Publication Title: Managing Customer Relationships in the Social Media Era: Introducing the Social CRM House.

Proceedings of: Journal of Interactive Marketing, 2013. Available online: 30 October 2013, [31 citations]

Authors: Edward C. Malthouse & Michael Haenlein & Bernd Skiera & Egbert Wege & Michael Zhang

Presented by: Hector E. Ugarte R. 3.6.2015

Bonn University - Germany1

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Customer Relationship Management

Strategy for managing all interactions with customers and potential customers. It helps

companies to improve profitability.

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Traditional CRM model!

Organization

possesses substantial information about its customers.

Use the information to manage its relationships with them.

Customer

have a passive role.

GOAL

Maximize customer lifetime value (CLV). Determined basically just with customers purchase behavior.

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Customer Lifetime Value

Is a prediction of all the value a business will derive from their entire relationship with a customer.

CLV as a periodic value:

12-month

(or 24-month, etc)

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Social Media

Group of Internet based applications that allow the creation and exchange of user generated content.

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The problem

CRM needs to adapt to the rise of social media.

The convergence of social media and CRM creates pitfalls and opportunities.

Companies are likely to find it increasingly difficult to manage the messages that customers receive about their products/services.

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Social CRM model!Customer

have an active rol.

can easily express and distribute

their opinions

to large audiences.

NOTE:

some experts suggests that instead of CRM, companies should focus on

doing vendor relationship management (VRM), where consumers are

managing their relationships with vendors rather than the other way around.

Organization

Hard to gather substantial information about its customers.

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The social CRM house

Framework to understand how social media affect CRM.

Two dimensions:

CRM dimension.

Social media dimension.

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CRM dimension

comprises the three basic components of the traditional CRM process:

ACQUISITION: relationship initiation of new customers.

RETENTION: maintenance of current customers.

TERMINATION: brake relations with customers.

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SOCIAL CRM STRATEGY

Organizing

PeopleSkills

Culture

Operational

excellence

Measuring

Outcomes

Understanding Customers and Deriving Insights

Data and Information Technology

Level of Engagement

Lower Higher

Acquire

Mantain

Retain, Cross-sell, up-sell, churn prevention

Terminate

Churn prevention, reactivation, termination

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2

3

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SOCIAL CRM STRATEGY

Organizing

PeopleSkills

Culture

Operational

excellence

Measuring

Outcomes

Understanding Customers and Deriving Insights

Data and Information Technology

Level of Engagement

Lower Higher

Acquire

Mantain

Retain, Cross-sell, up-sell, churn prevention

Terminate

Churn prevention, reactivation, termination

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2

3

4

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1. Level of engagement

When a user generates content related to a specific brand, he or she is engaging with the company.

Levels of engagement:

LOWER ENGAGEMENT: Describes situations in which consumers either only passively consume content or use very

).

HIGHER ENGAGEMENT: Describes cases in which consumers actively process the role of the brand in their lives or participate in various forms of co-creation, such as writing reviews or creating videos showcasing the product.

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1.1. Lower Customer Engagement

Acquisition

uploading advertising spots on YouTube, running promotions on Facebook, or providing information about their products on Wikipedia.

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Retention

Facebook brand pages, flagship brand stores in virtual worlds, etc.

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