Social CRM - evolution or revolution?

CRM is going Social. But isn't Social CRM just CRM done across social networks?

[pause] [wait for the flames]

The answer if you listen to the promoters of S-CRM is (quite vehemently) no, Social CRM is not a channel. It is not about using social networks to execute standard CRM practices.

In fact, in an interesting blog post by Wim Rampen, he makes some really excellent points about why Social CRM is simply not a channel extension of CRM - another way to speak customers - and instead has many unique properties that make it a more interactive, two way dialogue.

Whilst I get all of that - and largely agree, I guess my problem isn't with the Social aspect of S-CRM, it's with the CRM aspect.

If marketing started out as a way of focusing on the benefit the product provided, rather than on the product itself (so called Marketing Myopia) then CRM was a step forward again, focusing instead on the customer that was receiving the benefit and not just on the benefit itself. All customers weren't equal and so knowing which product to sell, what benefits to highlight, at what quantity and at what price became the mantra.

The buzz words were all about personalisation or 1 to 1 marketing - delivering the right message, to the right person, at the right time.

If only we could anticipate what you wanted to buy and nip in there quickly enough on a channel you were likely to read then we'd make a sale. You'd be happy as you got something you wanted and we'd be happy as we had sold it to you.

I think times are moving on though and if the focus on the product rather than the benefit was essentially Marketing Myopia - a blinkered view of the business a company was in - then focusing on the customer is potentially another blinkered view - almost a Social Myopia - in that it assumes that customers fit into a single neat box. There may be many different boxes, but each customer fits into each box.

This however is just not true and Will makes a very good point in his blog when he says:-

If there is one thing we (should) learn from emergent on-line communities it is that people join these communities to perform a certain job. This can be a social job, functional job or emotional jobs, mostly formed around a shared interest. It is these jobs & interests that bond the people in a community.

What this suggests (and it seems obvious really) is that it is not just about a customer segment, but almost customer personalities - or customer communities as Will defines them.

The problem with this thinking though is that if you begin to segment customers not just by social-demographic measures or exhibited behaviours but instead by community, a customer no longer fits into a neat box. I may be part of many communities - whether they're based around a passion like football, an interest like gardening or a function like my job. Even more complicated, these communities or personalities may vary by time.

My needs when doing the weekly shopping with a large shopping trolley are very different to when I'm walking the aisles on a Saturday evening with a basket - browsing DVDs, wine and ready cooked meals. I'm the same customer, reading the same newspaper, watching the same TV programmes - but I have different needs, desires and approach.

This is obviously difficult to have a view of in the physical world - but in the online world it is much easier to have a view of a persons different personalities or communities, and to interact with these at the appropriate time.

Will makes another interesting observation in a related blog when he says:-

Social Customer Relationship Management is not about managing the relationships with your Customers, it is (increasingly) about managing the knowledge-flows through the relationships of your Customers. And yes, you as a company maybe part of this eco-system of your Customers’ relationships. But please, don’t put yourself at the center of it.

I agree with this and it is why I think Social CRM is not really the right phrase - it isn't really Customer Relationship Marketing - in the traditional sense of trying to build a direct, single relationship with the customer and may be better phrased Customer Context Marketing - building numerous relationships centred around the relevant communities or personalities for a customer and being part of the conversation, not trying to own the conversation.

Whatever it's called however, it's clear that you can't simply apply existing CRM techniques in a social context. This would be similar to brands which simply "mobilised" their websites to create a mobile site - only to find it wasn't relevant to customers in the mobile context.

In the social space, context is king - it's not just the right message at the right time, but more the right message in the right context. Interestingly, a Forrester report designated 2010 as the era of Social Context based on the evolution of the Social Web with the author of the report quoted as saying:-

"The community will take charge and that's going to happen whether or not marketers or brands participate."

I think it's fair to say this also applies to the evolution of CRM - and communities and social context need to be at the heart of it. As the quote suggests, the community will take charge and if the interaction is not relevant and in context, it will be ignored.

twitter - The Swiss army knife of relationship marketing?

I'm increasingly amazed how quickly new technologies are becoming household names - in years past when I used to use Compuserve (remember that?) and ICQ, you'd never have seen them on the mainstream news, yet in recent years you can't move for updates on new online services.

Last year it was all about Facebook with news channels seeming to talk about it every other week – for 2009 however it has to be twitter - mainly driven by the antics of Stephen Fry (locked in a lift) and Jonathan Ross who are both avid tweeters and have made the service a household name. It is now starting to break out of the smaller eco-systems it has occupied and is becoming mainstream in a big way. DMNews points out that this time last year twitter was ranked at number 22 in terms of monthly web visits – it's now number 3 behind Facebook and Myspace and has just secured $35m in VC funding in the middle of one of the worst recessions.

People will have different opinions about what makes twitter great (or even be thinking "I don't get it") but I reckon the best thing about twitter is that with a maximum of 140 characters you're limited to short messages that are typically about the present – what you're doing right at this moment. You can't sit there and think about your tweet, planning the message you want to get across – its all about being open and telling it like it is – whether it's a status update, a comment on events or a rant, twitter allows you to get it off your chest - immediately.

People seem to tweet about anything and everything, with brands inevitably popping up in people's posts as well. In a recent article on Marketing Pilgrim the question was asked as to why Coca-Cola wasn't on twitter given that their brand pops up in tweets over 1000 times per day.

This got me thinking that FMCG brands like Coca-Cola do have one thing in common with tweets – and that is that the thought process for both is in the here and now – it's all about the present. People don't sit there and think about which brands they are going to buy – at best a customer will be considering categories – I need bread, milk, beer, pizza (you can see why my wife does the shopping) – but very rarely will a brand be strong enough that customers will consider it upfront. For brands the purchase decision is typically instant and emotional – when a customer is browsing a category they will pickup the brand they automatically recognise / is positioned in line of sight / is on special offer (tick all that apply).

The customer won't then give the brand a second thought until the time of consumption which may be days or even weeks later.

If you're a brand manager, you'll know this and so will be doing your best to make sure consumers are aware of and reminded of your product in the hope that when a customer does think about a purchase, your brand will benefit. Building loyalty to a brand though is all about building brand equity and isn't simply brand awareness – Woolworths was a well known brand, yet it still failed. Brand equity is about what consumers feel about a brand – consumers have to understand what it stands for, what it delivers and what makes it better than a competitor brand. If these messages aren't clear then there is no reason for continued loyalty (or initial purchase).

To make matters worse, what is important to consumers today can change over time as their tastes change, their budgets change and competitor products/communications change.

Many brands have no direct relationship with consumers and can sometimes be the last to know of these changes – seeing it first in their bottom line. In an ideal scenario brands would have a relationship with their customers, allowing easy, free flowing dialogue which enables them to understand issues a customer is having and to communicate what makes the brand special. Customer care-lines and websites have helped to open up brands to consumers, but these aren't really available when customers are thinking about a brand – either at point of purchase or consumption. What is a required is a means for consumers to feedback when they want to and when it's relevant – instantly - being able to update a brand on their thoughts – good or bad – or even to rant and to be updated when they want on their terms.

Using that most pervasive of technologies – the mobile phone – seems to be key to this, but services like SMS just don't appear to deliver.

This it seems to me is where twitter really comes into its own. Unlike SMS, twitter isn't charged per message so I'm not thinking "how much is this going to cost me", nor is it such as personal relationship – I'm fine with being a "friend" of Skittles on MySpace or Bebo but there is no way they are getting into my mobile address book.

Opt-in rates for SMS are also typically very low for brands and though this is in part due to perceived costs it is also due to the "interruptive" nature of SMS – when a message arrives I'll look it at almost immediately, but if it's not relevant you'll be sent "STOP" two seconds later. Twitter manages to solve these many issues, combining the immediacy (and increasingly availability via mobile), the "free" cost (normally hidden within overall data allowances) whilst supporting loosely coupled relationships and on-demand consumption.

Could this be the perfect communications channel? - Some brands seem to think so.

In the Telegraph it was reported that Tesco owned US brand Fresh & Easy was using twitter to inform customers and potential customers of special offers and new store openings. However, much more impressive I felt was its use of twitter to build direct dialogue. In one such exchange, a customer is reported as complaining about "sparse stock levels" in his local store, only to receive a reply highlighting "that levels tend to be a bit low at the end of the year due to shipping schedules". Now I know this won't help me with the question "where the heck are the pickled onions" when I'm in store, but answers (or simply acknowledgement) to questions like "why have you stopped stocking Silverspoon Sugar" - a personal gripe of mine last year – would be great.

So it seems to me that twitter offers brands that most elusive of things – a direct two-way relationship with consumers (see previous article of the value of customer feedback).

However I feel it could also offer so much more – the tracking of customer value.

Having followers is one thing and brands like Innocent are renowned for their blogs, newsletters and surprise and delight gifts at Christmas. The issue is a follower doesn't necessarily translate into a customer – sure it helps - but it doesn't tell you how often someone is purchasing your product, or even if they are purchasing it at all. To get this kind of insight many brands choose to run some kind of loyalty scheme or frequency marketing programme so they can get to know their customers – or at least some of them.

More recently many of the programmes I have worked on have been run using unique on-pack codes making the process more immediate though online entry – codes (and more importantly interest) are captured from the first product rather than waiting for someone to stick 20 coupons onto a form and mail it back 10 weeks later! Given that typically 1 customer redeeming can represent 50 customers who started collecting – getting to know the customer upfront can be very valuable for those brands wanting an ongoing dialogue – why talk to 10,000 redeemers when you can talk to 500,000 registrants.

Whilst on-pack collection schemes can work well for products consumed in-home as the label or packaging can be retained to be captured online later, for out of home consumption this can still prove challenging - I really don't want to have to keep an empty bottle and crisp packet (or two) in my pocket for the whole day.

Brands have tried to solve this issue by allowing customers to SMS codes in - think Coke Zone or Budbucks - however it can still be problematic for both sides. For the customer they're not sure of the cost and whether they will then be bombarded with ongoing marketing – for the brand the cost is typically absorbed so each SMS eats into margin which could have been used to reward the customer.

I really think twitter seems to provide an answer here to.

Allowing me to "tweet" my on-pack code means I'm not worried about the cost (and neither is the brand) and it removes concerns about ongoing marketing - I can read it when I want and if you send me stuff I don't want I can simply block it. Not only that but it also has the potential to provide a wider dialogue as messages not sent directly will be seen by all my followers - (@brandname 56G4K62KFIG4V) - letting all my friends and acquaintances know about my purchase (and potentially my Budweiser habit)

I've no doubt revenue models will change with twitter in the future as investors look to get some kind of return, but right now twitter is looking like the Swiss army knife of relationship marketing - providing a means for promoting offers, receiving direct response feedback, building relationships and tracking purchases.

Given the current cash-strapped climate and the phenomenal growth twitter is seeing, I think any marketer would be mad not to be looking at the benefits twitter can offer today.

PS. If you're still trying to get your head around Facebook – go check out the twitter help for a crash course

Without trust there is nothing

I was reading a new report this week from Forrester about how customers rate European banks. Across 7 different European countries, the UK stood out with the weakest scores to the question of whether customers felt their bank does what's best for them – with just 21% agreeing to this statement. Given the current credit crunch you could be forgiven for expecting this type of response as people lose faith in their banking institutions, however this is an annual survey and the results for 2008 are only marginally lower than for 2007. The report went on to discuss how customer advocacy improves a banks chances of winning new customers by word of mouth and that of those customers who think their main bank is a good customer advocate, the majority of these go on to be promoters.

Backing this research up, a recent study by Carlson Marketing of the financial services industry showed that customers with stronger relationships are 75% more likely to recommend to friends, 42% more likely to remain a customer and 57% more likely to buy additional products. As detailed within this study a key element of stronger relationships is trust which is defined as a belief that the company has the best interests of the customer at heart, and can be depended upon for respect, openness, tolerance and honesty.

Although many banks score badly in the area of trust, the UK based Nationwide Building Society has recognised this and actively looks to build trust with customers and potential customers. Its TV advertising highlights how other banks have preferential rates only for new customers – unlike Nationwide which has a fair pricing policy for all; it's ATMs highlight how there are no cash withdrawal fees and all its call centers are UK based. In 2001 the Nationwide launched an initiative to articulate the society's values to customers which included putting customers first, delivering best value and exceeding expectations. Since this time they have more than doubled their current account customers, tripled their credit card portfolio, significantly grown savings balances and doubled their annual profits. Not bad for a bank which is focusing on doing what's right for the customer, not just what's right for the bottom line.

The largest direct bank in the US, ING Direct announced recently that it will suspend foreclosure on all occupied family homes until March 2009 and suspend all evictions until January 15^th. Their CEO, Arkadi Kuhlmann is quoted as saying "We help customers buy homes with mortgages only if we believe they are suitable and affordable. Consequently, once we get customers into a home, we work hard to help them stay there. We hope this foreclosure suspension will provide some relief during the holidays to those experiencing financial hardships. I call on others in the mortgage industry to step up and help homeowners with foreclosure relief during these difficult times". Now obviously banks are not charities and if someone cannot pay for their home the bank will have to take steps at some point to recover their investment – however what ING shows is that this can be done whilst also recognizing that these are real people with real lives – this is sure to build trust as ING stands out from the crowd.

Spanish Bank Caja Navarra takes this one step further with its Civic Banking product. Unlike any other bank I've come across, Civic Banking tells you exactly how much money they make from you. Customers understand that banks are businesses and that business are there to make profits, however most customers don't actually understand how a bank makes money. Providing this clarity allows the customer to enter into an agreement with their eyes wide open, understanding what the bank is giving them and conversely what the bank is getting back. This isn't simply done however to provide transparency, the bank donates a percentage of the profits on the customers behalf to social projects. This allows the customer to see not only how much the bank is making, but also how much it is then giving away. The projects that the bank donates a percentage of profits to are not simply large charities but instead can be very small, localised projects, nominated by the customer and setup by the community. In one example a water saving project had requested £7,000 and this had been donated by just 113 people. Caja Navarra really do engender trust by providing true transparency and showing a genuine corporate social responsibility.

Given the importance of trust within relationships and the rewards that can come from this for financial institutions, there has been a noticeable hush from almost all banks since the credit crunch. For many this is probably due to still being in a precarious position and as the old adage goes, "when you have nothing to say - say nothing". However for many banks things have changed with government support stabilising them and so now is really the time to begin rebuilding trust.

LTSB in the UK are the noticeable exception to this with much of their recent outdoor activity focused around the message of a "bank you can bank on". While many of the larger banks in the UK have been focusing their advertising on savings messages - promoting great rates in the hope of attracting much needed savings balances - LTSB has been focusing their message on one of trust, reassuring customers and prospects that they are a bank you can bank on. If LTSB get it right all indications are that the savings balances will follow naturally.

Trust is a key component of customer advocacy, the visible expression of customer loyalty. Banks have historically scored low compared to other industries when it comes to trust and so now is the time to really put the customer first and start to rebuild that trust – the much needed profits will follow.