Social CRM: How Companies Can Link into the Social Web of Consumers

Perspective

Social CRMHow Companies Can Link into the Social Web of Consumers

Olaf Acker Florian GröneRami YazbekFares Akkad

Booz & Company

Contact Information

BeirutRamez [email protected]

Raymond [email protected]

BerlinDr. Florian Gröne Senior [email protected]

CanberraDavid [email protected]

ChicagoEduardo [email protected]

Mike [email protected]

DelhiSuvojoy [email protected]

DubaiFares AkkadSenior [email protected]

Rami [email protected]

FrankfurtStefan [email protected]

Olaf [email protected]

LondonHugo Trépant Partner [email protected]

Rami [email protected]

Saibal Chakraborty Senior [email protected]

MilanEnrico [email protected]

New YorkJeffrey [email protected]

São PauloJorge [email protected]

ShanghaiAndrew [email protected]

SydneyPeter [email protected]

Ramez Shehadi and Florian Poetscher also contributed to this Perspective.

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EXECUTIVE SUMMARY

Social networking and other new technologies have given rise to the “social consumer,” who now has the means to share reviews and opinions about virtually every kind of product and service. As a result, the days of the one-to-one relationship between companies and their customers are over. Now companies must contend with the huge and growing social web, where customer experiences and opinions are shared on a massive scale, and corporate reputations can be ruined almost instantaneously.

Navigating this new world requires a new way of approaching customer relationship management, commonly called social CRM. In addition to their traditional CRM tools and processes, companies must rethink their product, channel, and customer strategies in order to build an entirely new relationship with their customers through greater transparency. This new relationship will have two goals: to develop the credibility needed in the social web and to use this web to boost sales. This effort will require a major shift in the corporate mind-set toward collaboration and transparency. But if it is done right, the resulting benefits in terms of reputation and a more valuable relationship with customers can be significant.

Companies should begin simply by listening to the social web to get a better sense of where they stand in this world, and building a team of employees who are familiar with how this world works. This will serve as a basis on which to build true social CRM capabilities, including the ability to manage the company’s reputation, increase sales, and monitor the results.

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Exhibit 1 Managing the Social Web Requires a New Corporate Mind-Set of Collaboration, Transparency, and an Ongoing Conversation with Consumers

Source: Booz & Company analysis

Data (Black)

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Exhibit Subhead- Developer can self-determine:

- Quality of the infrastructure to be installed- Operational model of the network- Services to be provided- Quality of the services to be provided

- Developer can manage infrastructure and service modernization as demanded

- Developer can generate additional returns from telecommunications services

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4.3%

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CHANGE IN THE ENTERPRISE MIND-SET

Sales Employee

Customer Service Employee

Marketing Employee

Traditional Mind-Set New Mind-Set

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Marketing Team

Customer Service

Customer EcosystemCorporate Ecosystem

Customer

One-Sided Opaque Transactional Collaborative Transparent Conversational

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The traditional one-to-one relationship between companies and their custom-ers is rapidly evolving. Consumers now have a wide variety of new technologies at their disposal, with ubiquitous access to massive amounts of information, giving them near complete transparency into every com-pany’s products, services, and pricing data. Almost three-quarters of online adults in the U.S. read blogs, watch online videos, listen to podcasts, post to forums, and write reviews. Almost a quarter of them create their own content, publishing blogs and upload-ing videos and audios to sites such as YouTube. And more than a third of

all bloggers post their opinions about products and brands.

New publishing, collaboration, and social networking platforms let con-sumers compare, discuss, review, and comment on products and services with ease. Nearly 600 million people around the world now actively use Facebook, with the means to broad-cast their thoughts and opinions far and wide. As a result, consumers are shifting their trust away from corpo-rate marketers and brands and instead talking and listening to their fellow consumers. Their opinions about prod-ucts and services are being shaped by the information they get from fellow consumers offering their experiences, thoughts, and feelings over Web 2.0 collaboration technologies such as blogs, product reviews, and rankings—especially when their experiences have been bad. The newly empowered “social consumer” is here to stay.

If companies are to adapt and respond successfully to this new reality, they must develop a new corporate mind-set that goes far beyond the traditional one-sided, product-centric, transactional thinking. Companies must now be much more transpar-ent in their dealings with consumers, understanding that by creating an ongoing conversation with customers they can build a better, longer-lasting, ultimately more valuable relationship with them. However, if companies are to generate and manage this more complex relationship—and capture the resulting business value—they must encourage their marketing, sales, and customer service teams to collaborate in responding to social consumers, and to develop an entirely new set of capa-bilities and tools, commonly called social CRM, to manage their response (see Exhibit 1).

THE SOCIAL CONSUMER

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Social CRM should be seen not as a replacement for traditional operational and analytical CRM processes and tools, but as an extension of them. Companies seeking to build new social CRM capabilities

must adapt, augment, and rethink their product, channel, and customer strategies as well as their attendant delivery processes, tools, people skills, incentive systems—indeed, the entire corporate culture. Social CRM is not a “soft” addition to traditional CRM goals and processes; there are real costs involved in generating the required capabilities, and the return on investment should be clearly understood and measured.

The key to a successful social CRM effort lies in extending traditional

CRM strategies and processes to a company’s entire extended social network—a dynamic, constantly evolving organism that encompasses its customers and suppliers. As with every major business effort, all the processes associated with social CRM, whether they are designed to actively generate customer involvement in some way, or to react to it, should either boost the top line, protect the bottom line, or both. And the processes involved must be consistently monitored to determine their ongoing success (see Exhibit 2).

DRIVING CUSTOMER VALUE

Exhibit 2 Social CRM Involves Both Proactive Marketing, Sales, and Service and Reactive Preemption and Mitigation


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PR Crisis & Bad Publicity Reaction

Complaints Management

Social Support

Market & Product Insights

Lead Generation & Social Sales

Social Marketing & Promotions

Brand & Product Awareness

Loyalty & VIP Customer Treatment

Grow Top LineProtect Bottom Line

- Monitor & analyze

- Act on defined business rules

Reactive CRM

ProactiveCRM

Social Web

Grow Top Line

Protect Bottom Line

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Protecting the bottom line is most typically linked to reactive CRM activities such as monitoring complaints that may emerge from the social web and managing events such as bad publicity. No company can completely anticipate or control such events, but it is critical that every company build the capabilities needed to manage them when they occur, and to develop the “social web credibility” that will be needed in times of crisis. Companies that launch such efforts after disaster strikes will face little probability of success. The recent Gulf of Mexico oil spill severely affected BP’s reputation, yet the company only made it worse through such amateur glitches as the obviously edited photos of BP’s “situation room,” which quickly eliminated any credibility the company might have gained in its social web.

The most successful way to grow the top line through social CRM involves generating social sales—gains in e-commerce revenues that are driven

by social media, often in the form of word-of-mouth marketing. Critically, these social techniques for boosting revenue are even more dependent on credible positioning in the social web than reactive efforts are. Moreover, proactive and reactive efforts must be considered in tandem: Social sales requires social marketing to generate attention, but that attention depends on the social support needed to gain a reputation as a credible force in the social web.

Many of the results of the activities discussed above—such as social sales and social marketing campaigns—can be measured and quantified through traditional ROI analysis. Yet the highly interactive nature of social CRM will also bring with it secondary benefits that are in many cases even more significant, if much harder to measure. The goodwill gained from the increased transparency offered by social CRM, for instance, is hard to measure in isolation, but no less real.

The goodwill gained from the increased transparency offered by social CRM is hard to measure in isolation, but no less real.

How does social CRM work in the real world? The following three case studies will illustrate both the real benefits of creating relationships with social consumers and the potential costs when the power of those con-sumers is not handled well.

Dell Boosts Social Sales Thanks to such tools as price com-parison engines and social networks, consumers have gained the upper hand in e-commerce, and companies are finding it harder and harder to distin-guish themselves from the pack and to convert visitors to their websites into paying customers. In hopes of engag-ing potential buyers throughout the lead generation and buying process, computer maker Dell turned to Twitter as a new channel for pushing special promotions to its followers. In part-nership with Intel, Dell devised a mar-keting program called “Dell Swarm” that applied the “letsbuyit.com” concept to create an online promo-tion with a group-buy logic: The more people who join a “swarm” through invitations over social networks, the lower the price for the entire swarm.

While the initial program remains at a small scale, the results were impres-sive: Dell sold out the inventories

SOCIAL CRM IN THE REAL WORLD

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allotted to the campaign, taking in more than US$6.5 million in incremen-tal revenues. More than 200 blogs and 500 tweets applauded the program, boosting positive views of the Dell brand significantly. Prequalified leads jumped 15 percent, and 80 percent of people participating in the campaign opted in for further communications. Clearly, such trials demonstrate that social sales can create real revenue. Still, companies embarking on such efforts must tightly integrate tradi-tional sales and social sales channels in order to provide a seamless transac-tion experience all the way from the promotional tweet to online checkout, while keeping an eye on any potential cannibalization effects.

Best Buy Gains Social SupportComplex products such as comput-ers and consumer electronics typi-cally require a great deal of customer support, most of it done via costly call centers. At the same time, more and more consumers are using the Internet as a support channel, by searching for solutions to their problems online, often generating random results. In hopes of leveraging the Internet’s “col-lective intelligence,” embodied in other consumers, Best Buy created an online community forum where consumers can post questions and get answers from other consumers. Questions not answered by consumers are picked up by Best Buy employees, all 114,000 of whom have access to the system. The company also creates FAQ pages before the launch of major new products such as the iPhone, allowing consumers to get answers to questions in advance.

In 2009, Best Buy’s online commu-nity boasted 2.5 million visitors, who viewed more than 80 million messages and posted almost 80,000 times. Just 5 percent of consumers’ questions had to be answered by Best Buy staffers; the rest were answered by the community. As a result, complaints to Best Buy were reduced by 20 percent. And the iPhone FAQ page was viewed 84,000 times, saving untold numbers of call center calls. Altogether, Best Buy esti-mates that its social media activities have saved it $5 million.

There is no intrinsic reason that such self-help communities can’t become equally successful in industries other than consumer electronics. For any company, reducing the number of calls to call centers can lower the cost per contact by 75 percent or more while enabling the organization to focus on more complex problems and concen-trate on driving sales.

Crisis Management at SeaWorldMore people now get their news from the Internet than from either news-papers or radio—only TV still ranks higher. Three-quarters of consum-ers of online news say they get news forwarded to them through e-mail or posts on social networking sites, and more than half say they share links to news with others via these means. The resulting speed at which news and publicity—especially when it’s negative—can spread far and wide is astonishing, frequently allowing public relations crises to develop within hours and even minutes. Only by responding just as quickly can companies combat these negative impressions.

In February 2010, a professional trainer at SeaWorld was killed in front of a live audience by a killer whale. The bad publicity could have had disastrous consequences for the theme park, but SeaWorld acted fast. It tweeted about the incident almost immediately, and then acknowledged the trainer’s death on its Facebook page. Hours later, SeaWorld’s CEO posted plans to investigate the incident on the company’s blog, and left the blog open for comments. The next day, SeaWorld suspended the faux Twitter account of Shamu, another killer whale at the park, and users were redirected to the park’s main Twitter account. Meanwhile, emotional video tributes to the trainer were posted on YouTube. A rising tide of comments on Facebook advocating the closing of the theme park and freeing the whales was countered primarily by thousands of SeaWorld’s Facebook fans. At pres-ent, thanks to its rapid and sympa-thetic response, SeaWorld’s theme park operations are continuing normally.

Managing incidents such as this one depends greatly on developing a strategic framework for responding quickly to potential online crises. That framework should include a systematic effort to develop the processes, tools, and people needed to monitor social networks constantly, “keeping an ear to the ground.” Finally, the use of social media to manage crises should not be an entirely reactive measure to a potential threat; instead, companies must use social networks to develop permanent relationships with their customers and other consumers.

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The case studies above demonstrate a common truth about all social CRM efforts. They are not primarily technology problems requiring technology-driven solutions. Instead, all social CRM activities must be driven as part of the entire corporate culture if they are to have the credibility to be effective. We recommend taking what we call the “MASTER” approach to building the capabilities needed for a successful social CRM effort—monitor, assess, strategize, test, embed, and review.

Monitor:• Listen to what the social web has to say. Systematically gather insights, data, and experi-ence in order to understand your target consumer community and its dynamics, codes, and unwritten rules. This is often best done by participating in the social web just like any customer would. And pay attention to competitors as well.

Assess and analyze:• Consider care-fully the results of your monitoring, and rigorously map those areas of both opportunity and threat pre-sented by the social web that can in turn be addressed by social CRM.

Strategize and structure:• Develop a clear and workable social CRM value proposition, and then struc-ture your response, including the channel or platform mix—social networks, blogs, apps, social bookmarks—as well as the tools and practices needed, along with a go-to-market road map.

Test: • Begin by testing your strategy on a small, controllable scale in order to determine if your initial assumptions and your set of tools and practices work—and calculate the ROI.

Embed: • Once you have decided on a set of successful activities, put them into practice by defining their respective processes, installing the necessary social campaigning sys-tems and tools, and determining the required roles and responsibilities, employee incentives, and business targets.

Review: • Reassess embedded activi-ties regularly to improve, extend, or suspend them, as needed. And remember that the social web is a dynamic environment, so be pre-pared to adapt with it, continuously evolving your response to it.

This framework provides the general guidelines for building a successful social CRM presence, but getting the details right is critical. At each step of the framework, specific capabilities must be acquired in three areas in particular: business functions from innovation to marketing to sales to service; organizational structures, including the people and skills needed—and an incentive structure designed to promote them—as well as a plan for developing a corporate culture that encourages thinking and working in terms of transparency and collaboration, both requirements for social CRM; and technology platforms, including social CRM–specific tools and systems, as well as the broader integration of social CRM processes into the end-to-end IT architecture. Exhibit 3 offers a breakdown of those specific capability requirements, both at the initial stage of the social CRM effort and in its mature phase.

BUILDING CAPABILITIES

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Exhibit 3 Embedding Social CRM into Business Functions, the Organization as a Whole, and Technology


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SOCIAL CRM

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- Develop product insights from external social networks, leveraging the service as well as marketing insights

- Crowdsource research and development to accelerate product to market and improve the chance of product adoption

- Develop marketing insights from external social networks- Create one main blog, usually by the CEO’s office or other upper management

- In near real time, monitor chatter on social networks, including overall sentiment monitoring - Manage the organization‘s events- Promote cross-department blogging and social customer interactions

- Develop sales insights from external social networks- Provide social customers with product information through social media- Develop internal networks to collaborate on sales opportunities and leads

- Develop leads and sales opportunities from social communities- Use peer-to-peer lead generation through social recommendations, referrals, and customer testimonials

- Develop service insights from external social networks- Develop internal networks to collaborate on the response to customer issues and service requests

- Develop rapid service response to issues raised on social networks by proactive monitoring and establishing in-house social support structure- Harness the collective expertise of customers to develop a peer-to-peer social service

- Create isolated social programs typically focused on one department- Leverage select existing employees to interact with customers on social networks

- Dedicate a team, decentralized or centralized based on company size, to coordinate social CRM programs across all departments- Develop internal specialized skills to write, develop, and publish social media content such as blogs, podcasts, and multimedia

- Encourage employees to view social CRM program as a positive new experiment

- Integrate social CRM into the business with a clear mission, ROI, and KPIs- Harness an active and empowered change management program to help customer-centricity, collaboration, and transparency pervade the company‘s culture

- Leverage public and mostly free social media platforms available on the Web with no or minimal investment in hardware or software

- Invest in social CRM platforms that are becoming increasingly available in the market with specialization in social sales, social service, or social marketing

- Do not have to integrate program with in-house platforms such as CRM or business intelligence

- Integrate the social CRM platforms with operational platforms


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PR Crisis & Bad Publicity Reaction

Complaints Management

Social Support

Market & Product Insights

Lead Generation & Social Sales

Social Marketing & Promotions

Brand & Product Awareness

Loyalty & VIP Customer Treatment

Grow Top LineProtect Bottom Line

- Monitor & analyze

- Act on defined business rules

Reactive CRM

ProactiveCRM

Social Web

Grow Top Line

Protect Bottom Line

Product Innovation

Initial Stage Mature Stage

Business Functions

Social Marketing & Public Relations

Social Sales

Social Service

Organizational Structures

People & Skills

Culture

Technology Platforms

Tools & Systems

Integration

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The rise of the social customer has embedded every company in a complex web of relationships among customers, consumers, tastemakers, and employees. This social web con-tains many risks and threats—from much greater transparency into prices and customer opinions to the instant proliferation of bad news. In response, social CRM offers a whole range of new and powerful ways to build loyalty, market, sell, and otherwise influence every member of that web.

Still, it is critical to remember that the social web functions according to an entirely new set of rules that are always changing, and changing fast. Understanding these new rules will be a challenge for most companies—until they succeed in embedding the neces-sary spirit of transparency and col-laboration in their corporate culture and everyday business practices. As a guide to meeting this challenge, we offer three initial steps every company should take:

Start monitoring the social net-• works for mentions of your brand and company name. This is a critical first step in building reactive social CRM capabilities.

Decide whether you are ready • to use social CRM as a tool for proactive communication with customers. Doing so will require a conscious change in the company’s culture.

Follow the MASTER framework, • while forming a small team of dedi-cated employees who are already active in social networks so that you can leverage their know-how and networks for early trials of the system and to begin building your social reputation.

Ultimately, truly successful social CRM will require long-term think-ing and investment. It is not a one-off project, but rather a major capability that will take time to build properly. If done right, however, it will gener-ate significant financial rewards and reputational benefits.

THE CORPORATE SOCIAL WEB

KEY HIGHLIGHTS

Every company is now • enmeshed in the social web of consumers publishing their thoughts, opinions, and reviews of every kind of product and service.

Social CRM involves • the tools and processes companies need to manage their ever-changing relationship with the social web, increase sales through direct contact with “social consumers,” and handle crises.

Recent examples • demonstrate that the beneficial results of a strong social CRM program are real and quantifiable.

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About the Authors

Olaf Acker is a partner in Booz & Company’s Frankfurt and Dubai offices. He focuses on business technology strategy and transformation programs for global companies in the telecommunications, media, and high technology industries.

Fares Akkad is a Booz & Company senior associate based in Dubai. He specializes in Technology and Communications projects, assisting companies both in public and private sectors with their digital media and technology enabled initiatives. Fares has assisted clients on strategic projects in the Technology, Telecommunication, Media and Public sectors.

Dr. Florian Gröne is a Booz & Company senior associate based in Berlin. He works with communications, media, and technology industry players to define their go-to-market strategies and operating models, and transform customer-facing processes. He leads the firm’s CRM Center of Excellence in Europe.

Rami Yazbek is a Booz & Company associate based in Dubai. He specializes in technology-enabled transformation in government and the private sector. Over the last decade, Rami has helped numerous clients across multiple industries define and implement their CRM strategies. He is a member of the firm’s CRM Center of Excellence in the Middle East.

Resources

Michael Peterson, Volkmar Koch, Florian Gröne, and Kiet Vo, “Online Customers, Digital Marketing: The CMO–CIO Connection,” Booz & Company, 2009. www.booz.com/media/uploads/Online_Customer_Digital_Marketing.pdf

Michael Peterson, Florian Gröne, Karsten Kammer, and Julius Kirscheneder, “Multi-Channel Customer Management: Delighting Consumers, Driving Efficiency,” Booz & Company, 2009. www.booz.com/media/uploads/Multi-Channel_Customer_Management.pdf

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Social CRM: How Companies Can Link into the Social Web of Consumers

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