The rise of social networking sites has meant that customers are no longer prepared to be fed the traditional marketing, sales and service monologue from companies. They feel empowered with peer dialogue through online communities and have started to take greater ownership of the conversation with businesses which may be able to help them achieve their needs.
Traditional CRM strategies focus on managing relationships based on customer transaction history for the optimal extraction of value from the customer. These strategies create operational efficiencies in customer-facing activities to free up staff time to sell and resolve service issues e.g. opportunity management and pipeline visibility. Additionally they can create optimised offers for customers, leading to higher value customer purchases. This approach however is insufficient when it comes to customers whose trust lies in their peers. Customers are demanding engagement, not monologue, and want trusted relationships with authentic, timely communications.
This change in the locus of control from the organisation to the customer requires organisations to create a new approach to CRM strategy – one that builds on the operational capabilities of traditional CRM with the new capabilities of social media – to reflect who customers trust and how their buying/usage behaviours are influenced.
This new approach, Social CRM, is a business strategy designed to engage customers in conversation and reflects the organisation’s response to the customer’s ownership of the conversation. The strategy, supported by a customer focused culture, business rules, processes and technology, engages the customer in trusted and collaborative dialogue to provide mutually beneficial value. Whereas traditional CRM processes use push messages to make customers buy, social CRM pushes customers to engage, where customers rely on their networks to inform their buying decisions.
In order for companies to engage and provide value, they need to navigate their way in an environment that is more blurred than they’ve been used to previously.
Blurred divide between digital and physical
Whereas I do much of my shopping online as I value the convenience and price, my millennial generation daughter values the social experience of shopping with friends. This value is based on not only her friends’ opinions as opposed to the marketing that companies target her with, but also the physical social experience of shopping with friends. To engage effectively with customers, organisations are increasingly understanding how they can create the required experience through both a digital and physical presence. In addition to social media, Burberry establishes engagement in their Regent Street store with RFID chips in clothing which when worn, transforms mirrors into screens showing how the clothes would look on a catwalk and accessorised with other items. Burberry have created a physical version of their website, one that strives to meet the experiential needs of customers. In the social world, the customer drives the engagement and businesses need to understand how they can create value in this engagement. The challenge is that this value is contextual – knowledge and ideas are only of value if they have meaning under the circumstances the customer is in, which includes both digital and physical.
Blurred lines between the producer and the consumer
Social CRM is focused on customer engagement. The premise behind this strategy is that a customer will engage with an organisation and an organisation with a customer if there is clear value on both sides – in essence treating the customer as a partner. This partnership could be based on collaborative behaviour around product co-creation and enhancement, or customer service resolution. This collaborative behaviour then starts to blur the traditional roles that a company and customer have held. To succeed in this environment, businesses need to shift their focus from their traditional value chain and instead view value from the customer’s perspective and ask how they can help the customer fulfil their needs – their personal agenda. People don’t buy drills because they want drills, but because they want holes. This is a shift from the traditional supply chain focus to what is being called ‘demand chains’ (Bruce J. Rogow, IT Odyssey). Leading CIOs are supporting these business demand chains through the use of social media, mobile and cloud technology to understand, create and support demand for business services and products.
Blurred organisational boundaries
Engaging with and meeting the needs of customers is increasingly resulting in networked ecosystems – communities characterised by loosely and strongly coupled organisations and customers where there is mutual benefit. They give customers and partner organisations the capacity to interconnect and bring a more diverse set of creative resources to meet customer needs. Not only does this start to blur the boundaries between producers and consumers, but also the traditional boundaries within organisations between the Product development, Marketing, Sales and Customer Service functions.
Boundaries become porous, reflecting the multiple functions, partner organisations and customers involved in solving service issues. There can also be the creation and disbandment of staff and customer teams in the co-creation of products. All of which requires new organisation designs that have the resource flexibility to reflect who is best placed to meet the customer need.
Blurred personal and business boundaries
Lines are getting blurred between personal and business data which increases the complexity of understanding customer need and sentiment. Corporate information is increasingly available in personal social networking sites such as Facebook, and personal information in business social networking sites such as LinkedIn.
Navigating this blurred environment
Social CRM offers your organisation the opportunity to effectively engage en masse with customers, while also presenting the risk that customers engage with each other negatively about your organisation. Irrespective of your stance on social CRM, your customers are already engaging with each other.
Customers are now in more control of the business ecosystem because of the choices they have in their relationships to organisations and the intensity and reach of their relationships to their peers.
Social CRM is a business strategy designed to engage customers in conversation and reflects the organisation’s response to the customer’s ownership of the conversation. It is focused on customer engagement rather than customer management. To implement this strategy effectively requires navigating a journey that can be blurred and which undoubtedly introduces many new complexities that traditional operationally-focused CRM strategies did not have to contend with.
Designing and implementing the right solution in response to social CRM and providing the right foundation for the subsequent evolution will require clarity on the underlying operating model – how you operate and organize your resources and capabilities to deliver the strategy to reflect the blurred environment described.
The starting point of the operating model is understanding how your business can help customers achieve the goals in their personal agendas. This requires clarity on your target customers’ needs, the way your customers try to meet these needs, and what experience you should provide to engage them to help both understand and meet these needs. This understanding in turn drives implications for the design of marketing, sales and service processes, the agility of the organisation design to have the right people engage customers at the right time, and the underlying technical architecture to deliver this value.
Here at Differentis we work with those businesses that are experimenting and succeeding in the social world. We have supported organisations take the first step with the strategy and business case, and supported them in the design and implementation of the operating model to deliver their social strategies.