;)

A couple of weeks ago, well known social superwoman blogger Amber Naslund sent this surprised tweet out:

Amber Naslund Tweet

It is very interesting indeed. But I think I have a good idea of where that hiring company is going.

Today, I’m going to turn our attention to the second required role for your company: The Social Anthropologist.

I don’t know about you, but when I hear that phrase, it immediately brings to mind sleepy images of some British guy talking slowly and methodically on a Sunday afternoon about some displaced nomads in the bush of Botswana.

African Tribe

But that’s not what I am talking about here. I’ve said it once and I’ll say it again. Know your customer.

Today, most companies are doing a good job of profiling their customers based on transactional data.

(1) Who spent the most money with us this year?
(2) Who is forecasted to spend more money with us next year?
(3) What net new opportunities do we have?

We may be breaking this data down by region, SIC Code, etc. We may have history of our marketing campaigns, response rates, phone calls, web form submissions, email interactions, sales person’s notes. We’ve got it all; Mounds and mounds of data about our customers.

With all this data, we may think we know our customers. But we don’t. In fact, we know very little about them.

A more complete customer profile

Harvey Mackay set out decades ago with his Mackay 66 to learn more about his customers. It was a differentiator. This was the next step towards actually knowing our customers. Do something like this, and you’ll be heads and shoulders above most of your competition.

But what if we were to take it even one step further?

What if we were to not just know about our customers, but also about the groups of people that they were part of, who they interact with, how they interact, and why?

Wikipedia defines Social Anthropology the following way:

Social anthropology is the branch of anthropology that studies how contemporary living human beings behave in social groups.

Practitioners of social anthropology investigate… the social organization of a particular people: customs, economic and political organization, law and conflict resolution, patterns of consumption and exchange, kinship and family structure, gender relations, childrearing and socialization, religion, and so on.

Most of our customers don’t live on an island (unless they live in Hawaii, or Australia, or… Suwarrow). No, I’m not talking about that kind of island anyway.

Strive to learn about your customers (and prospects) in the context of their lives.

They (We) all have circles of friendships, professional relationships, patterns, etc. that we live by. We have patterns of decision making, and we all make decisions based on influence of those we know and trust.

Below is an example of the #scrm Accidental Community on Twiangulate compliments of Josh Weinberger

By understanding more about those who influence our customer’s decisions; who they interact with, how they interact, and why they interact, we may discover valuable insights that may help us to meet our customer’s needs better, and if your organization is prepared enough, even co-create solutions with them.

Conversely, we may also begin to understand who our customers influence, and why a successful sale might not only allow us to recognize revenue from that single purchase, but also a chain of purchases based on the influence and recommendation of our customer’s purchase decision.

These insights are not only valuable for each individual prospect or customer, but also in aggregate. By profiling groups or segments of our customer base (or our target market in general), we can potentially gain key insights into who is likely deriving the most value from our products and service offerings.

The internet is compiling a huge amount of data

Feed.ly knows that 65% of my facebook friends are male, their most popular music group is U2, and their most popular movie is Gladiator.

While this may not present immediate opportunity in your mind, the point is illustrated. By knowing who I talk to, what their interests are, when and how we communicate, there are numerous opportunities to know more about me, what my preferences are, and what opportunities exist to help me in my daily life.

IBM recently did a social network analysis project called SNAzzy , to accurately chart and predict lifetime customer value and churn rates in the telecommunications industry.

James Koblieus points out on his blog the huge impact social network analysis will have on data warehouse growth and there are plenty of other challenges that await us as we begin to analyze and make sense of this data, and integrate with our existing systems and processes.

This is a new area for me and something I’ll definitely be spending more time on. If you know of any additional resources, please send them over.

Your customers and prospects are sharing, talking, conversing, and transacting. Get to know them. Partner with them, and find more people like them.

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Traditional CRM vs Social CRM: Expanded

June 19, 2009 by 3 Comments

Brent Leary, widely recognized expert on Social CRM, does a great job of summarizing the difference between Traditional CRM and Social CRM in the Inc. magazine Article below. I’ve added some of my additional thoughts.

Traditional CRM vs. Social CRM

By Brent Leary

Traditional customer relationship management’s strong suit has been improved operational effectiveness, easier access to data, and improved collaboration. Social media adds the dimension of connecting with potential customers.

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Brian here. I would add the following to Brent’s statements:

The first being that many companies are now looking towards “Traditional CRM” solutions not only because they are interested in improving their customer acquisition efforts, but because they have realized that customer retention efforts are their best bet in an environment where there are fewer new and existing customers in the marketplace. This desire to improve customer retention is currently next to impossible because they don’t really even know who their customers are, and which ones would be the most beneficial to keep. CRM can help with that.

SaaS (Software as a Service) offerings have been steadily gaining traction over the past several years, but the argument that it saves cost, time, and effort has been a hotly debated topic. For some small businesses a SaaS solution certainly makes the most sense, but a good percentage of companies still choose an on-premise solution because of 1. Security/Privacy Concerns, 2. Ease of Integration with other applications 3. Lower long term TCO (Total Cost of Ownership).

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site — what they refer to as “member communities.” The integration of social media into CR strategy — called Social CRM — differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need — the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action — starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

In addition to supporting and enabling marketing, lead generation, and customer acquisition efforts, Social Media and therefore Social CRM are also being leveraged by companies for customer service, brand monitoring, and customer retention efforts. The content production that Brent mentions is a great way of attracting eyeballs and filling the lead funnel, but companies are also integrating “listening” into their Social CRM strategy. Companies like Comcast have used Twitter to monitor negative comments about their brand and take a proactive approach at solving problems for disgruntled customers. Social Media and its integration with traditional CRM efforts have opened up new ways to turn an unhappy customer into a raving fan. Other companies like HelpStream and Lithium are pioneering new ground, using Social Technologies to build communities where customers and prospects interact with each other to solve problems and discuss ways to best leverage companies products and services.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation — on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact — both internally and on the customer — social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary

via Traditional CRM vs. Social CRM

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