Don’t get me wrong. I am not saying that there is a shortage of Social Media consultants or self proclaimed “experts”. They are dime a dozen (or should I say tweet a dozen). What I am saying is that we have a shortage of people who really understand the power and potential of Social Media/Enterprise 2.0 tools AND can relate these tools to existing marketing/IT processes.

Just ask any self-proclaimed Social Media “expert” or Social CRM “guru” how many years’ experience they have implementing CRM solutions and for which companies have they implemented CRM, ERP, BPM, MDM or similar solutions? How many CRM “As Is” and “To Be” process flows have they mapped or how many Use Cases have they written? For how many clients have they documented CRM business requirements (BRs), Functional Requirements (FRs) or have designed the CRM system? What are their thoughts on integrating CRM system with multiple other enterprise information systems like Billing, Finance, HR? Can they describe current best practices when it comes to Data Migration or MDM? (heck, ask them what MDM stands for?) You can judge expertise of self-proclaimed gurus based on response to these questions. It is easy to browse internet, collect few talking points, prepare a sleek presentation and lecture unsuspecting audience about Social CRM, but when it comes to real life Social CRM, these are the questions we need to ask and there is a shortage of people who are good at both, Social Media AND Enterprise Solutions.

In the past few months, we have seen a shift in attitude among senior marketing and IT executives in favor of using Social Media and Enterprise 2.0 tools for engaging customers/employees and resources are being budgeted for Social Media initiatives. Spending on Social CRM solutions is likely to rise exponentially during 2011-2013 time-frame and in just 24 months from now, Social CRM will account for a major chunk of CRM (and Enterprise Solutions) market.

Unfortunately, we don’t have supply of talented people in enough numbers to match this demand in Social CRM space. Real bottleneck to growth in Social CRM is lack of competent people to drive sCRM initiatives. Unless you have the right people guiding your Social CRM initiatives, you are likely to go wrong and as we know, failure is not an option when it comes to Social Media.

Given my experience implementing CRM Solutions for more than a decade, having successfully managed many large and complex CRM projects for Fortune 500 companies in the US, here’s my suggestion: Identify people in your organization who “get” Social Media and know about existing marketing/IT systems and processes. Empower them to drive your Social CRM initiatives.

And since there are so few good consultants available for recruitment when it comes to Social CRM, Management Consulting and IT Services companies should identify consultants in their organization who “get” Social Media, are active on Social Media channels and entrust them task of building Social Media/Social CRM competency with specific focus on industry verticals (like Banking, Insurance, Retail, Pharma and Health Care, Travel & Hospitality to name just a few).

Sooner they do this, better for them as only those consulting and IT services companies who can bring right thought leaders and talented teams to the table for addressing growing demand in Social CRM space are likely to emerge as winners and can expect to corner a lions share of the market. This is all the more important given importance of Social CRM to senior marketing and IT executives in client organizations. Although size of Social CRM projects (in terms of revenue or team size) may be small as compared to large ERP or CRM projects, given the criticality and visibility of Social CRM initiatives, a successful sCRM solution implementation can open doors for many large “transformational” projects involving Social Media and Enterprise 2.0. It is absolutely vital that Management Consulting and IT services companies have right talent in place for leveraging Social CRM opportunity.

What do you think? Do you agree that we are facing a talent crunch when it comes to Social CRM? What is your experience. Look forward to hearing your thoughts on the subject …..

Dr. Harish Kotadia

But given recent growth in Social Networking on the internet and our ability to precisely track outbound Word of Mouth (WOM) and its impact on customer behavior, it is time for business to look beyond Loyalty Programs that reward repurchase and consider having Customer Advocacy Program instead.

In a recent research study titled Effects of Word-of-Mouth Versus Traditional Marketing: Findings from an Internet Social Networking Site, findings of which were published in Journal of Marketing (September 2009), it was found that “Word of Mouth (WOM) referrals have a strong impact on new customer acquisition. The long-term elasticity for WOM referrals is approximately 2.5 times higher than the average advertising elasticity reported in the literature. Part of the reason for the high long-term effect of WOM relative to traditional marketing is that it has a much longer carryover period.”

Marketing Managers should design programs to track and reward Customer Advocacy behaviors such as WOM on Social Networking sites.

Given the impact of Word of Mouth (WOM) on purchase decisions and our ability to track outbound WOM on Social Networking sites, Marketing Managers should design programs to track and reward Customer Advocacy behaviors such as WOM on Social Networking sites. This will not only help marketing managers in promoting their products or brands on Social Media channels, but will also help in building trust and loyalty among target audience.

What do you think? Do you agree that Loyalty Programs are Passé and companies need to have Customer Advocacy Programs instead? Please do share your thoughts!

Dr. Harish Kotadia

If one studies history of automobiles, the first cars powered by internal combustion engines running on fuel gas appeared as early as 1806. But early autos were little more than horse drawn carriage fitted with an engine. It was not until 1889 that Gottlieb Daimler and Wilhelm Maybach designed a vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an engine (for more on history of the automobile, see this link).

Something similar is happening with respect to Social Networking technology today when it comes to Customer Relationship Management (CRM). Instead of modifying and re-engineering their CRM business processes to take advantage of unique characteristics of Social Networks, companies are fitting “Social” engine to their existing CRM carriage and are expecting great results from it.

Just ask any executive or consultant who is involved in implementing a Social Media marketing or Social CRM solution about how to engage thousands of customers (Scale) on Social Media channels and their Call Center “in the box” thinking becomes evident, what I call fitting “Social” engine to their existing CRM processes (Carriage).

Instead, we need fresh outside the box thinking to take advantage of unique characteristics of Social Media and Social Networks. For example, instead of trying to respond to each and every tweet or Facebook posting by customers, something not practical for a medium or large business, the emphasis should be on creating advocacy and building trust among customers, keeping in mind the “Social Context” of the medium. No where this is more evident than in support communities, where brand advocates/loyal customers help other customers out by answering their questions or suggesting solution, rather than company Reps trying to answer all the question.

Similarly, companies must leverage unique characteristics of Social Networks and re-engineer their CRM business processes to derive full benefits from it, rather than trying to fit “Social” engine to their existing CRM carriage, calling it “Social CRM” and expecting great results from it.

What do you think? Look forward to your comments:

Dr. Harish Kotadia

Well, we may get as many different answers as the number of Social Media gurus and Advertising pundits out there, which by the way is not a small number!

“Nature of commercial message is not going to look like a display ad, it’s going to provide functionality and a different kind of interface for the user to act on something. People in Social context don’t want to be interrupted, instead want continue to be engaged and want functionality that eases a task they are about to engage in”.

Watch this excellent panel discussion and listen to what four real experts have to say on this subject. The experts are:

• Mark Pincus, Founder & CEO, Zynga
• Jeff Weiner, CEO LinkedIn
• Irwin Gotlieb, Global CEO, GroupM
• Dick Costolo, COO, Twitter

I like what Irwin Gotlieb says: “Nature of commercial message is not going to look like a display ad, it’s going to provide functionality and a different kind of interface for the user to act on something. People in Social context don’t want to be interrupted, instead want continue to be engaged and want functionality that eases a task they are about to engage in.”

Enjoy the video and do share your thoughts on what advertising will look like in Social Age.

Harish Kotadia

But inspite of the fact that SaaS CRM has been around for a decade, it is not as popular or widespread as what some might have expected it to be by now. I think this is about to change. As I noted in my previous post, four independent trends, namely Social Media, Smart Phones, Predictive Analytics and SaaS are now converging to bring about a Paradigm Shift in CRM.

In particular, Social Media will drive adoption of cloud computing/SaaS CRM going forward. Some of the key reasons why I think this is likely to happen are as follows:

* Social Media channels (like Twitter and Facebook) generate tremendous volume of user generated content created by millions of users. Not possible for CRM system to import/store the data “locally”. This is unlike “traditional” CRM, where data was generated by few users and stored in “local” database. SaaS Model makes it possible to store information in the “cloud” (shared space) and access it from (Social) CRM application “on-demand”

* Social Media space is changing and evolving rapidly. New Social Media channels and tools are being added almost every day. Very difficult, if not impossible, for any CRM vendor to incorporate all new channels and feeds “locally” for every installation of CRM system. Under the SaaS model, it is not difficult to add new Social Media channels/feeds to the “hosted” (Social) CRM application and make it available to users “on-demand”

* Service Oriented Architecture and Cloud Computing not only make it easy to integrate applications, but also facilitate “plug and play” modules and add-ons that can dramatically reduce time and cost involved in extending functionality of the application. This can be of great help in Social CRM as Social Media space is changing and evolving rapidly.

CRM and Analytics application vendors such as Oracle, SAP and SAS should take note of this trend towards SaaS and should extend their service offerings to include CRM SaaS.

What do you think? Please do share your thoughts and comments on impact of Social Media on SaaS CRM.

First step is to understand how customers of clients are using various Social Media channels (like Facebook or Twitter). And since this varies by the industry, IT services companies will need to come up with industry specific Social CRM approach and solution. Domain experts in each industry segment (called Verticals) need to evaluate ways their clients can:

• integrate social media channels into websites
• integrate the new channels into their Sales, Marketing & Support processes and systems
• include social media metrics in performance dashboards and SLAs

Next step for IT services companies is to develop delivery capability to address Social CRM requirements of their clients. They should partner with leading vendors in key areas of Social CRM, namely:

• Social Media Measurement & Monitoring
• Customer Community Platforms
• Social Media and Network Analytics

And finally, once the team has good understanding of the requirements (step 1) and tools (step 2), they should execute prototype or pilot projects with reference to each industry segment (or Vertical) that will demonstrate their capability in the area.

Given the buzz about Social CRM in the industry, I expect demand for “Social CRM” tools and services to pick up substantially in the near future. Those IT services companies who demonstrate thought leadership and build their delivery capability in this area “Proactively” will emerge as winners. Moreover, Social CRM offers a great opportunity for smaller IT services companies to “leap-frog” their larger rivals in this area who might be slow in responding to this opportunity.

What do you think? How should IT Services Companies prepare for Social CRM opportunity?

Given statistically significant correlation between social media engagement and financial performance metrics – revenue and profit, one would expect CMOs to be busy making elaborate plans about engaging customers through Social Media, Right? WRONG!

According to a survey of 124 chief marketing officers by The CMO Club and Hill & Knowlton, more than four out of five (84 percent) chief marketing officers (CMOs) allocate less than ten percent of their budgets to experimenting through social media and non-traditional communications channels, with more than half (55 percent) allocating just five percent or less.

To the question “Does your brand have a web 2.0 communications policy?” almost half said either they don’t have or are currently developing one. Only 14% CMOs said that they were “proactive” about creating external brand advocates and leveraging them (detailed findings of the survey here).

This lack of involvement on the part of CMOs contradicts with the growth of Social Media, not only in terms of users but time spent on it as well (see excellent post by Brian Solis on growth stats).

In another study by Weber Shandwick for evaluating how effectively Fortune 100 companies used Twitter to its full potential as an engagement platform, it was found that “for the majority of Fortune 100 companies, Twitter remains a missed opportunity. Many of their Twitter accounts did not appear to listen to or engage with their readers, instead offering a one-way broadcast of press releases, company blog posts and event information. This falls short of the opportunity that Twitter offers as a valuable communications channel and strategic social network.”

As per findings of two studies quoted above, we can see a major “disconnect” given the phenomenal growth in Social Media usage on one hand and lack of involvement of CMOs on the other. CMOs need to wake up to Social Media challenge NOW and lead from front, else they risk falling far behind other brands, not only in their industry, but across customers’ general online experience.

What do you think? What should CMOs do to engage their customers through Social Media for building Trust and Loyalty?

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

This study confirms the phenomenal growth in Social Media usage, not only in terms of number of users, but average amount of time spent by each user on social networking sites. There is a unique opportunity for marketers to leverage emerging media for Social CRM, which can be defined as business strategy of engaging customers through Social Media for building trust and brand loyalty.

But in spite of this clear opportunity, marketers have not allocated time or resources for engaging customers over Social Media channels. According to a survey of 124 chief marketing officers by The CMO Club and Hill & Knowlton, more than four out of five (84 percent) chief marketing officers (CMOs) allocate less than ten percent of their budgets to experimenting through social media and non-traditional communications channels, with more than half (55 percent) allocating just five percent or less. To the question “Does your brand have a web 2.0 communications policy?” almost half said either they don’t have or are currently developing one. Only 14% CMOs said that they were “proactive” about creating external brand advocates and leveraging them (detailed findings of the survey here).

In another study by Weber Shandwick for evaluating how effectively Fortune 100 companies used Twitter to its full potential as an engagement platform, it was found that “for the majority of Fortune 100 companies, Twitter remains a missed opportunity. Many of their Twitter accounts did not appear to listen to or engage with their readers, instead offering a one-way broadcast of press releases, company blog posts and event information. This falls short of the opportunity that Twitter offers as a valuable communications channel and strategic social network.”

Results of a study by Burson-Marsteller on Fortune 100′s use of key Social Media Tools and another study on use of Social Media tools by CEOs of Fortune 100 companies are equally disappointing.

Findings of studies referred above clearly indicate that even large companies don’t get it when it comes to Social Media. Marketers are not having their eyes and ears on Social Media channels that are going to drive their business going forward.

It is very important that all senior executives (and especially the CMOs) start taking Social Media initiatives seriously. They should lead from the front when it comes to use of Social Media, as survival and growth of their business rests on how effectively they leverage emerging tech tools. As a first step in this direction, I strongly recommend that CMOs should:

• Have a Twitter account and start using it for communicating with customers and general public
• Monitor discussion regarding their company or brands on Social Media channels and if there are any legitimate issues, take it up with respective execs and make sure that they are resolved
• Should use feedback gained from Social Media channels and ask right questions during review meetings. This will send out clear message down the chain that senior execs are listening to customers on Social Media and line managers or customer support staff will be more responsive to handling customer issues via Social channels.
• Set up a Social Media Task force that will advise them on how to quickly adapt and integrate their marketing operations into emerging Social web applications

These are some of the Must Do items that every CMO should tackle right away. Sooner they adopt and start using Social Media for engaging their customers better for them, else performance of their business will suffer.

Dear Social CMOs, the choice is yours!

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