Michael Wu, Ph.D. is Lithium's Principal Scientist of Analytics, digging into the complex dynamics of social interaction and group behavior in online communities and social networks.
Michael was voted a 2010 Influential CRM Leader by CRM Magazine for his work on predictive social analytics and its application to Social CRM.He's a regular blogger on the Lithosphere's Building Community blog and previously wrote in the Analytic Science blog. You can follow him on Twitter at mich8elwu.
I’ve spoken about sCRM at panels, but I’ve never actually written anything on this topic on my blog. So I thought today is probably a good time for me to talk about my perspectives on sCRM. I am not going to repeat the definitions or other aspects of sCRM that you can find elsewhere, because there are plenty of sCRM experts who know this topic way better than me. Rather, I will analyze sCRM from a communication perspective and explain some of the observed confusion around sCRM.
Before I do that, however, let’s take a look at the traditional channel of communication between corporate entities and their customers (Figure 1). Some of the key characteristics of the traditional channels are:
Transient & opaque: Communications between a company and a customer are usually not recorded. Even if they are tracked, they are not easily retrievable, and therefore not visible to other customers. This gives the company a lot of control over these communications.
Unidirectional: Customers-to-company communication is usually handled via support/service department, and company-to-customer communication is usually handled via marketing/PR department.
One-to-many (or many-to-one depending on the direction of communication): Since customers don’t know who and where the other customers are (due to the transience & opacity of communication), coordination between customers are difficult.
Many people think they are doing sCRM if they simply add the social media channels to their traditional channels and continue their business as usual (Figure 2). But IMHO, social CRM is not just another channel for the customers to communicate with the company.
Social Media Communication
The communications on modern day social media channels are clearly (1) Persistent & transparent, (2) Bidirectional, and (3) Many-to-Many. Some of the direct consequences of these changes in communication pattern are:
Persistent & transparent allow any customer to retrieve and see the communication between company and any other customers. In turn, this enables many-to-many communication and coordination among the customers. The result is that customers can now have much greater control of their communication with the company.
Unlike traditional media, social media is inherently bidirectional, so communications on social media channels go both ways (i.e. customer-to-company and company-to-customer). This is what led to the problem of “who owns social in an organization?” with many organizations vying for control of the medium.
Since the growth of many-to-many communication is roughly the square of the number of customers divided by 2, companies can never scale with the conversations of the social customers with just employees. Look at Figure 3, there are many more green lines (15) than gray lines (6). If you have 1000 customers, you will have only 1000 gray lines (customer-to-company communication), but there will potentially be 499,500 green lines (customer-to-customer communications). The difference will be even more dramatic as your customer base grows.
My Perspective of sCRM
So what is sCRM? To me, sCRM is everything that a company does to deal with the above changes in communication patterns introduced by social media. This involves many aspects of business. Clearly the technology has to change. Instead of managing the conversation with X number of customers, sCRM systems must track and manage roughly X-squared/2 number of conversations among the customers. Since these conversations are unstructured, sCRM systems must be intelligent enough to interpret and understand the conversation on the social web. Sentiment scoring is one but only the very first step in this analysis. Moreover, since there is no way for employees to engage and respond to every customer conversation, sCRM systems must enable business processes by prioritizing and routing the relevant conversations to the proper responder – in other words they have to scale with the company and their audience.
Aside from technology, new strategies and business processes must be in place to collaborate with people outside your company. I once said “the only way any organization can scale with social, is via social.” So companies must learn to work with their advocates, influencers and superusers to co-create value with them. Whether it is answering technical questions about your product, helping to spread your marketing message, or defending your brand, not only are these non-corporate affiliates crucial for scaling, they are actually more effective than the voices of the company.
There should be some level of change to the internal structure of the organization to facilitate the interaction between the support, marketing, sales, and product department within the company. The social customers see the company as one corporate entity (one Twitter account, one Facebook fan page, just like any other users), not a conglomerate of disparate departments. The relationship that sCRM manages should be the relationship between your customers and your brand; it shouldn’t be the relationship between your customers and the departments within your company. Breaking down some of the organizational walls not only provides a more seamless customer experience, it will also increase customer satisfaction and loyalty in the long run.
Finally, sCRM involves a change in the philosophy and the culture of the company. As conversations become more transparent, companies must engage social customers with authenticity and learn how to be more customer-centric. You may have 10,000 employees watching the social stream, but the whole world is watching yours.
Who owns social? I honestly think it’s owned by everyone. It is certainly everyone’s responsibility to know what the social customers are saying about their brand. The company may have guidelines on how to respond and interact on in the social web. But as the Gen-Z enters the work force, what used to be guidelines will simply become part of normal social conduct and etiquette for the new generation.
Social CRM is a fundamental change in the way companies run their business and do business. If you are simply using Twitter, Facebook, or a community, as another channel, then you are missing the whole point of sCRM. If you take this approach, you are going to miss out on the long-term and specifically the long-tail benefits from the co-created value through customer engagement. So this is my perspective on sCRM.
I am deeply honored to be named an influential leader in this new space. To be honest, I am relatively new to sCRM. I used to be a computational neuroscientist. Surprisingly, this turned out to be rather helpful as it encourages me to think out of the box, challenge pre-established standards, and examine the problem critically. Without the experiences, my thought process is also not limited by what some people called “intellectual baggage.”
Thank you to all you loyal supporter out there, for your readership, support, and validation. I must also thank Lithium for understanding the value of research, and for providing me with an intellectually stimulating environment and the freedom to pursue and explore some of the most interesting and challenging problems in sCRM. Last but not least, a big kudo to all my colleagues at Lithium and Scout Labs, I wouldn't be where I am without all of your help and support. As usual, comments of any kind are always welcomed. See you next time.