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Definition of Social CRM – Explained!

April 11th, 2010 · 12 Comments · All Posts, Dr.HarishKotadia

In one of my earlier posts, I defined Social CRM as follows:

Social CRM is the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty
. Loyalty is defined as attitude towards a brand that inclines a customer to repurchase it and/or recommend it to others. Social CRM and Social Media are more about building trust and managing loyalty with customers than about managing relationships or transactions, which are focus areas of “traditional” CRM.

I received a lot of great feedback on this definition and want to elaborate further on it to answer some of the questions raised by readers of this blog.

Let’s break-down the definition to its individual components:

1) Social CRM is the business strategy: It is not technology, tools or platform. Fundamentally, Social CRM is a business strategy. It is widely accepted by Social CRM practitioners and SMEs that Social CRM is a business strategy.

2) Engaging Customers through Social Media: Engagement through Social Media is the most important aspect of my definition. Any CRM related activity through existing channels like the telephone, email, snail mail etc.. will continue to be part of “traditional” CRM and will not be replaced by Social CRM (unless the Customer prefers to use Social Media instead of “traditional” channels).

Thus, Social CRM will augment “traditional” CRM, but will not replace it. And for some industries like health care or financial services, emphasis will continue to be more on “traditional” channels and not on Social ones for privacy related issues (who would want to tweet about their bank account or health condition). Traditional CRM channels will offer more private communication as compared to “public” Social CRM channels.

Having said Social CRM will augment traditional CRM and not replace it – let me add that Social CRM will be well integrated into overall CRM platform and systems with a 360 degree view of the Customer with feeds from all major Social channels. Customer will have a choice on what channels to use and organizations will reach out to the Customer based on that choice.

3) with goal of building trust and brand loyalty: Ultimate goal of Customer Engagement through Social Media is to build (a) Trust and (b) Brand Loyalty. I have used the word “Trust” before “Loyalty” for a reason because Social Media has introduced the “trust” dimension to marketing equation.

Before the Social Media age, Trust in marketing relationship was limited to face-to-face interactions (like friendly neighborhood coffee shop or grocery shop). What Social Media has done is to make it possible for any one to have the same sort of one-to-one relationship irrespective of geography. This kind of one-to-one relationships based on mutual “trust” are not possible through “traditional” CRM channels like phone, mail or emails.

While “traditional” CRM helped manage Customer Relationships on a massive scale, it did not help in building mutual trust between buyers and sellers as it is impossible to build “trust” with thousands of customers over phone or mail. For building Trust, you need to know your partner well and not just be limited to mere “transactions” as was the case with “traditional” CRM. Social Media provides the opportunity to marketers to become “personal”, interact with thousands of customers spread across geography on one-to-one basis so that marketer and the customer get to know each other so well as to trust each other – the essence of a true relationship.

Second most important goal of Social CRM is to build Customer Loyalty – the ultimate goal of any business! Some have interpreted my definition as not being “customer focused” or “customer centric” or being “Social Media Centric”. This is not correct. The very fact that goal of Social CRM in my definition is to build Customer Loyalty implies that it is “Customer Centric” – as you cannot build loyalty without having a customer focus.

Hope this clarifies many questions that were raised regarding my definition of Social CRM. Would love to hear your thoughts and feedback.

Link to the original post: http://hkotadia.com/archives/2157

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12 Comments so far ↓

  • jacob morgan

    Don’t agree with your definition. Social CRM does not have to engage customers through social media at all. Your mixing strategy and technology into a definition. Tech is enabler, SCRM is a strategy and can be defined as a portion of social business that helps companies make sense of and act on data that they collect from social customer interactions. This can be via phone, email, feedback forms, or anything else. Social CRM IS NOT ABOUT social media; the channels don’t have to be “social.”

  • Harish Kotadia

    Thanks Jacob for your comment, appreciated!

    I agree with you that SCRM is a strategy and tech is an enabler. I also agree with you that SCRM helps Co.s “make sense of and act on data that they collect from social customer interactions”.

    But that is only part of the equation (Listen and Learn). Social Media is much more powerful than being just a medium for listening and learning. It provides a platform for engaging customers in a meaningful conversation for building Trust and Loyalty, and that is what Social CRM is about. Not just for “recording” or “managing transactions” of Customers’ Social Interactions, but for Engaging Customers in meaningful conversation for building Trust and Loyalty!

    Hope this helps,

    Harish Kotadia, Ph.D.

  • Axel Schultze

    I agree the “s” in sCRM is a pointer to social media – otherwise sales and customer relationships are social since the first trader roamed the dunes of Egypt 6,000 years ago.

    But I’m not so clear about sCRM being “just” a strategy. sCRM is also a product – now. I posted a sCRM blueprint yesterday here: http://xeesm.com/_/site/index.php/2010/04/17/a-social-crm-product-blueprint/

    But so far – sCRM was indeed just a strategy as the technology hasn’t been there.

    Axel
    http://xeesm.com/AxelS

  • Mark A Carbone

    I think you are missing the future on this. Social CRM is not where it will end up even a year from now. Software vendors are making SCRM the acronym to be using and you are selling the concept short.

    It is Social Relationship Management – SRM.

    It is not about the social side of customers. That is a plan for failure and not how successful social enterprise strategies succeed.

    SRM is the management of all stakeholder relationships and Social CRM is just a cute patch to CRM shortfalls.

    Need to drop the “C” in SCRM.

  • Scott Saige

    I also disagree with the 3rd part of the definition -the goal is not always to build brand loyalty and trust. This is maybe what the goal should be, but Social CRM is a means (strategy & technology) to achieve business goals related to interacting with customers / potential customers – whatever those goals may be.

  • Social CRM: Controversial, Complex but Critical

    [...] our recent post from @HKotadia entitled Definition of Social CRM – Explained! and the subsequent comments discussion as just one example of how active a topic that Social CRM is [...]

  • ANDREA INCALZA

    Hi, i’d like to comment your post. As I saw there’s a lot of disagreement in the previuos comments but I think that the real point is that the “social side” of the CRM must be reconducted on what’s the baseline of this all. I mean, the social media are only a new powerful channel of interaction and partecipation that differ from the traditional channels because of its multidirectional way of linking the various actors (customer, prospects, curious, customer care, communication reps, etc.). I don’t believe in a new version of CRM but in a new CRM that involves a new channel with which it’s possible to improve tremendously the corporate opportunities to cope with all the customer and prospect requests (commercial, technical,etc.) reaching the brand engagement objective (which I remember is the REAL objective of all CRM activities). So the real questions, IMHO, are the following: how can the corporate take advantage of the opportunity of engaging users through social media in order to let them perform CRM activities on thier own working as ambassadors? What will be the trend in channels’ usage in the next years? Are we, in the meantime, ready for managing the social media opportunities with strategy, processes, resources and last but not least appropriate technical support integrated with actual Collaborative, Operational and Analytical CRM tools?

  • Harish Kotadia

    Thanks Axel Schultze for your comment:

    You are correct in saying “s” in sCRM is a pointer to social media – otherwise sales and customer relationships are social since the first trader roamed the dunes of Egypt 6,000 years ago.

    Regarding your point as to sCRM being “just” a strategy and not a product – I think over a period of time many products (tools) will be developed and marketed to engage customers through Social Media – and they will be called “Social CRM” products – and eventually, I guess it will become part of “CRM Software Applications” representing tools more than strategy.

    This is what happened almost a decade back with eCRM – it started out with strategy (I vividly remember Bob Thompson’s post on CRMGuru.com about this). And once application vendors like Siebel, PeopleSoft and SAP came out with modules to cater to eCRM – it quickly became part of CRM, and CRM became more of a product than a strategy. I guess history is repeating again – this time with “s”CRM instead of “e”CRM.

    Thanks again for your comment,

    Harish Kotadia, Ph.D.

  • Harish Kotadia

    Mark A Carbone – Thanks for your comment:

    What I have tried to highlight is Social CRM is part of overall Customer Relationship Management for a business and eventually “s” will be dropped and it will just be CRM. This happened with eCRM almost ten years back – see my previous reply.

    Thanks again for your comment,

    Harish Kotadia, Ph.D.

  • Harish Kotadia

    Thanks Scott Saige for your great comment:

    You have a great point that Social CRM is a means (strategy & technology) to achieve business goals related to interacting with customers / potential customers – whatever those goals may be.

    I think overall objective for engaging customers on Social Media is to build Trust and Loyalty. When executing this strategy (plan) – the tactical objective can be creating/increasing awareness or decreasing complaints etc… But the strategic objective has to be to build Trust and Loyalty – because this is what will help achieve overall biz goals for a business.

    It is like saying strategic objective is to win the war and tactical objective is to win the battle. Social CRM is more at a strategic level and when this strategy is executed, tactical goals are set and achieved.

    Hope this helps, thanks again for your comment.

    Harish Kotadia, Ph.D.

  • Harish Kotadia

    Thanks for your comment ANDREA INCALZA:

    You have a great point in calling for a new CRM that involves a new channel with which it’s possible to improve tremendously the corporate opportunities to cope with all the customer and prospect requests (commercial, technical,etc.).

    Social CRM is all about engaging users through social media (and if users so desire, than provide them platforms, tools to let them perform CRM activities on thier own working as ambassadors).

    Regarding your point: What will be the trend in channels’ usage in the next years? I am currently writing a blog post that highlights these details, please check out my blog for the post in the next 2-3 days http://HKotadia.com

    Regarding “are we, in the meantime, ready for managing the social media opportunities with strategy, processes, resources and last but not least appropriate technical support integrated with actual Collaborative, Operational and Analytical CRM tools?”

    Answer is a Very BIG No!!

    Very few CMOs and CIOs have recognized the opportunity and have acted on it. I have tried to highlight this through several of my blog post earlier. I think once CMOs and CIOs recognize the challenge – things will begin to move fast on this front.

    Hope this helps, thanks again for your enlightening comment.

    Harish Kotadia, Ph.D.

  • Axel Schultze

    Wow – this became a very interesting discussion here. We just did a session on social selling and how it applies in the new world. http://xeeURL.com/A02278

    @Mark Carbon – right on. I guess it would be a good idea to start defining SRM. I started it May last year at http://socialrelationshipmanager.com but I’m not happy with it – still to clumbsy, stiff – happy for any support on that.

    @Harish Excellent job – keep challenging all of us this is a great process!