Data-Driven Social CRM

I have been reading some very interesting books about strategies around becoming a customer-driven organisation and also about the benefits of Customer Engagement Programs (more on that in later posts). In the discussion around Social CRM we agree that it is beneficial to business to engage the Social Customer, but what seems to be more difficult to articulate is the Business Value Proposition – why should a company invest in Customer Engagement Programs in conjunction with CRM? What value is in it for the company and what is in it for the customers? We also talk about the need to move from value-in-exchange thinking to value-in-use. What tangible benefits are there for companies to take a a customer Lifetime Value approach rather than concentrate on the sale? Or simply, how can Social CRM Strategies can provide a significant impact to the bottom line.   

This is where Jim Novo’s book “Drilling Down” got me thinking – hard (and kudo’s to fellow AC-er Mike Boysen for helping me shape my thoughts). Jim Novo’s premise is that the data you have in your systems about your customers will allow you to segment them based on their behaviour and not sociodemographic characteristics and concentrate your resources on those that will bring you the highest value. It sounds kind of like inside-out thinking, but believe me, it is quite the opposite. Rather than concentrating on attrition and win-back of all your customers(which is far more expensive than customer retention), the method he proposes also allows you to pick up on deviation from expected behaviour, use these as triggers and perform what I’d describe as “just-in-time” retention activities to keep the patronage of high-potential or high-value customers.   

 This excerpt is taken from the free chapters of Jim’s book (you can get them here by signing up for his newsletter):   

1. Past and Current customer behavior are the best predictors of Future customer behavior. 

You can predict future behavior based on an understanding of past behavior, and use this knowledge to improve marketing or service programs [based on] actual behavior, not implied behavior.

2. Customers want to win at the customer game. 

They like to feel they are in control and smart about choices they make, and they like to feel good about their behavior. Marketers and service providers take advantage of this attitude by offering programs and communications of various kinds to get customers to engage in a certain behavior and feel good about doing it.

3. Data-Driven programs are about allocating resources.
 
Data-Driven marketing and service programs are among the very few allowing you to accurately measure ROI. [It’s about] reallocating capital with low return to higher return projects or programs, generating higher profits in the process.  

4.Action – Reaction – Feedback – Repeat.

Data-Driven marketing and service programs are driven by creating continuous communications and interactions between the business and the customer, and analyzing these interactions for challenges or opportunities.

This is the example Jim uses to illustrate his propos: 

For example, a win-back program is triggered when the customer defects. Have you switched long distance or cellular providers lately? Did you get inundated with win-back calls begging you to reconsider? “Jim, we just wanted you to know we have lowered our rates.” Yeah, well, thanks for telling me after overcharging me for the past six months! But could they have known I was about to switch by looking at my behavior? 

Sure. If they had looked at the calling patterns of previously defected customers like me, they would have seen a common thread in the behavior.[…] The proper profit maximizing approach is to wait until I look like I’m going to defect, and then call me and offer a lower rate before I defect.

Too late. The customer no longer is one.  

The “Drilling Down” approach is aimed at constantly improving and optimising the value of both the company whilst ensuring a satisfactory customer experience.  

 What I like about Jim’s approach is that they provide a concrete Business Value Proposition for implementing a Customer Retention Strategy that optimises the allocation of the company’s resources by focusing on the most profitable segments – or in Finance speak: optimize the Return On Investment.   And as you probably know, the quickest way to a CFO’s heart is not though his stomach, but through the figures…The only issue is that it requires the company to move away from a quarterly quota model to a customer Lifetime value approach (see the book for more details on this last remark…)  

 Enter The Social Customer  

 In Jim’s example above he focuses on someone who leaves and moves on without looking back. What has now changed the game is that the Social Customer – through her interactions with her peers – can have an impact on the cost of new customer acquisition and as well as on retention, both in a positive and negative sense. No longer is the customer ‘an island’ because of ubiquitous opportunities for peer to peer conversation. These can influence customer behaviour patterns on a world-wide scale and thus adds a variable to the equation to the above that needs to be taken into consideration.  

In a Social CRM strategy, to address the Social Customer whilst at the same time optimising the company’s resource usage and profitability, key to me will be the ability to link the conversations of your customers to the segments you have identified of high/low potential/value. This means that rather than tracking all conversations everywhere and pumping these into your database, you should be focusing on your high potential/value customers Furthermore your understanding of the customers should be aimed at identifying behaviour patterns and triggers within the channels where your customers express themselves and that you can monitor.  The barrier to pick up the phone [or fill in whatever channel you like] can be high for some customers and this can deprive you of the trigger needed to track a deviation and react accordingly. The conversation the Social Customers are having through these public communication means may now provide you with this trigger that you would have missed out on before. And rather than allocate your resources to responding to every person that wants to rant, you can concentrate your efforts on those that you would like to retain (whilst remaining ‘polite’ with those that are not of direct interest of course).  

 Although I realize that this line of though does not address all the opportunities of Social CRM and Social Business Strategies, it is my first attempt at rationalising  and articulating the Business Value Proposition. With a broad stroke of the pen I have put other elements such as peer to peer support, ideation, customer experience programs, open innovation etc. under the header of Customer Retention Strategies, and I do apologize for this.  I will try to work out my ideas in further posts.  

 What do you think? How would you formulate the Business Value Proposition for Social CRM and Social Business.

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On Social CRM Options

The discussion around Social CRM is entering a phase whereby we are trying to move away from turning around in circles about semantics, towards a more practical and pragmatic approach that businesses can identify with so as to consider implementing it. I won’t deal with CRM Vendors here, as Social CRM can be seen as an extension to CRM. As a primer on SCRM I suggest you look at Bill Band’s article on Customer Think. The main idea that we all do agree upon is that we need to become customer-centric in order to respond to their changing needs and expectations, and this may have some major ramifications on the way we organise our businesses.

Wim Rampen recently did a must-read post on Real-Options for Social CRM, with great comments from the #scrm crew. If you’re like me, you have been looking around for what these options could be – sifting through all the information links provided through the accidental community on Twitter #scrm- so that you can start mapping your own options and seeing where they would fit in an approach that is apt for your business situation. Below I have tried to describe some of the the landmarks that you may encounter on your  journey. Please join in and tell me what I’ve missed!

1. Monitoring and Analysis

We have settled on the idea that we cannot manage what is being said about us (as long there is any Buzz we should be happy, right?). What we do need to do is understand what is being said and for which reasons. We also need to do some introspection and find out whether we are aligned with customer perceptions about our business, and this is where monitoring and analysis comes in.

– Social Media Monitoring
 Twitter, FB, Search Engine Result Analysis, crawling non-managed forums, or whatever this month’s Black is  (according to Altimeter you need at least 6 channels to be an engagementdb.com Maven).

– Sentiment Analysis
Natural Language Processing in order to extract opinions – automation of Social Media Analysis

– Customer Surveys, Website-, Call Center-, Customer Support Feedback, Email Campaign Results
Feedback from other channels should not be neglected – Social CRM is not only about feedback obtained through Social Media channels. I suggest reading Aggregated Stats Are Key to Social Media ROI

The return of this could be used to shape your Marketing Strategy (Social Media and traditional) or for even for Lead Generation. Vendors in this area are Radian6, Scout Labs (see list), or for the budgetarily-challenged Open Source/Freemium

2. Social Media Marketing

I know I am over-simplifying, but sometimes I think SMM has sofar mostly been facilitating banner clickthroughs based on adwords and user browsing history and the likes to push trafic to brochure websites in the best case, and buckshot email spam in the worst. Consumers are however becoming more web-savvy and filter out these ads from the content they are interested in so this is becoming less effective.

Community and conversation is all – if the consumers trust the community, they will extend the trust to the brand (Brand and Marketing trends for 2010). People have spontaneously gathered for example on Facebook, now companies are trying to get in on the act by setting up their own Fan Pages (at their own risk and peril, I must add…). These communities offer the company the opportunity to engage in the conversation, but it still very much an unstructured, resource intensive approach. My take on SMM will be aimed at driving people towards and participate in Brand Communities (point 3) where monitoring what is happening and identifying causal relationships will be more manageable. See Junta42 42+ Social Media Marketing Tools.

3. Brand Communities

Providing a platform that can house a community around your Brand and attracts prospective customers would be the next step. The objective is not to gain control, but rather better monitor what is going on, find opportunities, work on your reputation by adding value rater than pushing a message, and react in a timely manner to any issues.

I would like to split this out into three separate areas (even though they could share the same platform provided by the same vendor)

– Social Support Communities
Peer-to-peer Support can be great means for finding out what customers have issues with concerning your offering, as well as deflect calls from your Customer Support, leaving them with more time the more difficult cases or just to go beyond the Call Handling Time and focus on the Customer Interaction (see Cicero). To me this type of community because sometimes its super-users can provide more value than has its merits for because ROI can be shown (see John Bauer’s comment on SCRM for SMBs, reduce by at least 10% your case load).

– Social Objects Communities
In an earlier post, I set out to give a name to another type of community that has as its purpose to provide a platform for people to socialize around “Social Objects”. Barnes & Noble Review would be a good example of this. It is said that participants have a higher average customer spend and higher customer lifetime spend on the B&N site (any hard datafacts, Lithium?). Furthermore upsell opportunities are placed into the community site to drive revenue.

– Ideation
Behind this is the objective to create communities where customers would put forward ideas for the company (crowdsourcing). Where they have failed is that the ideas not always were in line with the operational realities or objectives of the company, and are often left unanswered (leading to dissatisfaction). Graham Hill has written an interesting article on co-creation that has some insights on what could be a better approach to co-creation.

Players here are Lithium Technologies, Helpstream, Parature. Prem Kumar recently mentioned on John F. Moore’s blog that there are Open Source solutions out there, I think they do not (yet) have the monitoring & analysis capabilities that we’d be looking for here

4. Feedback Management

Our friend Esteban Kolsky is very keen on this one. The main idea behind this is that we take existing data available through the CRM system about our customers (not only profile information) and mix it so that get a full 360° view that includes history and information gathered from monitoring and analysis as well as information from 3rd parties. Just as there is a market now for Credit Score informatin, there may be a time when companies sell trend information to other companies as a by-product. Imagine if PayPal or eBay were to make historical purchase data available!

FM has the potential to analyse and determine a response and who should be dealing with formulating it (add a dash of Business Process Management?). The wikipedia link has a list of  vendors, no actor has a significant advantage as far as I know

5. Response Communities

In the way that Brand Communities can be used for customers to share and collaborate, the same platform could also be used to let cross-functional teams (and even cross-organisational if we also include partners and suppliers)  collaborate on the response to the events generated in EFM. Super-users could be identified and nurtured in the same way as in the Brand Communities.

Response Communities only really make sense once your company has learned how to collaborate internally – which takes us to Enterprise 2.0 (the collaboration kind, not the knowledge management one…). Internal networking will create the right mindset to then go out and collaborate with customers, for value co-creation. 

6. Insourcing

Insourcing is about allowing your employees to collaborate directly with your customers, such as your store personnel providing product informationor answer support questions through the likes of Twitter (see Best Buy’s Twelpforce). This can increase the breadth of your response by added more voices to the conversation than just your customer service and support reps, but increases the risks of potential blunders. Good, clear and precise policies can help to mitigate these risks.

I am aware that I have probably missed out on some elements (and have not developed each of the bullet-points sufficiently) but my objective here is to give a quick overview, a starting point. Please chime in and add your point of view!

The Boardroom’s Tipping-Point for Social CRM Implementation

Bob Warfield recently posted a great article with the title The Customer, as Social CRM, is the Fourth Pillar of CRM. I posted the following in reply, for you to muse over.

Customer-centricity is definitely the way forward, and I like the idea of the customer as a stakeholder in co-determining the company’s success. Enterprise 2.0 is potentially a great basis to promote collaboration between employees. CRM is the touchpoint between them and the outside world. Social CRM adds the dimension of opening up the company to the customers, allowing for better communication, mutual understanding and foremost enables a collaboration model to be put in place between internal employees and the customer community. Many benefits are expected, such as co-creation, peer-to-peer support, First Call Resolution, brand image improvement, opportunity detection…

The question that now arises would be up to which point we open up, just how much before it becomes counter-productive. When I go to a restaurant, I don’t expect them to open up the kitchen to me – I’m there to enjoy the great food that is prepared there (and I can’t cook as well as the Chef). You could reply that some fancy restaurants do actually showcase the kitchen and you can see your food whilst it is being prepared (great entertainment!), but that doesn’t mean I can just wonder in, touch the ingredients, fiddle with the stove and visit at leisure. Other patrons would not appreciate.

The biggest obstacle to change will be not come from the customers, but rather from the Boardroom. Defining where the tipping-point for Social CRM (and Enterprise 2.0) implementation is for Upper Management will be the next big hurdle. It is not just about the ROI of a Social CRM software solution and its pay-back, but rather a “remise en cause” of the entire Business Model with far-reaching consequences for the way the company goes about its affairs. How much investment will it take to retrain the workforce to “think customer”, to implement and use the tools effectively? How much resistance to change will be encountered and how to deal with it? What will the implementation timeframe be and the cost of starting off too late? And most essentially, what is the ultimate overall pay-off. The Boardroom needs to justify its action to its Shareholders, and more specifically justify the expenditure of Social CRM in conjunction with Enterprise 2.0. If the metrics of the costs and the expected benefits are not clear it will be tough to swallow.

To summarize, the Boardroom will need to determine where the the tipping-point is to implement Social CRM, what level of customer-company collaboration they’re after, and in exchange for which expected benefits, and this needs to be understood by the shareholders.

enterprise 2.0 and Social CRM

I met with Bernard Parisot and Catherine Chapuis of Net7 in Paris today to exchange with them on the subject of Social CRM. Net-7 consists of a number of C-Level Executives who have founded a company to provide expertise to Senior Management in many different sectors. They have often come across the issues involved implementing CRM systems so I highly value their input and experience!

The key point that I took away from this meeting is that not only do you need to put the right Social CRM tools in place to better communicate with your client base, you also need to gear your organisation in order to create a mindset that facilitates this interaction. Not only do internal employees need to come to grips with using the tools, analysing the data that comes out of them, but they also need to understand that they need to reach out and communicate with the other ‘silos’ that exist within their company. Information should flow freely and correlations should bubble up in order to create a synergy that will help to better serve the customer and provide her with what she is looking after.

Not only does a company looking to integrate Social CRM need to acquire the technology to allow them to interact with the customer and analyse data patterns, but also change organisational behaviour to become the much-touted ‘Enterprise 2.0’  – all this to better serve the customer’s needs. This is where experience and expertise can be a great asset – look at what is available when choosing your CRM system, be it from the vendor’s Professional Services or your favourite SI!

The other main topic is convincing the C-Suite crowd of the ROI that can be obtained by the implementation of this extension to traditional CRM – but will be the subject of another blogpost 🙂