Social CRM: is it hype – or fundamental to managing customer relationships?

Social CRM: is it hype – or fundamental to managing customer relationships?
By Graeme Foux, chief executive of Knexus

Published: June 10 2010 19:24 | Last updated: June 10 2010 19:24

Brand owners need to distinguish between real value and fool’s gold – but into which category does social customer relationship management fit? What is it – and where has it come from?

Social CRM has emerged from the shifting balance of power between organisations and their customers. Via the internet, social networks, blogs and online communities have enabled people to connect easily and quickly with like-minded individuals and groups to share interests.

One impact has been to cut organisations out of the loop, losing control of the customer relationship. Consumers have tasted freedom to connect, share and talk, benefiting from more timely, relevant and trusted interactions.

This is a profound change, leaving companies with little (or more likely no) hope of wresting back control and re-establishing previous levels of influence.

No wonder social media monitoring tools are red-hot, as companies scramble to re-engage with the disparate conversations taking place on the web about them, but not with them.

Social CRM is about companies attempting to get back into the conversations controlled by the customer – listening and engaging to build trust and value.

It also gives companies the opportunity to stimulate conversations with and between customers and use these to build relationships sooner than would traditionally have taken place, managing a pipeline of opportunities more effectively and producing a higher return.

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

So is social CRM a source of real business value or simply fool’s gold? Breaking down ”social” into several categories can be a helpful way to remove confusion and determine where to focus business resources. I like the definitions used by social CRM consultant Esteban Kolsky, as follows:

● Social Media is about tools and tactics, you can never set a strategy for it, and it has very short-term life and results.

● Social CRM is about strategically setting long-term goals for working better with your clients (customers), and improving your organisation in the process.

● Social business is the long-term, strategic process of reinventing your organisation to collaborate with employees, partners, and customers.

This separation is very helpful because it starts to create clarity around social and, for example, highlights the role of a PR firm in managing a brand’s reputation through social media channels, versus the deep strategic importance of having a social business strategy to make a business relevant and competitive in the 21st century.

Kolsky argues that social CRM is much closer to social business, sitting under the category of strategically important initiatives that will directly impact revenue and profitability.

If we revert back to our earlier acknowledgment that companies have lost control of their customer relationships, who could argue that this isn’t strategically relevant?

As such, social CRM is profoundly important.

It is true that many companies remain either in denial over the power shift, hoping a Facebook page and some Tweeting will sooth away the issue, or are still bogged down with getting the fundamentals of their CRM strategy right, and therefore unable to innovate.

But the writing is on the wall and those companies able to apply clear thinking on “social” and embrace social CRM are stealing a highly profitable competitive lead for the new business cycle that has just begun – and beyond.

Copyright The Financial Times Limited 2011. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others.
.."FT" and "Financial Times" are trademarks of the Financial Times. Privacy policy | Terms
© Copyright The Financial Times Ltd 2011.