1. Social Networking for Customer
Contact—Market Insight
Market Overview
Introduction
Social networking has been and continues to be a cultural phenomenon. It is quickly also
becoming a business phenomenon. Increasingly, current and prospective customers are using
social networking to communicate about the products and services they buy or intend to buy.
These peer-to-peer or customer-to-customer communications are sometimes happening
instead of contacting the companies who offer the products and services. Leading enterprises
have recognized the importance of tapping into these customer-to-customer communications
and are following a number of paths to learn, participate, support their customers and in
other ways leverage these social conversations for their business' benefits.
Various departments in enterprises see opportunities with social networking, including sales
for lead-gen, public relations for brand promotion/defense, and product management for
product feedback and ideas. Leading enterprises are also addressing social networking for the
purpose of customer service. Customers helping each other on social networks could be
viewed as a value add by enterprises—"they are answering each others questions and it is not
costing us anything". But, most are viewing this activity as a disruptive force in customer
service or as a proof point for the movement or power shift from the enterprise to the
customer —"they are not coming to us directly because we have lost their trust or failed them
in some other ways".
Early adopter enterprises are engaging social networking for customer service in three
primary areas. One is establishing customer communities or forums which support on-line
virtual customer communities where customers and enthusiasts can ask each other questions
and share experiences with the enterprise's products and services. Another is through the use
of listening platforms, which are applications for monitoring social conversations on the
Internet and elsewhere. Through monitoring social conversations an enterprise can get an
early warning about customer service issues. And the third is building contact center applica-
tion support for processing inbound and outbound customer contacts via social media, such
as Twitter messages.
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2. The business cases for these social networking activities in support of customer contact are
just emerging. Actual costs for establishing and supporting a customer community vary
greatly. Likewise, benefits for customer communities vary, but primarily based on calls
deflected (answered in the forum) most enterprises are realizing a payback within 12 months.
Business cases for monitoring of social conversations are less clear. But, with or without clear
business cases support for social networking has become a high priority for early adopter
enterprises, particularly large B2C enterprises.
Scope and Methodology
This research service presents a picture of the use of social networking for customer contact
in North America in 2010. This research service also outlines the key trends, drivers, chal-
lenges and restraints observed in the social networking for customer contact market during
2010, along with the Frost & Sullivan strategic recommendations for growth initiatives.
The following research methodology was employed for this research service:
Frost & Sullivan primary interviews—Frost & Sullivan conducted extensive interviews
with the key market participants in the North American social networking for customer
contact market to understand key dynamics and other information required for a
comprehensive market analysis.
Secondary research—Secondary research consisted of extensive reviews of press releases
issued by market participants, industry publications, SEC filings, as well as
Frost & Sullivan's in-house databases.
Definitions
Call Deflection—direct—the avoidance of customer telephone calls to an enterprise's contact
center—resulting from potential callers posting question/receiving answers on customer
community/forum—indirect—the avoidance of customer telephone calls to an enterprise's
contact center—resulting from potential callers finding answers to questions on customer
community/forum or web site without asking question; also referred to as savings from
search.
Customer Communities and Forums—on-line virtual community where customers and enthu-
siasts can interact with each other including: search for information, post questions, answer
questions, offer advice, share experiences. Example forum application vendors: Lithium
Technologies, Get Satisfaction, Consona, and RightNow Technologies.
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3. Listening Platforms—applications capable of mining a wide variety of on-line sources, such
as social networking websites and blogs, to extract enterprise brand and product references.
Example listening platform vendors: Radian6, Nielsen BuzzMetrics, and Visible
Technologies.
Sentiment Analysis—language processing and text mining to determine the attitude of a
speaker or a writer with respect to a topic; also referred to as opinion mining
Social CRM—the intersection of social networking and customer relationship management
Market Trends
Explosive growth in the use of social networking
Over the past several years there has been gradual and since 2009 an explosive growth in the
use of social networking on the Internet. This is part due to the advertising-funded model
many of the most popular social networking sites operate on. Some recent statistics about the
leading social sites are:
Facebook
300 million active users
50% log on everyday
fastest growing demographic—over 35 years old
supports 69 languages
70% of users —outside the United States
Twitter
50 million tweets/day
75 million users
20% contain product or brand references
LinkedIn
48 million over 200 countries; 1 joins each second
50% of members—outside the United States
executives from all Fortune 500 companies are members
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4. YouTube
serving 1 billion videos per day
every minute, 20 hours of video uploaded
Increasing relevance of social networking for
enterprises
Some social networking activities are clearly business-focused, such as participating in
LinkedIn for maintaining/growing business contacts. However, most appear to be
purely-social—meeting new people, reconnecting with old friends, and sharing experiences
with other like-minded people. While the purely-social use of social networking continues
unabated, increasingly so people are using social networking to ask each other questions and
share experiences about the products and services they buy and are interested in. Various
groups within enterprises, particularly large B2C enterprises are beginning to see opportuni-
ties for their activities from social networking. Sales groups see the opportunity to find new
customers, public relations groups see the opportunities for brand promotion, product devel-
opment groups see the opportunity to get product feedback and new ideas, and customer
service groups see both the cost savings values of customers answering each others questions
and the imperative to connect with this peer-to-peer customer support activity. Centers of
excellence for social networking are emerging in leading adopter enterprises. The location of
these centers of excellence varies by industry and by company, but are often centered in the
public relations and marketing groups with customer service as a key participant.
Growing availability of SNCC solutions
There is a growing availability of customer service-related social networking solutions. In
broad categories there are:
a) forums for supporting online virtual customer communities
b) listening platforms for monitoring social conversations on the Internet and elsewhere
c) applications for processing inbound and outbound customer contacts via social media,
such as Twitter messages.
Surrounding the broad categories are a number of other related applications such as knowl-
edge bases for containing the knowledge created in customer communities, analysis tools for
processing the content of social conversations and determining customer values and senti-
ment, and reporting/dashboard tools for monitoring social activities. At this point, many of
the social networking applications for customer contact are only available as hosted or
SaaS-based service offerings. These would include customer forums and social conversation
listening applications.
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5. Market Challenges
Non-business Perception of Social Networking
There is a wide-spread perception that social networking is a cultural phenomenon engaged
in primarily by young people and has little or nothing to do with business. Social networking
is also viewed to be an employee time-wasting activity and a potential security risk for
company confidential information. (Source: recent Frost & Sullivan survey of C-level
executives)
Unclear Business Case for Social Conversations
Monitoring
Even as business cases for supporting customer communities and forums are very good, the
business cases for the monitoring of social conversations are not as clear. Most social
conversation monitoring business cases seem to be based on difficult-to-quantify intangibles,
such as the avoidance of low-probability, but very high-cost brand damaging incidents, or the
feedback value of product/services social commentary. While this justification is sufficient for
an increasing number of enterprise public relations groups to engage in monitoring it has not
been sufficient for most customer service organizations.
Enterprises' Lack of Social Strategies
It is still early days for social networking and its value for business. In a great many enter-
prises the awareness of the potential of social network and the imperative to engage with it
are just emerging. Departments within enterprises view the opportunities differently. For
example, sales sees lead-gen opportunities, public relations see brand promotion and defense,
product management sees crowd-sourcing product/service feedback and ideas, and customer
service sees another channel for support. Very few enterprises have pulled together these
departmental views/opportunities to create enterprise social networking strategies or
programs.
Economic Conditions
The current down economy in which both enterprises' capital budgets are tight and credit
hard to get makes investments in new technologies and applications particularly challenging.
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6. SMB Market Segment Challenges
Selling customer contact solutions to SMBs has its own challenges, including products/serv-
ices must contain SMB-appropriate levels of functionality, must be easy-to-use, low-cost to
support, priced competitively, and sold/serviced by local-to-the-SMB suppliers. Most,
certainly not all, of the currently-available customer service-related social networking solu-
tions have been designed for large enterprises and are being sold and serviced directly by the
vendors. In addition, these solutions often require significant professional services engage-
ments to configure them to the enterprises' requirements. This last issue is not untypical of a
new technology or application, but nevertheless is an affordability challenge for SMBs.
Market Drivers
G row i ng Awa r e n e s s o f S o c i a l Ne t wo rk i n g ' s P ow e r
To some extent the awareness of social networking's relevance to business has been fueled by
some very well-publicized public relations disasters, such as negative videos posted on
YouTube. But, increasingly social networking's positive impacts are in the news and as the
use of social networking grows more and more business people are becoming personally
aware of its possibilities for business-related communications. In addition, there is a growing
library of well-documented business success stories for the support of customer communities
and forums which document both hard-dollar cost savings and many other less-tangible
benefits.
Customer Retention
One important justification for enterprises' investments in social networking programs is the
desire to better support customer retention initiatives. Providing excellent customer support
across customer interaction channels, including social networking, is one aspect of enter-
prises' customer retention strategy.
Competitive Advantage
Increasingly enterprises, particularly those in the most mature and globalized industries, are
relying on excellent customer service for competitive advantage. These competitive strategies
are driving investments in social networking for customer service programs and functionality.
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7. Customer Experiences
As with the customer retention and competitive advantage drivers, many enterprises are
increasing their focus on tracking and providing excellent customer experiences for their
customers and prospects. Support for social networking and its seamless linkage with other
customer interaction channels is a natural extension of a comprehensive customer experience
program.
Pro-Active Customer Contact
Leading companies are discovering the strategic business value of comprehensive approaches
to pro-active customer contact. Again, pro-actively addressing customer questions and issues
which are expressed in social networking settings is a natural extension of a comprehensive
pro-active customer contact program.
Market Restraints
Common View of Contact Center as Cost Center
The mission of most contact centers is customer service, not revenue generation. These
customer service-focused centers are typically operated as cost centers. The perception that
social networking has more to do with lead-gen, and brand promotion/defense than customer
service is one restraint. But, even for those who see customers searching for answers on
social sites rather than contacting customer service, the business case for reaching out in the
social world to address those questions/issues is a hard one to make. This is particularly true
for cost-focused organizations which have spent years trying to reduce incoming calls, such
as by deflecting them to self-service. Enterprises which don't see the value of being pro-active
with their customers won't see the value in reaching out to address customers in the social
world.
S N C C P o i n t S o l u t i o n s N o t Pa rt o f Fo r m a l C u s to m e r
Service
Most social networking for customer contact solutions available today are point solutions,
such as for customer communities, or social conversation monitoring/analysis. These point
solutions are being integrated with early adopter enterprises' contact center applications, but
are not yet generally available as pre-integrated contact center solutions.
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8. Reluctance to Add New Customer Interaction Channels
Almost all enterprises support customer contact via telephone calls. About three-fourths also
support customer contacts via email and about half support Web collaboration. Far fewer
support other channels of customer interaction, such as video, and text. No doubt some
enterprises' contact centers will add support for social media, such as inbound and outbound
Twitter messages, but most will not—at least for the foreseeable future. The reasoning for
not supporting Twitter messages is a bit like the "chicken and egg" parable—can't justify
supporting Twitter messages because we don't get many vs. we don't get many Twitter
messages because we don't support that channel. As unlikely as it seems today with the
explosive growth of social networking, some might wonder if it is a fad which will decline
over the next few years.
End User Budget Constraints
End-user budget constraints will continue to be a significant restraint for investments in
social networking support. This is particularly true for enterprises which do not view their
customer service as strategic to the business.
Lack of Understanding of or Focus on Customer Service
Requirements
Many of today's social networking support vendors have limited knowledge or experience
with customer service. This is the result of them being recent startups with a primary focus
on other uses of their applications, such as brand promotion/defense, lead-gen, customer
loyalty, and internal enterprise uses of social networking such as collaboration.
Business Case for Customer Communities
Customer Community Benefits
Customer communities or forums support customer-to-customer communications.The bene-
fits for the participants include:
Receive answers to questions from knowledgeable customers
Receive answers about 3rd-party and off-label uses of products
Learn from other customers' experiences
Share experiences
Help other customers – gain status in customer group
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9. The benefits for the enterprise supporting the customer community include:
Reduce support costs (customers help each other)
Grow/strengthen knowledge base
Promote customer loyalty, and
Receive feedback on products/services.
Customer Community Costs
Actual costs for establishing and supporting a customer community varies greatly, depending
upon many factors including: the functionality supported, the size of the community, whether
it is integrated with the enterprises other business applications. The categories of costs for a
customer community can include the following:
Start-up Costs
community web design
community integration with enterprise's customer service and other business applications
community integration with knowledge base
training
project management
community manager
IT support
community launch activities, and
community planning/policy-setting
On-going Costs
subscription fees for forum hosting vendor
community manager
community monitors
community KB manager
IT support
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10. Strategic Considerations
End User Recommendations
For enterprises not already supporting social networking for customer service, some recom-
mended beginning steps to take:
Investigate your enterprises current social activity by conducting a trial of one of the
listening/monitoring social conversations services. The results will provide input to your
next decisions on what to do and how urgently.
– How many of your customers/target prospects use social sites?
– What are they saying about your products and services?
– How much of these conversations are customer service-related?
– Track competitors' social conversations—look at the same topics, notice how actively
your competitors are engaging in social conversations.
– Analyze patterns (growth rates, types and frequency of references…)
Ask your contact center vendors about their plans to support social networking
Find out which other departments have or are planning social support?
Consider business cases for adding social networking support
Consider listening to social conversations as part of your overall "voice of the customer"
initiatives
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