Applying the Eight Building Blocks of CRM to Social Media
The increase in adoption of social media across media, high-tech, consumer goods, and retail sectors has been prolific during the past few years, and is set to expand into other industries during the next three years. Organizations need to embrace this phenomenon as an integral part of their CRM strategy.
Our research points to improvements in customer and market responsiveness, product development, sales effectiveness, and operational efficiency as key drivers. Success, however, requires the same due diligence in traditional CRM that Gartner has reinforced for the past decade.
CRM is difficult to get right and Gartner estimates that fewer than 10 percent of organizations have optimized the management of their customer relationships. A decade ago, Gartner created a framework called "The Eight Building Blocks of CRM" to help organizations be more successful. This framework has stood the test of time and is still highly regarded worldwide. Updated versions of the original research have been released over the years to reflect market shifts, but no fundamental changes have been made to the core framework.
Our very latest research emphasizes the additional considerations that organizations now need to factor in across each building block from a social CRM perspective. Many of the social CRM projects Gartner has studied over the past three years have been in the "pioneer" phase, where individuals experiment and break new ground, but don't measure benefits. We are now seeing a desire to move to the "settler" phase, where a more structured approach is needed to get business results. Of course, to achieve this settler status, commitment to all eight of the building blocks will be required.
Gartner defines social CRM as a business strategy that mutually benefits cloud-based communities and the business by fostering engagement while generating opportunities for sales, marketing, and customer service. The key considerations within this definition that organizations need to take heed of are:
- Social CRM is a sustainable strategy, not a single project, such as setting up a Facebook page or mining social media.
- Social CRM requires an increased level of openness and a willingness to engage more with customers.
- Social CRM relationships need to be mutually beneficial to work.
- Social CRM has to have a positive financial impact on the organization through the associated impact on sales, marketing, and service.
Given these considerations, each of the eight building blocks needs to be refined accordingly.
Social CRM Vision
A CRM vision encapsulates the very essence of a company's reason for existence, highlighting the differentiated attraction for its customers. A social CRM vision should take this customer value proposition further by embracing the shift of power associated with social CRM to one that is much more balanced.
Social CRM Strategy
The CRM strategy is a blueprint for how to create and maintain a customer base that is an asset to the company. It needs to integrate with the overarching corporate strategy, and requires the segmentation of customers by attributes such as value, loyalty, and satisfaction. Adding a social dimension to a CRM strategy does not technically change anything, it just expands the options available for each segment and each phase of the customer life cycle.
Social Valued Customer Experience
A successful customer experience management initiative ensures that feedback is continually used to help design and refine the customer experience. When adding a social dimension, organizations need to consider how social media can be used to better set/reset expectations with customers, to positively influence the customer experience directly, and to collect feedback on the customer experience and then act on it in an appropriate and timely manner.
Social Organizational Collaboration
Once an organization begins to embrace external social media, new guidelines and policies for employee participation need to be created, and associated aspects (such as its governance and enforcement) embraced. With social CRM and the emphasis on having a true relationship with customers, in which they contribute through activities such as co-creation, support, lead generation, and campaign feedback, these "customers" have a far more influential role to play within each department.
Social CRM Processes
Customer process re-engineering to ensure each process flows down a logical path from the customer's perspective is a common investment area and a key influencer of the customer experience. When executing against a social CRM strategy, specific processes spanning sales, marketing, and customer service will potentially be impacted. The key is to determine what processes are most appropriate to be driven socially, and where mass collaboration adds value, ensuring that there is an upside to the customer, as well as the business.
Social CRM Information
In addition to the sheer volume of social data that can be collected from customers and prospects from social environments, the subsequent challenges associated with determining its meaning and importance are the major hurdle to tying that data to individual customers within the existing customer database. The ability to capture the comments made by an anonymous customer called "Jimbo" and then to retrospectively assign them to "Mr. Jim Davies" once a linkage can be determined is a key development area. However, there are lighter-weight approaches that can provide some degree of value and should be explored, for example, looking at participants' follower numbers on Twitter to determine the importance/impact of their comments.
Social CRM Technology
Most, but not all, CRM initiatives require some form of technology to enable the CRM strategy. Within the social CRM area, the marketplace is extremely fragmented, with over 100 vendors, each providing a specific functional capability. Most have annual revenue of less than $1 million and are not profitable. No one vendor can yet provide a holistic social CRM suite that can facilitate execution of socially driven sales, marketing, and customer service processes. However, over the next two years we expect significant market consolidation and much tighter integration between social processes and traditional processes across sales, marketing, and customer service.
Social CRM Metrics
The health of any CRM strategy can only be assessed through the provision of appropriate metrics. Once social CRM is embraced, new metrics need to be applied, which are often much harder to measure. Very few organizations have measured the return on investment of their social CRM activities, but this will begin to change in 2011 in line with growing maturity.
Jim Davies is a research director at Gartner and will be presenting at the Gartner Customer 360 Summit 2011, which takes place March 30-April 1 in Los Angeles. For more information on the Summit please visit www.gartner.com/us/crm.