SocialMeetsCRM Blog

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

Fri, 09 Dec 2011 03:56:55 -0500

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?

Customer Service - the Great, the Bad, and the Ugly

Thu, 25 Aug 2011 04:06:26 -0400

We recently read Peter Shankman’s raving experience report about Morton’s Steak Houses where essentially the management of the restaurant chain went out of their way to provide a loyal, valuable (and influential on the web) customer with a surprise meal after he jokingly tweeted that he is hungry and would really enjoy a porterhouse steak on the airport. Morton’s made this happen and excited a customer who created a buzz on the web in terms of tweets and re-tweets, an intensely discussed blog post, numerous mentions in other blogs (including this one here).

The consequences of this not so simple action are obvious:

An influential and already loyal and happy customer turns (even more) into an advocate. He talks about his amazing experience – and justifiably so
A customer originated marketing message is sent that promotes the brand
Morton’s brand perception increased even more (I didn’t even know of them before, but then I am a German who lives in New Zealand…)

I really would not be surprised if the incremental revenue that is directly attributable to this smart move of a company that is consequently and consistently active on the social web outweighs its cost by orders of magnitude.

This episode clearly shows the potential for businesses that lies in actively using the social web.

Unluckily it is still an outlier.

Reality looks different.

Let me bring three examples of very different businesses in Germany that could use Morton’s as a guiding light. The businesses are

A major railway operator
A leading mobile carrier
An online bank

Three very different businesses – yet they share a lot! E.g. their lacking focus on their customers, although expressed differently.

As this tends to become a little longer I’ll make a mini-series of two posts out of this.

Let me elaborate on the first one.

I used the railway to get from one place to another. Actually I used them a couple of times during that trip, with mostly a good experience (apart from grimy train stations, but lets not be picky – the weather was good).

Being a “typical” German (yeah, I love driving fast on the Autobahn) I was sort of suspicious, but I liked the experience…. till everything ground to a stop. Fire in a control center ahead. Thunderstorm. Well, that happens.

But how about our connections? No info in the train. The company’s iPhone app told me that my connecting train has enough delay to not be worried … but no info in the train …

Arriving at the station where I needed to change train the information on the delay was different from the delay advertised on the web, luckily less than the app told me at the same time.

What?

Needless to say that the actual delay, when announced via the speaker system, was different again (albeit closer to the info from the web).

Just that it wasn’t true.

The actual arrival of the train I wanted to board was about 10 minutes after advertised. Looks like the officials think that we cannot take the truth.

Now, what does this all tell us?

The good news is that we seem to see a company that devises some way to inform their customers, even via a Twitter account @DB_Info. They are, frankly, better than their reputation although they could do with more competition.

We, however, look at a company that is not there yet, that seems to work with disparate systems. Some aspects express this:

Information that gets published in their branded iPhone app seems to be different from the information that is available to their platform information systems
The personnel in the trains seem to be largely left out of the loop, which puts them into an awkward situation. Or worse, the train personnel does not have a work order that includes keeping the passengers informed about what they care most: Their connections and how they get to their final destination

One can also get the impression that information about actual delays is provided only in a piece-meal manner, instead of providing a real account, when being on the platform

My recommendations?

Well, at large there are three:

Integration is key. It is good that customers can get good information if they have a smart phone. It would be better, if the own personnel and the platform information systems had the same. There is no reason or excuse for distributing different versions of the truth
Be transparent. Don’t provide piecemeal information about delays. Delays happen - for reasons inside and outside the realm of best possible efforts. Passengers will be upset – but they will be more so if they feel cheated. So, be transparent. Treat them like you would like to be treated yourself.
There are a number of real time information channels. Use them, aggregate them, and make sure that information at least as good is available for the own personnel

Social CRM - A customer oriented view on the state of affairs

Mon, 15 Aug 2011 10:30:00 -0400

I have spent the last week talking about CRM and SCRM to three retail companies. They cover different, although overlapping ranges and are of very different organizational maturity states. They are also on different positions on both, the CRM and SCRM scales. What they have in common are a desire to have a 360 degree on their customers and the opinion that it is important to excel on the service side. They also are looking for or running tier one enterprise systems with Oracle/Siebel and SAP. None of the three companies is looking at their main software vendors when it comes to “social software”.

The first company, a retailer in startup mode with a wide range, will actively pursue Social Media, for listening but also using it as a sales channel as part of their omni-channel strategy. They want to get the proverbial 360 degree view on the customer, who is “owned” in the marketing department, with PR, not marketing, owning their upcoming Social Media platform, an e-commerce group building the web shop, mobile applications, and sales apps to be embedded into several platforms – yes, there is something else beyond Facebook, if you leave the US. IT organizes and owns the ERP and CRM systems and implementations.

Overall they are striving to implement a superior experience when interacting with their brand, which includes a branded community and listening/engagement abilities in the social web.

The second one, an electronics retailer, wants to become the “best brand in the industry” and looks into a systems implementation from next year on, after some higher priorities are dealt with. These priorities include getting a zoo of technologies migrated into a more manageable architecture and to gain a complete 360-degree on the customer leveraging the existing data and touch points.

The third company is the retail daughter of a mobile phone carrier; their people were listening with some interest when we talked about SCRM. It, however, was clear from the outset that Social Media, to not even thinking of SCRM, is not on their agenda at this time (which is a shame as telcos regularly find themselves at the bottom of customer satisfaction rankings, have e.g. a look at the recent Temkin Group study).

This gives a number of insights on the state of adoption of SCRM, also in the wake of the current discussion about the recently published Gartner Magic Quadrant on Social CRM.

Companies are still at very different states of maturity when it comes to leveraging the power of the social web
Even young companies in a build-up phase still look into the topic of creating value for their customers from a traditional company centric point of view; or the other way round: very few companies start to think about co-creating value with their customers yet
The notion of a 360-degree view on the customer regularly does not yet include the information that consumers leave on the social web. Far from wanting to create a new buzzword we might want to talk about a spherical view on the customer when including social data.
Companies still have pressing needs resulting from previous implementations that are more important/urgent and are reluctant to start too many parallel initiatives
The tier one enterprise software vendors are not providing the functionality retailers need for interacting with the social web (shameless plug here: This is one reason why I am building SocialmeetsCRM)

Why is this? I think that the brief analysis that Wim Rampen recently published is right, at least a very good starter. Then it seems that companies currently are looking deeper into their operational efficiencies again, instead of pursuing growth strategies. On top of this the majority of vendors is not yet there, which makes up for an immature and highly segmented market, with no vendor showing the ability to cover all or at least most of their customers’ requirements. As a proof in point one just needs to have a look into the Gartner MQ, which shows a very fragmented market.

The future of CRM

Tue, 10 May 2011 05:06:23 -0400

A few days ago @MarkTamis called me with a question: “Where do you think CRM heads to in future?” Uhhm, not that simple a question. It really forced me to think as all those thoughts, observations and discussions of the needed to be brought into a better structure.

To lay the foundation I need to start with a definition of CRM; as I like it I start off with the one that Wikipedia provides:

Customer relationship management (CRM) is a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.^[1] Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments

This definition shows that the question has at least two layers: A technological one, and a strategic one. Of course, we should not forget about the customer.

Let me start with the (for me, being a technology guy) easiest one: The technology.

What I consider state-of-the-art right now is the availability of integrated software suites that cover marketing, sales, service, and analytics – this across a variety of channels, including mobile, web, interaction center. Surely, some software packages are stronger in one area or the other but essentially we have seen a tendency towards suites. The other thing that we have seen is a shift from on premise to on demand. In parallel we have seen the change from a horizontal CRM to industry specific solutions and the start of a change of mind on the vendors’ side, away from product to solution. This implies the advent of outside-in thinking. SaaS as a method of delivery is well established now and will likely become even stronger, albeit with the occasional backslash.

Then we have a raft of buzzwords: Social media, communities, and related to this social analytics (socialytics) and social CRM, customer experience management, mobility, location bases services, unified communication, gamification, to name but a few.

On the strategy level we see more and more companies applying holistic and business driven CRM strategies as opposed to the originally very technology driven CRM implementations. We see that the companies are starting to integrate different business functions and –processes. This is accompanied by the thought of establishing a 360 degree view on the customer. Further, companies started to not only ask for more internal efficiency but also to see increased top- and bottom lines coming out of their CRM initiatives. To support this companies implement loyalty programs and reach out into different channels, including social media. Companies also increasingly look into building their brands by providing consistent customer experiences across the various touch points that they offer.

On the service side we observe a number of support communities, product development partly gets input via idea marketplaces, and so on.

All this has the three goals of increasing customer retention, increasing the number of customers overall, and increasing the operational efficiency.

But where is this headed now?

Different people say different things: Graham Hill suggests value co-creation being the right path, although there are other possible routes; others are suggesting “a complete package, consisting of a thorough strategy and value added services” or are simply putting it as being “social and mobile”. Gartner looks at it from a more technical level by saying that the (big) vendors will concentrate more and more on providing a platform that then can get used and enhanced by more specialized vendors and customer companies.

So, let’s connect the dots.

The future of CRM, as a strategy and as a technology, will more and more be driven by two dimensions, the company internal and the company external dimension. I also think that CRM will more and more be driven by strategy as opposed to the technology. The technologies mentioned above and likely some more will converged to support the strategy.

Internally there still is a high need for user adoption, especially when it comes to CRM systems. This will be achieved on the short term by making internal systems more and more available via easy-to-use or even fun-to-use applications that do not require an explicit login into the CRM system itself. These applications are logging the user on to the CRM system implicitly or via settings. The CRM systems themselves will be more networked with other systems and include and provide more relevant information automatically, instead of requiring manual action. As a part of this mobile devices will become more and more important, also to be able to ubiquitously access the systems. In the longer run I think that gamification, or rather lessons learned from the success of game platforms, and behavioral theories will drive the evolution of systems. How this will look like is still evolving, but I think that Michael Wu is correct when he says that fun should be made a part of the design requirements of a business application, in order to gain user productivity.

Externally it is about the rationalization that (potential) customers, be they companies themselves or consumers, are now at eye’s height with the companies they buy from. With that companies will need to strive for

Convenient and easy experience for the customer, both during the preparation and execution of a transaction, but also afterwards.
Creating value for, if not together with the customer; this value is not only the product itself but also includes services around the product; these values are provided, pre- to post purchase. These services will appear to be individualized to the customer.
Shifting their concentration from transactional “value in exchange” thinking to process-orientated “value-in-use” thinking

How can this look like?

Earlier this year there have been a few blogs describing potential futures in a retail orientated environment; one by Mark Tamis around the scenario of preparing for a cocktail party, another one, by me using grocery shopping. Surely there are others, sorry for not mentioning them as well.

Both examples combine the convenient and easy experience with the idea of creating additional value for the customer in collaboration with other companies, and with the customers’ interactions, including their relationships to other people.

Let me briefly sketch another example using the automotive sector, again connecting different companies and customers, to create value.

BMW and Audi have thriving communities on Facebook. At least in Germany it is long possible to “custom build” one’s dream car using configurators. The goal and achievement of this is higher brand engagement and an improved customer experience, both important parts of a CRM strategy.

This experience goes on after the cars get picked up with subtleties like sound design and lots of helpers, including maintenance warnings.

Now let’s go on a little further and think of a “no worries” package: as part of their commitment to the client the dealership picks up my car if there is an appointment scheduled, e.g. from my workplace – and delivers it back in the afternoon, when the service is performed. Given my permission my car could even send its health data back to the service station, thus avoiding a good number of surprises; some will stay but the dealership can inform me early that something bigger is going to happen – that information could even be provided by the car itself. Going on the car systems could identify a pending failure somewhere on the road and warn me to either reduce load and/or to drive to a nearby service station. The GPS system could direct me there. The service station is already informed about what needs to be done, so that they can call me on my car phone to further explain the problem and discuss options. They probably can schedule the service immediately or alternatively provide me with an adequate loan car to continue my trip while caring for its pickup and the delivery of my car to where I am. The car, using the sensors that it already has built in can communicate with a hive of other cars that are on my route, identifying and notifying me of adverse traffic or weather conditions. It might re-plan my route for me – or tell me that any other route likely still needs more time.

Conclusion

The value chain as we know it converges towards a value network, that partly gets built dynamically to fulfill a customer’s need or, in other words, to get the customer’s job done.

Companies will organize themselves and network with other companies, transfer customers between them in a dynamic flow. This will happen based upon the explicitly or implicitly stated need of a customer, the ‘job’ she wants to get done. As a consequence we will see dynamic value networks of companies, customers, and their connections that are purpose-built and rebuilt to fit the need.

All this will be supported by a strong platform built from currently disparate but converging technologies.

In few words CRM will change from being a company strategy to an ecosystem strategy. The ecosystem consists of different companies, customers, and their networks, collaborating with the goal of putting together a value proposition that leads to customers choosing your company's over ones proposed by others.

Social CRM needs a CRM system, doesn't it?

Sat, 09 Apr 2011 05:45:41 -0400

Some days ago Bob Thompson interviewed Graham Hill about his take on Social CRM. The interview covered a lot of topics, most notably the future of Social CRM about which Graham has a particular view and led Bob to ask the question whether it is necessary to have a CRM system to have Social CRM.

On a first glimpse this question sounds simple, but it really isn’t. From a business perspective it only matters that CRM is executed upon, if CRM is a topic. This is totally independent of systems, as are the possible paths into the future of Social CRM that Graham sees, which is a deviation from this post that I likely will look into in a later post.

My answer to Bobs question is a clear No – but Yes!

Sounds odd, doesn’t it? So let me explain.

CRM is a business strategy; so is Social CRM. In an earlier blog titled CRM vs. Social CRM – what is the difference? I discussed differences as I do saw them at that time. My view has slightly evolved since, but this is another side track.

Let’s have a look at good definitions of CRM and Social CRM.

Wikipedia defines CRM as “a widely-implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments.”

The most widely used definition of Social CRM is the one of Paul Greenberg in his Stake in the Ground blog: Social "CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & 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."

Both definitions have some themes in common:

They look at CRM and Social CRM as business strategies
Technology is an enabler

So: No, you do not need a CRM system to have Social CRM. In fact you do not even have to have a system to do CRM! But, and this is important: There is no Social CRM without CRM. A CRM strategy is the foundation for a Social CRM strategy. If you don’t do CRM, where is the point in going social?

Proof in point:

My wife and I spent some time searching for a bank to run the account of her new company. We chose to go to three banks, one of them being the bank we have our private accounts at.

The experiences were extremely different and can be grouped into two categories: CRM in action and, well, you get the point...

In the first bank we were directly shown into the business section and introduced to someone to answer our questions and to recommend a package of services to fulfill our needs. He didn’t know everything but knew how to find out fast. CRM in action.

At the second bank, which happened to be our home bank we stood there for a while in front of empty desks, observing the staff, including the branch manager running back and forth, without even acknowledging the presence of customers – and we were not alone. Finally a team member who knew us approached us and we ended up with a number of brochures and the recommendation to make up an appointment, because she couldn’t help us. Now, the appointment turned out to be only geared towards making the deal, totally unprepared to answer questions first. Customer relationship management at its worst – with the notable exception of one individual.

Now, at the third bank, we approached them slightly differently by making an appointment right away. The people were prepared and able to answer, what they didn’t know they found out fast, as with the first bank. They came forward with their views on our needs and even talked us out of something we thought we need. Needless to say that we went with that bank. The positive impression got on even then, as the setup of internet banking happened well in the evening hours, still executed by the persons we interacted with at the branch. Again: CRM in action.

Well, bank two also lost us as private customers (but this is a deviation again) …

What do I want to tell with this story?

CRM is not dependent on systems. It is about persons interacting with each other. All persons we interacted with worked within their priorities, which are defined by the corporate strategy. At two banks this meant that relationships and CRM have a high priority.
Social CRM works without a CRM system. There was no system involved in the whole process, except the system that got our account data. One could say that CRM in itself is social.

Another point, that is interesting is in how far we have a kind of co-creation going on in this process. If co-creation is about joint creation of value by the company and the customer then we might be close to it in this case. In any case the third bank provided me with I think is an outstanding service, as compared to the other two banks. I will dig into the topic of value co-creation in a later post.

Having said that a system is not a precondition for pursuing a CRM strategy it is very beneficial to support a CRM strategy with a number of systems, or in other terms, a solution to the problem that the implementation of a CRM strategy is.

CRM works only if various departments are orchestrated via common processes and common data, and there are lots of data.

A part of what makes CRM so powerful is having a complete view on the customer and the customer base. This makes implementing a working CRM strategy complex and complicated, which in turn calls for an enabler: Technology, a system, a solution to put it in business terms. I cannot emphasize enough on it: The technology, the system, is an enabler only; if a company installs and runs a CRM system it does in no case mean that it does CRM. On the contrary, it just added to the cost of making business.

Pursuing a Social CRM strategy adds complexity to an already complex strategy, especially if the strategy also extends into the social web, and there is no way around doing so.

This has some implications:

CRM systems are needed to efficiently execute on a CRM strategy
There is a need for Social CRM systems, and we see them emerging
Social CRM systems need to be integrated into the existing CRM systems

In conclusion: Yes one needs a CRM system to successfully pursue a Social CRM strategy, unless one is working on a very small scale.

This means that in practice there is no way around having a number of (sub) systems that closely interact with each other or, even better, deeply integrate into each other. To be able to effectively and efficiently execute on a Social CRM strategy it is very helpful to have a number of additional systems integrated to the core CRM system. Which systems these are depends heavily on the state of implementation of the strategy, but they will very likely cover listening abilities, measurement abilities, engagement abilities, as well as pieces of software that make it convenient for customers to interact with the company. This of course includes mobile applications.

Social Shopping = Groupon? Nope - this is only the beginning

Sat, 26 Mar 2011 18:30:44 -0400

Some time ago my wife Nicole posted a small series of blogs about the topic of Loyalty on ciber.com. In these readable blogs she identified and summarised three main strategies of acquiring loyal customers, which are

Every day low price
Classic loyalty programs that base upon cash-back options or that are points based
Hybrid models

To gain and retain loyal customers it is necessary for Retailers (or brands, or …) to get into a mutual engagement with the customers. In order to achieve this it needs something like a WOW!-factor. An important way to get this factor for Retailers is the usage of social media (or social CRM when being more advanced).

Every day low price of course means plain ole price competition. No WOW!-factor whatsoever involved here. On top of that there can be only one competitor that actually has the lowest price. All the others go in from second place onwards. Given that, competition only on price is the surefire way to a Retailer’s death if the Retailer is not the one with the lowest price. Price competition kills margin, service levels, shopping experience, ability to gather and analyze more data on customers, as it needs an investment, which needs to be paid out of lowering margins. Every day low price works well for highly commoditized products and services, else it is dangerous. Customers will not see the real price of a good or service anymore but ask/search for a discount. It is extremely difficult to change this behavior once it shows up – and we consumers are already educated about the fact that the same product can come cheaper, so why pay the full price?

How do Groupon or other, less known similar providers (like steals4all.com, an aggregator on Groupon, or 1-day.co.nz, to name but a few) fit into this – at various levels?

Well, Groupon basically adds some WOW!-factor to price competition by adding a community feeling and some lottery atmosphere. But essentially Groupon is about low prices, which widely opens the road towards price competition, with all its risks.

Having said that, Groupon has hit a nerve, as rising user numbers and soaring valuation show. There is a demand. Still it needs to be used wisely and as a part of a wider social strategy, or preferably by Retailers who follow low price strategies – with the caveat that Groupon, being a business, takes an additional part of the remaining margin for itself, of course.

Leading Retailers who want to take real advantage of social environments (not social media, not social CRM) will get further. These Retailers will provide added value to their customers, be it via a consistent user experience in the different channels, ease of use, solutions to challenges that I, as a customer always have, co-creating it with their customers and so on.

These Retailers will also successfully integrate their social media endeavours with their traditional CRM strategy and implementation, in order to learn and be able to act on the learning, to their customers benefits, which is the ultimate way to the Retailers’ nirvana.

Mark Tamis , I and others have blogged about this before, so there is no real need to repeat possible value adding scenarios, but probably much scope to look into taking more advantage of value adding and possibly co-creation (I need to thank @grahamhill for a good discussion and links to this topic, which I still need to digest). Groupon and its likes are by far not the end of the road – merely only the beginning.

Social Shopping - A Retail Future

Mon, 07 Mar 2011 04:10:49 -0500

A while ago I blogged about threats and solutions in the retail industry that have their origin in rise of social media; with this post I would like to continue on this topic, focusing on possible solutions for retail companies.

This blog also ties in to a recent article by Mark Tamis on Social CRM in Retail. In his article Mark describes an interesting and elaborate scenario that showcases a technology enabled, consumer and network driven decision process, using the example of buying a party dress. This example is interesting because, although the process is entirely consumer driven, the involved companies use the technology to add value to the customer, thus achieving a win-win situation.

What the involved companies (a retailer and a hairdresser) are doing is establishing customer loyalty by

Engaging the customer
Providing a superior shopping experience, combining online- and offline aspects
Enabling the customer to get immediate feedback from their network

With this the two involved companies manage to align their interests with the customer’s interests.

In other words, they are distinguishing themselves through service, instead of price. Trying to achieve loyalty through the offer of “least price” is a surefire way to death. To quote the 1986 Highlander movie: There can be only one.

Although the scenario described by Mark sounds very advanced it isn’t. The enabling technologies exist and “just” need to be tied together. We are not talking Star Trek here. I really like this scenario as it depicts what could be. Still, integration is a hard business.

Because of this I would like to come forward with another scenario that is definitely less sexy, that involves me, my wife, and our three kids, and the fulfillment of a very basic requirement: Food. I also put some emphasis on integration into a back end CRM system (now this one may be an ERP system, but I happen to be a CRM guy). It starts off very simple and gets additional bells and whistles, which I included into the scenario using some of Marks thoughts that he came up with during our continued discussion.

Assume a food retail chain is running a CRM system and has its product catalogue online on their transactional web site and on Facebook, probably also transactional there. Their CRM strategy includes a seamless brand experience and the provision of additional value to customers. This leads them to providing a commented catalogue of receipts with user comment options and a news section about food relevant topics on their sites and on Facebook. As part of their technology strategy the retail chain also provides downloadable apps for e.g., iPad, iPhone and some Android devices, which are data-fed from their CRM system.

The retailer also offers a shopping list application - on Facebook, on their web site, and as apps for the same devices. The shopping list can be shared between me and my wife and stays synchronized between the channels, because it is hosted on the retailer’s CRM system that drives the whole system, or on a system that is connected to the CRM system. My wife and I, whatever device we use, wherever we are, and whenever we think about it, can add items to our shopping list. We can add products and just product categories like bread, joghurt, ... from the catalogue or from the catalogue of receipts that give us inspiration.

In store we get presented with matching products, promotions and cross-/upselling opportunities. These are generated based upon the shopping list, our previous shopping, explicitly stated preferences, our choice of meals, and derivations from our reactions to cross- and upselling attempts. Products that are maintained as categories only receive suggestions with real products based upon information that the company has about us. Unavailable products are substituted according to our profiles.

We would use our iPhones rather than iPads in the shop as it is somewhat cumbersome to handle an iPad while pushing the cart and also handling our three little kids – although the iPad is so easy to use that we could have our 4 year old manage the shopping list in store.

This is the bread-and-butter scenario that only needs me to check in to the store. How about making it even more interesting?

The retailer’s stated goal is to distinguish itself by providing value to customers. To accomplish this they provide the ability to build nutritional plans for families. To support this the shopping list app offers the creation of the shopping list based upon the nutritional plan, taking preferential criteria, like “Italian”, “Rice”, “healthy”, “low calories”, … into account. As we are currently pursuing a low fat, low carb diet the system builds us the week’s menu for the family and builds our shopping list, considering our previous shopping behavior and other stated preferences. Of course, both of us, my wife and I, do some changes to this generated list. It also offers a dashboard that allows us to monitor our weight objectives against our plan.

For a further phase the retail chain is considering to team up with a fitness studio chain to plan and support a diet that supports our overall physical fitness goals and and regularly establishes a fitness status using the data that gets collected at the fitness studio’s machines.

Still not enough? So let’s also use the advanced location services of today’s smart phones.

As the store "knows" that we are there, where we are in the store, and what we want to purchase, the in-store system can guide us the shortest way through the shelves (would be the right thing for me) or take some detours to lure me into buying some other groceries (works well for my wife).

At the checkout we pay using the phone. Since the store is also offering Fuel Dockets (fuel vouchers giving a discount on the fuel price at a cooperating brand of stations) the docket gets loaded onto my phone for later usage at the filling station. As we are members of the store chain's loyalty club my account gets updated immediately and I get my new account balance displayed on my device, which is far more convenient and offers more privacy than using the customer facing screen of the checkout.

The checkout process is powered using near field technology.

This could be added upon further, just consider the groceries being delivered to my gym, so that I can pick them up after my training, if I wished so …

Why would a retail store that usually is short on margin go through these lengths, even the investment that is necessary for the bread-and-butter scenario? The answers are loyalty and identification of the customer. An implementation like this would greatly improve upon the shopping experience, and the perceived service level of the retailer. The chance of customers continuing to buy at “their” retailer instead of another one is greatly improving.

Secondly: Retailers generally correlate purchases to target customer groups. Using the described scenario they can do this even better – they actually could identify their customers without a formal registration (e.g. using the phone identity). With this cross- and upselling attempts will be more successful, which adds to revenue and margin.

The fitness studio’s benefits would lie in increased sign-up rates, getting a better insight into their customers’ lifestyles and possibly in a more attractive supply contract for food items and drinks sold in studio.

Some Klout Score Musings

Wed, 02 Mar 2011 04:24:30 -0500

Today I’d like to present some musings about the klout score. Now, mine is not particularly high – actually it is pretty low – as you can see below; but the curve is interesting, if set into a context.

So far I only followed my klout score pretty idly, till I started to do some minor experiments on 16.02.2011. You see some immediate effect on the day after. This is mainly due to me posting a blog entry and communicating this via Twitter and LinkedIn. There also should be a communication via CIBER’s Twitter account. This usually leads to a few clicks and one or two followers on Twitter.

However, the real point I’d like to draw your attention to is the 22.02.2011. This is the day the 6.3 earthquake struck in Christchurch downtown and caused severe devastation.

As you may know, I normally blog about CRM and social CRM on the CIBER site, so that event is clearly outside my usual activity. Now the catch is: I do live in Christchurch and quite some of my network friends do know this. So I did some simple things by updating my status in the few networks that I actively use:

LinkedIn with direct update to Twitter
Facebook
XING

As you can imagine this still caused some reactions of my friends – quite some of which are real life friends.

Of course there are still one or two CRM related posts of mine in there, plus an opinion on a political matter in Germany, but the majority of all conversations deals with the Christchurch quake, and the good thing is that it shows a lot of empathy, for which I am really grateful. I do not want to diminish the empathy shown by my friends but I am particularly grateful for reactions from Miriam Schwab (klout score 44) from Israel, Chris Heaslip (klout score 21) from NZ, Francine Hardaway (klout score 61) and Paul Greenberg (klout score 61) from the US, four persons who have never met me physically but who instantly asked whether my family and I are OK, which led to brief conversations. The conversation with Francine was on a mailing list, so is not relevant for the further discussion. I added the klout score here as I think the number is relevant for what happened to my klout score.

A few of the sites I used are monitored by klout to calculate their score, the mailing list isn’t. Note: LinkedIn was not added to my account, this followed only on 24.02.2011, leading to a further boost to 29, as this is my most frequently used network.

As you can see there is a sharp rise from 19 – 24. What does this tell me? Well, a couple of things:

The number of conversations matter, i.e. not the own tweets but getting reactions. Proof will be a far slower increase of my klout score or a slow decline, as I am not as diligently blogging or twittering than colleagues (but may be I, one day, make it out of the explorer section ...).

However:

The topic seems to be pretty irrelevant
there is no visible measurement of sentiment. This ties in with with the soaring klout score of Kenneth Cole who now can be used as a bad example of Twitter usage after tweet relating his brand to the Egypt revolution that came across pretty cynical
It seems logical that interactions with higher scoring partners increase the own klout more than interactions with lower scoring partners

The klout website is unluckily not particularly helpful when trying to analyse this, so all faults in this article are genuinely mine.

Without being cynic we can learn some lessons from this which might help companies in their social media marketing efforts, and again, I am not cynic here, just starting off an example that intrigued me because of the effect in the system that I observed and because it effected me; and then since klout is starting to become a business tool with companies starting to use it to plan their reactions on activities on the network that relate to them. Consumers also use klout to assess brands, inferring from a high score (high influence) that the brand is of high value or trustworthy. This ties into the word of the “company like me” that Paul Greenberg dubbed in 2008.

My lessons learnt are:

Interaction pays off. The klout score as a measure of influence makes some participants in conversations more attractive than others.
A quality network is important. I define quality here as the average klout of the participants.
Using the right networks is important. When using klout these important networks are at this time Twitter, Facebook, and Linkedin.

But be aware: At this time it doesn’t really seem to be important what one says as long as it generates conversations. It also does not seem to be relevant how well received the statement is. This may tempt us to lose focus as quantity seems to be more important than quality and to start to overly polarize but this is an approach that is dangerous as

Further research by the readers easily shows that the klout score does not relate to the own competency
The analysis tools and algorithms will surely improve fast and give a more detailed picture on where the klout comes from. An early indication for this is the quadrant that klout spans already now

Did you have similar observations?

This is a repost with the author's permission from the original one on http://socialmeetscrm.blogspot.com.

Social CRM for Retail – Threats and Solutions

Sun, 20 Feb 2011 03:19:37 -0500

Brick-and-mortar retail businesses face a combination of ever-increasing customer expectations, customers being “educated” to expect and receive promotions, and of course an ever increasing competition in the market place for their customers’ share of mind and share of wallet. On top of all this they need to realize that they do not control the communication to their customers anymore, let alone being capable of controlling the communication in between their customers. As many bloggers, including myself, and analysts already stated, the advent of extremely user friendly and ubiquitous mobile devices and web applications essentially decoupled retailers from communications between their customers and even led to their marketing messages becoming part of the “background noise” for lots of consumers – just something one filters out when it comes to getting serious information.

Of course there are exceptions, especially considering that retail businesses reacted to this threat.

For retailers it is about being where the customers are. This started with setting up transactional web sites (web shops) to drive additional sales, using more and different ways to address customers, e.g. setting up and participating in communities, building fan pages on Facebook, Twitter streams, keeping in touch with exciting new services like Groupon, building capabilities to monitor and participate in discussions in forums, creating loyalty programs, and so on.

Quite some of the challenges facing retailers have the potential of being disruptive to their business models. Take Groupon as an example: Groupon is the successful implementation of a scheme that shifts the power balance drastically to the buyer (consumer) side; the scheme is similar to the earlier development of retailer purchase organizations that intended to counter the power of their suppliers (e.g. the expert group). Another example is yourbus, a German startup company that organizes long distance bus services, if the demand is high enough. Yourbus has the potential to really hurt the German railway.

Another main challenge is that fending off possibly disruptive attacks and staying in the minds of customers is a costly exercise – and retailers often run on slim margins. This means that activities need to be organized and efficient while making sure that the customer experience is consistent across all channels or touch points, like radio, TV, store, point of sale, web site, general marketing collateral, and, yes, of course, Facebook, blog sites, Twitter, and so on and so forth. The key word here is consistent; the experience does not need to be the same, actually cannot be the same; just imagine the differences between radio and TV, or between Facebook and Twitter. The current buzzword for achieving and maintaining this consistency is customer experience management.

There are a lot of good approaches towards keeping in the minds of customers. There are interesting reactions to Groupon, e.g. Wal-Mart’s CrowdSaver on Facebook or Uniqlo’s Lucky Counter that does the same via tweets on Twitter – offering a discount if enough positive voices are there. Social commerce and F-Commerce (e-commerce via Facebook) are definitely on the current hip list. The need to integrate topics like CRM, loyalty, mobile, e-commerce is definitely there.

What currently inhibits retailers (and other companies) from more effectively pursuing this necessary integration is lacking integration into back end systems. Gartner identified more than 100 vendors with Social CRM offerings in their first Magic Quadrant on Social CRM that dates June 2010. In the same research they assessed that only in 2011 social CRM suites will emerge, which then will be rapidly evolving.

I do not say that there is nothing out there – that would not be true. Salesforce.com, Oracle, SAP, Microsoft, Sage, RightNow technologies and Netsuite, also SugarCRM, they all have some or the other functionality, but there is no real breadth yet. Of course this list of vendors is not complete.

Let us focus in on SAP as an example. I do not single out SAP here; it is just that I know SAP a little more. SAP has all the necessary technologies, including an engine that is capable of measuring sentiments and StreamWork, a highly interesting tool. But neither SAP nor its partners do have a compelling integrated social CRM solution yet. There is SAP consulting themselves with their Social Media Cockpit, which effectively does some integration of CRM and Twitter as a marketing and service support tool. SAP consulting, too, has an add-on to CRM that extends loyalty management to Facebook. Then there is movento who have a Social CRM add-on that provides information about business partners from online communities directly in CRM. And CIBER is one of few companies bringing an integrated solution to organizations managing consumer marketing across multiple websites, having more a process than a product view.

So, what are avid retailers doing in these times? The market even now offers tools and technologies to support most important business processes that involve the social web, from (community) platforms via monitoring and listening tools, towards more business process orientated tools that support marketing, sales and service processes.

Today retailers pick and choose the tools that best support their social CRM strategies. They implement them as spot solutions, in silos, and increasingly also with custom integration into business systems.

Tomorrow we will see that they also have the option to choose pre-integrated software.

This post is a re-post of the original post on blog.ciber.com with the permission of the author.

A Company like Me

Mon, 17 Jan 2011 02:58:38 -0500

We trust those sources most, who are like us.

“A company like me”, as Paul Greenberg dubbed it in an article for destinationCRM, is a vision that depicts a trustworthy, almost human, company; maybe this vision is not an achievable one, but it still is a very good one since easily related to and understood. It clearly shows the path to the ultimate goal of each company: To add value to customers by being trustworthy.

Adding value to customers increases their loyalty and having more loyal customers directly translates into an improved bottom line since loyal customers have a higher value than irregular customers. They spend more and more often. Loyal customers furthermore often act as ambassadors for “their” companies and brands thus providing a free-of-charge marketing- and sales force which results in a better top line.

As a matter of fact and as stated in several blogs before, people – customers – are more connected than ever. They get information they trust on products and services anytime and anywhere via their personal networks and can easily confirm or prove wrong all information that is pushed out by companies. They achieve this via usage of services like Epinions, Tripadvisor, Facebook, Priceme, and so on. Customers use these sites from their home computers and via their smart phones, so that they even take ad-hoc decisions informed. As a result the push approach does not work anymore. Companies are no more in control of the information that is available about them and their brands.

Successful companies embrace this. As an example (and sorry to all the not mentioned ones, ...) we find pages for different brands like Coca Cola, Miele, Nestle, Adidas, Nike or New Zealand’s Icebreaker on Facebook. Coca Cola also embarked on a marketing campaign “Expedition 206” in 2010 that fully embraces social media - and sparked quite some discussion about whether this is social CRM or only social marketing.

These companies, as well as other ones, have understood that they need to become part of their customers’ networks of trust and act accordingly. The first step towards achieving this is engaging and fostering a bi directional communication that involves customers into marketing-, sales- and service processes and ultimately also into product development processes, while following a clear brand message. This engagement can start by targeted campaigns, loyalty activities or questionnaires, to give but some examples. Each customer participation, or non participation to that regard, in campaigns, loyalty programs, surveys, participation in forums, etc, is a valuable answer. Answers may be given in forms that are immediately ready for automated processing or in human readable format that needs further processing before it can be used by an automated system. Analysis of click streams gives hints on what gets customers’ attention and what not.

Successfully engaging customers into a longer dialogue creates transparency for customers. They know what a company stands for and where it heads to, in other words what they can expect.

The longer the dialogue lasts the higher are the chances of increasing a customer’s loyalty.

However: Action without measurement is nothing! It is important to collect, analyse, and use the data that is gathered in the course of this dialogue, to convert the data into information, to learn from this information, thereby turning it into actionable knowledge, and last but not least to properly apply the new knowledge.

By using this knowledge resulting from their dialogue with the customers and combining it with the transactional data that is readily available it is possible for companies to conduct a conversation with customers like they know them the way a friend (at least an acquaintance) is known.

This creates (the impression of) a personal connection although it is independent of any company employee.

By means of a CRM system that is able to integrate the social knowledge with the knowledge gained from customer transactions a company can ensure that the customer is addressed the right way, regardless of the channel. A company then may appear almost human.

By getting closer to this ideal of a humanised “company like me” a company gets deeper and deeper into their customers’ networks of trust. As a result the customers are not only providing more and more valuable information but are also increasingly advocating the company and/or its products or services. This way a mutual give and take and an eye-to-eye relationship evolve.

Companies that are able to get close to this vision will be able to solidify their market position since they have a loyal customer base and know that they are providing the right products and services to them.

This is a revised version of the article A way towards Nirvana - Embracing Social CRM is Key, posted ealier on ciber.com and has been republished with the permission of the author.

A Survey on the adoption of Social CRM

Thu, 13 Jan 2011 00:50:57 -0500

We recently conducted a small survey on the adoption and priorities of Social CRM in corporations. The results, of course, cannot be treated as absolute, as the sample size is too small. However, they correlate to research done by Jeremiah Owyang and the Altimeter Group. This especially relates to the modest available budgets and somewhat to the way ahead. The Altimeter group research can be found here.

Btw: Jeremiah's blog is a worthwhile reading for anyone who deals with social CRM.

Back to my main topic, our survey results.

The top findings are that

only 12 per cent of our answers indicate that companies are not using social media at all, and are not planning to do so. There is a quarter of the answers saying that social media usage is part of normal business processes.
more than fifty per cent of the respondents say that they are using social media for marketing, but not via formal campaigns
about 90 per cent of the respondents claim that they are working with a budget for social media that exceeds 10,000 dollar
a vast majority of 80 per cent of the respondents think that the importance of social media will increase for their company in the next year.
Companies are using a plethora of unintegrated tools to manage their social media efforts
a staggering 40 per cent of the respondents see it as unlikely that they connect their CRM system with their social media efforts.

Now the last one puzzles me, especially following the statement that the usage of social media is important, especially in the marketing. This indicates a slight disconnect, as marketing is core functionality of noteworthy CRM systems – and social media are “just” another channel. Of course it is a bidirectional channel, in contrast to the traditional ones. Still this ambivalence may raise the question whether social CRM is as mainstream as most protagonists think.

But where does all this lead us to?

To me it appears that companies are well aware of the – still increasing – importance of social media. There also seems to be an increasing notion that working with social media involves listening. Third, many companies seem to still be in experimentation mode, as indicated by the low available budgets. Social media efforts still often seem to be driven by the passion of small groups of employees.

The vendor side apparently still needs to evolve in their maturity, too. There are literally hundreds of point solutions available. Apparently the CRM vendors, be them big (and traditional) like SAP, Oracle, Salesforce.com, Microsoft, or smaller like Sage, SugarCRM, RightNow, NetSuite, … to just count some important ones, have not yet been able to provide compelling (or just good enough) integrated functionality. A similar picture appears when looking at the vendors that come from the social side, the likes of Lithium, Jive, CrowdFactory, GetSatisfaction, to name but a few. There is no immediately visible deep integration into one or more of the important CRM systems.

So, as a conclusion and matching the time of the year: These are my three forecasts about what happens in 2011

the adoption of social media will increase
we will see vendors coming out with more integrated products, that are structured around business processes, not departments
we will see a consolidation and a good number of mergers as the market right now is too fragmented

This year will certainly be interesting in terms of CRM, especially when looking into the maturing social CRM. How do you see 2011?

This blog is a revised version of the one originally posted on as Social CRM - a forecast for 2011 and has been posted here with the author's permission.

Traditional CRM vs. Social CRM - What is the difference?

Wed, 12 Jan 2011 23:17:46 -0500

Just by looking at the terms Customer Relationship Management and Social Customer Relationship Management one can see that they are sharing the same roots; Social CRM is either a limitation to or an enhancement of (traditional) CRM – or is it something entirely different?

Let me take a brief view at what CRM and Social CRM are and are not and then come to a conclusion.

CRM – Customer Relationship Management – is a business strategy. If you do a brief research on the web you will find many definitions with their own tweaks. What most of them have in common is that they all say that the strategy is about the customer and about how to engage a customer so that the company applying the strategy

gets most knowledge about the customer (groups)
and is able to action upon this knowledge to maximize the own results (be it market share, revenue, margin, win, ...)

As such a CRM strategy covers all relevant actions to market the right products to customers, sell the products and potentially provide service afterwards.

CRM by no means is a technology, although sometimes this is still peoples' thinking. A CRM application/system or suite enables and supports the business in pursuing its CRM strategy. The software does this by providing the tools to perform the necessary tasks and by providing the data that is necessary to control processes and to take necessary action.

Something that is not explicitly said is that one fundamental underlying premise of pursuing a (traditional) CRM strategy is that the business owns and/or governs the communication with the customers.

This premise is fundamentally flawed, it always was! It just didn't show until a few years ago.

For quite a while the fundamental quality of this flaw was not recognized or didn’t need to be addressed.

The reason for this is mainly a technology issue. Although businesses never really owned the communication with their customers it often was good enough to assume ownership of the communication because ultimately a business appeared to have the stronger voice and the better information.

This changed over the past ten or so years at an increasing pace, initially very slowly, through the growth and adoption of the World Wide Web and the increasing power of mobile technologies.

The web empowers customers to gather relevant information about businesses and their products and services, as well as competing products, services and businesses. Quality independent information and a comparison are only a couple of clicks away. This information increasingly did not only come from the businesses themselves but from other sources. These sources often are more trusted than the businesses themselves, because they seem to be independent or simply because customers know them. In contrast, a business is biased by definition, so not fully trustworthy.

The tipping point was reached around 2005 with the widespread adoption of communities on the web and mobile technologies. The number of acquaintances or “trustworthy” sources increased manyfold and still increases. All of the sudden it was very easy to spread and gain information in a network of trust and on the spot.

Communication since then is no more confined to the physical neighbourhood but to virtual neighbourhoods.

Businesses regularly are outside this network of trust.

While the concept, strategies and tactics of embracing the customer hold true it became more and more apparent to businesses that something needs to be done to alleviate this fundamental flaw.

Social CRM is the reaction of businesses to address the fundamental flaw. So, Social CRM is an extension to (traditional) CRM.

Social CRM is an enhancement of CRM strategies that bases upon the premise that a business does not own the communication with the customer and, moreover, cannot even control it. They, however, are able to participate in it and ultimately influence it, as they gain the trust of the participants.

This they are doing by listening to discussions between customers, even fostering them, and, as appropriate, participating in them as and where they are happening. This may be in a community that is driven by the business (e.g. on the own web site or a Facebook fan page) or in a totally uncontrolled world like a foreign community or Twitter.

The ultimate goal is to become and stay trustworthy and an important member of relevant networks of trust.

As the purpose of a business is adding value to their customers by selling relevant products the definition of CRM that is given above still holds true: A CRM strategy covers all relevant actions to market the right products to customers, sell the products and potentially provide service afterwards.

Just that the relevant actions have changed following a changed mindset.

Of course, with this also the technology needs to take pace as businesses need to cover more channels than before, actively as well as passively. Still, again, technology enables and supports businesses in pursuing their strategies.

In summary, the main differences between CRM and Social CRM are:

first and foremost a mindset change from business owning the communication to customers owning the communication in Social CRM
The importance and, moreover, relative importance of communication channels and -media changed from traditional CRM to Social CRM, moving away from platforms that are owned by the business to the “places” that the customers use
Social CRM has an even higher bi-directional component than traditional CRM
in Social CRM the necessity for fast reactivity is even more important than in traditional CRM

This blog is a revised version of a blog originally posted on http://blog.ciber.com/article.cfm?articleid=2010070852110&ptopic=crm and has been posted with the permission of the author.