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Is ‘social’ consciously deployed in your customer management model?

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9th Jan 2012
Managing editor MyCustomer.com
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Despite all of the talk around Social CRM and the focus on ‘listening platforms’, many businesses are still failing to integrate their social and CRM efforts around one common customer management strategy, says Neil Woodcock of The Customer Framework.

In earlier reports, Professor Merlin Stone and I explored some basic models of customer management, ranging from key account management, product marketing, relationship marketing (through brand and service), to spot buying and auctioning (traditional and online). However, these are what we call “component models” – in practice companies combine these models in very complex ways. Their success comes from:
  • How they balance the different models, in different markets or market segments
  • How effectively and efficiently they deploy them, relative to their competitors
  • How the experience they provide to customers through the models they adopt delivers employee and customer commitment to the brand
  • How quickly they evolve them to meet the needs of changing markets, product substitution, digitisation, regulations, competitive pressures, etc.
Models are often deployed subconsciously
Perhaps the most interesting thing about models is that organisations do not necessarily deploy them consciously, in the sense that the company uses the terms used here, or interpret success or failure to successful deployment of particular models.  We liken this to the example of Moliere’s Le Bourgeois Gentilhomme, who was ecstatic when he learnt that he was speaking “prose” because he had no idea he was doing it.  For example, excellent management of large customers may come from formally deployed models of key account management, as at IBM, BP or DHL, but might also come from a sales team that is organised geographically, but trained and motivated to give excellent service to customers, while prioritising their time according to the likely revenue of each customer.
One might argue that Walmart Asda’s policy of a wide product range and high availability at low prices to customers delivered by close attention to logistics and relationships with suppliers, results in a classic pure retail customer management policy that is one of the best. Tesco combines this approach with more customer focus (e.g. a “light” relationship) with some success, though it has to be careful to ensure that the approach does not add cost and so make it hard to compete with Asda. Asda and Tesco are two high performing retailers with different business models.
However, there are also some component models that tend to reappear, whatever other models the company has combined. For example, strong branding seems to unite the successful adherents of many different models. This is because for nearly all models, branding is a necessary condition for success, though not a sufficient condition. The appropriateness of the customer experience actually delivered, through the product and service, is critical to profit sustainability, and this is where the disciplines of branding, CRM, product and pricing, HR, channel management and logistics all overlap and need to be aligned. Customers who don’t like your brand won’t buy products from you even if you are cheap, perhaps particularly not if you are cheap, or at the other extreme won’t trust you and enter into a relationship with you. That’s why you must understand how customers feel about the brand, and in particular how customers who spend a lot on the category feel about it. Increasingly it seems, their emotional engagement (i.e. their ‘loyalty’ or ‘commitment’) needs to be examined, not just whether the product and pricing is right.
But what if the model changes?
Furthermore, if a model is deployed “unconsciously”, then even if it succeeds for years, the risk is that if market conditions change and so the “ideal” model changes, the company may not react appropriately. Thus Xerox in the photocopier market for long pursued a policy of complex, innovative products, with many add-on variants. Imperfect reliability was underpinned by excellent service. They were challenged by the Japanese model of standard products, all features included, highly reliable until end of life (which came sooner), but at much lower cost. It took Xerox ten years to react to the new model, but meanwhile their senior management was focused on measures related to their old model, such as service revenues. Put simply, the line of sight used by senior management depends on the explicit model. When this changes, or when the implicit model is stronger, senior managers may be managing the wrong things, because they are looking at the wrong things. We see this phenomena happening today in many companies with the advent of ‘social’.
‘Social’ is a disruption to all traditional models
Social is disrupting traditional models of customer management, but few organisations are recognising it as any more than ‘some extra channels’. Our experience across large organisations in many sectors has shown various levels of maturity between sectors in the way they implement social marketing approaches. Many of those that at least recognise the potential importance of ‘social’ continue to use traditional customer management model measures and organisational approaches. 
They can be used throughout the customer cycle - to make people aware of the brand, to encourage them to buy, to help them buy easily and conveniently, to help them use the brand, or to help manage service issues and dissatisfaction. They can be used over the product cycle, to help design new products, to increase their speed to market, to build early sales quicker so as to maintain their price premium, or to understand the functions and features that customers most like. They can also be used to optimise the costs of sales, marketing and service incurred by managing customers, by; providing new communication channels to either replace traditional media or make them more effective; or by providing new distribution channels offering lower transaction costs; or by enabling peer to peer self-help and service channels and by listening to issues to reduce the ‘cost of failure’.
The ‘social’ philosophy needs to go to the heart of the business, as many posts on this blog and others point out.  
The socially enhanced customer model encourages purposeful transparency, insight generation, interaction, participation and engagement with customers. We say purposeful because the purpose is to engage and sell, not just engage. It increasingly relies on real time, or near real time communications, which provide contextual, relevant, engaging communications, not ‘interruptions’ to a customer’s day. This means new data sources and combinations, new technologies, new ways of working, new ways of measuring and a new way of thinking. Social media channels enable the brand to extend its personality to engage with consumers on their terms, when they want, at work and play, through their chosen channels. From a brand engagement perspective, applications or content for entertaining, informing, educating or providing insight can be designed to connect with consumers wherever they are, whenever they want.
How socially mature are companies (early study)?
One way to look at how well social is integrated into the business system that drives profitable customer management is via TCF's SCHEMA model. Qualified consultants use ‘questions’ about organizational capabilities to assess just how customer-centric a business really is and in addition, identify the customer management priorities depending on that business’s culture and strategy.  So far TCF have positioned 21 large companies on this social maturity curve and we thought it might be interesting to share a summary of findings here. 
In the graphic you can see a socially enabled business (SEB) maturity curve with ‘time’ and perception of ‘business benefit’ as the two-axis.  The ‘time’ axis is also likely to represent the ‘scale of change’. Organisations in maturity levels 1 and 2 show an emerging but disparate interest in using social to listen to, understand, engage with and sell to customers and is normally dependent on enthusiasts within an organisation. Maturity levels 3 and 4 imply integration of social into the overall customer management 'business system’ (the way a business works).  We’re not sure yet if the maturity curve is this elongated ‘S’ shape, so it is a hypothetical shape for now. This graph is based on a Ogilvy/QCi study from traditional CRM research, which was backed by considerable analysis (Woodcock, Starkey et al QCI’s State of the Nation IV, Ch 6. 2006. Contact [email protected]).    
We believe that the SEB shape will be similar because of the similarities in the business transformational nature of dealing with customers in a more structured way (even if it involves using un-structured social data).  We are working with clients to better understand this curve and to identify the different organisational challenges and financial benefits as maturity evolves.  An understanding of the challenges and benefits of each stage of maturity helps manage leadership expectations, resources required and capabilities required to progress.  As with CRM, socially enabled customer (relationship) management (or SCRM if you will) at these levels is not just about technology, but also about leadership, people, processes, policies and data. Our SCHEMA research to date shows that by far the majority of companies (19 out of 21) are between Stage 0-2.
On the curve we have positioned the top scorer in the sectors we have assessed and, for the best sector, Consumer Product Groups (CPGs), the average and the top scorer. It is apparent (and not surprising) that it is early days for many organisations in this 'socially enabled world'. CPGs as a sector are generally leading the way in becoming socially enabled businesses with heavily regulated industries such as financial services and pharmaceuticals being slower to adopt social approaches.  
Conclusion: Social is not integrated into customer management models

 
Despite all of the talk around Social Marketing, Social CRM and the focus on ‘listening platforms’, ‘engagement programs’ and ‘participation platforms’,  many businesses are still failing to integrate their social and CRM efforts around one common customer management strategy. There is a focus on the IT system, but not on the business system (i.e. policy, people, processes, data and IT – the way of working) which must evolve to make the most of the opportunity that social, mobile, data and content provides organisations. We are advocates of the need for solutions that can replace legacy, outbound, batch and inflexible technologies.  
However, technology is only part of the answer and one component of the business system of customer management. Social integrates into the very heart of a customer management model. If you look at TCF’s SCHEMA model diagram, there is not an area of the model where social does not have an impact. In future articles in this series we will explore these areas in more detail and show the potential integration of social, not to dominate the customer management model, but to enhance it and make the model more effective in engaging customers and selling products.

Invitation: TCF, in partnership with Hewlett Packard’s Enterprise Information Solutions Social Intelligence group, will be carrying major primary research into social business evolution maturity over the next few weeks and will publish detailed results to participants in early 2012. If you work for a large organisation and are interested in taking part in the research on behalf of your company, we’d love to hear from you. All results will be coded by business profile and the results treated anonymously. It will take no more than 30 mins of your time to complete the interview and you will benefit from receiving a detailed research report about social maturity. Only summary results will be published widely.

Neil Woodcock is CEO and Chairman of The Customer Framework. Neil has co-authored five books, various reports and numerous articles on Customer Management. He is on the editorial board of leading journals and is an honorary fellow of the IDM. He is a regular speaker at conferences, at home and overseas.

 

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