Managing customer experience in the era of Social media

1. T he C us tomer
E xperienc e
In a World of S oc ial
Media R evolution
Ed Thompson
VP, Analyst

2. “ May you live in
interes ting times ”
Source: Confucius, 500BC
Source: John F. Kennedy, 1966
Source: U-Turn by Duncan H Munro, 1950

3. Greek Autumn
Source: Wikipedia

4. Arab Spring
Source: Wikipedia

5. London Summer
Source: Wikipedia

6. Welsh Winter

7. New Zealand Summer

8. Tools of Revolution?

9. Tools of Revolution… People

10. E ngaging P eople is
R es haping S oc iety

11. E ngaging P eople is
R es haping C ountries

12. E ngaging P eople is
R es haping B us ines s

13. Facebook
Public Social Networks
Skype Google+
The Source
CompuServe GeoCities
LinkedIn Bebo
1980 1990 2000 2010
AOL
Delphi Twitter
BIX MySpace
Orkut
The QZone
WELL Friendster

14. Agenda
What’s happening today?
What’s really happening today?
Where are we heading?

15. Agenda
What’s happening today?
What’s really happening today?
Where are we heading?

16. Top 10 CEO Business Priorities in 2011
Mean
Rank
Business Priorities in 2011 Rating
Order
Score
1 Retaining and enhancing existing customers 6.17
2 Attracting and retaining skilled workers / talent 6.09
3 Attracting new customers 5.89
4 Building a responsive, flexible organization 5.78
5 Reducing costs via better efficiency 5.71
6 Fostering innovation 5.59
7 Becoming more open and collaborative with customers 5.55
8 Planning and designing the strategy for your business 5.52
Improving management decision making via better
9 5.46
information and analysis
10 Balancing short-term goals with long-term strategy 5.45

17. The Top 12 Board of Directors Business Priorities
Rank Business Priorities Importance
(1 to 7)
1 Maintaining competitive advantage 6.39
2 Retaining and enhancing existing customers 6.27
3 Attracting new customers 5.83
4 Focusing on core competencies 5.68
5 Fostering innovation 5.41
6 Developing a succession plan 5.32
7 Building new competencies 5.27
8 Moving into new geographical markets 4.90
9 Increasing speed to market 4.85
10 Changing the expected rate of return for shareholders 4.83
11 Responding to regulatory changes 4.80
12 Moving into new product or service markets 4.80

18. CEO Concerns 2011 vs. 2010
Start 2010 Start 2011
1. Retaining customers and 1. Retaining customers and enhancing
enhancing existing relationships existing relationships
2. Attracting new customers 2. Attracting and retaining skilled
3. Attracting and retaining skilled workers/talent
workers/talent 3. Attracting new customers
4. Reducing costs via better 4. Building a responsive, flexible
efficiency organization
5. Balancing short-term goals with 5. Reducing costs via better efficiency
long-term strategy

19. CRM Objectives in August 2011
Increase acquisition of new customers
Increase sales revenues
Improve lead quality and conversion
Create a single view of the customer
Increase customer loyalty
Revenue
Increase sales person productivity
Reduce cost of service Loyalty /
Increase value to citizens Satisfaction
Other (please specify)
Cost Reduction
Increase partner loyalty
Improve pricing
Increase community participation rates
Source: Gartner CRM Summit Pre-conference Survey
August 2011, three responses permitted
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

20. What's Hot in CRM in 2011
Sales Customer Service Marketing
Mobility –Tablets/ Smartphones Social CRM / community Social media for marketing
SaaS SFA SaaS CSS Digital marketing
E-Commerce/Web 2.0/B2B Web self-service Loyalty management
Lead management Knowledge management Lead management
for service resolution
Social CRM sales Mobile support Marketing resource mgmt
Price Optimization Real time decisioning Marketing perf. measurement
Sales Performance Mgmt Feedback management Predictive analytics
Configure, Price, Quote Multichannel service BPM Inbound marketing
Webchat for service Partner, distributed and field
Sales Incentive Comp.
marketing
Forecasting and pipeline Workforce optimization Mobile marketing
Unified communications
Sales Effectiveness Content Web analytics & Advert mgmt
and collaboration
Sales training Text mining Event-triggered marketing
Multichannel Selling VOIP and Presence Integrated Marketing Mgmt.
Cross-CRM
Master Data Management Business Process Mgmt Customer-Centric Web

21. CRM Application Selection Criteria
Weightings 2000-2011
Functionality
Vision 24%
7%
Viability Technical
18% Architecture
16%
Services Costs Usability
20% 15% 10-15%
Upward Trend for Downward Trend
Weightings for Weightings

22. CRM Trend Waves
6% of spending 24% of spending 70% of spending
Potential 30% growth 20% growth 10% growth
Disruption
Social
Analytic
Operational
Reciprocity Understanding Automate
Do For You Do With You Do To You
Customer Centricity
Emergent Established

23. Social CRM Investment
By YE2012, spending on social software to help sales, marketing
and customer service processes will exceed $1 billion worldwide.
Supporting the SPA: Alternate position to the SPA:
• Use of social media is growing, and it is • The business value of adding "social"
thus a natural extension of what as a communication channel has
channels organizations engage their proved negligible for many
customers through. organizations.
• The relentless focus on the "customer • New legislation will restrict the ability
experience" will continue to fuel to market and sell within the public
investment, as Social CRM offers an social arena (much like
ideal opportunity to understand what telemarketing).
customers want and what experiences
they've had.
• Vendors are emerging that provide
viable social CRM solutions.

24. Three Realms of Social Software
Social Software Externally Facing Public
in the Workplace Social Software Social Media
Data, user experience
Data, user experience and governance
and governance may
controlled by the enterprise; private; white label
be controlled by
others; prebranded
Your people, Your people, Your people,
your place other people, other people,
your place their place
Assisting with connecting, marketing, selling, servicing, crowdsourcing, recruiting,
training, producing, communicating

25. Top Reason for Investing in Social Media:
To Strengthen Customer Relationships
Question: What are the three most important reasons for your organization to invest
in social media and collaboration tools and software?
Strengthen relationship with customer
Enhance brand awareness or brand…
Establish interactive relationship with…
Share information and ideas with…
Increase my organization's revenue
Leverage viral marketing
Enhance general employee productivity
Move users toward a self-service model of…
Decrease business costs
0 5 10 15 20 25 30 35 40 45 50
N = 798 Percentage of respondents
Source: Gartner Social Media Survey (February 2011)

26. Which Industries are Investing?
Information technology services…
Banking, Finance and Insurance
Retail
Consumer product manufacturer
Education
Media
Manufacturing - Computers,…
Pharmaceuticals and Healthcare…
Charities
Telecommunications and Comms…
Government
Automotive
Healthcare providers
Business Services - Consulting
Aerospace & Defense
Utilities and Energy
Construction and Real Estate
Transport and Logistics
Other, please specify
Social CRM Magic Quadrant References May 2011
n=145 % 5% 10% 15% 20%

27. Agenda
What’s happening today?
What’s really happening today?
Where are we heading?

28. New CRM is
Driven by the
Customer Experience

29. My World!
My Way!

30. C ons umeris ation
of IT

31. The Tyranny of the People
Source:
http://www.computerworld.com/s/article/9213139/Apple_s_iPad_2_provokes_IT_anxiety?source=CTWNLE_nlt_dailyam_2011-03-04

32. S oc ially C onnec ted
Digitally E nabled

33. “In a few hundred years, when the
history of our time is written from a
long-term perspective, it is likely the
most important event historians will
see is not technology, but the
unprecedented change in the human
condition. For the first time, people
have choices.”
Peter F. Drucker

34. If it is Digital –
it is Dis c overable

35. C ontrol is an Illus ion
- G et Over It

36. T he “ C ollec tive”

37. You
C annot
C ontrol the
C ollec tive

38. Don’t under-
es timate the
C ollec tive

39. T he C ollec tive has c hanged
the c ours e of His tory

40. T he
C ollec tive
is c hanging
the c ours e
of His tory
now

41. What do P eople
really Want?

42. Value
Matters

43. Trus t
Matters

44. R eputation
Matters

45. Edelman Trust Barometer 2010: Trust
Trust in Business 2001 to 2010
60
40
20
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
U.S. U.K./France/Germany

46. Edelman Trust Barometer 2010: Reputation
How important are these factors to
corporate reputation?
83
Company I can trust 83
79
Communicates frequently 75
72
Good corporate citizen 64
58
Innovator 48
47
Financial returns 45

47. Customers Care More About the Customer Experience Than in the Past
Those discontinuing business with a company after a negative customer
experience climbed from 68% in 2006 to 86% in 2009
60% of consumers will always or often pay more for a better customer
experience. 82% of consumers with a bad experience told others about it, up
from 67% in 2006
69% of consumers switched providers in at least one industry sector because of
poor service in the last year, 89 percent tell their friends about their bad
experiences, and 25 percent use social media
40% of loyal customers said that they are willing to pay 10% or more to continue
purchasing from companies delivering great experiences, in contrast with 9% of
dissatisfied customers. 52% of dissatisfied customers expect discounts of 5% or
more to continue doing business
87% of people felt they had a right to a better contact center experience if they
regularly spend money with a company
Sources: Customer Experience Impact Report, 2009 by Harris Interactive for RightNow, Sept. 2009; 2009 4th Annual Customer Service
Survey, Accenture, Nov. 12th 2009; 2009 Customer Experience Consumer Study, Strativity Group, Aug. 4th 2009, Consumers Unforgiving
When it comes to Customer Care, YouGov for Teleperformance, Oct. 2009

48. The Measurable Benefits of Customer Experience Management
Customer Satisfaction Scores Average Cycle Times
Mystery Shopper Scores Timeliness
Customer Product Review Ratings Competitive Benchmarks
Satisfaction First-Call Resolution Rates Number of Support Requests
Customer and Employee Referrals Average Order Size
Deactivation/Reactivation Costs Average Customer Tenure
Customer Attrition/Churn Rates
Loyalty/ Loyalty Program Enrolled/Participating
Purchase Frequency
Adoption of New Products
Advocacy Brand Advocates/Net Promoters Use of Multiple Channels
No. of Product or Service Upgrades No. of Repeat Orders
No. of Customers "Likely to Defect" No. of Customers Interacting
Brand/ Brand Value Price Sensitivity
Social Network Participation, Likes
Reputation Brand Perception (Recognition,
Trust Rating
Website Usability Benchmark
Credibility, Relevance, Influence) Sentiment Scores
Product Reliability or Defect Rates Delivery Timeliness and Accuracy
Quality Tolerance of New Processes Product Return Rates
Accuracy of Inventory and Pricing End-to-End Transaction Times

49. Heading for Higher Levels of
Customer Experience Maturity 1%
Culture
4% Change
Profit Parity
20%
Execs
30% Engaged
VOC
45% Validated
Fragmented
Focus
Initial Developing Defined Managed Optimizing

50. "We are entering the
period of the open-source
brand, where in order for
people to feel it is relevant
to them, they have to have
a part in creating it."
Mark Kingdon, former CEO of Ad agency Organic

51. Agenda
What’s happening today?
Where are we heading?

52. Mobile Devices are Transformational
Smartphones and Media Tablets vs “Why can’t I get this
PC Shipments application on my
1000 IOS, iPhone?”
Android  Mobile #3 CIO
units (in shipments)
800 and RIM technology priority
phones Windows for 2011
600 PCs  Some CIOs expect
400 20%+ of employees
IOS and
to use tablets instead
200 Android
of laptops in ‘13
Tablets
0
2008 2009 2010 2011 2012 2013 2014 2015

53. Apps are Transformational
“Why can’t this
Phone & Tablet vs ERP and BI
application be like an
Application Revenues
50
app?”
Phone,
Tablet  Convenient
revenue ($billions)
40
Apps  Cost-efficient
30 ERP
 Delightful
20  User-centered
BI
 Simple
10
 Single-purpose
0  Social
2008 2009 2010 2011 2012 2013 2014 2015  Rewarding

54. App Stores are Transformational
Phone and Tablet App Store “Why can’t I choose the
Downloads (billions) application that’s best for
120 me?”
108.8
 Competition
100 76.1  More innovation
80
49.2  Lower sw costs
60  Challenges
31.2
40  Security
17.7
20 8.2  Interoperability
2.5
0.5  Support costs
0
2008 2009 2010 2011 2012 2013 2014 2015

55. New Developers are Transformational
“Why do I have to wait for IT?”
 100k+ apptrepreneurs
 300k+ crowdsource developers
 50+ million potential end user
Application Value
developers
IT
Cut-off
Apptrepreneurs
Crowdsourcing
DIY
Application Rank
Source: SCAFFIDI C., SHAW M., AND MYERS B.A..
Estimating the numbers of end users and end user programmers

56. Hype Cycle for CRM Customer Service
expectations
Expertise Location and Management
Customer Service
Process Integration Audio Mining/Speech Analytics
Enterprise Feedback Management
External Community Platforms
SaaS for Contact Center Customer Service
Real-Time Decisioning Directed Dialogue Speech
Contact Center Workforce Optimization
Recognition for Contact
Customer Interaction Hub Contact Center Performance Management Applications
Center
Interaction Analytics Natural-Language
Intent-Driven Systems Speech Recognition
Emotion Detection Contact Center BPO
MDM of Customer Data
Customer Service Contact
Video-Based Customer Support Center Software
Contact Center Workforce Management
Mobile Virtual Worlds Contact Center Quality Management
Customer-Centric Web Strategies Comprehensive
CM BPO Knowledge Management for Customer Self-Service
Video Analytics for Customer Voice Verification for Field Service Management
Service Call Center Customer Web Customer Service Suites
Rich Information Visualization Authentication Work-at-Home/Remote Agent
Virtual Assistants Intelligent Device Management
Field Service Workforce Optimization
Pattern-Based Strategy
As of July 2010
Technology Peak of Trough of Slope of Enlightenment Plateau of
Trigger Inflated Disillusionment Productivity
Expectations
Years to mainstream adoption: time
obsolete
less than 2 years 2 to 5 years 5 to 10 years more than 10 years before plateau

57. Strategic Planning Assumption:
By 2015, one-third of spending on
new CRM software will be SaaS.
In 2010, 26% of the CRM software market was delivered by software as a service (SaaS).
This is up from virtually zero in 1999. For 2014, Gartner forecasts that 32% of the
CRM software market will be delivered by SaaS. For 2020, analysts expect that
50% of the market will be SaaS.

58. Strategic Planning Assumption:
In 2015 75% of consumers will tell
their friends about their bad experiences
using social media up from 25% in 2010

59. CRM application Social CRM CRM Apps 40% of
spending grows market tops market reaches all CRM Fred Reichheld’s
15% in 2011 $1 Billion $11.7 Billion sold as next great book
(up 28% on SaaS
2009)
2012 2014 2016
2010
RightNow
Initiate, Siperian, becomes 8th
Biz360, Chordiant, largest CRM
Sterling Commerce, Facebook reaches
software vendor
Jigsaw, Scoutlabs, Tata, Wipro, Infosys or two Billion
RightNow Cognizant become 4th members
Cast Iron, Sybase
tops $230m largest CRM service
acquired
revenues provider in NA

60. What CRM Could Look Like in 2020
1990 2000 2010 2020
App Penetration 2% 25% 40% 90%+10%(!)
DIY vs. COTS 90:10 80:20 50:50 30:70
Hot App SFA Suites Social Mobile/IDM**
Hot Tech Laptop Single View SaaS Utility
Hot Sector Pharma Telco CPG Retail
Differentiator Viability Function Ease of Use Price
P/U/P/M* $300 $150 $75 $25
Vendor Numbers 50 800 700 500
"8BB" Most Tricky Tech Strategy Metrics Governance
Department $ IT Sales Marketing CSS
Biggest Projects $10m $500m $100m $200m
Customer-Focused Medium Low Medium High
* Price of software per user, per month. **IDM = intelligent device management

61. T he C us tomer
E xperienc e
In a World of S oc ial
Media R evolution
Ed Thompson
VP, Analyst