• May 18, 2011
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Peer Power

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Not long ago, Specialized Bicycle Components, a Morgan Hill, Calif.–based designer and maker of bicycles and related equipment and apparel, received an alert from its social media monitoring software that a customer had posted a complaint because his local bike shop was going to take three weeks to fix his Specialized bike.

Specialized stepped in, contacted the irate avid bicyclist, phoned the repair shop, and was able to return the bike to the rider the next day. As a result, the customer pledged his loyalty to Specialized.

“It’s a lot of fun, and it feels great when someone starts out mad at you, and at the end of the day they’re saying they’re with you for life,” says Ryan French, director of inside sales and customer service operations at Specialized.

Not only does Specialized keep an eye on blogs and social media sites like Facebook and Twitter by using RightNow Cloud Monitor software, but the company also created a support community and forum called the Master Link. There, customers post questions and answers, search for information in a self-service FAQ, share stories, and vent frustrations. A full-time customer service employee monitors and responds to issues raised there and on other sites, and two part-timers help out. The social community handles about 15 percent of all interactions itself, and in those cases the customer service rep monitors responses to ensure the advice offered is accurate.

For its social media efforts, the company has created brand advocates, increased self-service and call deflection rates, reduced support costs, and expanded Web traffic to featured product pages by 30 percent.

“Every time someone’s been heated enough to go on a blog site or social media and we’ve intervened, we’ve saved that relationship,” French boasts. “We’re not making a huge impact with a large number of people, but the people we have reached are very loyal now. They’re saying they’ll never buy another bike from anyone else.”

More companies are adopting social community platforms as a form of customer service and are garnering more tangible results. Social CRM solutions provider Lithium Technologies, for one, says that users of the social communities it has created generated nearly 106 million posts last year alone, estimating the value of those communities at more than $466 million.

Companies like Comcast—well-known in social media and CRM circles for its popular @ComcastCares channel on Twitter (see Q&A with Frank Eliason)—and others like Dell, Bank of America, Best Buy, JetBlue, and Zappos have some of the more recognizable deployments of social CRM products. However, there have been a handful of others during the past year or two.

Linksys is a Cisco Systems division that offers consumer and small-office Voice over Internet Protocol (VoIP) and networking solutions. Through its online customer support community, powered by Lithium software, the company attracts more than 4 million user sessions and more than 3,000 new threads each month. Its forum is available in English, German, Spanish, French, Italian, and Portuguese.

For Linksys, the measurable benefits overwhelmingly come in the form of call deflections. By its own estimates, direct deflection (which occurs when a user who would ordinarily call support instead posts a question and gets a response) happens more than 1,000 times per month; indirect deflection (when a customer gets the answers he wanted without having to post a question) accounts for another 120,000 cases per month. In addition, Linksys was able to eliminate email support within a year of launching the community.

The support costs to Linksys are minimal: a staff of full-time moderators who manage the community, IT, and Lithium licensing. Overall, the company is saving millions in support costs.

StrongMail, an email marketing and social media firm, also has reaped huge rewards since implementing a social media customer service tool from Jive Software. StrongMail’s Spark online community has seen an 86 percent adoption rate by customers, with 58 percent logging in to Spark regularly to search for answers or help others. Among the benefits to that, the company found that 95 percent of customers who log in find answers to their questions or have their issues resolved there, leading to a 50 percent reduction in calls to its technical support center. Sixty-nine percent of users turn to the Spark community first before contacting support, and 90 percent have found it helpful.

“There’s a phenomenal amount of customer engagement and participation in this community,” says Adam Mertz, senior product marketing manager at Jive.
Cisco, another Jive client, sees 25,000 questions posted to its community site each month; millions of new cases are avoided each year because customers find the answers they need from previous posts. That amounts to tens of millions of dollars saved annually, Mertz notes.

LANDesk Software, which uses Jive for the company’s service and support platform, has also seen savings in personnel. It reports a 16 percent deflection from the call center—the equivalent of four full-time employees. What’s more, “the company is getting new brand advocates for each launch they do,” Mertz says. “It really is helping drive the customer experience while reducing costs for the company.”

Jive released research that shows that for many of its 3,000 clients, social CRM is delivering quantifiable results and is becoming a mission-critical component of customer service strategies. Among the top customer engagement benefits were:

• a 33 percent increase in customer satisfaction;
• a 42 percent increase in communications with customers;
• a 31 percent increase in customer retention;
• a 34 percent rise in brand awareness;
• a 28 percent reduction in support call volume;
• a 34 percent increase in feedback and ideas from customers; and
• a 27 percent increase in new customer sales.

The survey involved 500 people from more than 300 companies, including Cisco, Intel, Vodafone, Pegasystems, VMWare, SAP, Hitachi, and McAfee. Other Jive clients include Avon, Starbucks, Lifetime Fitness, and LiveNation. For all of them, “social media has become one more layer in their enterprise stack,” Mertz explains.

In the Network
But perhaps the most telling of all ROI stories related to social CRM comes from Giffgaff, a mobile virtual network operator in the United Kingdom. Its customer community, which launched in late 2009, is the company’s only customer support channel. Giffgaff has no contact center, but its support teams are more active than ever. In 2010, more than 100,000 questions were posed in the help forum, and community members answered all of them. For most questions, the average response was three minutes, and 95 percent of questions were answered in less than an hour.

“That’s not something you get from even some of the best contact centers,” says Phil Soffer, vice president of product marketing at Lithium, whose software powers the Giffgaff social channel.

“The value generated by the community is incredible and means we can take the savings we make from not having a traditional, high-cost infrastructure, and pass that directly to our customers in terms of great product value. Everyone wins,” Vincent Boon, community manager at Giffgaff, says in an email.
Giffgaff’s strategy works, says Santanu Nandi, executive vice president of telecom and media at Firstsource, a global business process outsourcer, because communities like that help companies “create a strong bond with customers.”

In addition, Giffgaff has a built-in rewards program for select customers who handle inquiries from other customers. “It keeps them active and responsive because they’re getting rewarded for helping fellow customers,” Nandi says.

The rewards also help Giffgaff gain customers. Some use the rewards—typically free minutes or services—themselves, but many share them with friends and family, who become customers, too.

There is little cost involved in a rewards program because it needs to be applied to only a handful of people. “In most support communities, 5 percent of the people answer 80 percent of the questions,” Mertz says.

In addition to free offers and incentives, Sanjay Dholakia, founder and CEO of CrowdFactory, advocates some form of recognition on the site for members of the online community who are particularly helpful and knowledgeable. That can be accomplished by automatically attaching special badges or icons to those members’ posts, he says.

Moreover, while it is important for companies to monitor and verify the information being presented in peer-to-peer support, many customers view the data from fellow customers as more credible because it’s presented without any corporate spin.

The challenge, though, is to give these people a favorable view of the business, Dholakia says. When that happens, the benefits to the company are immense. “When someone goes into the community and asks a question and someone else answers it, that’s a call that didn’t have to go to the contact center,” he says. “That’s an easy benefit to spot. The biggest benefit is when people start talking about the business and bringing other people to it.”

Building a Following
This form of customer service will become the norm, according to research firm Gartner. “At current trajectories, within five years we expect that community peer-to-peer support projects will supplement or replace tier-one contact center support in more than 40 percent of the top 1,000 companies with a contact center,” says Drew Kraus, a research vice president at Gartner.

Martin Schneider, former senior director of communications at SugarCRM, also predicts a three- to five-year window before social media is fully embraced by customer service. “We’re now probably in year two,” he says. “2012 is really when you’re going to see the big push.”

The change has already started. “Adoption has been picking up in just the past few months,” Schneider adds. “We’re seeing a very rapid uptick.”
But before community platforms can become a mainstay of customer service, companies must break down the silos that separate sales, marketing, and customer service, realign staff and business processes, update their software, and build communities and nurture them. Also important is integrating customers’ social networking information with existing CRM data.

According to SugarCRM’s 2010 Social CRM Survey, only 26 percent of respondents currently integrate customer social networking and CRM data. But 72 percent of respondents plan to do so this year.

Half of the respondents to the SugarCRM survey also said social networks have helped their businesses become more successful during the past year.
In basic terms, social media is a way to gauge customer sentiment, which is important because negative feelings can spiral out of control quickly if left unaddressed. But, with a proper customer community in place, complaints can be handled quickly, often without a lot of staffing. “The real power [of social media] is in putting your business in the hands of the crowd to act on your behalf,” Dholakia says. “If my business can empower the crowd, I’m no longer limited in the number of people I can have on staff.”

But it’s often not as easy as it sounds. Call deflection alone doesn’t always lead to an opportunity to reduce staff, Kraus says. “If you’re just adding a more convenient channel for customers to interact with your company, you’re not going to require fewer people to support it,” he explains. “If you can get your customers to support one another, that’s where you get the benefits.”

Doing so can also protect a company 24/7, even when staff members who monitor and respond to posts are not on the clock. The company’s community brand advocates can respond when its own employees have logged off.

If the community can draw members from all around the world, that’s even better. Toward that end, Jive has worked with Lingotek to incorporate a translation engine into its forum sites. Using the Lingotek tool, users can type their questions and answers in their native languages and other community members can click on the tool to have posts translated for them.

Get Back to Me
While debate continues about whether most people who post negative comments to a social site want to be contacted by the company, Jen Page, product marketing manager of social solutions at RightNow Technologies, says it doesn’t hurt to reach out. And she has numbers to back up that claim.

According to her firm, 58 percent of consumers expect a response when they post a complaint, and 42 percent want that response within 24 hours. Also, 68 percent of customers who posted a complaint using social media were contacted by the offending company. And, as a result, 34 percent deleted their negative posts, 33 percent posted positive reviews, and 18 percent became loyal customers.

“Many of these complaints can be solved easily,” she says. “It’s a low-cost way to deal with issues while creating loyalty among customers.”

In most cases, timing is of the essence. By most estimates, high-volume negative posts to Twitter can become viral in an hour. “If you can respond to it within an hour, you have just given yourself an immense savings,” says David Lowy, vice president of product management at social media monitoring solutions provider Moxie Software.

Lowy recommends that companies use analytics and sentiment analysis tools to determine which Tweets need to be addressed immediately. “Look at how important the person is. Does he have a lot of followers?” he says. “Also, look at the volume of complaints around the same issue.”

For a company such as Specialized, riders are not the only things that move fast. “There’s often a very short period of time before something goes viral. You have to respond lightning-fast because information travels lightning-fast on social media,” French says.

The Web is 24/7, and employing one person eight hours a day won’t cut it, he adds. He hopes to expand his staff and the number of sites the company monitors.

“So far, keeping our customers happy and providing a positive experience has been huge for us and our dealers,” French says. “If you’re a company dedicated to customer service, you’ve gotta be using social media.” 

News Editor Leonard Klie can be reached at lklie@infotoday.com.

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