The Value of Social Media in CRM - Customer Relationship Management

Charlene Li,the former Forrester analyst,current President of Altimeter,and co-author (with Josh Bernhoff) of Groundswell (well worth reading),defined the use of social computing as “a social structure in which technology puts power in communities,not institutions.”Those technologies are the social media applications and the vessels for human participation—the social networks and communities that have begun to redefine the way businesses are looking at working with their customers.

Social media—blogs,podcasts,videocasts,wikis,RSS
feeds,social tagging/bookmarking,and to a lesser extent,texting and instant messaging—have been available to consumers for years and they’ve been using them to communicate with each other. Text messaging has been a staple of communication since 2001. In 2001,there were 17 billion text messages sent;by 2004,there were 500 billion text messages sent;in 2007 it was 1.9 trillion,and that is only going up. According to a research report released in mid-2009 by BuddeComm,the estimate for text messages sent in 2009 is 3 trillion.

But it is only very recently that businesses are beginning to see the value of social media as a means of communicating with customers—and that only because the customers expect that kind of communication. There is a real reluctance to move forward,but the upward pressure of customer demand is pushing IT departments in particular forwardto deploy these tools.

Part of the disinclination was simply IT budgetary constraints. For example,as late as June 2008,a Forrester report about the U.S adoption of Web 2.0 technologies found that of 729 IT decision-makers at U.S companies with 500 or more employees,64 percent of the IT shops wouldn’t invest in wikis in 2008 and 69 percent wouldn’t invest in blogs;66 percent had no interest in RSS investment.

The chant keeps getting louder. Statistics are there—Gartner estimated that by early 2009,50 percent of all corporations will have social software or its components up and running. That hasn’t quite happened,but adoption rates are up over last year. But it isn’t the numbers that drive it,it is that verbiage which goes,“Customers are going to have the conversation with or without you. Whether or not you give them what they need to have it with you is up to you,fair enterprise.”

What Are the Tools?
In this chapter and the next three chapters,we’re going to cover the newest and most important tools of Social CRM—the social media and social networks that have been such a hot topic. The more traditional tools and practices will be covered in coming Part.

Social Media,Social Networks—I Don’t Get It,Do I?
Actually,you do. You’re using them,or reading them or commenting on them or even donating through them or seeing them or hearing them or writing on them. A study completed in August 2008 by the Interpublic Universal McCann (UM) unit called “Media in Mind” found that more than half of all adults are relying on at least one of the social media—okay,Web 2.0—platforms for communicating on a regular basis with someone from somewhere. The specific forms ofcommunication are social networks,text messaging,blogging,or some other digital interaction. In fact,in the 18 to 34-year-old bracket,Gen Y,social media is the dominant form of communication according to the study,with—get this—85 percent using Web 2.0 platforms to stay in touch with others. Universal McCann’s conclusion,which is correct,is:

Although age is the driving force behind usage patterns of these technologies,it is clear that a fundamental shift has taken place in all of our lives about what it means to communicate in the 21st century.

This revolution in communication has accelerated at remarkable speed. The same “Media in Mind” report found while in 2007,5 percent of all Americans were publishing a blog,as of 2008,10 percent were. The same doubling occurred in the 18 to 34-year-olds,with the rate going from 10 percent to 20 percent. The readership has soared also. We all know that to one degree or another,but what’s interesting is the reason that UM figured out:

We think that’s due to the increased use of social networking,and blogs are an integral part of using them. Two years ago,asking people about blogs,people were shaking their heads. I think now it’s taking off because social networks are taking off. RSS feeds,which make reading blogs easier,have become an integral part of the way people communicate and exchange content. People may have been doing it before,but may not have realized it. Now they’re recognizing it for what it is.

The revolution in customer engagement and Social CRM starts with the revolution in the use of social media.


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