Thanks to social media, consumers now control the dialogue with companies, and CRM systems must adapt.
Customer relationship management (CRM) Guru Paul Greenberg said in a recent webinar that traditional CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment.
Social CRM, he said, is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics. It is designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment.
"CRM is no longer just a model for managing customers, but one of customer engagement," said Greenberg. "Social CRM is the company's programmatic response to the customer's ownership of the conversation."
What are the implications of this shift moving forward? And how is CRM ultimately changing in the enterprise? Greenberg pointed out the difference between true CRM and social media applications such as Lithium and Jive, which are called CRM but have no real operational capability in the CRM realm. Therefore, he believes that sales, marketing, customer service, operational, transactional and customer databases should underpin CRM while social applications extend that functionality.
CRM definition changes
Richard Hughes, director of product strategy at BroadVision, concurs with Greenberg that while CRM was about managing the customer, Social CRM is about engaging with the customer.
"It is therefore wrong to think of social CRM as the next generation of CRM — CRM and social CRM are actually doing different things," said Hughes. "Some CRM vendors will try to evolve their products into also being social CRM solutions, but it is by no means certain that this is the best thing to do."
To his mind, CRM is typically an internal-facing system providing employees the information they need about a customer, whereas Social CRM is fundamentally an external-facing system where employees engage with customers, but also where customers engage with each other. Obviously, he said, the dynamics of each are quite different.
So how should CRM be defined these days? In much the same way as it always has been, said Hughes.
"Social CRM doesn't change the definition of CRM, it supplements it," he said.
One of the biggest problems he sees facing social CRM at the moment is a lack of common understanding about what it really is. To some people, social CRM is nothing more than talking to customers on Facebook and Twitter. While that might be a crucial part of it — go where your customers are — social CRM is much more than that.
Social networking has enabled customers to get together to put pressure on businesses, said Hughes. It's much harder to ignore a coordinated group of customers than lots of isolated individuals. If a business doesn't provide a place for customers to exchange their views, the internet provides plenty of other sites for them to do it, usually in a far less constructive manner. Put simply, businesses need to be seen to be listening to their customers.
"They might find that listening to customers is valuable in all sorts of ways," said Hughes. "For example, taking customer opinions into account when designing new products or identifying problems in products."
Social media changes CRM definition
Martin Schneider, senior director of marketing at SugarCRM, said that while CRM has traditionally been defined as a system involving people, process and technology that aims to optimize the identification, acquisition and retention of customers, the social media field has created a definite shift.
"The 'C' in CRM is slowly being replaced by an 'X' — meaning we are not simply seeing the platform used for customer interactions, but also for citizen interactions in e-government initiatives; criminal interaction by law enforcement and corrections facilities; candidate interactions for HR use ... and we're just naming the C's," he said. "The best CRM tools on the market are also platforms for managing any kind of interaction."
The need for businesses, governments and other organizations to streamline operations, reduce costs and increase satisfaction among the parties they serve are therefore driving more widespread and varied use of CRM systems. In addition, the explosion of data inside (and outside) enterprises and organizations has revealed the need for better interaction management systems; ones that can append all types of additional data about customers and citizens. There is so much valuable information available that intelligent organizations are looking to use modern CRM tools to discover, track and store this data in addition to more traditional process automations.
The role of analytics, marketing, call centers and ERP systems
Okay, so that's how CRM is broadening in application. But what about the other end of the spectrum? What is not CRM? Schneider isn't as restrictive as Greenberg. He said that a CRM initiative takes on many forms and goes beyond the technology involved — people and processes are the more important aspects. Therefore, Web analytics (including Google analytics and Adwords), demand generation tools (such as Pardot or Marketo), call center tools (from Avaya, or open source tools based on Asterisk), and even ERP tools that store transactional data can power a smart CRM initiative to enhance a customer experience.
"If the system touches the customer or customer data, it could potentially be involved in the overarching CRM strategy," said Schneider. "Therefore, CRM should be defined as an organization-wide effort, involving people, process and technology, aimed at optimizing the experience of your customers/citizens/students/etc."
Social media, he said, is just another channel of interaction. Organizations of all sizes need to look at where and how their target customers and prospects are leveraging social media and engage with them accordingly. When it comes to CRM systems, the best social CRM tools will be those with a flexible core platform to accept different social data and integrate with different sites and networks. This is important because there is no true fixed engagement platform in the social universe — it is a highly dispersed and varied world.
"Some companies will want to engage in one network or via one medium, and another will have a vastly different approach to social engagement," said Schneider. "Therefore, the CRM platform must be able to offer simple methods of building social engagement — with any site or data set — into the system."