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

Posted by Thomas on 12 January 2011 | 40 Comments

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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.

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