Social CRM – time to get on board?

Anyone who thinks social networking is something that’s only of interest to feckless youth with nothing better to do needs to revise their views fast.

Facebook now has more than 400 million accounts and is still growing fast. Twitter, the site that forces people to express themselves in 140 characters or fewer, now has an estimated 74 million accounts, having grown by 1,500% in the last year.

And that’s only the two best-known examples. Add together all the myriad other social networking sites, and there are around a billion people using them. The phenomenon is also driving the purchase and use of high-tech smartphones like the Apple iPhone, for which Facebook is now the most commonly downloaded application. Last September, the mobile phone companies reported data traffic had overtaken voice traffic for the first time, most of it driven by the use of social networking.

Users are not just on these sites to pour out their teenage angst. During the riots in Iran last year, people on the street used Twitter to provide the rest of the world with up-to-the-second accounts of the struggle and the police brutality. State censorship had no weapon to stop it.

Social networks also allow people to come together in cyberspace to create instant communities of common interest. If people now object to something, from the war in Afghanistan to what their neighbours’ new extension is going to look like, they are now just as likely to start up a group on Facebook as to go marching on the streets or get up a petition.

And if they feel they have had a raw deal – whether from British Gas, Ryanair, Thames Water or your company – they are very quick to express those views online and invite others with similar experiences to join them. People with bad things to say about your business now have an unprecedentedly powerful tool at their disposal to help them spread the word and if you don’t already have a voice in the social media arena, you could find yourself helpless to stop them. You may not even know what is happening until a virtual army of unhappy customers beats a path to your door.

“The days when people would write in to complain are gone,” says Chris Pang, a consultant with the research group Gartner. “Now they do it on Twitter and Facebook in a one-to-many fashion. Lone voices are no longer lone voices.”

Social networking is changing the way we use the internet, which has spent the last 15 years as a transactional medium where you go to do a specific task or find out a specific fact. In future, the web will be more about social interaction, about conversations and relationship-building. So it really is time to start exploring what these new technologies can do and, if possible, turn them to your advantage. Welcome to the world of social CRM.

The first point to make is that few, if any, organisations have got a real handle on the commercial potential of this phenomenon. It is developing so quickly that no one can guess with certainty how it will develop. “Companies are still coming to terms with how they can be more in tune with the social web and learn how to mitigate the risks of the internet and these social communities, says Pang.

Blaise Hammond, the UK head of marketing agency Racepoint, agrees: “This whole subject is still in its early days, but there are some very interesting approaches being trialled.” He adds that the social web paves the way for a more thoughtful approach to customer relationship management, something he describes as “business empathy”.

“Unlike traditional CRM, we now have the opportunity for proactive engagement with customers on their terms,” he says. “Traditional CRM systems dealt with how to track and log customers’ behaviour with a view to predicting how they might act ahead of a transaction. Now, companies can create microsites that are content heavy, which attract customer conversations and can pull them through to a transactional conclusion.”

He breaks down his approach to social media relations into three main channels: blogs and micro-blogs (Twitter); social networks (Facebook and LinkedIn); and video and photo-sharing communities (YouTube and Flickr). “These offer fantastic insight into customer behaviour and preference. The information within these channels primes and pumps social CRM proper,” he says.

One example of this in action is a social website set up by the coffee chain Starbucks – www.starbucksidea.com. This has been created by the company to encourage customers to talk to each other, to provide feedback on anything they like and to make suggestions. Other visitors to the site can discuss the ideas and even vote on them. Discussions take place under the watchful eye of 40 so-called “Starbucks idea partners” from various departments of the company and some of the ideas actually turn into actions, which are also recorded on the site.

Starbucks boasts that it has received more than 75,000 ideas in the six months since the site launched and claims it has become “a major force in helping direct the future of the company”.

As Racepoint’s Hammond says, the social web and its connectivity also allow an organisation’s sales and support teams to engage directly with customers its conventional website base, for instance, by getting involved in communities of interest.

But this requires scrupulous honesty and openness, he says. Back in 2006, Sony got into hot water for employing a marketing agency to pose as keen teenage fans of its PlayStation and write blogs about it. The subsequent backlash against the company when the pretence was uncovered has gone down as a textbook case of how not to behave on the web.

Similar questions have been asked of Twitter users who enthusiastically endorse specific products or services. How can you tell if they are as genuine as they seem?

It’s a tough lesson to learn for marketing professionals, according to Matt Hobbs, a partner at PWC. “Marketing has grown up over the last three decades as a command-and-control operation. This whole concept of trying to get into the social mindset is a little alien for them,” he says. But if companies can manage the change and break that old mindset, then they can start to build trust and, as in the case of Starbucks, a real affection for what they are offering.

The communication can take many forms. For example, Hammond says NXP (formerly Philips Semiconductors) is exploring the benefits of having its engineers use the internet to talk to other engineers, discuss topics and answer questions. That way, they can influence opinions, gather feedback and also pick up any comments, good or ill, about NXP itself.

“Essentially, an organisation’s customer reps, engineers, marketers and so on can join communities – the pools that the fish are in – and engage with stakeholders, not just customers, but partners and market influencers,” he says. Previously, most CRM effort was focused on the website, but now he says “it’s the individual from the company who is engaged and engaging with customers across the web in communities of interest though forums, chat rooms and social networks. They are now active CRM agents.”