• June 1, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

The Second Coming of Web 2.0

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It probably started with the debut of Business 2.0 in 1998. With a nod to how software developers name product updates, that magazine's title referred to a newer way of operating an enterprise. Ever since, people trying to get in front of an emerging trend have slapped the 2.0 label on just about anything. (And even successes don't last forever: Business 2.0 itself folded in October 2007.)

Cliché or not, 2.0 is useful shorthand for indicating a break with old ways of doing things; Web 2.0 is a major topic -- and so by extension is CRM 2.0, the use of Web 2.0 technologies to improve customer experience and CRM system efficiency. CRM magazine isn't above leveraging this concept -- consider our recent cover story, for example ("It's All Coming 2.0gether," December 2007), or any of a number of articles we've run since. But what's beyond the notation? What exactly is "Web 2.0," anyway?

There are several definitions -- and there's a lot of "I know it when I see it" involved -- but the most common ones revolve around social media. As William Band, vice president and principal analyst for business process and applications at Forrester Research, describes the trend in his March 2008 paper, "The CRM 2.0 Imperative," "[t]he social Web...includes fast-growing peer-to-peer (P2P) activities like blogging, RSS, file sharing, open-source software, podcasting, search engines, and user-generated content." Other 2.0 technologies include wikis, social networking sites and services, and even tiny content-delivery systems known as widgets. Combined with more-established technologies such as instant messaging, email, and forums, these are the tools that enable the creation of distributed communities built around common interests and goals, whether it's socializing, commenting on cricket teams, sharing a passion for theater, or forming a user group to swap software-development tips. This phenomenon has transformed the Web from a source of canned information, static messages, and banner-ad bombardment to a destination of sorts where people can interact with one another in the manner of their choosing.

In his report, Band says that rapid adoption of Web 2.0 technologies is not just a critical factor, but a generational one as well, noting that "22 percent of adults now read blogs at least monthly, and 19 percent are members of a social networking site like Facebook or LinkedIn. Even more amazingly, almost one-third of all youth publish a blog at least weekly, and 41 percent of youth visit a social networking site daily."

Band also suggests that the true 2.0 shift has been about control and power. "'Web 2.0' began as a user-focused revolution," he writes, "remaking the consumer Web into a landscape that is easy to use, efficient to navigate, populated by self-generated content (versus institutional publications) and driven by ad hoc and established communities of people with similar interests. In a Web 2.0 world, power moves from institutions to consumers because they can now rapidly connect and digitally converse among themselves about the products and services they buy."

Reid Conrad, the chief executive officer of social networking platform provider Near-Time, finds that the user-based genesis of Web 2.0 means his clients are usually familiar with one or more aspects of social computing. "Generally, [clients] have worked with individual enterprise 2.0 applications -- blogs, wikis, and such -- but haven't tied them together," he says. "Early users, not surprisingly, were IT professionals. Now we're seeing more line-of-business personnel -- many of our customers are Web 2.0 -- savvy and competent."

The Real Business 2.0

Despite this emerging familiarity, Web 2.0 fundamentally remains a new way of doing business -- in fact, maybe this is Business 2.0. "The traditional way our [users] interact with prospects is email; they have to change that old habit," Conrad says, adding that they have to think about when to use email, and why. Similarly, they must utilize the social environment to put information and content in the right place at the right time.

"We're finding organizations that more and more want to interact in any given format," Conrad says. "You have different forms of interaction for different purposes. Put executives in a wiki format and expect them to produce content? Well, good luck. But those same execs would be very comfortable participating in a forum." That represents a change to the idea of building valuable content: It has to be done continuously, in a living forum, instead of just creating a deliverable for several months down the line.

This arena is already benefiting from leadership provided by several companies, especially those that specialize in certain types of content. "I homed in on sports, because it's my background," says Scott Tilton, CEO of Loop'd Network, a creator and host of social networks based on action sports. "I've been a professional athlete, and have competed in motocross, BMX, and downhill mountain biking -- and sports haven't been at the head of Web 2.0."

Participation, Tilton says, is the common denominator -- and it levels the literal and figurative playing fields. "When I look at some sports -- especially 'stick-and-ball' sports -- the information is out there, but it's in the hands of a few huge companies controlling the majority of sites," he says. "In participatory and action sports, there are no monolithic corporate players, and the audience is skewed toward youth." In this area of sports, interest is driven by personal involvement and passion more than by tracking a team through a season. "Community members are looking for events, discussion, advice -- even sponsorships. The older people who come are more focused on training logs, coaching, and feedback."

Sponsorship represents a significant part of Loop'd Network's value, not to mention its history. In 2001, Tilton co-founded SponsorHouse.com, an online service connecting athletes with sponsors. The experience he gained there was built into the new venture, and continues to inform the sponsorship networking that occurs on Loop'd. "Brands are using our network as a means to sponsor athletes," he says, adding that, while Loop'd sometimes marries groups together, sponsors and the athletes often find each other.

At Powered, a social-media integrator, Mark Drosos, the firm's chief operating officer and creative executive -- a perfect 2.0-style job title -- developed a methodology for strategizing and business-enabling that he calls social marketing. (See sidebar, "3+3," below.) As one of three legs in that process, Powered builds branded social community sites and strategies. "Our job is to figure out what the client needs and then build it," Drosos says. "When you look at building communities, there are several ways [that] Web 2.0 can help a brand: It can drive purchasing behavior, influence brand consideration and advocacy, or increase product familiarity, for instance."

Perhaps the most efficient of those is product familiarity; Drosos contends that familiarity can pave the way for all the others. "Social strategy should be about making people understand how to use your product better, or in new ways," he says. From the perspective of a camera company, for example, a successful social network could appeal to photography enthusiasts and camera owners with information on shooting techniques and camera functions. By making people more familiar with the product, the company establishes itself not just as a vendor but as an expert, at the same time exposing users to other products, such as lenses and tripods. "When we build social sites for our customers, we've seen their messaging start to change, from talking about product advantages and the so-called 'feeds and speeds' to providing a source of info so customers understand the products better," he says.

Businesses have to change their thinking when it comes to marketing in a social world. Where active and overt techniques for marketing and selling may have worked in the past, they will typically fall flat with Web 2.0 interactions. "Customers are OK with some relevant advertising and marketing in a community setting, but not the hard sell," Drosos says. "Learn to engage the customer's lifestyle, and the sales will come to you."

Still, he says, the next big thing for Web 2.0 may be explicit commerce. "The question is how to extract sales," Drosos says. "We've found ways to engage the customer, but have not found a way to drive immediate-action sales." But immediacy isn't all; another area for development is establishing lifelong relationships. "Kids looking for a cool camera will want something different in 10 years when they have kids of their own," he says.

Vendors Get Social, Too

Social technology isn't just customer-facing, either. "Turned inside, social media will really take off for the enterprise," Drosos says. "It won't replace sales-and-marketing tools, but it will integrate them, creating a central means of sharing information and connecting the dots when it comes to operations and processes."

Sage Software, for example, is one of many vendors building Web 2.0 technologies into its CRM strategy and solutions, most notably in its Act! product line. In addition to a series of blogs by executives (including David van Toor, general manager for Sage CRM solutions for North America; Larry Ritter, the senior vice president of global product management; and Pierre Semaan, senior vice president of technology for global CRM) covering everything from strategy to fixing problems with Web 2.0 itself, Sage has outlined its overall approach to emerging social technology through 2010.

The Sage CRM Solutions 2010 Strategy integrates internally focused Web 2.0 tools and those facing the customer, as well as an "Anywhere Workforce Experience" that employs context awareness across devices, users, and networks. An excerpt from the March 2008 overview document states that "all of the Sage CRM Solutions products will include adoption of new Web-Oriented Architecture (WOA)...to ensure that the integration capability of the products evolve[s] to provide services-based integration from all product lines." Other CRM vendors, including Oracle, SAP, and Salesforce.com, to name a few, have also built or incorporated community features and other Web 2.0 technologies into their offerings.

The sidebar to this article (below) offers some highly relevant advice on how best to embed Web 2.0 technology into CRM efforts. But the most critical advice overrides and informs all the rest: Do what makes sense for your business. Web 2.0 (and CRM 2.0, for that matter) isn't entirely new, but it's new enough that businesses can afford to be circumspect in their approach to it. Research the techniques and tools that work best in your industry, for your audience, and with your available resources. Go into any initiative with a clear idea of the desired result. And always put the customer audience first when designing a community and the experiences within it. After all, you're doing it for them.

SIDEBAR: 2.0 Best Practices: Customers, Customers, Customers

Forrester Research offers numerous recommendations for businesses to improve their use of Web 2.0 technologies. The following are excerpts from Forrester's best practices for CRM practitioners:

  • Support customer-to-customer interaction. Sharing resources via file exchanges (such as Voice over Internet Protocol and content networks) allows nodes in the network -- in other words, individuals -- to sustain one another and to rely less

    on institutional support. (See "Linksys Gets Shaken, a Community Is Stirred," page 43, for a successful example of customer-to-customer interaction.)

  • Embrace customers as cocreators. Soliciting user input is cheaper, better, and faster than more-structured, top-down methods of product development. This means complete strangers can codevelop open-source software and collaborative information banks such as Wikipedia. As more people tote cameraphones with Internet access and install webcams and microphones at home, user-generated content will provide companies with great insight. (See "Power to the People," December 2007, page 28, for more on user-generated content.)
  • Understand new consumer-behavior patterns. Although social computing is having a profound effect on buyers, it affects different types of consumers in different ways. Effective next-generation CRM strategies will be grounded in a deep understanding of "social consumer" behavior, as well as more-traditional demographic and psychographic attributes.


Mark Drosos, chief operating officer and creative executive at Powered, offers a plan of attack when it comes to tackling what he calls "social marketing."

To craft an effective social-marketing presence, you need vehicles to get you there, and objectives to keep you on track. For the fullest impact, three possible vehicles for your social-marketing strategy need to work in conjunction with each other:

    1. Advertise: Pay for placement on social networks such as MySpace and Facebook.

    2. Embed: Install your brand in the social network with brand pages, widgets, video, and promotions.

    3. Build: Create your own branded social network.

And within these three areas, you'll need to keep three key objectives in mind:

    1. Design your brand's persona so it drives value.

    2. Give community members a reason to meet, communicate, and share.

    3. Provide relevant content that has value within the community.

SIDEBAR: Be the Community You're Waiting For

Best practices from Scott Tilton, chief executive officer of Loop'd Network:

"If you're building a niche network from scratch, identify who else is out there doing the thing you want to build the community around. Get the key opinion-makers and other important players involved from Day One.

"Make sure it works, and that users are getting the experience they're expecting to get. Be prepared for scaling problems early on; if the site is overloaded with visitors, it will lag and be unavailable -- and that will kill it before it even really starts. And always involve an experience, something useful and important to users outside of commerce; otherwise it's an obvious marketing ploy.

"Keep it focused, keep it relevant. As soon as you lose that, users aren't using the community as well as they could. They become distracted and the community loses momentum."

Contact Senior Editor Marshall Lager at mlager@destinationCRM.com.

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