Social CRM: The New Frontier of Marketing, Sales and Service

The emergence and increasing usage of social media and other Web 2.0 tools has dramatically altered how companies interact with their customers. For instance, buying advice, product information and technical help is increasingly being disseminated from consumers to other consumers, in some cases without involvement or oversight by the provider. Clearly, this shift presents both opportunities and risks to companies.

To derive greater value from these new communication channels, companies should adopt a “social CRM” strategy. Such a strategy will help them touch customers at many more points and much earlier in the buying process, often at lower cost than that of more traditional marketing, sales and customer service channels.

To do so, companies should embrace the social media channels being used by their customers; identify and engage with the “superusers” who supply product expertise to other customers; and harness the power of advanced analytics to provide broad insights on customer needs, wants and behaviors. Perhaps most importantly, companies must remember that social media and Web 2.0 will not work for all customer needs and segments, even though they can significantly alter the role played by more traditional contact channels.

In short, social CRM presents many opportunities to build a distinctive capability that can serve as a building block of high performance: a method to potentially connect more tightly with customers at lower cost and in a way that provides a real differentiation from competitors.

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The evolution of the Internet and social media—The evolution of social media and other Web 2.0 tools is having a significant impact on both how consumers interact with companies and the level of control such companies have over the sales, marketing and service of their products. (Although it is difficult to find consensus on what exactly is meant by “social media,” for the purpose of our discussion, the term refers to Internet and mobile channels that enable users both to view and create content and to share that content with others.)

Today, consumers make their purchases either via retailers’ or manufacturers’ sites or retailers’ physical stores. However, as social networking and other Web 2.0 tools have exploded in popularity—consumers have many new sources of product information and buying advice, as well as answers to usage and technical questions about the products they have purchased.

In this new world, companies have an opportunity or a threat, depending on how they adapt marketing, sales and service of their own products to a new consumer ecosystem: one in which enthusiasts and detractors can dictate customer perception and experience for manufacturers.

Ramifications for providers—What are the ramifications of this shift? At a high level, the evolution of social media has introduced new contact channels that must be integrated into marketing, service and support strategies. However, while social networking and social media are certainly on the rise, there are still large groups of customers who do not communicate via these tools.

Therefore, differentiated service takes on an even greater role because of these new channels. A thorough understanding of customers’ channel preferences, combined with insights into the true value of customers to the business, must drive how companies interact with each respective segment.

In addition, because of the speed with which customers and information move today, companies must be able to incrementally, and very quickly, improve their operations based on what they learn from observing customers. As a result, many companies have shifted the focus of their investments from building channel infrastructure to creating nimble and robust content management and data collection and analysis capabilities.

From a marketing perspective, the evolution of social networks and online communities has resulted in a collapse of the marketing funnel. How so? Traditional, mainstream marketing forces a message through the marketing funnel, moving through stages from building awareness to earning loyalty. It only allows dialogue and relationship building as the prospect or customer progresses through the funnel.

By contrast, the digital revolution, and particularly social media, makes it possible to engage in a dialogue with prospects or customers much earlier and at many more touch points. The collapse of the marketing funnel, in turn, means the distinctions between marketing and sales become further blurred and, in some cases, disappear entirely. In fact, social media increasingly is being referred to not in terms of marketing or sales, but rather, as an “engagement channel,” which incorporates elements of both marketing and sales.

With consumers increasingly relying on third-party sites for usage and technical information, manufacturers must build capabilities to strengthen their brands and customer loyalty via these channels, as well as to up-sell and cross-sell relevant, related products and services, and gather and integrate cross-channel customer data. Indeed, smart use of these third-party channels can become a powerful way to boost image and customer satisfaction while reducing CRM operational costs.

A way forward: social CRM
What should companies do to respond to these changes? They should start by developing a “social CRM” strategy, which Accenture defines as an operating model, supported by technology and business processes, that is designed to engage customers in a mutually beneficial two-way conversation. Social CRM is a company’s necessary response to its customers’ transformation from spectators (“TV watcher," "newspaper reader," "Web browser”) to participants ("product rater," "blogger," "ambassador") and their subsequent co-ownership of the company’s brand.

A key element of a social CRM operating model is a very flexible framework that allows a company to observe what customers are doing and saying, and then experiment with different customer experiences to discover those that resonate with customers. However, companies also must be careful to balance the online feedback they gain from customers and prospects.

While such feedback certainly can provide valuable intelligence on what customers are thinking, too much focus on one source or one segment can lead to a narrow or biased perspective. Thus, companies must integrate the data they gain from online channels with other, more holistic quantitative and qualitative data gleaned from other sources to paint a more accurate picture of their overall customer base.

As they develop their social CRM strategies, companies should consider a number of actions they can take within marketing, sales and service to build and strengthen customer relationships.

Companies that integrate social CRM into their customer-facing operations are better positioned to simultaneously improve their consumer relationships while reducing the cost of marketing, selling and delivering service. From a marketing and sales perspective, companies should embrace the same social media sites their customers use, and use those sites to both create dialogues with customers to help them with their purchase decisions, and mine sites for information on what customers are saying about the company and its products. New tools that enable the amalgamation and analysis of a wider range of quantitative and qualitative data will be a key enabler in this regard.

In terms of service and support, organizations need to leverage social media and Web 2.0 tools to create more robust service and support capabilities that enable customers to interact with each other as well as company representatives to find solutions to their issues quickly and easily. Robust customer forums, powered by passionate customers who are appropriately motivated and rewarded by the enterprise, are especially critical to making these sites preferred sources of solutions to customers’ problems.

Also, companies that crawl third-party sites to proactively identify possible service issues mentioned in consumers’ online conversations can avoid or reduce the impact of potentially bigger problems that arise when issues are left unaddressed.

By making social CRM an important element of their customer strategies, companies are better positioned to achieve a stronger and more differentiated market position, provide superior service, lower operational costs and attain a competitive advantage—all of which helps them take major strides toward high performance.

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