One of the baffling aspects of customer relationship management (CRM) was the apparent inhumanity of the systems. Now a new improved version, Social CRM (SCRM), promises to breathe new life into CRM. It could work, as long as the original mistakes are not repeated. But what were those mistakes?

Kate Mayfield, CEO of CRM and market automation consultancy 70 Fathoms, defends CRM technology and says the problems with it lie not with the systems themselves but with the way organisations choose to use CRM, although she does admit that there were communications problems between vendors and customers. The greatest problem with CRM, however, is in its operation, which in the case of some organisations has failed to take into account the needs and desires of the most important people an organisation has: its customers. This has resulted in the now widely discussed dislike by the public of call centres and a feeling that organisations do not have the customer’s best interests at heart. “It’s amazing how vendors don’t educate people on implementation. The way you use a system is much more important than the choice of vendor,” says Mayfield. “Social CRM can be very labour-intensive, but it could give far more rewarding payback,” she adds. Perhaps, but only as long as the mistakes of the past are not repeated.

Marketing forces The consensus of those experts and analysts interviewed for this feature is that CRM has not been good for business. It’s less clear who is being blamed for this own goal but within corporations, as the implementation leader of CRM systems, it’s the CIO who is going to catch some of the flack. Whether that is fair or not is a moot point, as in many cases the chief marketing officer (CMO) would be equally culpable. However, social media could create an opportunity for CRM to meet some of its original objectives. Social networks including Facebook, LinkedIn and Twitter are presently not considered by organisations as business-class systems. But a new breed of Social CRM system has emerged, which offer the enterprise a user-friendly communications system akin to social networks with industrial strength management and security features. In essence, Social CRM allows companies to engage with their customers using services, techniques and technology associated with social networks. At its most basic this could involve monitoring blogs, Facebook, Twitter or LinkedIn for relevant mentions of a product or brand and responding accordingly, or in a more pro-active sense, for a company to create and manage its own online communities. Social CRM tools take this largely manual labour a step further, tracking references to your company across the social networks, drawing up dashboards to show you your most active social markets and helping you respond to customers and manage relationships with them through these informal interfaces. These SCRM tools offer the enterprise the ability to talk to customers in the way a customer wants. Because SCRM tools are user-friendly CMOs are bypassing the CIO and the IT department and implementing these tools themselves. According to analyst house Gartner, the worldwide SCRM market will be worth $1bn by 2012. At the moment there are around 100 vendors in this germinal market, of which most are unprofitable and generate an annual turnover of less than $1m.

Buyer beware Investing in SCRM has the risks associated with a growth market. If you are unlucky in your choice of supplier you may find yourself with a platform that becomes obsolete when your supplier goes bust or merges with a bigger competitor. Nevertheless, SCRM is growing fast. “Use by consumers accounts for over 90 per cent of spending on social CRM, but spending on business-to-business (B2B) use is growing faster and will account for 30 per cent of total social CRM spending by 2015,” says Adam Sarner, research director at Gartner. Many of the SCRM companies grew by 50 to 100 per cent last year, reports Sarner. None, however, seem to have the full set of functions that an enterprise might need in order to integrate this new tool with its existing business systems. As a result, the implementation of SCRM has been disjointed in many enterprises as different departments of adopt their own systems. SCRM as a cloud computing tool has made it easy for departments to make these tactical purchases, leading to a situation where cloud data is on one side of the firewall and old fashioned CRM data is on the other. As SCRM systems multiply like knotweed, it is inevitable that they will grow to the point where they begin to affect the wider IT environment. On the basis of Gartner’s analysis, CIOs can expect three major outbreaks of SCRM in their organisations.

8 ways CIOs can drive a social media strategy

Separate parts of a firm will buy different types of applications for different purposes. CIOs can categorise them into three main areas: sales, marketing and customer service. There will be vendors that excel in one of the three – they will inevitably be acquired at some stage in the future by a bigger player, and the technology purchased is likely to be unsupported or changed. The more likely long-term survivors, according to Gartner, will be the vendors that take a wider approach. Not necessarily the best tools, but the best integrated suite. “The majority of vendors that survive and thrive in the mid-term will offer tools that can address multiple use cases in more than one department,” says Sarner. As history shows, it’s rarely the best systems that win out, but the vendors with the best marketing strategy.

The CIO’s burden will be to integrate all the various strands of social CRM. They have the choice of struggling to bring together the best of breed in each category, or finding a vendor which has at least gone halfway to creating a coherent foundation. If at some stage in the future a CIO is asked to rationalise a knotweed of different SCRM systems, it would help if they could identify the starting points for the various systems they have. Today’s SCRM startups seem to approach the ‘socialising’ of the enterprise in one of four different ways. Some sell systems on the basis of their functions, other concentrate on process workflow, another distinct group uses social CRM for analytics and a fourth group, surprisingly enough, sees SCRM being a way of delivering ‘superior experience through professional services’. A CIO who takes charge of SCRM before it takes off might have more chance of damage limitation in the long run. But leading from the front won’t be easy, because many of the traditional CRM players are not ready to help. “Many of the old CRM players have done a poor job of it, and many new [vendors] refuse to accept that the old stuff still needs to be covered,” says Clive Longbottom, senior research analyst at Quocirca. CIOs need to be prepared for a battle to manage perceptions, says Longbottom. “The biggest misconception is that social replaces anything that has gone before,” he says. Unfortunately, paper mail, telephone, EPOS, web contacts and ‘old’ types of social media (like instant messaging) are all still important. “Facebook and Twitter have not taken over the world,” says Longbottom. Market watchers say social solutions won’t solve anything any more than CRM created a relationship with customers. All that happens is that another silo of information is created. “Customers are fickle – they may use the website for some interactions, social for others and heritage methods for yet others. If all this isn’t pulled together by the business, the result will be angry customers,” says Longbottom. So CIOs must make sure they provide a system that pulls everything together, that allows all interactions to be carried out in the manner that the customer or prospect chooses. The integration of social and traditional CRM is one challenge. It’s not inconceivable that Facebook, LinkedIn and Twitter will be used to talk to customers – which will lower your training costs. SugarCRM, for example, claims to work with popular tools that users are familiar with, as well as integrating with collaboration tools like LotusLive, Cisco WebEx and Gotomeeting.

More than words The challenge is not just in pulling this information together, but making it meaningful, says Andrew Yates, CRM expert at integrator Artesian Solutions. This, he says, makes choosing the right vendor critical. “The important question is whether the vendor goes beyond simply harvesting and curating content. That’s not of great value once you get beyond a pretty graph which is counting mentions,” says Yates. The value of SCRM only materialises when some kind of relevance filtering is applied to make it specific to your company. For example, a story about a customer conversation which became a trigger for a product or service that your company could sell the customer. Or perhaps some bad news which warrants caution or a change in tactic. Choose a SCRM vendor who can provide analytical insight and who gives the user the means to act on that information, says Yates. The problem with SCRM is that people are involved and people can be highly unpredictable. You need to put the right people with the right skills in your customer facing roles, Yates adds. Again, much of the success of social CRM depends on the people leading it. The early signs are not encouraging, according to 70 Fathoms’ Mayfield. Senior marketing people are used to getting low returns on their broadsides. But the conversational nature of SCRM means companies can expect much grater feedback, but those in charge are not ready for it. “I met 10 marketing experts recently who had a single Twitter address on their business card. But not one of them had an idea of how they would measure responses,” says Mayfield.

Why CIOs need social CRM

Many marketing managers were shocked in September when a survey revealed that customer service is the crucial factor in any company’s ability to gain market share. A UK-wide survey of 180 businesses (for Cognito) found that 68 per cent of respondents said customer service made all the difference when buying a product. The only surprise is that the figure is so low, says Oliver Trabert, chief technology officer for vendor Questback. Customers have always been desperate for good service but didn’t have any power. The rise of Social Media has dramatically changed that, says Trabert. “Social media has empowered customers to talk openly about products and services and given them an easy-to-use channel to broadcast their experiences which has a huge impact on the company’s control over its relationship with its customers,” says Trabert. CRM needs to open into to the social networks and connect business units to communities in order to engage customers with CRM processes, he says. “Before I buy a product I always consult the web and look at unhappy comments,” he adds.