At its broadest, a Social CRM strategy is one focused around customer engagement. It differs from more traditional CRM strategies because the primary concern is not managing relationships that are based on understanding a customer’s transaction history and behavior, but instead is founded on treating the customer as a partner who will, in return for benefits of some kind, provide value to your company.
CRM 1.0 strategy was operational and tactical but was at its core a strategy for actually managing corporate transactions with customers— and at its best a strategy for managing the interactions with customers. The software associated with it was based on process efficiencies and interaction effectiveness. Pretty much the best you could expect from it was a greater knowledge of a customer via the 360-degree view of the single customer-which still is in woeful short supply at the companies that claimed CRM in their portfolios. A McKinsey study placed it at 38 percent. On the other hand, the February 2009 Speed Trap/Econsultancy Social CRM study found that 70 percent of their respondents had at least centralized storage for customer data-which isn’t the same as a single customer record but at least shows some promise of progress.
But that was CRM 1.0. Social CRM is widely recognized as a strategy for encouraging the customer to participate with your company in making decisions that affect the particular customer. What it does is take CRM 1.0 and extend it far beyond its original bounds.
Social CRM as a strategy (less so as a technology) is actually maturing as more and more companies are adopting at least some facets of it. But to do it successfully, the implications need to be clearly recognized by the companies embarking on developing the strategy. For example, it assumes the existence of a social customer who controls their own interactions with other customers and with the company, which CRM 1.0 strategy did not. In fact, the fundamental idea behind Social CRM strategy is that the customer will engage with the company in a way that provides mutually beneficial value, rather than a strategy for the optimal extraction of value from a customer in exchange for, at best, a delightful experience. Not that there’s anything wrong with that—it just limits what the customer and the company can do.
In a Social CRM strategy, the company’s skin in the game is to be honest and straightforward with the customer (authenticity is the buzzword du jour), to be open with the customer and reveal more of the inner workings of the company to the customer so that they have the information they need to make intelligent decisions on how they are going to interact with the company-in the context of their personal agenda.
This doesn’t mean giving away every secret the company has. Transparency doesn’t mean slutty behavior. In the electronic chapter called “Honestly, I Want This Chapter to Be on Privacy, but if I Wrote It, I’d Have to Blog About You, ”there’ll be more on transparency. Suffice it to say, what it means for strategy is at least an understanding that the customer needs to know more than they have traditionally in order to have a great enough personalized experience to want to continue to do business with you—at a minimum. Optimally, your KPIs will be around advocacy, not just retention. But we’ll see about that, won’t we?
The Social CRM definition from the CRM 2.0 wiki bears repeating:
Social CRM is a philosophy and a business strategy, supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.
Increasingly, companies are incorporating customer engagement strategy into their efforts to develop customer value. There are an increasing number of companies, large, medium and small, using blogs, providing podcasts (both audio and video), developing communities, and participating in communities not built by them, such as Facebook or more specific communities that cater to the company’s interests. What does that mean? It’s recognition that the customer is now not only the owner of the business ecosystem but is controlling the chatter going on. What they don’t control is the traffic flow—and that’s where engagement comes in.
The Voice of the Customer Has a Larynx
The first element leading to true customer engagement is always identifying and integrating the voice of the customer. This does not mean making presumptions for those customers. This means actively involving them in helping you know them. Unfortunately, that’s always in theory, since most companies don’t do that.
In order to develop a customer strategy, knowledge of your customer is primo on the agenda. That’s the way Social CRM rolls.
Who Is Your Customer?
Knowing who your customer is sounds like a piece of cake, doesn’t it? But, in truth, it isn’t. Who your customer is can change in a dynamic business environment. How you perceive your customer—even if it’s the same people—can also change, which can complicate an already complicated matter.
For example, how many on the list below have you thought about as possible customers?
C’mon, admit it. Most of them didn’t even cross your mind as a customer that you had to serve. From your standpoint, the first one—the paying client—is what you ordinarily think of as your customer. Butif you think it through, in a B2C environment that paying client, the individual consumer, is the customer that we’re talking about. In a B2B environment, that paying client can be the senior management of another company. But you have to engage not only the senior management as customers but those who influence the senior management. In your own company, if you don’t treat your sales consultants or suppliers as customers, it can cause damage that will impact your ability to sell to those potentially paying consumers.
But it doesn’t stop with just the recognition of new categories of customers. It also means that your perception of customers can vary due toa variety of fluid conditions. For example, as we established early in this book, the social customer demands treatment as a partner, not just a paying customer, and that changes how you interact with that customer. There are a huge variety of factors that can affect your customers’ interactions with you and your response to them. Among them:
You skeptical? Let’s look at social climate changes. In first Chapter, we established that peer trust became dominant in 2004. That was a change in the social climate that also triggered a change in individual expectations and the attitudes and behaviors associated with that change. This new direction for trust came simultaneously with advances in technology, particular web-based and particularly around personalized communication that gave peers the ability to interact with each other 24/7 and in real time.
That led to a very smart presidential candidate’s staff tapping into a specific “customer group” that was particularly sensitive to both the new form of trust and the changes in technology that were dynamically being utilized following 2004. That group, Gen Y, and other websavvy groups were a primary force responsible for Barack Obama’s presidential victory in 2008. Yet, in 2005, did you even vaguely fathom that this was possible? I doubt it. Not only did you barely remember who Barack Obama was at all—unless you had seen him speak in 2004 at the Democratic convention—but you didn’t know that this kind of customer could lead a social change that dramatically changed the perception of the United States once again.
Developing a Strategic Map: The Elements
There are a few things different from 2004. First, it’s years later! Second, you now need a customer engagement strategy, not just a strategy to manage customers around their transactions. Third, back in 2004, customer strategy was a significant and important of corporate strategy. Now, customer strategy is corporate strategy. That said, the elements of strategy I would have proposed in 2004 are pretty much the same as I’m about to provide to you here—with a few additions this time around.
There are some caveats and assumptions that you have to operate under when it comes to customer strategy. If the strategy doesn’t benefit those executing it, you might as well chuck it. This may sound like a “duh” moment, but in fact, the primary reason that CRM fails, according to studies done by pretty much every 800-pound or less gorilla analyst firm, is because of the failure to involve users from the beginning. The most popular study, done by AMR Research as far back as 2004, claimed 47 percent of the failures are due to that lack of upfront involvement.
What that means is that when developing the strategy you have to consider personal values and concerns. They have to be part of the planning you’re doing. Don’t underestimate the importance of this. I put it in italics because it is a centerpiece for your strategic framework. Why? Because human beings are self-interested. This isn’t a bad thing. Self-interested doesn’t mean selfish. It simply means you have an agenda that you intend to fulfill to your satisfaction throughout your life—and that extends to your work, too. You matter. There may be no “I” in team, but there is an “I” in “I.” Which is a good thing.
Personal benefits to the stakeholders who will be responsible for execution of the strategy or those who will be impacted by the strategy have to be considered when developing the business objectives. While ultimately you won’t please everyone and will most likely lose even some highly valued employees to dissatisfaction, you can attempt to incorporate the idea that you are creating a “community of self interest.”
On a practical level that can include:
But to include these things in your plans means to first be able to identify who those stakeholders are.
Choosing Stakeholders (Including Customers)
In retrospect, book burnings in the 15th century were a historic error. In retrospect, the strategy used by Vice Admiral Zinovi Rozhestvensky at the naval battle of Tsushima during the Russo-Japanese War of 1904–05 was an error of historic proportion. Choosing stakeholders solely from senior management is also a historic error, just of a lesser magnitude.
Stakeholders in a CRM strategy and program can be senior management, but may also encompass mid-level managers, senior staff, power users, some junior staff, business partners, suppliers, and customers. After all, who has more of a stake in this than the customers? But that said, choosing from all of these can be a bit unwieldy, and a stakeholders team of 5, 000 is probably a bit much. Kidding. About the number, not the clumsiness.
Since other stakeholders are necessary for the success of CRM initiatives, it pays to be selective on who is recruited so that you can have a total group that can be effective, yet represents the important constituencies that exist.
One group to ferret out and solicit has little to do with formal titles bestowed by the management hierarchies, but instead is those natural leaders who exist at every company regardless of size. You know them. They are the people who are the “mom” or “dad” of the department— always willing to listen to the troubles of their fellow employees. They are the power users you ask to fix your computer because you don’t want to deal with IT and they know enough to do it—for the most part. They are Jack on the TV show Lost.
Essentially, these are peers who, for one reason or another, have risen through the ranks and are trusted by their fellow employees. Typically, while they hold no particular title within the company, they command the respect and the loyalty of specific groups of fellow employees. When developing a CRM initiative, it’s important to find these natural leaders and select those who are able to serve on the CRM stakeholding team.
This serves two purposes. First, they are trusted peers who will ably represent the “constituency” that trusts them and the constituency will feel represented. Second, they are the best evangelists back to their constituents as the strategy evolves and is put into action.
Customer Advisory Committee (CAC)
The other ignored set of stakeholders is (he says, awash in a sea of irony) the customer. Needless to say, this is a stupid mistake that needs to be corrected before it ever gets made. Customers need to be involved in the development of the Social CRM strategy, since the strategy is being developed to optimize impact on them.
In order to hear their voice, creating a customer advisory committee is a must. Typically, customer advisory committees are in the world of B2B—because the customers are companies that are engaged in processes that are serviced by the company—and they have a stake in the creation of the tools and solutions that enhance those processes. It’s corporate to corporate. That is typical. In fact, one B2C customer of mine attended a conference on customer advisory committees in 2008 that had about 100 attendees, and he was the only one from a B2C company there. He was looked at with a good deal of curiosity.
Don’t shy away from a B2C customer advisory committee. The consumer knows what they want and recruiting them to help you figure out what that means strategically for you is something you should see as an imperative in your planning of the strategy.
Some considerations in recruiting a CAC:
Mission and Vision
Once you’ve chosen your stakeholders, putting together a corporate mission and vision statement is the next step. “But, ”you say with a puzzled look and a furrowed brow, “we have a mission and vision statement.”
It doesn’t matter. The idea is that you are developing a customercentric corporate strategy focused around an objective of customer engagement, which is not the likely purpose that your original mission and vision statements were created for. Consequently, by developing new mission and vision statements, you’ll be able to see the gaps that are in the older ones. Then you’ll understand what you have to change at the company that much better.
The mission and vision statements are your anchors for the entire strategy. They are short versions of your entire strategy and programs. Marketing messages are aligned with the mission and vision statements. They aren’t marketing messages.
The mission statement is the “as is” declaration—the overarching objectives of your company as they are today. The Ritz-Carleton, perhaps the most famous hotel in the world, is defined by its level and quality of service. Their mission statement:
We Are Ladies and Gentlemen Serving Ladies and Gentlemen.
This is a poetic declaration (nothing wrong with poetry or creative metaphor when it comes to a mission or vision statement) of what the Ritz Carleton provides. It will offer elegant and perfect customer service, including the appointments in the room and throughout the halls, the training of the staff, the treatment of the customers, the quality of the food, and whatever else is involved in creating the experience of “ladies and gentlemen serving ladies and gentlemen.”
Vision is the corporate grand strategic objective—the “to be”—also at its best poetic. Typically, it expresses your outlook for leadership, market position (of the future), and your value proposition.
One of the most famous vision statements in history was “An Apple on Every Desk, ”a clever visionary phrase by Apple which promoted their computers and used the old teacher/student metaphor to focus everyone on something that felt and sounded familiar but something that also was a future objective of the company. Notably, they didn’t achieve this, but it was and might still be their vision.
This is straightforward. What kind of return are you looking for? Are you looking for a strategic win (increased Net Promoter Scores across the company or 5 percent increase in market share over a twoyear period) or a tactical victory (free up two hours per week per salesperson)?
The one thing that is tough here is that the objectives not only vary from company to company, so there’s no real template, but they can be intangible or not all that easily measurable. For example, how do you measure what it takes to be more “engaged” with the customer?
Business Case Including Costs/TCO
This is the Episode Where You Justified Spending Money on CRM to the Boss.
Essentially, this is the “why” we are doing this. Because CRM can be hard to quantify, this particular segment has to be as crisp as an overcooked potato chip. In 2007, Gartner Group research vice president and analyst Michael Smith took an expansive view and at a high level defined eight elements of the business case:
You’ll note that what Michael Smith defines as the business case encompasses everything that I’ve been (and will be) talking about within the context of a CRM strategy, including the strategy. Unless you want to be thrown into a Möbius-strip-like infinite loop, please don’t think of the business case as a step in the strategy but as the documentation of the strategy and all its elements and the justification for the program in writing to the decision makers.
In 2005, I was speaking at the Financial Services User Group for analytics vendor SAS in New York. The setup was a stage not too high off the floor;there was a curtain across the stage from wall to wall. In front of the curtain was the screen;behind the curtain was a wall. This was a common setup that I had had several times before when speaking.
I’m a pretty demonstrative speaker. I move around a lot. At one point, I went back to make a point and use my hand to slap the screen. So, screen, curtain, but, oops—no wall. I went straight off the back of the stage and hit the ground. It was amazing to hear 100 senior execs from financial services companies simultaneously going “ooooooh.” As a result of this, whenever I run across this setup, before I speak I go to the curtain and push at it to make sure there’s a wall. No more assuming that there is.
What does this ridiculous story have to do with risk assessment and mitigation? Everything.
Risk assessment and mitigation is not mysterious. They are what we do naturally with every step we take. Think of the story. I assessed risk incorrectly due to past patterns, which ordinarily had a wall behind the curtain. The wall wasn’t there, so I fell off the stage. I mitigated future risk by hitting the curtain with my palms in all future similar situations and seeing if there was a wall.
Risk assessment and mitigation should be that little a deal when you’re doing a CRM project. They have to be done because it’s necessary to understand what might go wrong. It makes sense to then figure out what you might do to deal with a future problem.
If you’re dealing with complex environments, you could do scenario planning, but I wouldn’t otherwise spend enormous amounts of time on risk assessment and risk mitigation. While this might sound flippant, it’s not. What you plan for going wrong is often not what does go wrong. What you can be assured of is that something will go wrong. Be prepared with what you can, but more than that, be flexible and cooperative and you’ll be able to get through a lot of the problems you run into.
One commonly found problem in CRM strategies, when it gets to this granular a level, is that the technology tends to become the predominant factor in determining how the business is to be run. Several years ago, I had a client who called me in because their CRM strategy had gotten hopelessly ensnared in the features of the software they had purchased—leading them to a bloated implementation and to adding processes that were not needed by their business.
What we did was what should be done at a middle or late stage of the development of a CRM strategy. We reassessed every single process the company used and discarded those that were not valuable to the company and the customer. We modified those that could be saved, added those that were missing, and then decided which CRM applications were to be used based on the processes needed and the performance objectives of the company.
This was the methodology of York International, a multi-billiondollar HVAC equipment provider in their award-winning implementation of Siebel Field Service CRM in 2003. They spent many months examining each and every process in the company—more than 250— and determining which made sense for the future of their business. Once they had a final process map, they were able to go to the CRM application vendors with this question: What can you do out of the box to meet these process and business requirements?
York International understood that some customization was going to be necessary. But by going into the selection process with a clear understanding of their business and process requirements, they were able to make the most cost-effective and best fit selection because the software had to be fit to the business, not the other way around.
There’s a lot more on process in coming Chapter, so I’ll hold off until we get there for a more detailed discussion on how to look at business processes when making these decisions for your Social CRM programs.
I’m going to spend a little time looking at the left-brained part of CRM, meaning metrics, including KPIs and benchmarks. Some of this is covered in more detail in other chapters.
While I’m always railing about the quants in CRM who substitute scales and numbers for human judgments and experiences, I do recognize that there has to be accountability for performance and also a way of determining whether you’re doing “good” or “bad” against what you perceive to be the norm.
Those are served by developing metrics for your ROI, TCO, and benchmarks with key performance indicators for achievement, which means metrics and measurement and numbers—precisely the things that CRM left-brainers are always focusing on.
The Value of Measurement
Gartner Group did a study in 2007 of 251 clients who implemented CRM. They found that:
The survey results indicated that the more measurement is done, the more successful a company is with its CRM implementation. For example, if the respondent indicated that they had done only a project plan, then they succeeded 50 percent of the time. If they added an ROI analysis to that, it rose an additional 10 percent. If they did a postproject review, it jumped to 70 percent—though I’m a little unclear how a review after the implementation is done can contribute to the success of the implementation, since it’s done. However, the results are as indisputable as any survey results—the more you measure in CRM, the more you succeed.
Key Performance Indicators (KPIs)
KPIs are perhaps the best way to account for how a person or program or project or process is doing against expectations. They are what they sound like—a measurement that is designed to give someone a numerical standard to adhere to.
In order to establish KPIs, it’s important to establish performance objectives for each department or sector of the business. Once those objectives are set, then the KPIs—which really are nothing more than the measurements of those objectives—can be established.
KPIs can be strategic or tactical. For example, a strategic KPI would be some rate of external innovation, such as Proctor & Gamble’s intention that 50 percent of all technology the company develops will come from outside sources by 2010.
An example of a tactical KPI would be that the time of replacement of materials from the point of sale must be reduced to one day.
CRM-related KPIs that you might run across—both tactical and strategic—are:
Culture and Communications
Communications in an environment receptive to a new outlook when it comes to customers are not only mission-critical but in fact symbiotic. Open communications on the nature of the strategy and its implementation to employees, customers, partners, and suppliers—in other words, those parties affected by the strategy—go a long way to making it much more adaptable than it would otherwise be.
By the same token, organizational change efforts are essential to CRM initiatives because how the company is going to function and the way that employees and customers interact will be successful only if the changes that become necessary are, by the end, not resisted. That means that open communications play a role in how well the organizational change goes.
I’m going to concentrate on the communications policy, both internal and external, as the CRM initiative moves ahead. The downloadable chapter “You Can’t Handle the Truth—So You Have to Change” is entirely about organizational culture and transformation from the perspective of the customer-centric, so it doesn’t bear repeating here. Suffice to say, culture change is one of the most important parts of an overall Social CRM effort.
When the teams are in place, the customers are engaged in the creation of the strategy, and the effort is underway, it pays to make sure that the employees of the company are informed of the initiative by an announcement. How the announce- ment goes out will be indicative of what communications channels are used throughout the life of the program. They might include:
These are just a few of the possible communications channels. Be alert to who at your company uses which of the channels. Like all other efforts, this announcement and the subsequent updates need to be effectively communicated, not just communicated. The Gen Yers at the company will want to communicate via text messaging while the older generations will prefer e-mail.
Everyone loves a party.
Because communications about the strategy are widely disseminated, that doesn’t mean they have to be entirely democratic. “Need to know” is certainly a good rule of thumb for the communications policy. For example, it isn’t necessary to reveal the entire budget for the Social CRM initiative to every staff member. Some will resent it if they hear about it. Others will have no interest in it and consider the communication a nuisance. However, the finance department may need to know because they are responsible for allocation of the money, as are perhaps line of business (LOB) owners who will have their departmental funding affected.
The communications policies and the channels being used should be planned from the beginning of the endeavor. The reason? Communications are the lynchpin for the success of the effort.
You know I’m right about this. Just spend about two seconds to remember a time when communications with some company you were dealing with failed. What happened? You hated the company but you also thought “if only someone had just talked to me. . . .” Well, that happens all the time, and that’s why internal and external communications about the status of the CRM initiative are so important. Don’t underestimate it.
Training is going to be necessary. Not only is it necessary to get adoption of the system that you’re using, it’s important for the psyches of the staff who will be the system users. They want to participate in learning about the system and in shaping what they learn. That’s standard operating procedure.
Iterative learning—training that incorporates the participation of the trainees in the evolution of the curriculum—is something that works in CRM technology and program training environments. That means interactive participation so that the training is modified as it is taught.
As part of my CRM “existence” I both co-own a CRM Training Certification company, BPT Partners, and I train on CRM strategy and social media implementation (two separate courses). We do a lot of interactive training and are constantly requesting feedback, including evaluations at the end of sessions and spot phone calls or e-mails to former students on what they’d like to see. We then incorporate the feedback into the future iterations of training and the process begins again. This is particularly effective when planning your CRM strategy. How you train is as important as who you train and what you are training them on.
To make sure the training is effective, the systems are adopted, and the communications continuous, it pays big time to train a superusers group who are trained to train. This is called, another “duh” moment, “train the trainer” and is something I can’t stress enough. Often the superusers are the same people who function either as the natural leaders—those trusted on their personal authority by others at work— or even the stakeholders—the ones involved in creation of the CRM program. Because they are “someone like me, ”training them to train others is far more effective than even the professionals who might be doing the original training, simply because those taking the training trust its source.
Vendor Selection Strategy
I’m only putting this in as a placeholder for coming Chapter, where you can see how to go deep on vendor selection. Keep in mind a major caveat. Vendor selection, which involves choosing the applications and the company that provides the apps, is one of the later stages of the overall implementation of the strategy. You do it at the beginning and your odds of success go down, though you might have the technology in hand. You do it later, and you’re doing it smarter. But I’ll let Bruce Culbert tell you about that in coming Chapters.
Model Project (Pilots)
Doing a pilot in the case of a CRM program doesn’t mean a smaller version of what will be a larger implementation. It means choosing a specific tactical objective and then developing a strategy and implementing toward a solution for that tactical objective. For example, several years ago, a client who was not prepared to do a CRM implementation because of cultural issues that were related to their relationship to their sales force, which was independent agents, still needed a new marketing and sales management system because theirs was so badly broken. The implementation of that sales and marketing system was primarily to increase operational efficiencies, not make a change on how to deal with customers per se. We brought in NetSuite as an interim solution with the understanding that they would still have to bid with everyone else when this company was finally ready to develop a full-blown CRM strategy and implement a comprehensive system.
One of the effects of the effort was that the company and the agents got comfortable with the idea of a CRM technology, which will make the transition culturally a lot smoother when the time for the more comprehensive solution is at hand. The pilot fulfills a need and provides a quick “win” so there is acceptance of CRM at the senior level and among the staff. This isn’t simply just a scaled-down test. It’s a small tactical effort with a purpose.
Extending the Community
This is a new Social CRM element in the pantheon. Part of your planning now has to be on how you’re going to engage your constituents— be they customers or voters or people with like interests. No longer are you implementing just the operational CRM programs that improve your business processes. You need to add a social component to your strategic thinking, which might include the use of social media, or monitoring external communities who are “conversing” about you, or even creating a customer community that would be part of your ecosystem so that the conversation would at least be visible and available to you if not in your control.
But it goes even beyond the obvious. Part of this planning is how transparent and open you’re going to be as a company—that is, what you are going to let your customers know that in the past you wouldn’t. How are you going to treat your customers, as clients or as partners? What does that imply for your corporate culture? What kind of channel strategy does this mean? Are your partners a receptacle for your products or are they part of an integrated ecosystem that’s organized around the enhancement of the customer’s experience?
All in all, what you’re planning for is how your customers will be participating in your business with you and what that means to your contemporary business environment.
The CRM Killing Fields
Okay, in a perfect world, the CRM . . . wait, there is no perfect world. Something is going to go wrong (remember risk assessment?). I guarantee that. Let me give you an idea of what could and how bad it can get, just so you don’t get too giddy. These are the CRM killing fields.
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