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Social CRM Strategy Shift

 

Social CRM presents some pretty significant changes and shifts, organizationally, technically, and strategically for companies, but it isn’t for nothing. The  business environment is changing.

For example, the game industry has been a great lab for a new business model that  is intermeshed with contemporary social CRM and customer engagement strategies. You can’t have one without the other, though you can build toward either or both incrementally.

There are some distinct characteristics that define this model:

  •  The lines between producer and consumer are blurred. The effort is cooperative and the interest in making the products “consumable” is mutual. For example,   Day of Defeat game, a multiplayer add-on to Valve Software bestselling first-person shooter (FPS) game, Half-Life. This wasn’t a  Valve original product. Day of Defeat was a mod and the company supported it by distributing the updates as if it were a company product. The company and the customer were operating in conjunction with each other.
  •  The company moves from being the producer or distributor of goods or the provider of services to the aggregator of products, services, tools, and experiences to allow the customer to meet the needs of their personal agenda, or in bizbuzz, their personal value chain. This implies that what the company packages is actually a solution set, though not in the classic sense. For example, with the release of Half Life 2, not only did  Valve release the game itself, but the source code, the tools to author the modifications, and a page where you could download the best practices that were culled from the hundreds of mods the game had engendered. You had all you needed to tailor your own experience if you were so inclined.
  •  The users and producers are engaged in the co-creation of value. The game companies sell millions of copies of the game, and the gamers are able to make the game into something that has value to them—often emotional and always replayable without buying a new game.
  •  The users have the tools to configure and/or customize their personal experience with the product. This is part of the core difference with the older business model. The traditional model treats products and services as items for purchase. The new model incorporates configuration tools as something available for the customer’s use.
  •  The users and producers encourage each other and mutually define the future directions of the specific products. The game industry sponsors conferences for modders, and will typically invite influential modders and other key gamers into corporate strategy sessions. Blizzard, which holds an annual conference attracting as many as 6000 gamers, will wine and dine key gamers at the conference and let them in on future plans, in return for advice. The users and producers take advantage of the most advanced methods of communication within the global matrix (e.g., user communities on the Web). Transparency is the rule, not the exception.
  •  Even though the users are working on the product changes for their own experience, the changes to the product have universal and commercial value and drive the sales of the product. Valve Software’s Half Life 2 is one of the most modified games in history. One mod, Counterstrike, was so popular that Valve acquired it and by 2006, it had sold over 18 million copies, was being played on 36,000 servers as a multiplayer game 24/7, and had over 4.5 billion minutes a month being played. Not a commercial game—a mod. This game has since been superseded by World of Warcraft—you know, the one that you’re playing, but the mod was the most successful in gamer history.
  •  The producer is not just the publisher/manufacturer but operates as an aggregator for the user’s creative interactivity. The company provides the products, services, tools, and experiences that allow the customer to personalize their interactions with the company in the way they want them.
  •  The user is not just a purchaser but also an advocate of the experience around the product and, by extension, the company. The existence of multiple communities and sites associated with modders who are constantly chattering is a perfect example of this. Firaxis, the publisher of Sid Meier’s Civilization IV, has hundreds of mods—some on sites that are for the mods themselves (such as www.civfanatics.com), some that are the subjects of threaded discussions on the main Civilization IV website.
  •  The companies and the customers jointly create and provide the tools to make this collaboration successful. The customers often create the tools. For example, the Rome: Total Realism team developed their own skinning tools to make the uniforms of the varying factions in the game accurate.
  •  The customization effort itself, not just the result, is part of the experience, thus enhancing the producer/consumer collaboration all the more. Most of the more complex mods are team efforts, and the collaboration itself and the sharing of the mod with the public is as important as the results of the effort.
  •  The overall effort involves a corporate culture that is defined by the voice of the customer first. The difference between John Carmack or Valve Software versus Sony.
  •  The model uses and provides the most advanced technological tools for these globally matriced communities that are interactive and real time. Many of the mod teams have never met their fellow developers. They are successful because all tools, code, and communications media are available via the Web in either real time or as threaded discussions accessible on demand, despite the teams being spread across multiple nations.
  •  The company and the customer each get value in ways that  are appropriate and satisfying to them.  the company  and the customer are participating jointly in creating something mutually beneficial. Revenue or profit for the company; some form of emotional satisfaction for the customer.
  •  The company’s revenues increase accordingly, as does their profitability, given that their customers are doing something freely—and for free. That remains the most astonishing facet of this business model. The customer has no problem doing this for free because they see it as a benefit to them.

Social CRM strategy
Customer strategies just a few years ago were primarily based around internal factors. What kind of processes do we need to allow us to reach out to the customer more often and with greater effectiveness? What kind of tools do we need to make sure we have an accurate record of our individual customers’ activities so we can develop programs or campaigns that will be optimal for varying groups or, if really sophisticated, individuals? What do we do to increase the customer’s commitment to us? Transactional strategies ruled the day.   the strategies have moved from transactional to interactional. That means the involvement of customers isn’t just important—it’s vital to how you improve customer commitment and thus improve your acquisition and retention of customers.

At its broadest, a Social CRM strategy is one focused around customer engagement. It differs from more traditional CRM strategies because the primary concern is not managing relationships that are based on understanding a customer’s transaction history and behavior, but instead is founded on treating the customer as a partner who will, in return for benefits of some kind, provide value to your company.
CRM 1.0 strategy was operational and tactical but was at its core a strategy for actually managing corporate transactions with customers— and at its best a strategy for managing the interactions with customers.
The software associated with it was based on process efficiencies and interaction effectiveness. Pretty much the best you could expect from it was a greater knowledge of a customer via the 360-degree view of the single customer—which still is in woeful short supply at the companies that claimed CRM in their portfolios. A McKinsey study placed it at 38 percent. On the other hand, the   Speed Trap/Econsultancy Social CRM study   found that 70 percent of their respondents had at least centralized storage for customer data—which isn’t the same as a single customer record but at least shows some promise of progress.
But that was CRM 1.0. Social CRM is widely recognized as a strategy for encouraging the customer to participate with your company in making decisions that affect the particular customer. What it does is take CRM 1.0 and extend it far beyond its original bounds.

Social CRM as a strategy (less so as a technology) is actually maturing as more and more companies are adopting at least some facets of it. But to do it successfully, the implications need to be clearly recognized by the companies embarking on developing the strategy. For example, it assumes the existence of a social customer who controls their own interactions with other customers and with the company, which CRM 1.0 strategy did not. In fact, the fundamental idea behind

Social CRM strategy is that the customer will engage with the company in a way that provides mutually beneficial value, rather than a  strategy for the optimal extraction of value from a customer in exchange for, at best, a delightful experience. Not that there’s anything wrong with that—it just limits what the customer and the company can do.

In a Social CRM strategy, the company’s skin in the game is to be honest and straightforward with the customer (authenticity is the buzzword du jour), to be open with the customer and reveal more of the inner workings of the company to the customer so that they have the information they need to make intelligent decisions on how they are going to interact with the company—in the context of their personal agenda.

This doesn’t mean giving away every secret the company has. Transparency doesn’t mean slutty behavior.  Suffice it to say, what it means for strategy is at least an understanding that the customer needs to know more than they have traditionally in order to have a great enough personalized experience to want to continue to do business with you—at a minimum. Optimally, your KPIs will be around advocacy, not just retention. But we’ll see about that, won’t we?

The Social CRM definition from the CRM 2.0 wiki   bears repeating:
Social CRM is a philosophy and a business strategy, supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.

Increasingly, companies are incorporating customer engagement strategy into their efforts to develop customer value. There are an increasing number of companies, large, medium and small, using blogs, providing podcasts (both audio and video), developing communities, and participating in communities not built by them, such as Facebook or more specific communities that cater to the company’s interests. What does that mean? It’s recognition that the customer is now not only the owner of the business ecosystem but is controlling the chatter going on. What they don’t control is the traffic flow—and that’s where engagement comes in.

Social CRM Benefits to Each Department
 Benefits for Human Resources: Using the employee base to recruit with a deeper understanding of candidates and ecosystem needs
Benefits for Marketing: Obtaining information from business development to produce more meaningful marketing
Benefits for Product Development: Working with the marketing team to harness customer interactions within the community to discover new product opportunities
Benefits for Business Development: Using information obtained from marketing and product development to understand opportunities for further engagement of prospects
Benefits for Customer Service: Tapping into employee- and customer-generated solutions within the community and seizing escalated/unanswered questions to provide support to community members using internal information

The Voice of the Customer
The first element leading to true customer engagement is always identifying and integrating the voice of the customer. This does not mean making presumptions for those customers. This means actively involving them in helping you know them. Unfortunately, that’s always in theory, since most companies don’t do that.
In order to develop a customer strategy, knowledge of your customer is primo on the agenda. That’s the way Social CRM rolls.
Who Is Your Customer?
Knowing who your customer is sounds like a piece of cake, doesn’t it? But, in truth, it isn’t. Who your customer is can change in a dynamic business environment. How you perceive your customer—even if it’s the same people—can also change, which can complicate an already complicated matter.
For example, how many on the list below have you thought about as possible customers?

  •  Paying clients
  •  Sales consultants
  •  Management
  •  Suppliers
  •  Business partners
  •  Independent agents

From your standpoint, the first one—the paying client—is what you ordinarily think of as your customer. But if you think it through, in a B2C environment that paying client, the individual consumer, is the customer that we’re talking about. In a B2B environment, that paying client can be the senior management of another company. But you have to engage not only the senior management as customers but those who influence the senior management.

In your own company, if you don’t treat your sales consultants or suppliers as customers, it can cause damage that will impact your ability to sell to those potentially paying consumers.
But it doesn’t stop with just the recognition of new categories of customers. It also means that your perception of customers can vary due toa variety of fluid conditions. For example the social customer demands treatment as a partner, not just a paying customer, and that changes how you interact with that customer.

There are a huge variety of factors that can affect your customers’ interactions with you and your response to them. Among them:

  •  Business environment changes
  •  Customer behavior changes to the individual level
  •  Business model changes
  •  Product line changes
  •  Technology advances
  •  Social climate changes
  •  Ad nauseam, ad infinitum

Let’s look at social climate changes.  That was a change in the social climate that also triggered a change in individual expectations and the attitudes and behaviors associated with that change. This new direction for trust came simultaneously with advances in technology, particular web-based and particularly around personalized communication that gave peers the ability to interact with each other 24/7 and in real time.
That led to a very smart presidential candidate’s staff tapping into a specific “customer group” that was particularly sensitive to both the new form of trust and the changes in technology that were dynamically being utilized following 2004. That group, Gen Y, and other websavvy groups were a primary force responsible for Barack Obama’s presidential victory in 2008. Yet, in 2005, did you even vaguely fathom that this was possible? I doubt it. Not only did you barely remember who Barack Obama was at all—unless you had seen him speak in 2004 at the Democratic convention—but you didn’t know that this kind of customer could lead a social change that dramatically changed the perception of the United States once again.

Developing a Strategic Map
There are some caveats and assumptions that you have to operate under when it comes to customer strategy. If the strategy doesn’t benefit those executing it, you might as well chuck it. This may sound like a “duh” moment, but in fact, the primary reason that CRM fails, according to studies done by pretty much every 800-pound or less gorilla analyst firm, is because of the failure to involve users from the beginning. The most popular study, done by AMR Research as far back as 2004, claimed 47 percent of the failures are due to that lack of upfront involvement.

What that means is that when developing the strategy you have to consider personal values and concerns. They have to be part of the planning you’re doing. Don’t underestimate the importance of this.
Why? Because human beings are self-interested. This isn’t a bad thing. Self-interested doesn’t mean selfish. It simply means you have an agenda that you intend to fulfill to your satisfaction throughout your life—and that extends to your work, too.

Personal benefits to the stakeholders who will be responsible for execution of the strategy or those who will be impacted by the strategy have to be considered when developing the business objectives.
While ultimately you won’t please everyone and will most likely lose even some highly valued employees to dissatisfaction, you can attempt to incorporate the idea that you are creating a “community of self interest.”
On a practical level that can include:

  •  Incentives to make improvement in customer experience “worth it” to other customer groups
  •  Changes in compensation for employees who focus on customer satisfaction
  •  Supplier premiums for beating the baseline guarantees of SLAs
  •  Partner rewards for customer satisfaction to be applied for  benefits
  •  Tools for the customer to not only manage but create their own experiences

But to include these things in your plans means to first be able to identify who those stakeholders are.

Choosing Stakeholders and Customers
In retrospect, book burnings in the 15th century were a historic error. In retrospect, the strategy used by Vice Admiral Zinovi Rozhestvensky at the naval battle of Tsushima during the Russo-Japanese War of 1904–05 was an error of historic proportion. Choosing stakeholders solely from senior management is also a historic error, just of a lesser magnitude.
Stakeholders in a CRM strategy and program can be senior management, but may also encompass mid-level managers, senior staff, power users, some junior staff, business partners, suppliers, and customers. After all, who has more of a stake in this than the customers? But that said, choosing from all of these can be a bit unwieldy, and a stakeholders team of 5,000 is probably a bit much. Kidding. About the number, not the clumsiness.
Since other stakeholders are necessary for the success of CRM initiatives, it pays to be selective on who is recruited so that you can have a total group that can be effective, yet represents the important constituencies that exist.

Natural leaders
One group to ferret out and solicit has little to do with formal titles bestowed by the management hierarchies, but instead is those natural leaders who exist at every company regardless of size. You know them. They are the people who are the “mom” or “dad” of the department—always willing to listen to the troubles of their fellow employees. They are the power users you ask to fix your computer because you don’t want to deal with IT and they know enough to do it—for the most part. They are Jack on the TV show Lost.
Essentially, these are peers who, for one reason or another, have risen through the ranks and are trusted by their fellow employees. Typically, while they hold no particular title within the company, they command the respect and the loyalty of specific groups of fellow employees. When developing a CRM initiative, it’s important to find these natural leaders and select those who are able to serve on the CRM stakeholding team.
This serves two purposes. First, they are trusted peers who will ably represent the “constituency” that trusts them and the constituency will feel represented. Second, they are the best evangelists back to their constituents as the strategy evolves and is put into action.

Customer advisory Committee (CaC)
Customers need to be involved in the development of the Social CRM strategy, since the strategy is being developed to optimize impact on them.
In order to hear their voice, creating a customer advisory committee is a must. Typically, customer advisory committees are in the world of B2B—because the customers are companies that are engaged in processes that are serviced by the company—and they have a stake in the creation of the tools and solutions that enhance those processes. It’s corporate to corporate. That is typical. In fact, one B2C customer of mine attended a conference on customer advisory committees in 2008 that had about 100 attendees, and he was the only one from a B2C company there. He was looked at with a good deal of curiosity.

Don’t shy away from a B2C customer advisory committee. The consumer knows what they want and recruiting them to help you figure out what that means strategically for you is something you should see as an imperative in your planning of the strategy.
Some considerations in recruiting a CAC:

  •  Consider doing a mailing to a selected segment of your customer lists that have shown something more than a passive interest in you. If possible, have the mailing give the customer a couple of options such as becoming a member of the CAC or being part of a community—to be planned—that would have less responsibilities than the CAC.
  •  Scour the Web for those customers who vocally love you or hate you and recruit them to the CAC. Yes, you heard me. Those who hate you too. They are passionate for a reason and if you can turn the frustration into a productive channel, it can be hugelybeneficial because they are typically intelligent, savvy customers who have ideas. They also become great advocates—the passion transfers to the plus side of the equation.
  •  Make sure you have a well thought out (and spelled out in writing) purpose and make the amount and type of time commitment clear, such as one in-person meeting and a quarterly phone call.
  •  Make sure senior management is well represented during the actual CAC meetings.
  •  Make sure that the CAC suggestions are acted upon and reported back to the CAC.
  •  If you have an enterprise social network or community, give the CAC official visibility in that community. Reputation matters. Validation does too.
  •  Make sure the members of the CAC are compensated in some appropriate way. Their time is valuable.

Mission and Vision
Once you’ve chosen your stakeholders, putting together a corporate mission and vision statement is the next step. “But,” you say with a puzzled look and a furrowed brow, “we have a mission and vision statement.”
It doesn’t matter. The idea is that you are developing a customercentric corporate strategy focused around an objective of customer engagement, which is not the likely purpose that your original mission and vision statements were created for. Consequently, by developing new mission and vision statements, you’ll be able to see the gaps that are in the older ones. Then you’ll understand what you have to change at the company that much better.
The mission and vision statements are your anchors for the entire strategy. They are short versions of your entire strategy and programs. Marketing messages are aligned with the mission and vision statements. They aren’t marketing messages.

Objectives/ROI
What kind of return are you looking for? Are you looking for a strategic win (increased Net Promoter Scores across the company or 5 percent increase in market share over a twoyear period) or a tactical victory (free up two hours per week per salesperson)?
The one thing that is tough here is that the objectives not only vary from company to company, so there’s no real template, but they can be intangible or not all that easily measurable. For example, how do you measure what it takes to be more “engaged” with the customer?
Business Case Including Costs/TCO
This is the Episode Where You Justified Spending Money on CRM to the Boss. Essentially, this is the “why” we are doing this. Because CRM can  be hard to quantify, this particular segment has to be as crisp as an overcooked potato chip. In 2007, Gartner Group research vice president and analyst Michael Smith took an expansive view and at a high level defined eight elements of the business case:
1. Develop a CRM strategy to support your business strategy
2. Select business metrics to support your CRM strategy
3. Establish a baseline for these selected metrics before the project begins, and if possible, benchmark performance against industry peers
4. Describe the capabilities of the CRM application
5. Negotiate targeted improvements using the baseline metrics
6. Convert the targeted improvements into financial results
7. Develop the TCO
8. Calculate the ROI

 
Key Performance Indicators (KPIs)
KPIs are perhaps the best way to account for how a person or program or project or process is doing against expectations. They are what they sound like—a measurement that is designed to give someone a numerical standard to adhere to.
In order to establish KPIs, it’s important to establish performance objectives for each department or sector of the business. Once those objectives are set, then the KPIs—which really are nothing more than the measurements of those objectives—can be established.
KPIs can be strategic or tactical. For example, a strategic KPI would be some rate of external innovation, such as Proctor & Gamble’s intention that 50 percent of all technology the company develops will come from outside sources by 2010.
An example of a tactical KPI would be that the time of replacement of materials from the point of sale must be reduced to one day.
CRM-related KPIs that you might run across—both tactical and strategic—are:

  •  Revenue per salesperson or agency (sales)
  •  Ratio of administrative to street time for salesperson (sales)
  •  Customer lifetime value (CLV) (sales)
  •  Response rate percentage of increase for marketing campaigns (marketing)
  •  Queue time reduction (customer service)
  •  Increased up-selling and cross-selling opportunities over time (customer service, sales)
  •   Increased percentage of positive sentiment on social channels
  •  Increased engagement percentage through chosen social networks

Framing your success will go a long way to actually creating success for your Social CRM strategy. After setting up your department goals and objectives, take the time to sit down and set up your KPIs and measurement processes to make sure that you and your team stay on track to that success through the lifetime of your strategy.
Open communications on the nature of the strategy and its implementation to employees, customers, partners, and suppliers—in other words, those parties affected by the strategy—go a long way to making it much more adaptable than it would otherwise be.
Organizational change efforts are essential to CRM initiatives because how the company is going to function and the way that employees and customers interact will be successful only if the changes that become necessary are, by the end, not resisted. That means that open communications play a role in how well the organizational change goes.

 

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