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Lithium Technologies
Powering the Customer
Network with Social CRM
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
2 of 17
Table of Contents
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
The Case for Social CRM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
What is Social CRM?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
The Social CRM Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
3 of 17
Executive Summary
According to a 2008 study, 60% of Americans use social media and a third of them report
having a stronger connection with the companies they interact with that way. These customers
are more actively engaged than ever before and it’s up to enterprises to find a way to capitalize
on this engagement or risk missing the conversation.1
Social CRM—the point at which online customer communities, social networks, and traditional
CRM meet—is a powerful new business strategy to achieve this goal. Companies that embrace
Social CRM can engage with their customers not only one-to-one, but also in the increasingly
important many-to-many venues where their customers now congregate. Social engagement
enables companies to create customer networks that turn good customers into better ones
and their best customers into full-fledged brand advocates.
The value to the company of customer advocates is tremendous. More than half of the
participants in a recent survey of CxOs and VPs of large enterprises estimated the annual
value of a customer advocate at $50,000 or more. Twenty-seven percent put the value at more
than $250,000. What if you could build a customer network that produced just a few brand
advocates, or a hundred, or a thousand?
The Case for Social CRM
The past five years have seen a revolution in the way people communicate, with each other and
with their brands.
Sixty percent of Americans use social media.
Fifty-six percent of Americans believe that a company should have a presence in social
media and more than half of them believe companies should use social media to interact
with consumers.
A third of Americans feel both a stronger connection with and better served by companies
they interact with in a social media environment. 2
It’s no longer a question of whether businesses should engage with their customers using
social media, but of when and how. Natalie Petouhoff of Forrester Research answers the first
question. “The time to shift gears and join the social media business revolution is now.”3
And a consensus has emerged among successful companies that the answer to the second
question is to give customers a venue where they can connect with each other, influence your
products, and carry the flag on your behalf.
As Brent Leary and others have pointed out, traditional CRM focuses on its strong suits:
helping companies form and manage their one-to-one relationships with customers and
prospects, automating and tracking sales processes, providing a repository for prospect
and customer contact data, and serving as an operational hub for marketing and
sales organizations.4
There has been a
revolution in how we
communicate, affecting
all of the institutions we
interact with.
Paul Greenberg,
CRM at the Speed of Light:
Essential Customer Strategies
for the 21st Century
Don’t wait for further
proof about the need to
adopt next-generation
CRM capabilities.
William Band,
Principal Analyst, CRM 2.0:
Fantasy or Reality?, Forrester
Research, Inc.,
November 2008
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
4 of 17
However, when it comes to today’s social customers, CRM systems are inside out. They are
designed with the company’s needs in mind, for the agent at the console or the manager
looking for a sales optimization report, not for the majority of customers who want to engage in
relationships with their brands.
One of the results of the communications revolution is that customers have exploded out of
the traditional CRM silos. For every one-to-one conversation between the company and a
customer or prospect, the company is missing hundreds or even thousands of conversations
between customers, influencers, and prospects.5
While you read this paper, someone out there
is selling your product for you. Someone else might be doing the exact opposite as well.
“The phenomenon of the ‘social Web’,” says Forrester’s William Band, “is forcing CRM
professionals to expand their thinking beyond the goal of optimizing a two-way relationship
between an enterprise and customer to include the simultaneous interactions that customers
have between themselves.”6
Ross Mayfield of SocialText describes it as an engagement iceberg: only a small portion of the
conversations and engagements are truly visible. Most occur below the water line, out of view.7
The pervasiveness of social
media gives customers more
impact than they have ever
had before. According to the
2009 PricewaterhouseCoopers
Global CEO Survey, 71% of
CEOs believe that the influence
of customers and clients on
companies has increased.
In The New Influencers, Paul
Gillin describes the extensive
reach of socially networked
customers: “Conventional
marketing wisdom has
long held that a dissatisfied
customer tells ten people.
But that’s out of date. In the
new age of social media, he
or she has the tools to tell 10
million.” Or in the case of a Canadian musician whose guitar was destroyed by airline baggage
handlers, 2.5 million people (more than 21,000 of whom left comments) in less than a week. On
the other hand, satisfied and engaged customers have exactly the same tools at their disposal
and they, too, show an inclination to use them. These are your new brand advocates. And if you
build a network with more of these advocates than your competitors, you gain an unparalleled
advantage.
Concludes Adam Sarner of Gartner Research, “Social networking, or social computing, has
changed the way a critical mass of individuals behave, including how they act as customers
and prospects.”8
100%
100% 75% 50%
Influence has grown stronger over the past three years (inverted scale)
25% 0%
75%
50%
Currentlycollaborate(invertedscale)
25%
0%
Non-governmental organisations
Local communities
Government and regulators
The media
Industry competitors and peers
Customers
and clients
Providers of capital
(e.g., creditors and investors)
Your supply chain partners
Employees
(including trade unions)
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
5 of 17
The challenge is not to control the conversation—that’s no longer possible. There are simply
too many conversations occurring at this very moment beyond the company’s reach. Instead,
companies need to find a way to unlock the value that already exists in these conversations and
to discover their brand advocates. As Roland Rust noted in a recent Harvard Business Review
article, “Companies must focus on customer equity rather than brand equity.”9
According to a March 2009 Nielsen report, two-thirds of the world’s Internet population visit
social networking or blogging sites, accounting for almost 10 percent of all Internet time.10
Further, a 2009 consumer preference study tells us, “About two-thirds of U.S. consumers
believe that companies should ramp up social media usage to ‘identify service/support issues
and contact consumer to resolve.’” And more than half want companies to host an online
community on the company web site.11
Marc Benioff, CEO of Salesforce.com sums it up: “Brands aren’t about ‘messages’ anymore.
Brands today are conversations — and today the most important conversations are happening
... through social media.”12
What is Social CRM?
Social CRM is a new strategy
and applications approach that
combines the power of online
customer communities, broader
social networks, and traditional CRM
systems.
“We are now at a point,” says Paul
Greenberg, “that the customers’
expectations are so great and their
demands so empowered that our
(Social) CRM business strategy needs
to be built around collaboration
and customer engagement, not
traditional operational customer
management.”13
The technologies that comprise
Social CRM—online customer communities, social networks, and traditional CRM
applications—already exist. Customer communities, for example, have already amply
demonstrated their value to the enterprise. Linksys, a division of Cisco Systems, estimates
that its customer community accounts for 1.4 million deflected support calls and saves the
company $10 million annually.14
However, it is only through Social CRM that companies can connect their business processes
with their customers and build a network of advocates on the social web.
Online Customer
Communities
Social Networks Traditional CRM
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
6 of 17
Imagine a conversation about your company’s products on Twitter:
A potential customer tweets, “Is it worth the money?”
A customer advocate sees the question in the Twitter feed and brings it into your com-
pany’s forum, where other customer advocates respond.
The original questioner hears about the forum discussion and becomes engaged.
Based on positive comments from your customer advocates, the potential customer
decides to buy from you.
Meanwhile, as a result of integration with your CRM systems, your social marketing
manager takes note and tweets the thread in reply. Now, anyone who follows your com-
pany can also view the conversation.
The payoff? A sale, great marketing materials, and a wider reach for your message via the
original tweeter’s followers.
Social CRM integrates with and builds on existing technologies and processes, taking
advantage of what already works and adapting it for a new kind of customer, a new type of
relationship, and a new way of communicating. It moves beyond automation and delivers the
customer network.
By plugging CRM into the social web and accommodating the social customer, companies can
turn their customers and advocates into a competitive advantage—effectively multiplying their
resources and reach at minimal cost. However, simply plugging social channels directly into
existing CRM systems is not sufficient. It’s the customer network that gives the integration
value. Without a critical mass of customer advocates, the technology is irrelevant.
It is an approach both tailored to and shaped by a consumer population that spends much of
its spare time online, and much of its online time communicating and consuming user-created
content. Consumers routinely share their opinions and media on sites such as Facebook,
YouTube, and Flickr, and crowd-source their decisions with reviews on sites such as Amazon or
Yelp. In the face of stringent news embargoes and official censorship, the 2009 post-election
revolution in Iran has been broadcast to the world on Twitter, 140 characters at a time.
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
7 of 17
The Business Value of Social CRM
Social CRM gives companies access to previously untapped value to be found in customer
generated content and customer advocates. The customer advocates—influencers—in your
customer network will innovate on your products and services, promote your brand, and
support your customers. And they will do so because they want to, not because you pay them.
Innovate: Collectively, your customers know as much or more about your product usage
than the company itself. They often have terrific ideas for product improvements or for new
capabilities. Social CRM can help companies harness this knowledge, move new products to
market faster, and drive new revenues.
Online real estate brokerage Redfin’s social approach to customer relationship manage-
ment has proven to be a competitive advantage. The more the company hears and learns
from customers the better Redfin gets at serving them. And the approach is paying off;
Redfin’s Net Promoter Score increased by 5%, revenues grew by 40% year-over-year, and
marketing expenses were reduced by 82%.15
“The Future Shop community is fundamentally about enhancing the online customer
experience for our consumers. That said, savvy groups within the organization are
beginning to tap into the power of the community to improve initiatives such as recruiting
and marketing promotions.” Robert Pearson, Vice President of e-Commerce,
Future Shop16
Promote: The web acts as a giant megaphone for your customers—both happy and not. Happy
customers can create a groundswell of support; unhappy ones can do significant damage to
your brand.17
The huge lift that companies get from word-of-mouth promotion comes in large part from the
efforts of the influencers in its customer network. They’re the ones who tell their friends when
they like a product or post to Twitter when a company does right by them.
”Sage Marketing standing up and trumpeting its own ability is interpreted as self-serving.
But having passionate customers who support our product and talk to other customers
about it is a whole other thing.” David Van Toor, General Manager, Sage CRM Solutions of
North America
As a result of its online community efforts, Sage has seen a 20% increase in customer
loyalty and a 300% increase in beta program participation. 18
“As a customer with a lively community on the Lithium platform, we’re enthusiastic about
the Social CRM vision,” said Kevin Ryan, VP of Social Media at Barnes & Noble. “The
readers engaged in our online Book Clubs at Lithium also have a significant presence in
the larger social web, and helping them share the B&N experience elsewhere will bring
more people into our community and strengthen our social commerce efforts across
the board.”
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
8 of 17
Support: Peer-to-peer support, often one of the first social initiatives for many companies,
is also one of the best ways for end-users to get answers. Customers or prospects may be
considering a purchase or need urgent help.
The savings that accrue from call deflection are significant and well known:
Linksys, a division of Cisco, estimates that the indirect deflection attributable to its online
community is close to 120,000 cases per month. In a 2008 survey, more than 25% of
support site visitors chose community generated answers as their solution.19
As the result of its myFICO community, Fair Isaac has seen a 41% increase in spending
from community members and a 10% redirection of lengthy calls.20
“Our goals of increasing revenue, shortening support calls, and elevating brand loyalty are
definitely being met.” Barry Paperno, Manager, Customer Service
Pitney Bowes has reported hundreds of thousands of dollars in savings as theresult of call
deflection to its online community.
However, companies are still leaving value on the table until they start thinking beyond call
center savings to the value of the knowledge that their customers create. The single answer
posted to a customer’s question can just as easily provide a solution for hundreds or thousands
of other users—and at significantly less cost to the company than a traditional knowledge
base article.
Furthermore, because of the collaborative nature of social knowledge bases, the value of such
an article only increases as the community refines and updates it over time.
Bob Thompson of CustomerThink refers to this as CrowdService, which he believes “delivers
ROI by using social media to let customers help each other, creating and using a kind of
communal knowledgebase where the good answers bubble to the top.”21
The Social CRM Solution
A forward-looking strategy for capturing the value of Social CRM is to concentrate the
company’s efforts in two main areas: building its own social presence and reaching out to the
social web. The first approach gives companies a home field advantage as they engage with
customers, prospects, and influencers and allows them to identify and develop their customer
advocates. Plus, companies own their community data and can mine it for insights into
customer attitudes and behavior. The second approach allows companies to listen and react to
what’s being said about their brands, wherever the conversation is occurring.
In a blog post discussing Verizon’s online customer community, Andrew McAfee (principal
research scientist at MIT’s Sloan School of Management and fellow at Harvard’s Berkman
Center) notes: “The best of these communities become hugely valuable resources for everyone
who visits them—super-users and lurkers alike—as well as for the organizations that
host them.”22
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
9 of 17
Superusers, the all-important customer advocates, will share their suggestions for product
innovations, promote your brand to their friends and peers, and support other customers for
you. Although a handful of companies have been able to accomplish this without their own
social presence on the web, they didn’t have access to customer interaction data or direct
contact with their advocates.
A complete Social CRM approach includes five key elements:
Customer-focused community applications—establishes the company’s beachhead in the
social web and serves as the jumping-off point for future inroads.
User profiling and reputation management—helps companies identify and cultivate the
advocates and influencers who will amplify the company’s message and provides data for
socially-driven marketing campaigns.
Workflow connection to traditional CRM systems—ties the social web to the company’s
internal processes, allowing all parts of the enterprise to take action.
Integration with the social web—lets companies participate in the vast majority of
conversations that are already occurring just out of sight.
Actionable analytics—provide insights so that companies can be proactive when they
detect trends and demonstrate ROI.
Customer-focused community applications
Customer-focused community applications, what Clay Shirky defines as “software that
supports group interaction,” are the cornerstone of a Social CRM solution. 23
These
applications are business tools that encourage participation and interaction among users
who don’t know one another. Further, they tie customers more tightly to one another and to
companies that deploy them.
Customers
Company
Influencers Prospects
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
10 of 17
The most common customer-focused applications include forums, blogs, chat, idea exchanges,
and wikis or community-driven knowledge bases. Online community members typically use
social bookmarking, tagging, RSS feeds, and search to organize and access the content they’re
most interested in. It’s important to note that these applications are distinct from internal
collaboration tools that companies may use internally because they succeed or fail based on
the level of trust they create between people who may otherwise have no connection to one
another. Social CRM applications must be customer-focused to deliver value by helping to build
the customer network.
Beagle Research Group sums it up this way: “Community is the heart of all CRM 2.0 capabilities
because the community is the means by which customers on the outside become participants
on the inside.”24
Andrew McAfee adds, “The benefit of blogs becomes much more clear when they’re seen as
tools to convert potential ties, strong or weak, into actual ones.” 25
One area in which enterprises can see clear benefit from online customer communities is
word-of-mouth message propagation. A rock dropped in a pond creates ripples that eventually
decay over time. Likewise, marketing messages fizzle out unless they are rebroadcasted.26
According to Dr. Michael Wu, principal scientist at Lithium, customer communities help
generate market buzz by rebroadcasting the brand message with both strength and frequency.
These interesting conversations are not limited to the community. In one of his many studies
of online communities, Dr. Wu has observed that customer advocates function as repeating
stations, broadcasting their opinions to their personal social networks.
Another source of significant benefit from online customer communities is in the area of
peer-to-peer support. Natalie Petouhoff of Forrester Research points out: “Customer service
professionals must find innovative ways to engage with ‘social customers’ via emerging social
media technologies. Online customer service communities make self-service a more satisfying
customer experience, in addition to reducing costs for the provider.”27
User profiling and reputation management
Before they can mobilize advocates, companies must know the people who are talking about
them and what they are saying. Social media, by its very transparent nature, is of tremendous
assistance to companies in the perpetual quest to know and market to their customers better.
Not only can companies listen to their customers, but they can also observe how they behave in
social situations, gauge their impact on others, and connect with them directly.
According to Tom Chapman of Social Media Marketing, “Marketers need to understand
that social networks and communities will influence CRM; resulting in corporate sites and
marketing communications being able to recognize social relationships and customers’
preferences and deliver customized experiences to them in real-time.”28
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
11 of 17
Now, more than ever,
reputation matters. The
increase in social interactions
brings a corresponding
increase in noise. Open and
transparent communities not
only attract highly passionate
advocates, but also users with
malicious intent.
However, community
practitioners have discovered
that they can let customers
differentiate themselves by
their online behavior. Avid
contributors nurture and
protect their reputations
because their ranking or
position in the community is a
source of pride.
Jeremiah Owyang of Forrester Research sums it up this way: “A reputation system that
identifies the most active contributors lets marketers easily reward members’ participation
and nurture their positive behavior. For example, Lithium Technologies’ system accomplishes
this by rewarding helpful members with badges, additional community privileges, and access
to VIP areas.”29
At the same time, rank in the community helps to reduce the uncertainty that customers
and prospects might feel when faced with anonymous advice or reviews. Networks like Yelp
and eBay thrive on user reputation; a strong reputation fosters trust among the community
members and makes the individual more influential.
As Andrew McAfee describes
it, “Self-organizing
communities…don’t care what
your job title is, where you
went to school, or how many
letters you have after your
name. People build status,
reputation, and authority
within them based on how
much they do and how well
they do it. These reputational
attributes become very
important to many (if not
most) members.”30
A reputation management system is also essential to enable content consumers—who far
outnumber content creators—to separate the useful from the non-useful and categorize
content as relevant and trustworthy.
Forums TKB
Blogs
Ideas
US User-Generated Content Consumers and Creators,
2008 & 2013 (millions and % of Internet users)
User-generated content consumers
115.7 (60%)
154.8 (70%)
82.5 (42.8%)
114.5 (51.8%)
User-generated content creators
Source: eMarketer, January 20092008 2013
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
12 of 17
Jakob Nielsen’s widely accepted 90-9-1 rule states that 90% of community participants are
lurkers or readers, 9% occasionally contribute content, and the remaining 1% are active
contributors.31
The active 1% typically generates 40-60% of content on a community. Similarly,
in a recent Harvard Business Review article the authors observed that 10% of Twitter
participants accounted for 90% of tweets.32
Identifying and cultivating brand advocates—the active 1%—becomes critical to the success of
the enterprise.
A recent profile in the New York Times examines “Web-savvy helpers” that Verizon and other
enterprises are coming to rely on for customer service. Volunteers like Justin McMurry, a
“Silver II” contributor and community leader on the Verizon support community, give their time
and knowledge freely, representing a significant asset to enterprises that identify and nurture
them. What’s in it for the brand advocates? Recognition and a sense of satisfaction.
In discussing the Verizon community, Andrew McAfee comments, “Part of the reason I
advocate Enterprise 2.0 ratings for knowledge workers is to harness this addiction—to find the
Justin McMurrys of the world, take as much as they’re willing to give, and give them something
they value in exchange, namely a persistent and visible reputation as an expert / maven /
mensch / all-around-good-person-to-have-around.”33
In the world of Social CRM, a good customer is no longer the one who buys the most. Paul
Greenberg advises, “Rather than aiming at a satisfied customer (an increasingly useless
metric) and even rather than thinking that a loyal customer is your best customer, your
objective should be to create advocates and settle for loyal customers.”34
Workflow connection to traditional CRM systems
Simply showing up and listening is not enough. In return for the peer-to-peer support,
product or brand advocacy, and new product ideas that will flow from online communities and
the social web, companies must respond. They must encourage continued participation by
acknowledging customer feedback, but more importantly, they must act on that feedback to
capitalize on the market advantage that their customers are providing.
The surest and most effective way to ensure that companies respond appropriately is to
capitalize on the significant investment they have already made in CRM. For example:
By integrating their social web and online communities with existing cross-functional
workflows, companies can both divert issues away from a paid support force and ensure
that critical issues and insights from the community are escalated to the correct organiza-
tion for action.
Companies can capture the content produced by their community experts and use it to
augment the company’s knowledge stores.
Companies can enhance their sales prospecting activities by monitoring unusual activity
on the community.
Companies can use community demographic and behavioral data in CRM or marketing
automation tools to target customers more effectively.
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
13 of 17
In making the case for Social CRM, Tom Chapman offers this: “Social CRM…is your existing
CRM that has the ability to leverage the social web and automate the conversation process.
The social CRM can be used by marketing and sales teams to listen to conversations, craft
appropriate messages, join in immediately with customer conversation and offer them value in
terms of information and solutions.”35
Integration with the social web
Your customer network is everywhere—in your online community and in all the other places
where your customers can be found. Conversations are happening on Facebook, on Twitter, and
on hundreds of similar social sites. Customer communities give corporations good visibility
into a large percentage of the conversations, but companies also need to invest in integration
not just to connect the social web to the company, but also to the customer community. Only
the community can effectively mediate between the social web and the company.
According to TechCrunch, “The conversations that power social media are sparking a sense
of urgency to identify influential voices and talk to customers in a place and time of their
choosing.”36
In response, a number of companies of all types—Comcast, Virgin America, JetBlue, and
Qwest, for example—have used Twitter to reach out to customers. However, we suspect that
Twitter will only provide business value when users’ energies are directed from Twitter to sites
that are both social and goal-oriented.
Rather than continuing to invest in the infrastructure and resources required to participate
in a handful of today’s most popular social media channels, companies are better served by
integrating their listening activities into a single, scalable platform.
Whether the conversation is on Facebook, Twitter, MySpace, or the Next Big Thing that’s
just around the corner, companies will want to do more than listen; they will want their best
advocates to be able to participate. And without an established platform for these advocates,
companies will find it vastly more difficult to direct the conversation.
Actionable analytics
In the fast-evolving world of the social web, companies are constantly iterating on their social
engagement practices, trying new strategies and learning from both their successes and
failures. Solid analytics are essential for all of the varied stakeholders in the enterprise to
gauge the effectiveness of their programs and to make course corrections as needed.
All of the interactions that occur in a community are generating a gold mine of data for the
company. In the hands of people who can act on it immediately, this data gives companies a
tremendous competitive advantage. The close proximity that companies have to their own
community data lets them respond to rapidly shifting conditions at web speed.
Writing in his personal blog, Paul Gilliham of Juniper Networks says, “I now have the ability
to target particular metrics in my promotion or tuning of a community. And for a Community
Manager, that is gold.”37
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
14 of 17
And more…
Just as there’s more to customer relationships than data management and process
automation, there’s more to Social CRM than a box of software that lands on your doorstep.
In addition to the appropriate technology, a Social CRM implementation requires a sound
strategy, careful planning, and best practices to ensure its success.
Perhaps Matthew Lees of Patricia Seybold Group sums it up best when he advises companies
to be where their customers are. “Your customer community goes well beyond the forums
and blogs your organization supports. It’s anywhere your customers are connecting with each
other, online or off.”38
Summary
A social revolution has changed the way people communicate—with each other and with the
brands they purchase and support. In the wake of this revolution, customers are no longer
content to be passive consumers of advertising; instead, they want to engage in a conversation
with their brands. They want the companies they buy from to be responsive and to acknowledge
their feedback.
The conversation will continue to buzz, regardless of whether companies join in. To capture
the value to be derived from a customer network, however, companies must use Social CRM
strategies and applications to engage with their customers both on their own home ground and
across the social web. Only then can companies tap into the millions of dollars of value that
come from the customer advocates who are waiting to help you improve your products and
services, promote your brands, and support your customers. All you have to do is ask them.
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
15 of 17
Notes and References
1
“2008 Cone Business in Social Media Study”, Omnicom Group, September 2008.
(http://www.omnicomgroup.com).
2
“2008 Cone Business in Social Media Study”, Omnicom Group, September 2008.
(http://www.omnicomgroup.com).
3
Petouhoff, Natalie, PhD, Senior Analyst. “The Economic Necessity of Customer Service”,
Forrester Research, Inc., 21 January 2009.
4
Leary, Brent. “Traditional CRM vs. Social CRM”, Inc. Technology, June 2009.
(http://technology.inc.com/software/articles/200906/leary.html).
5
Solis, Brian. “Real-Time Conversations Hasten Social CRM”, TechCrunch, 11 July 2009.
(http://www.techcrunch.com/2009/ 07/11/real-time-conversations-hasten-social-crm).
6
Band, William, Principal Analyst. “CRM 2.0: Fantasy or Reality?”, Forrester Research, Inc., 17
November 2008.
7
Mayfield, Ross, CEO and Founder of SocialText. “Real-Time Conversations Hasten Social
CRM”, TechCrunch, 11 July 2009.
(http://www.techcrunch.com/2009/07/11/real-time-conversations-hasten-social-crm).
8
Sarner, Adam, Research Director. “The Business Impact of Social Computing on CRM”,
Gartner, Inc., 4 February 2009.
9
Rust, Roland T., Lemon, Katherine N., and Zeithaml, Valerie A. “Return on Marketing: Using
Customer Equity to Focus Marketing Strategy”, Journal of Marketing, January 2004.
10
“Global Faces and Networked Places: A Nielsen report on Social Networking’s New Global
Footprint”, The Nielsen Company, March 2009. (http://blog.nielsen.com/nielsenwire/wp-content/
uploads/2009/03/nielsen_globalfaces_mar09.pdf).
11
Thompson, Bob. “U.S. Consumer Preferences for Company Usage of Social Media”,
CustomerThink, June 2009. (http://www.customerthink.com).
12
Benioff, Marc, CEO of Salesforce.com. “Businesses to Use Twitter to Communicate With
Customers”, USA Today, 26 June 2009. (http://www.usatoday.com/tech/news/2009-06-25-twitter-
businesses-consumers_N.htm).
13
Greenberg, Paul. “Time to Put A Stake in The Ground on Social CRM” blog post, ZDNet —
Social CRM: The Conversation Blog, July 6, 2009. (http://blogs.zdnet.com/crm/?p=829).
14
Lithium Case Study: “The Linksys ROI Story: Support Community Delivers Significant Savings
From Call Deflection”, Lithium Technologies, Inc., March 2008.
15
Lithium Case Study: “The Redfin Customer Community Social CRM Drives 40% Revenue
Growth”, Lithium Technologies, Inc., July 2009.
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
16 of 17
16
Lithium Case Study: “The Future Shop Community: Connect, Share, Learn”, Lithium
Technologies, Inc., May 2009.
17
Thompson, Bob. “CrowdService: A Clear and Present ROI for Social CRM”, CustomerThink,
26 June 2009. (http://www.customerthink.com/article/crowdservice_clear_and_present_roi_for_
social_crm).
18
Lithium Case Study: “Sage Software’s ACT! Community: Transparency Drives Increased
Customer Loyalty”, Lithium Technologies, Inc., January 2009.
19
Lithium Case Study: “The Linksys ROI Story: Support Community Delivers Significant Savings
From Call Deflection”, Lithium Technologies, Inc., March 2008.
20
Lithium Case Study: “Lithium Technologies Helps Create World Class Online Customer
Support Community”, Lithium Technologies, Inc., December 2007.
21
Thompson, Bob. “CrowdService: A Clear and Present ROI for Social CRM”, CustomerThink,
26 June 2009. (http://www.customerthink.com/article/crowdservice_clear_and_present_roi_for_
social_crm).
22
McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of
IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras).
23
Shirky, Clay. “A Group Is Its Own Worst Enemy” blog post, Clay Shirky’s Writings About the
Internet, 1 July 2003. (http://www.shirky.com/writings/group_enemy.html).
24
Pombriant, Denis. “CRM WizKids 2008: Taking CRM to the Next Level”, Beagle Research
Group, March 2008.
25
McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of
IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras).
26
Wu, Fang and Huberman, Bernardo, “Novelty and collective attention”, Proc. Natl. Acad. Sci.
(USA), Vol. 105, 17599. 2007. (http://www.hpl.hp.com/research/idl/papers/novelty/index.html).
27
Petouhoff, Natalie, PhD, Senior Analyst. “The Economic Necessity of Customer Service”,
Forrester Research, Inc., 21 January 2009.
28
Chapman, Tom. “Social CRM — the next big thing?” blog post, Social Media Marketing Blog,
13 June 2009. (http://www.socialmediamarketinguk.com/social-crm-the-next-big-thing).
29
Owyang, Jeremiah K., Senior Analyst. “What Works in Online Company Forums”, Forrester
Research, Inc., 24 November 2008.
30
McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of
IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras/).
31
Nielsen, Jakob. “Participation Inequality: Encouraging More Users to Contribute” blog post,
Useit.com Blog, 9 October 2006. (http://www.useit.com/alertbox/participation_inequality.html).
Powering the Customer
Network with Social CRM
© 2009 Lithium Technologies, Inc. All Rights Reserved.
Lithium Technologies, Inc.
lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801
17 of 17
32
Heil, Bill and Piskorski, Mikolaj. “New Twitter Research: Men Follow Men and Nobody
Tweets” blog post, Harvard Business Publishing — Conversation Starter Blog, 1 June 2009.
(http://blogs.harvardbusiness.org/cs/2009/06/new_twitter_research_men_follo.html).
33
McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of
IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras).
34
Greenberg, Paul. “Time to Put A Stake in The Ground on Social CRM” blog post, ZDNet —
Social CRM: The Conversation Blog, July 6, 2009. (http://blogs.zdnet.com/crm/?p=829).
35
Chapman, Tom. “Social CRM — the next big thing?” blog post, Social Media Marketing Blog,
13 June 2009. (http://www.socialmediamarketinguk.com/social-crm-the-next-big-thing).
36
Solis, Brian. “Real-Time Conversations Hasten Social CRM”, TechCrunch, 11 July 2009.
(http://www.techcrunch.com/2009/07/11/real-time-conversations-hasten-social-crm).
37
Gilliham, Paul. “Measuring Community Health” blog post, Tea Fueled Experience Blog, 7 July
2009. (http://bladefrog.blogspot.com/2009/07/measuring-community-health.html).
38
Lees, Matthew, Vice President and Consultant. “Community and the Customer Lifecycle:
Supporting Your Customers as They Navigate the Seven Lifecycle Phases”, Patricia Seybold
Group, 11 December 2008.

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Powering the Customer Network with Lithium Social CRM

  • 1. Lithium Technologies Powering the Customer Network with Social CRM
  • 2. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 2 of 17 Table of Contents Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Case for Social CRM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 What is Social CRM?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Social CRM Solution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Notes and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
  • 3. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 3 of 17 Executive Summary According to a 2008 study, 60% of Americans use social media and a third of them report having a stronger connection with the companies they interact with that way. These customers are more actively engaged than ever before and it’s up to enterprises to find a way to capitalize on this engagement or risk missing the conversation.1 Social CRM—the point at which online customer communities, social networks, and traditional CRM meet—is a powerful new business strategy to achieve this goal. Companies that embrace Social CRM can engage with their customers not only one-to-one, but also in the increasingly important many-to-many venues where their customers now congregate. Social engagement enables companies to create customer networks that turn good customers into better ones and their best customers into full-fledged brand advocates. The value to the company of customer advocates is tremendous. More than half of the participants in a recent survey of CxOs and VPs of large enterprises estimated the annual value of a customer advocate at $50,000 or more. Twenty-seven percent put the value at more than $250,000. What if you could build a customer network that produced just a few brand advocates, or a hundred, or a thousand? The Case for Social CRM The past five years have seen a revolution in the way people communicate, with each other and with their brands. Sixty percent of Americans use social media. Fifty-six percent of Americans believe that a company should have a presence in social media and more than half of them believe companies should use social media to interact with consumers. A third of Americans feel both a stronger connection with and better served by companies they interact with in a social media environment. 2 It’s no longer a question of whether businesses should engage with their customers using social media, but of when and how. Natalie Petouhoff of Forrester Research answers the first question. “The time to shift gears and join the social media business revolution is now.”3 And a consensus has emerged among successful companies that the answer to the second question is to give customers a venue where they can connect with each other, influence your products, and carry the flag on your behalf. As Brent Leary and others have pointed out, traditional CRM focuses on its strong suits: helping companies form and manage their one-to-one relationships with customers and prospects, automating and tracking sales processes, providing a repository for prospect and customer contact data, and serving as an operational hub for marketing and sales organizations.4 There has been a revolution in how we communicate, affecting all of the institutions we interact with. Paul Greenberg, CRM at the Speed of Light: Essential Customer Strategies for the 21st Century Don’t wait for further proof about the need to adopt next-generation CRM capabilities. William Band, Principal Analyst, CRM 2.0: Fantasy or Reality?, Forrester Research, Inc., November 2008
  • 4. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 4 of 17 However, when it comes to today’s social customers, CRM systems are inside out. They are designed with the company’s needs in mind, for the agent at the console or the manager looking for a sales optimization report, not for the majority of customers who want to engage in relationships with their brands. One of the results of the communications revolution is that customers have exploded out of the traditional CRM silos. For every one-to-one conversation between the company and a customer or prospect, the company is missing hundreds or even thousands of conversations between customers, influencers, and prospects.5 While you read this paper, someone out there is selling your product for you. Someone else might be doing the exact opposite as well. “The phenomenon of the ‘social Web’,” says Forrester’s William Band, “is forcing CRM professionals to expand their thinking beyond the goal of optimizing a two-way relationship between an enterprise and customer to include the simultaneous interactions that customers have between themselves.”6 Ross Mayfield of SocialText describes it as an engagement iceberg: only a small portion of the conversations and engagements are truly visible. Most occur below the water line, out of view.7 The pervasiveness of social media gives customers more impact than they have ever had before. According to the 2009 PricewaterhouseCoopers Global CEO Survey, 71% of CEOs believe that the influence of customers and clients on companies has increased. In The New Influencers, Paul Gillin describes the extensive reach of socially networked customers: “Conventional marketing wisdom has long held that a dissatisfied customer tells ten people. But that’s out of date. In the new age of social media, he or she has the tools to tell 10 million.” Or in the case of a Canadian musician whose guitar was destroyed by airline baggage handlers, 2.5 million people (more than 21,000 of whom left comments) in less than a week. On the other hand, satisfied and engaged customers have exactly the same tools at their disposal and they, too, show an inclination to use them. These are your new brand advocates. And if you build a network with more of these advocates than your competitors, you gain an unparalleled advantage. Concludes Adam Sarner of Gartner Research, “Social networking, or social computing, has changed the way a critical mass of individuals behave, including how they act as customers and prospects.”8 100% 100% 75% 50% Influence has grown stronger over the past three years (inverted scale) 25% 0% 75% 50% Currentlycollaborate(invertedscale) 25% 0% Non-governmental organisations Local communities Government and regulators The media Industry competitors and peers Customers and clients Providers of capital (e.g., creditors and investors) Your supply chain partners Employees (including trade unions)
  • 5. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 5 of 17 The challenge is not to control the conversation—that’s no longer possible. There are simply too many conversations occurring at this very moment beyond the company’s reach. Instead, companies need to find a way to unlock the value that already exists in these conversations and to discover their brand advocates. As Roland Rust noted in a recent Harvard Business Review article, “Companies must focus on customer equity rather than brand equity.”9 According to a March 2009 Nielsen report, two-thirds of the world’s Internet population visit social networking or blogging sites, accounting for almost 10 percent of all Internet time.10 Further, a 2009 consumer preference study tells us, “About two-thirds of U.S. consumers believe that companies should ramp up social media usage to ‘identify service/support issues and contact consumer to resolve.’” And more than half want companies to host an online community on the company web site.11 Marc Benioff, CEO of Salesforce.com sums it up: “Brands aren’t about ‘messages’ anymore. Brands today are conversations — and today the most important conversations are happening ... through social media.”12 What is Social CRM? Social CRM is a new strategy and applications approach that combines the power of online customer communities, broader social networks, and traditional CRM systems. “We are now at a point,” says Paul Greenberg, “that the customers’ expectations are so great and their demands so empowered that our (Social) CRM business strategy needs to be built around collaboration and customer engagement, not traditional operational customer management.”13 The technologies that comprise Social CRM—online customer communities, social networks, and traditional CRM applications—already exist. Customer communities, for example, have already amply demonstrated their value to the enterprise. Linksys, a division of Cisco Systems, estimates that its customer community accounts for 1.4 million deflected support calls and saves the company $10 million annually.14 However, it is only through Social CRM that companies can connect their business processes with their customers and build a network of advocates on the social web. Online Customer Communities Social Networks Traditional CRM
  • 6. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 6 of 17 Imagine a conversation about your company’s products on Twitter: A potential customer tweets, “Is it worth the money?” A customer advocate sees the question in the Twitter feed and brings it into your com- pany’s forum, where other customer advocates respond. The original questioner hears about the forum discussion and becomes engaged. Based on positive comments from your customer advocates, the potential customer decides to buy from you. Meanwhile, as a result of integration with your CRM systems, your social marketing manager takes note and tweets the thread in reply. Now, anyone who follows your com- pany can also view the conversation. The payoff? A sale, great marketing materials, and a wider reach for your message via the original tweeter’s followers. Social CRM integrates with and builds on existing technologies and processes, taking advantage of what already works and adapting it for a new kind of customer, a new type of relationship, and a new way of communicating. It moves beyond automation and delivers the customer network. By plugging CRM into the social web and accommodating the social customer, companies can turn their customers and advocates into a competitive advantage—effectively multiplying their resources and reach at minimal cost. However, simply plugging social channels directly into existing CRM systems is not sufficient. It’s the customer network that gives the integration value. Without a critical mass of customer advocates, the technology is irrelevant. It is an approach both tailored to and shaped by a consumer population that spends much of its spare time online, and much of its online time communicating and consuming user-created content. Consumers routinely share their opinions and media on sites such as Facebook, YouTube, and Flickr, and crowd-source their decisions with reviews on sites such as Amazon or Yelp. In the face of stringent news embargoes and official censorship, the 2009 post-election revolution in Iran has been broadcast to the world on Twitter, 140 characters at a time.
  • 7. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 7 of 17 The Business Value of Social CRM Social CRM gives companies access to previously untapped value to be found in customer generated content and customer advocates. The customer advocates—influencers—in your customer network will innovate on your products and services, promote your brand, and support your customers. And they will do so because they want to, not because you pay them. Innovate: Collectively, your customers know as much or more about your product usage than the company itself. They often have terrific ideas for product improvements or for new capabilities. Social CRM can help companies harness this knowledge, move new products to market faster, and drive new revenues. Online real estate brokerage Redfin’s social approach to customer relationship manage- ment has proven to be a competitive advantage. The more the company hears and learns from customers the better Redfin gets at serving them. And the approach is paying off; Redfin’s Net Promoter Score increased by 5%, revenues grew by 40% year-over-year, and marketing expenses were reduced by 82%.15 “The Future Shop community is fundamentally about enhancing the online customer experience for our consumers. That said, savvy groups within the organization are beginning to tap into the power of the community to improve initiatives such as recruiting and marketing promotions.” Robert Pearson, Vice President of e-Commerce, Future Shop16 Promote: The web acts as a giant megaphone for your customers—both happy and not. Happy customers can create a groundswell of support; unhappy ones can do significant damage to your brand.17 The huge lift that companies get from word-of-mouth promotion comes in large part from the efforts of the influencers in its customer network. They’re the ones who tell their friends when they like a product or post to Twitter when a company does right by them. ”Sage Marketing standing up and trumpeting its own ability is interpreted as self-serving. But having passionate customers who support our product and talk to other customers about it is a whole other thing.” David Van Toor, General Manager, Sage CRM Solutions of North America As a result of its online community efforts, Sage has seen a 20% increase in customer loyalty and a 300% increase in beta program participation. 18 “As a customer with a lively community on the Lithium platform, we’re enthusiastic about the Social CRM vision,” said Kevin Ryan, VP of Social Media at Barnes & Noble. “The readers engaged in our online Book Clubs at Lithium also have a significant presence in the larger social web, and helping them share the B&N experience elsewhere will bring more people into our community and strengthen our social commerce efforts across the board.”
  • 8. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 8 of 17 Support: Peer-to-peer support, often one of the first social initiatives for many companies, is also one of the best ways for end-users to get answers. Customers or prospects may be considering a purchase or need urgent help. The savings that accrue from call deflection are significant and well known: Linksys, a division of Cisco, estimates that the indirect deflection attributable to its online community is close to 120,000 cases per month. In a 2008 survey, more than 25% of support site visitors chose community generated answers as their solution.19 As the result of its myFICO community, Fair Isaac has seen a 41% increase in spending from community members and a 10% redirection of lengthy calls.20 “Our goals of increasing revenue, shortening support calls, and elevating brand loyalty are definitely being met.” Barry Paperno, Manager, Customer Service Pitney Bowes has reported hundreds of thousands of dollars in savings as theresult of call deflection to its online community. However, companies are still leaving value on the table until they start thinking beyond call center savings to the value of the knowledge that their customers create. The single answer posted to a customer’s question can just as easily provide a solution for hundreds or thousands of other users—and at significantly less cost to the company than a traditional knowledge base article. Furthermore, because of the collaborative nature of social knowledge bases, the value of such an article only increases as the community refines and updates it over time. Bob Thompson of CustomerThink refers to this as CrowdService, which he believes “delivers ROI by using social media to let customers help each other, creating and using a kind of communal knowledgebase where the good answers bubble to the top.”21 The Social CRM Solution A forward-looking strategy for capturing the value of Social CRM is to concentrate the company’s efforts in two main areas: building its own social presence and reaching out to the social web. The first approach gives companies a home field advantage as they engage with customers, prospects, and influencers and allows them to identify and develop their customer advocates. Plus, companies own their community data and can mine it for insights into customer attitudes and behavior. The second approach allows companies to listen and react to what’s being said about their brands, wherever the conversation is occurring. In a blog post discussing Verizon’s online customer community, Andrew McAfee (principal research scientist at MIT’s Sloan School of Management and fellow at Harvard’s Berkman Center) notes: “The best of these communities become hugely valuable resources for everyone who visits them—super-users and lurkers alike—as well as for the organizations that host them.”22
  • 9. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 9 of 17 Superusers, the all-important customer advocates, will share their suggestions for product innovations, promote your brand to their friends and peers, and support other customers for you. Although a handful of companies have been able to accomplish this without their own social presence on the web, they didn’t have access to customer interaction data or direct contact with their advocates. A complete Social CRM approach includes five key elements: Customer-focused community applications—establishes the company’s beachhead in the social web and serves as the jumping-off point for future inroads. User profiling and reputation management—helps companies identify and cultivate the advocates and influencers who will amplify the company’s message and provides data for socially-driven marketing campaigns. Workflow connection to traditional CRM systems—ties the social web to the company’s internal processes, allowing all parts of the enterprise to take action. Integration with the social web—lets companies participate in the vast majority of conversations that are already occurring just out of sight. Actionable analytics—provide insights so that companies can be proactive when they detect trends and demonstrate ROI. Customer-focused community applications Customer-focused community applications, what Clay Shirky defines as “software that supports group interaction,” are the cornerstone of a Social CRM solution. 23 These applications are business tools that encourage participation and interaction among users who don’t know one another. Further, they tie customers more tightly to one another and to companies that deploy them. Customers Company Influencers Prospects
  • 10. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 10 of 17 The most common customer-focused applications include forums, blogs, chat, idea exchanges, and wikis or community-driven knowledge bases. Online community members typically use social bookmarking, tagging, RSS feeds, and search to organize and access the content they’re most interested in. It’s important to note that these applications are distinct from internal collaboration tools that companies may use internally because they succeed or fail based on the level of trust they create between people who may otherwise have no connection to one another. Social CRM applications must be customer-focused to deliver value by helping to build the customer network. Beagle Research Group sums it up this way: “Community is the heart of all CRM 2.0 capabilities because the community is the means by which customers on the outside become participants on the inside.”24 Andrew McAfee adds, “The benefit of blogs becomes much more clear when they’re seen as tools to convert potential ties, strong or weak, into actual ones.” 25 One area in which enterprises can see clear benefit from online customer communities is word-of-mouth message propagation. A rock dropped in a pond creates ripples that eventually decay over time. Likewise, marketing messages fizzle out unless they are rebroadcasted.26 According to Dr. Michael Wu, principal scientist at Lithium, customer communities help generate market buzz by rebroadcasting the brand message with both strength and frequency. These interesting conversations are not limited to the community. In one of his many studies of online communities, Dr. Wu has observed that customer advocates function as repeating stations, broadcasting their opinions to their personal social networks. Another source of significant benefit from online customer communities is in the area of peer-to-peer support. Natalie Petouhoff of Forrester Research points out: “Customer service professionals must find innovative ways to engage with ‘social customers’ via emerging social media technologies. Online customer service communities make self-service a more satisfying customer experience, in addition to reducing costs for the provider.”27 User profiling and reputation management Before they can mobilize advocates, companies must know the people who are talking about them and what they are saying. Social media, by its very transparent nature, is of tremendous assistance to companies in the perpetual quest to know and market to their customers better. Not only can companies listen to their customers, but they can also observe how they behave in social situations, gauge their impact on others, and connect with them directly. According to Tom Chapman of Social Media Marketing, “Marketers need to understand that social networks and communities will influence CRM; resulting in corporate sites and marketing communications being able to recognize social relationships and customers’ preferences and deliver customized experiences to them in real-time.”28
  • 11. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 11 of 17 Now, more than ever, reputation matters. The increase in social interactions brings a corresponding increase in noise. Open and transparent communities not only attract highly passionate advocates, but also users with malicious intent. However, community practitioners have discovered that they can let customers differentiate themselves by their online behavior. Avid contributors nurture and protect their reputations because their ranking or position in the community is a source of pride. Jeremiah Owyang of Forrester Research sums it up this way: “A reputation system that identifies the most active contributors lets marketers easily reward members’ participation and nurture their positive behavior. For example, Lithium Technologies’ system accomplishes this by rewarding helpful members with badges, additional community privileges, and access to VIP areas.”29 At the same time, rank in the community helps to reduce the uncertainty that customers and prospects might feel when faced with anonymous advice or reviews. Networks like Yelp and eBay thrive on user reputation; a strong reputation fosters trust among the community members and makes the individual more influential. As Andrew McAfee describes it, “Self-organizing communities…don’t care what your job title is, where you went to school, or how many letters you have after your name. People build status, reputation, and authority within them based on how much they do and how well they do it. These reputational attributes become very important to many (if not most) members.”30 A reputation management system is also essential to enable content consumers—who far outnumber content creators—to separate the useful from the non-useful and categorize content as relevant and trustworthy. Forums TKB Blogs Ideas US User-Generated Content Consumers and Creators, 2008 & 2013 (millions and % of Internet users) User-generated content consumers 115.7 (60%) 154.8 (70%) 82.5 (42.8%) 114.5 (51.8%) User-generated content creators Source: eMarketer, January 20092008 2013
  • 12. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 12 of 17 Jakob Nielsen’s widely accepted 90-9-1 rule states that 90% of community participants are lurkers or readers, 9% occasionally contribute content, and the remaining 1% are active contributors.31 The active 1% typically generates 40-60% of content on a community. Similarly, in a recent Harvard Business Review article the authors observed that 10% of Twitter participants accounted for 90% of tweets.32 Identifying and cultivating brand advocates—the active 1%—becomes critical to the success of the enterprise. A recent profile in the New York Times examines “Web-savvy helpers” that Verizon and other enterprises are coming to rely on for customer service. Volunteers like Justin McMurry, a “Silver II” contributor and community leader on the Verizon support community, give their time and knowledge freely, representing a significant asset to enterprises that identify and nurture them. What’s in it for the brand advocates? Recognition and a sense of satisfaction. In discussing the Verizon community, Andrew McAfee comments, “Part of the reason I advocate Enterprise 2.0 ratings for knowledge workers is to harness this addiction—to find the Justin McMurrys of the world, take as much as they’re willing to give, and give them something they value in exchange, namely a persistent and visible reputation as an expert / maven / mensch / all-around-good-person-to-have-around.”33 In the world of Social CRM, a good customer is no longer the one who buys the most. Paul Greenberg advises, “Rather than aiming at a satisfied customer (an increasingly useless metric) and even rather than thinking that a loyal customer is your best customer, your objective should be to create advocates and settle for loyal customers.”34 Workflow connection to traditional CRM systems Simply showing up and listening is not enough. In return for the peer-to-peer support, product or brand advocacy, and new product ideas that will flow from online communities and the social web, companies must respond. They must encourage continued participation by acknowledging customer feedback, but more importantly, they must act on that feedback to capitalize on the market advantage that their customers are providing. The surest and most effective way to ensure that companies respond appropriately is to capitalize on the significant investment they have already made in CRM. For example: By integrating their social web and online communities with existing cross-functional workflows, companies can both divert issues away from a paid support force and ensure that critical issues and insights from the community are escalated to the correct organiza- tion for action. Companies can capture the content produced by their community experts and use it to augment the company’s knowledge stores. Companies can enhance their sales prospecting activities by monitoring unusual activity on the community. Companies can use community demographic and behavioral data in CRM or marketing automation tools to target customers more effectively.
  • 13. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 13 of 17 In making the case for Social CRM, Tom Chapman offers this: “Social CRM…is your existing CRM that has the ability to leverage the social web and automate the conversation process. The social CRM can be used by marketing and sales teams to listen to conversations, craft appropriate messages, join in immediately with customer conversation and offer them value in terms of information and solutions.”35 Integration with the social web Your customer network is everywhere—in your online community and in all the other places where your customers can be found. Conversations are happening on Facebook, on Twitter, and on hundreds of similar social sites. Customer communities give corporations good visibility into a large percentage of the conversations, but companies also need to invest in integration not just to connect the social web to the company, but also to the customer community. Only the community can effectively mediate between the social web and the company. According to TechCrunch, “The conversations that power social media are sparking a sense of urgency to identify influential voices and talk to customers in a place and time of their choosing.”36 In response, a number of companies of all types—Comcast, Virgin America, JetBlue, and Qwest, for example—have used Twitter to reach out to customers. However, we suspect that Twitter will only provide business value when users’ energies are directed from Twitter to sites that are both social and goal-oriented. Rather than continuing to invest in the infrastructure and resources required to participate in a handful of today’s most popular social media channels, companies are better served by integrating their listening activities into a single, scalable platform. Whether the conversation is on Facebook, Twitter, MySpace, or the Next Big Thing that’s just around the corner, companies will want to do more than listen; they will want their best advocates to be able to participate. And without an established platform for these advocates, companies will find it vastly more difficult to direct the conversation. Actionable analytics In the fast-evolving world of the social web, companies are constantly iterating on their social engagement practices, trying new strategies and learning from both their successes and failures. Solid analytics are essential for all of the varied stakeholders in the enterprise to gauge the effectiveness of their programs and to make course corrections as needed. All of the interactions that occur in a community are generating a gold mine of data for the company. In the hands of people who can act on it immediately, this data gives companies a tremendous competitive advantage. The close proximity that companies have to their own community data lets them respond to rapidly shifting conditions at web speed. Writing in his personal blog, Paul Gilliham of Juniper Networks says, “I now have the ability to target particular metrics in my promotion or tuning of a community. And for a Community Manager, that is gold.”37
  • 14. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 14 of 17 And more… Just as there’s more to customer relationships than data management and process automation, there’s more to Social CRM than a box of software that lands on your doorstep. In addition to the appropriate technology, a Social CRM implementation requires a sound strategy, careful planning, and best practices to ensure its success. Perhaps Matthew Lees of Patricia Seybold Group sums it up best when he advises companies to be where their customers are. “Your customer community goes well beyond the forums and blogs your organization supports. It’s anywhere your customers are connecting with each other, online or off.”38 Summary A social revolution has changed the way people communicate—with each other and with the brands they purchase and support. In the wake of this revolution, customers are no longer content to be passive consumers of advertising; instead, they want to engage in a conversation with their brands. They want the companies they buy from to be responsive and to acknowledge their feedback. The conversation will continue to buzz, regardless of whether companies join in. To capture the value to be derived from a customer network, however, companies must use Social CRM strategies and applications to engage with their customers both on their own home ground and across the social web. Only then can companies tap into the millions of dollars of value that come from the customer advocates who are waiting to help you improve your products and services, promote your brands, and support your customers. All you have to do is ask them.
  • 15. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 15 of 17 Notes and References 1 “2008 Cone Business in Social Media Study”, Omnicom Group, September 2008. (http://www.omnicomgroup.com). 2 “2008 Cone Business in Social Media Study”, Omnicom Group, September 2008. (http://www.omnicomgroup.com). 3 Petouhoff, Natalie, PhD, Senior Analyst. “The Economic Necessity of Customer Service”, Forrester Research, Inc., 21 January 2009. 4 Leary, Brent. “Traditional CRM vs. Social CRM”, Inc. Technology, June 2009. (http://technology.inc.com/software/articles/200906/leary.html). 5 Solis, Brian. “Real-Time Conversations Hasten Social CRM”, TechCrunch, 11 July 2009. (http://www.techcrunch.com/2009/ 07/11/real-time-conversations-hasten-social-crm). 6 Band, William, Principal Analyst. “CRM 2.0: Fantasy or Reality?”, Forrester Research, Inc., 17 November 2008. 7 Mayfield, Ross, CEO and Founder of SocialText. “Real-Time Conversations Hasten Social CRM”, TechCrunch, 11 July 2009. (http://www.techcrunch.com/2009/07/11/real-time-conversations-hasten-social-crm). 8 Sarner, Adam, Research Director. “The Business Impact of Social Computing on CRM”, Gartner, Inc., 4 February 2009. 9 Rust, Roland T., Lemon, Katherine N., and Zeithaml, Valerie A. “Return on Marketing: Using Customer Equity to Focus Marketing Strategy”, Journal of Marketing, January 2004. 10 “Global Faces and Networked Places: A Nielsen report on Social Networking’s New Global Footprint”, The Nielsen Company, March 2009. (http://blog.nielsen.com/nielsenwire/wp-content/ uploads/2009/03/nielsen_globalfaces_mar09.pdf). 11 Thompson, Bob. “U.S. Consumer Preferences for Company Usage of Social Media”, CustomerThink, June 2009. (http://www.customerthink.com). 12 Benioff, Marc, CEO of Salesforce.com. “Businesses to Use Twitter to Communicate With Customers”, USA Today, 26 June 2009. (http://www.usatoday.com/tech/news/2009-06-25-twitter- businesses-consumers_N.htm). 13 Greenberg, Paul. “Time to Put A Stake in The Ground on Social CRM” blog post, ZDNet — Social CRM: The Conversation Blog, July 6, 2009. (http://blogs.zdnet.com/crm/?p=829). 14 Lithium Case Study: “The Linksys ROI Story: Support Community Delivers Significant Savings From Call Deflection”, Lithium Technologies, Inc., March 2008. 15 Lithium Case Study: “The Redfin Customer Community Social CRM Drives 40% Revenue Growth”, Lithium Technologies, Inc., July 2009.
  • 16. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 16 of 17 16 Lithium Case Study: “The Future Shop Community: Connect, Share, Learn”, Lithium Technologies, Inc., May 2009. 17 Thompson, Bob. “CrowdService: A Clear and Present ROI for Social CRM”, CustomerThink, 26 June 2009. (http://www.customerthink.com/article/crowdservice_clear_and_present_roi_for_ social_crm). 18 Lithium Case Study: “Sage Software’s ACT! Community: Transparency Drives Increased Customer Loyalty”, Lithium Technologies, Inc., January 2009. 19 Lithium Case Study: “The Linksys ROI Story: Support Community Delivers Significant Savings From Call Deflection”, Lithium Technologies, Inc., March 2008. 20 Lithium Case Study: “Lithium Technologies Helps Create World Class Online Customer Support Community”, Lithium Technologies, Inc., December 2007. 21 Thompson, Bob. “CrowdService: A Clear and Present ROI for Social CRM”, CustomerThink, 26 June 2009. (http://www.customerthink.com/article/crowdservice_clear_and_present_roi_for_ social_crm). 22 McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras). 23 Shirky, Clay. “A Group Is Its Own Worst Enemy” blog post, Clay Shirky’s Writings About the Internet, 1 July 2003. (http://www.shirky.com/writings/group_enemy.html). 24 Pombriant, Denis. “CRM WizKids 2008: Taking CRM to the Next Level”, Beagle Research Group, March 2008. 25 McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras). 26 Wu, Fang and Huberman, Bernardo, “Novelty and collective attention”, Proc. Natl. Acad. Sci. (USA), Vol. 105, 17599. 2007. (http://www.hpl.hp.com/research/idl/papers/novelty/index.html). 27 Petouhoff, Natalie, PhD, Senior Analyst. “The Economic Necessity of Customer Service”, Forrester Research, Inc., 21 January 2009. 28 Chapman, Tom. “Social CRM — the next big thing?” blog post, Social Media Marketing Blog, 13 June 2009. (http://www.socialmediamarketinguk.com/social-crm-the-next-big-thing). 29 Owyang, Jeremiah K., Senior Analyst. “What Works in Online Company Forums”, Forrester Research, Inc., 24 November 2008. 30 McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras/). 31 Nielsen, Jakob. “Participation Inequality: Encouraging More Users to Contribute” blog post, Useit.com Blog, 9 October 2006. (http://www.useit.com/alertbox/participation_inequality.html).
  • 17. Powering the Customer Network with Social CRM © 2009 Lithium Technologies, Inc. All Rights Reserved. Lithium Technologies, Inc. lithium.com | 6121 Hollis Street, Suite 4, Emeryville, CA 94608 | tel 510.653.6800 | fax 510.653.6801 17 of 17 32 Heil, Bill and Piskorski, Mikolaj. “New Twitter Research: Men Follow Men and Nobody Tweets” blog post, Harvard Business Publishing — Conversation Starter Blog, 1 June 2009. (http://blogs.harvardbusiness.org/cs/2009/06/new_twitter_research_men_follo.html). 33 McAfee, Andrew. “Three Mantras” blog post, Andrew McAfee’s Blog: The Business Impact of IT, 29 April 2009. (http://andrewmcafee.org/2009/04/three-mantras). 34 Greenberg, Paul. “Time to Put A Stake in The Ground on Social CRM” blog post, ZDNet — Social CRM: The Conversation Blog, July 6, 2009. (http://blogs.zdnet.com/crm/?p=829). 35 Chapman, Tom. “Social CRM — the next big thing?” blog post, Social Media Marketing Blog, 13 June 2009. (http://www.socialmediamarketinguk.com/social-crm-the-next-big-thing). 36 Solis, Brian. “Real-Time Conversations Hasten Social CRM”, TechCrunch, 11 July 2009. (http://www.techcrunch.com/2009/07/11/real-time-conversations-hasten-social-crm). 37 Gilliham, Paul. “Measuring Community Health” blog post, Tea Fueled Experience Blog, 7 July 2009. (http://bladefrog.blogspot.com/2009/07/measuring-community-health.html). 38 Lees, Matthew, Vice President and Consultant. “Community and the Customer Lifecycle: Supporting Your Customers as They Navigate the Seven Lifecycle Phases”, Patricia Seybold Group, 11 December 2008.