Social CRM needs a CRM system, doesn’t it?

Hi Thomas,

I agree with your premise about Social CRM and CRM systems. What I would like to add is it is great that they used their systems to get you onboard as a customer, but for it to be a “real” scrm strategy, I think you should look at how the relationship continues in the future (value-in-use). How will they use their systems to nurture the relationship, which in your case is how to a become proactive partner in your business venture.

Also, you could have asked other business owners what their experience is with this particular bank – and the bank could potentially have helped you connect with this network of customers.

This is to say that the initial transaction of you becoming the bank’s customer set expectations about how you will likely be treated in the future), whereas had the bank had a SCRM strategy, they would have realised they could have provided you with ‘reassurance’ about the overall customer experience by helping you connect with ‘people like you’ to get more validation. And this as well would be a good opportunity for the bank to understand what people are looking for!

Cheers
Mark

Hi Thomas,
As always a very well written and informative article for someone who is your student in Social CRM.
I liked your bank`s example and the fact that technology is an enabler for CRM as a business strategy.
However the technology as an enabler can make an organisation implement the CRM in a better way.

Consider that you decided to go to the fourth bank.
You were greeted by a staff member and a professional had a meeting with you answering all your questions. As she did that, she searched for you on Facebook/Linkedin and got to know you better. Your questions were answered keeping in mind that you are a SAP Consultant, who travels widely and has certain likes and dislikes. The banks offers you the bundle of services you need.
You come home and see that a few of your friends like the bank and have left a +ve feedback.

Your decision is probably to go with Bank4.

Reason : Their Social CRM systems made them more competitive that Bank3. Bank 3 was good but Social CRM system at Bank 4 gave them the edge.

In my mind to compete in today’s challenging markets, technology as an enabler of a CRM / Social CRM is mandatory solution.

Hi Varun, thanks for the flowers 🙂

agreed. Technology is one of the things that can make the implementation of a strategy efficient, can actually give an edge – if applied appropriately.

In this particular case your point is good but probably not too important as we took the decision of informing the banks early about what Nicole is doing and what we think she needs when making up the appointment. The relevant likes and dislikes are not on the web (at least I hope).

I think that all three banks have a CRM strategy of sorts. This strategy starts with the corporate culture and needs the people who are interacting with other people in the branches. This is working (without a system) in two of three, with the third one, and that I didn’t mention in the post, being recommended to us as a bank that is good on relationships. The same person referred to bank two as the one having the leading technology in NZ (friend of the family, former long time banker, now mortgage broker, so pretty credible in the first instance).

So while I agree that it would have been a real positive surprise to see them using data that is available on us – and published by us it comes back to the strategy and its implementation. Systems are needed, but they help only if the strategy is there and lived by the people. One of the banks in this example just doesn’t cut it.

Hi Mark,

always great to read your comments. Thanks a heap!

I think all three banks have a CRM strategy of sorts. The strategies seem to base in their cultures, as exhibited by the behaviours of their employees – the ones we interacted with (or not …). I do not think that they have a formalized SCRM strategy. Also none of the banks used elaborate systems to get us on board. Everything was human interaction, which supports the point that systems are not necessary to have CRM or to even appear/be(?) social. It is first about people on both ends. CRM as a strategy is inherently social in itself (that is one of the reasons why I think that we in ~ 3 years will no .

I failed to mention that bank three was actually recommended to us by a former banker and nowadays mortgage broker as the bank in NZ that is strong on relationships, with bank 2 (the one that had our accounts) being probably the technologically most advanced bank in NZ. It also would have been a really good move of the banks if they would have asked us to tap into their relevant customer base to get a more balanced opinion (given that they weren’t only providing their reference customers …).

I think you are right with the opportunities for the banks that you see. But: Do you see any bank that is that anywhere near realizing this on a corporate level? I don’t. Not that I wished they were … Consumers and (smaller) companies are still very dependent on banks, which they interpret as a comfortable position. So there is still lots of opportunity for people like us 🙂

Interesting discussion.

Theory: CRM and Social CRM don’t need technology.

Reality: CRM and Social CRM are built around enabling tools.

Everyone in business “does” CRM if they have marketing, sales or customer service. Even a very small business with no technology can claim to do CRM.

Likewise, any business that socalizes with customers (golf outings, anyone?) can be said to “do” Social CRM.

But is that really what we’re talking about here?

In today’s modern world, the term CRM generally mean technology-enabled relationship management — what Gartner initially called TERM. Although CRM stuck as the industry term and some (me included) tried to expand it to more of a business approach, tech is still at the core of what CRM is about in the real world.

And Social CRM is an extension of TERM to include social media/tools. Ideally it *should* include actually being social, but let’s face it, most companies are going to use social to keep doing what they’ve been doing, not to engage and collaborate with customers/prospects.

As I’ve said elsewhere numerous times, I think people should say “CRM strategy” or “Social CRM strategy” to avoid being confused with the tech that everyone seems to want to talk about.

My interview with Graham can be found here.

Hi Bob,

indeed an interesting discussion and I would agree that nowadays the term CRM is often used to describe the technology, and not the business strategy behind it – unluckily. I also agree that the topic is somewhat artificial / hypothetic as in the larger companies that we see (and target, being consultants, ISVs, or similar) we are often looking at implementing systems, at times even in companies that are not ready for having a system, because of lacking strategy, mindset, even structure.

In contrast to you I tend to think that people should say “CRM system” or “Social CRM system” if they talk about the technology – and “CRM” or “Social CRM”, when it comes to the strategy. Another reason for my saying that is that the discussion then turns more into a discussion about solutions for challenges facing companies and not one about products.

Ultimately: It does not need a CRM or SCRM system for doing CRM and/or social CRM. If the company is not “doing” CRM the system is just an additional cost factor. Same for social CRM. Coming from the pure system angle and not from a business point of view caused many CRM implementations to fail. We will see a repetition for SCRM if companies “keep doing what they’ve been doing, not to engage and collaborate with customers/prospects”

That would be a pity.

Hi Bob,

The issue with TERM is that is not about using technology in general, but rather the translation of certain practices into software. This has been evident in for example SFA – capture the contact details and transaction history, take him thru the sales funnel etc. – exactly the same way that can be found in 90% of competing software products.

The paradigm shift could be in the way we integrate different lead nurturing and sales models into these software products- including the ‘social’ interactions and tracking, to accomodate for alternative approaches to go to market. I’ll write something up in more details later.

What do you think?

Cheers,
Mark

Completely agree Using “CRM” all by itself is bound to lead to confusion.

“CRM System” or “Social CRM System” should be used when talking about the tech. I could also live with “software” or even “solution” because these words mean tech.

These days, we should all recognize the power (wisdom, even) of the crowd. A Google search of “CRM” leads to a page full of ads and organic listings for vendors.

At the top is Wikipedia with an crowd-authored entry that starts this way…

“Customer relationship management (CRM) is a widely-implemented strategy for managing a company's interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes…”

So, sure, CRM is a strategy. But it’s pretty clear that what CRM means is a strategy to use technology to manage/automate customer information.

Maybe it’s my imagination, but I think vendors are doing a better job of using “CRM software” or “CRM solution” these days. I think consultants should do likewise and use “CRM strategy” or “CRM plan.”

Thanks again for a great post.

Mark, you’re absolutely right. Most enterprise software is designed to automate/improve existing processes, not transform them. That’s the low-hanging fruit in companies and the best way to make money for vendors.

“Technology enabling” something means doing the same thing better/faster. Can’t complain about that, can we?

But with Social CRM (or Sales 2.0), the opportunity is to do something more innovative. Yet most of what I’m seeing is some form of TERM — layering on social to make an incremental improvement in an existing marketing, selling or service process. It’s time for some new ideas that better fit the world of Buying 2.0. Look forward to reading your thoughts soon!

Hi Mark

I have been consulting with large, profitable corporations for almost 25 years. In the dozens of companies I have worked during this time only a handful had what would pass muster for a ‘Customer Strategy’. At best, the rest only had what you would describe as a ‘Strategic Intent’, or at worst, a series of recurring budgets that allocated resources and allowed some flexibility to divert resources to new areas.

We harp-on about the need for a Customer Strategy to guide resource allocation. But do companies really need one? All those large, profitable corporations that do quite nicely without one suggests that they don’t.

Graham Hill
@grahamhill

@Thomas

Thanks for listening to the interview and/or reading the transcript. As you point out, our discussion was very wide ranging.

Ignoring the Wikipedia definitions of CRM and SCRM, (they are so politicised they have become almost meaningless), what CRM and SCRM clearly have in common is the need to deliver mutual value to customers and to companies.

CRM has historically been skewed towards companies, aided and abetted by data, analytics and marketing technology. Technology is clearly an enabler, but all the independent research suggests that you only need a MINIMUM of technology to gain most of the available benefits from it. Most CRM implementations have suffered because too much attention was lavished on the latest technology and not enough on all the other complementary factors such as data, processes, job roles, work climate and culture that you need to get the most out of the technology enabler. Once you get outside individual departments, more technology often leads to less business return.

Customers have long felt short-changed by CRM-wielding companies' greed. Just look at the poor satisfaction scores for data-rich companies like telcos, utilities, banks and airlines. Who doesn't have a teeth-grinding horror story to tell about their incompetence or greed? SCRM arose in part to redress the balance. It is harder to be incompetent, or greedy, or not to fulfil your side of the bargain when every instance can quickly find itself on Twitter, YouTube and the BBC. And heaven help you if you should break somebody's guitar.

The single most important thing to take away from the interview with Bob is that companies SHOULD experiment with Social Media to learn how to better engage with customers. They SHOULD experiment with the minimum amount of Social Technology to learn how to better engage with customers. And when they have done that, they SHOULD start experimenting with value co-creation to provide a better foundation for customer engagement, referral and profitability.
Value co-creation provides a tried and tested approach to understand who is involved in creating value, what each of them wants, at which touchpoints they come together to co-create value, what resources they need to bring to the touchpoints to do that, which different touchpoints are used over the end-to-end 'customer journey', and how value and resources flow between the companies, customers and 3rd parties over the journey. Once you understand the value network and how it co-creates value, you are uniquely placed to identify the right interventions to improve it in a way that co-creates even more value.

The challenge we have now is that companies are making the same old mistakes with SCRM that they did with CRM. They are throwing too much new technology at the opportunity before they know what is required to take advantage of it. And they are doing it in an inside-out way that delivers little value to customers. We know where that leads. It should come as no surprise that Social Media fatigue has already started to set in.

As German philosopher Hagel said, "The only thing we learn from history is that we learn nothing from history". We only have ourselves to blame if this leads to the failure of SCRM.

Graham Hill
@Twitter

Hi Bob,

I would agree that there is a tendency to simplify CRM towards using “technology to manage/automate customer information”.

Maybe I am fighting windmills here but I think that this is a degeneration of what CRM really is: A business strategy to put the customer, customer needs and the relations that the customer has with the business at the centre of the business, instead of the business itself or it’s products/services.

Now executing on this strategy may be hard using current software systems, this is true – but this is one area where developers, consultants, ISV’s and software vendors are working upon (at least some).

Hi Graham,

is it fair to say that the companies that are doing really well without a customer strategy are in industries where companies managed to make customers really dependent on themselves, i.e. where the difference in height of eye between company and customer is particularly high? Below you point to telcos, utilities, banks, airlines. For these, I guess this is true.

Thomas

Hi Graham,

I agree with the challenge and the problem analysis, and although I still struggle with getting a clear vision of co-creation I buy in to the idea that it is mutually beneficial if companies and customers are in a dialogue when it comes to the development of solutions to problems at hand (one could also say products but I now wanted to formulate an outside-in approach).

Companies are successful if they deliver value to their customers; customers must perceive the value they get as being higher than the value they give away (usually a number of Dollars, Euros, …).

Now, what do I as a customer perceive as value?
– It is valuable it helps me overcoming a problem (need to get a nail into the wall then a hammer is of value)
– I am getting happier (I might have an emotional connection to Apple as a brand, so I just need to have a Macbook, iPhone, iPad – full disclosure, I have none of these devices)
– …

Now, I trade something in to get this value. What I am asking me is why should I (as a consumer, that I am) invest more resources in order to get a product developed, that then probably is even more expensive than something that might be already there?

Maybe I am just missing a couple of examples.

Thomas

Hi Thomas

In none of the examples I quoted are customers dependent upon the companies. Au contraire, in all of the examples there is considerable competition for customers. Churn rates approaching 30% in some of them attest to that. Customers have a large range of choices and today, comparison websites to help make them. So customers could not be considered to be either locked in or at an informational disadvantage.

What I think it is is that the Customer Strategy Process is simply too slow and cumbersome to be of much use today. The Process is mostly based around a, frankly, out-of-date Porterian model of defending a competitive position within an industry, rather than one based on using resources adaptively to earn the best returns, collaborating with partners and customers, and continuously adaptating tactics to match emergent opprtunities. The result is that the Customer Strategy Process tends to produce monolithic documents that sit on a management shelf gathering dust, as they are too difficult to implement and are out of date almost as quickly as they are written.

It is time to change how we do the Customer Strategy Process. Today’s model is obsolete. And no longer delivers the goods. What do you think will replace it?

Graham Hill
@grahamhill

Graham –

Good perspective on the downsides of sharing ideas. I want to examine this comment:

“Why would you give away what might turn out to be your next startup, to a company too lazy to create its own ideas and too greedy to share any of the benefits with you?”

My response?

There are many people with good ideas, but for whom entrepreneurship may not be an option. They may not be comfortable with that level of personal financial risk. They may have families where career stability is a must. They may have job situations they love, and aren't interested in dropping out. They may not have the skills and connections to move their idea forward by themselves, and lack others to help.

By all means, go create a company if you’ve got the next great idea, and the financial situation to undertake the risk. That is the lifeblood of dynamics economies. Do realize that most startups don’t make it.

However, I would expand the landscape of *who* has valuable ideas. On a planet of almost 7 billion people, there is much potential to find great ideas from people who are not actually interested in starting their own companies.

Rather than create competitors, they are introducing the jobs they want fulfilled.

I do agree that companies owe something back to the customers who provide the ideas that drive material improvements in results. It wouldn’t cost them much relative to the gain, but would be quite valuable in maintaining the health and interest in the customer community to participate.

Hutch

Hi Thomas

This is turning into a fine, multi-threaded conversation.

There is a lot of confusion about co-design, e.g. crowdsourcing, and value co-creation.

Co-design is where a company harvests the ideas, opinions and preferences of customers to create new or improved products, services or experiences. Dell’s Ideastorm and Starbucks’ MyStarbucksIdea crowdsourcing programmes are two examples. This is CO-CREATION LITE as once the ideas have been gathered, commented on and voted on, the company continues to use them exactly as if they had had them itself. The customer plays no further role in their development, other than in buying the new or improved product. And it is all about the company, not about customers. In fact, practically 100% of the benefits go to the company; there is little or nothing in it for customers other than the kudos in taking part (i.e. emotional and/or social jobs to be done).

There is a BACKLASH starting against crowdsourcing’s one-sidedness. If you look at the T&Cs of most crowdsourcing sites, it is clear that once you provide an idea, comment or vote, all the intellectual property rights are transferred from you to the company. Your idea instantly becomes their potentially next best selling product. This is just a Business 1.0 model disguised as a Business 2.0 model. It’s all about the company, not about you. Why would you give away what might turn out to be your next startup, to a company too lazy to create its own ideas and too greedy to share any of the benefits with you? I wouldn't and I don't.

In contrast to co-design, VALUE CO-CREATION is about understanding how value flows within the business ecosystem. And then identifying where the right interventions will allow each of those involved to co-create more of what they value. Together. This requires identifying the parties involved in creating value, what each of them values, at which touchpoints they come together to co-create value, what resources they need to bring to the touchpoints to do that, how different touchpoints combine to create an end-to-end 'customer journey', and how value and resources flow between the parties over the journey. Once you understand the value network and how it co-creates value, you are uniquely placed to identify the right interventions to improve it in a way that co-creates even more value. For each of the parties involved.

If CRM was about doing things TO customers because you could, and Customer Experience Management was about doing things FOR customers because they expect it, then value co-creation is about doing things WITH customers because that is the only way everyone gets to win.

Graham Hill
@grahamhill

Hi Hutch

I agree with you, in principle.

Most people with good ideas are not entrepreneurs and don’t want to become entrepreneurs either. They are happy with their current jobs. Short of using one of the many entrepreneurial idea curation sites springing up, what else can they do with their ideas but give them to companies, in the hope that they will be implemented and ultimately, will make their lives easier, cheaper or better in the future. Crowdsourcers like Dell and Starbucks play on this ENTREPRENEURIAL DEFICIT.

They have also learned to make it easier for customers to contribute their ideas using GAMIFICATION principles to make giving ideas, commenting on others’ ideas and scoring them seem like a fun-filled game. Who doesn’t like to play games? Except that it isn’t a game. Its big business. And as is often the case, all the real benefits accrue to the company and very few to the customer.

I have no problem with companies asking customers for ideas. Even mighty corporations like P&G only have a tiny fraction of the staff they need to come up with all the best ideas themself. Open innovation makes a great deal of sense. What I do have a problem with is the ONE-SIDEDNESS of the whole thing. That companies take all the benefits from customer’s good ideas and provide nothing of real value in return, except for a warm feeling from having contributed the idea that saved Dell $100,000 of cost savings, or made Starbucks an additional $200,000 in profit.

If companies want customers to co-ideate with them, and they should, there has to be more in it for customers than playing a fun game or just warm feelings. It's time to put the CO into VALUE CO-CREATION

Graham Hill
@grahamhill