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CRM and the rise of social media: The tail wagging the dog?

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15th Nov 2010
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Social media has opened up a new channel of customer information - but Gary Schwartz warns that firms that rely too heavily on social media feedback run the risk of making a business decision based purely on anecdotal evidence.

CRM means different things to different people: technology, strategy, sales automation, call centre management, marketing automation, customer experience. Ultimately it’s about customer relationships. In the early days of CRM the technologies developed allowed companies to manage their interactions with their customers.
Over the years, though, the tide has turned in favour of the customer managing key aspects of the relationship: where to shop (online or offline), when to shop (24/7 online), and how to contact company representatives (phone, online, chat, in store). 
Most recently there’s been a rebalancing of information sources in which customers contact each other first and decide what to buy and from whom before ever contacting the company for information or a store for purchase.
This of course refers to the rise of social media technology – Facebook, Twitter, etc – that for the most part keeps the company out of the conversation, only making matters worse.
Loss of control
There’s a considerable amount of consternation in the boardroom and the marketing suites about this lack of control. The lack of control over communications necessarily translates to lack of control over the brand. Some companies have handled this better than others.
Companies often embrace social media as another channel because it offers an immediate vehicle for communication.  Its very strength and public nature means that they will need to monitor and respond to it extremely quickly. It may offer customers a flexible way to send feedback to a company and enable companies to learn things that they never knew they needed to ask but unstructured data is hard to measure and almost impossible to incorporate into the overall business picture.
Companies that rely too heavily on social media feedback run the risk of making a business decision based on anecdotal evidence. Just because a small minority shout out loud about an issue or create a fuss about a squeaky wheel, it does not mean that their comments are representative of the majority.
Companies still need to work to confirm that the feedback they get via the social media channel makes sense for the overall business. Otherwise they risk making poor, perhaps knee jerk responses to what they hear on Twitter and other media when it is not reflective of the entire customer base.
Customers rule
There’s no management by the company anymore in CRM, but very much management by the customer. And it isn’t only product purchase that’s at stake. Increasingly, social media have a tremendous impact on company reputation, including events like the recent oil spill.
Quantifying whether the response is representative of the customer base is a key to getting the business decisions correct. This is where a voice of the customer programme would go a long way to helping a company meet its overall business objectives. The only way to really know what your customers are thinking is to ask them.
Not enough companies take advantage of the data that they are collecting. The people conducting the programs don’t always properly communicate the results to senior management about how the feedback program could help the business meet its objectives. 
The risk of assuming you know what customers think is a knee-jerk reaction that only prolongs the misery. The value of confirming what you think you’ve learned, or what you’ve heard through social media, is making better business decisions that move the business closer to hitting its goals.

Gary Schwartz is SVP marketing at Confirmit.

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By 123Contracting
29th Nov 2010 14:55

The CRM software we use has social media aspect to it - we use peoples LinkedIn profiles only which more often than not gives us a professional picture of each contact in our CRM. We can then talk to someone on the phone as if we know them without having ever met them. This can help to build repour with our contacts.

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Accountants for Contractors

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