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Social CRM: Fool's gold or golden opportunity?

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17th May 2010
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With 16,500 people classing themselves as social media 'experts' on Twitter alone, there is social CRM gold fever. Can it really deliver business value?

Is Social CRM an important business issue requiring attention, resources and investment? Or a lot of hype tied in with social media hysteria? As brands go in search of their social media ROI this seems a very reasonable question. I noted recently that there are 16,500 Twitter users who describe themselves as ‘social media experts’. A sure fire sign of a gold rush in a very confused marketplace.

For brand owners, the trick is to distinguish between real value and fool’s gold. We’ll take a look at how to do that for social CRM shortly, but let’s start by understanding what Social CRM is and where it’s come from.

Social CRM has emerged from the shifting balance of power between organisations and their customers. By now we’re all familiar with how social networks, blogs and communities have empowered people to easily and quickly connect with like-minded individuals and groups to share mutual interests.

The impact has been to cut organisations out of the loop, losing control of the customer relationship. Consumers have tasted freedom to connect, share and talk, benefiting from more timely, relevant and trusted interactions. This is a profound change, leaving companies with little (or more likely no) hope of wrestling back control and re-establishing previous levels of influence. No wonder social media monitoring tools are red-hot, as companies scramble to re-engage with the disparate conversations taking place on the web about them, but not with them.

Social CRM is about companies attempting to get back into the conversations controlled by the customer, listening and engaging to build trust and value. It also gives companies the opportunity to stimulate conversations with and between customers and use these to build relationships sooner than would traditionally have taken place, managing a pipeline of opportunities more effectively and producing a higher return.

Social CRM is an integral component of an overall CRM strategy. However, social CRM is also different in the sense that traditional CRM has been about structuring and controlling data to help manage relationships more effectively, whereas social is unstructured and much more difficult to categorise by its very nature.

Strategic or not?

So is social CRM a source of real business value or simply fool’s gold?

Breaking down ‘social’ into several categories can be a very helpful way to remove confusion and determine where to focus scarce business resources. I like the definitions used by social CRM consultant Esteban Kolsky, as follows:

  • Social media is about tools and tactics, you can never set a strategy for it, and it has very short term life and results.
  • Social CRM is about strategically setting long-term goals for working better with your clients (customers), and improving your organisation in the process.
  • Social business is the long-term, strategic process of reinventing your organization to collaborate with employees, partners, and customers.

This separation is very helpful because it starts to create clarity around social, and say the role of a PR firm in managing your brands reputation through social media channels, versus the deep strategic importance of having a Social Business strategy to make your business relevant and competitive in the 21st century. Esteban argues that Social CRM is much closer to Social Business, sitting under the category of strategically important initiatives that will directly impact your revenue and profitability.

If we revert back to our earlier acknowledgment that companies have lost control of their customer relationships, who could argue that this isn’t strategically relevant? As such, social CRM is profoundly important. It is true that many companies remain either in denial over the power shift, hoping a Facebook page and some Tweeting will sooth away the issue, or are still bogged down with getting the fundamentals of their CRM strategy right, and therefore unable to innovate.

But the writing is written large on the wall, and those companies able to apply clear thinking on ‘social’ and embrace social CRM will steal a highly profitable competitive lead for the new business cycle that has just begun, and beyond.
 

Graeme Foux is CEO of Knexus, advising many leading global brands and is a successful internet entrepreneur.

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