Social CRM: The inner meaning

Enterprise software is rapidly evolving to reflect the growing importance of social software. Nowhere is this change more obvious than in customer relationship management (CRM).

Enterprise software is rapidly evolving to reflect the growing importance of both social software and channels such as Twitter and Facebook. Nowhere is this change more obvious than in customer relationship management (CRM).

Historically, CRM systems were primarily transaction-based, intended to facilitate operational activities associated with managing customers. For example, typical CRM tasks might include tracking customer calls, organizing mailings, and reporting sales statistics to management.

In traditional CRM, company efforts to channel customer responses in pre-determined ways were the paramount center of gravity. Enterprise vendors designed these systems to help organizations control customer behavior related to buying and interacting with the corporate mother ship.

Today, social software and the Internet have created a "culture of participation," in which consumers can quickly pool their power into a strong, and historically unique, collective voice. Technology enables consumers spontaneously to form ad hoc affinity groups, sometimes comprised of literally millions of participants. For example, about 7.5 million people have watched United Breaks Guitars, an anti-United Airlines video on YouTube.

Related: Social CRM: Shifting power and rapid burn

These changes have caused substantial shifts in the balance of power between buyers and sellers. Social CRM reflects these power shifts and recognizes that lasting customer relationships arise naturally from genuine engagement, discussion, and interchange.

The era of organizations thinking they can use technology as a means to control customer behavior is ending.

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To better understand Social CRM and learn about buyer/seller power shifts, I spoke with Paul Greenberg, who is among the strongest and most influential CRM voices. Although we intended the conversation to focus on the new fourth edition of Paul's seminal book, CRM at the Speed of Light, the discussion immediately shifted to Social CRM.

In this podcast, Paul offers a brilliant summary of Social CRM and explores the inner meaning of this important topic. Click the player at the top of this post to listen.

Here's a summary of key points we discuss in the podcast. These are edited snips and not intended to be a transcript. If anyone out there wants to transcribe and publish the recording be my guest, but please reference this post.

On the market conditions that created Social CRM:

Business/customer communication has changed dramatically since 2004, influenced by trends such as the worldwide growth of mobile devices; web communities and peer trust becoming primary modes of interaction; and customer expectations for 24/7 support.

On differences between traditional CRM and Social CRM:

Customers now control the ecosystem, whereas in traditional CRM it was controlled by business. In the past, standalone customers read product reviews; today, activist social customers can take down or build up a company just by word of mouth.

The Internet creates greater buying ease, so customers have developed higher expectations. When companies don't meet these expectations, customers respond by telling everyone else. The social customer uses a kind of amplified word of mouth.

On great sales people and their relationships:

Customers now expect businesses from which they buy to offer a consistent level of service that only the best sales people could provide in the past. Those great sales person relationships alone are no longer sufficient for meeting customer expectations. That's a huge shift.

Companies must develop a culture that communicates, "We collaborate with customers to provide mutual value for them and us." The goal is institutionalizing extraordinary sales experiences so customers will say nice things about us when they talk with their peers.

On practical steps companies can take to engage with customers:

Listen to your customers' voice directly from their actual larynx, rather than to the opinions rolling around in your head. For example, build a customer advisory committee and ask exactly what they want and think.

Participate in their communities to find out who they are, what they want, and learn how they can also provide value to you. A company can engage this way with only one or two smart people. It's not heavy lifting.

On transparency:

Transparency is absolutely a vital ingredient in dealing with social customers. It means companies must provide sufficient information and visibility so customers can make intelligent decisions.

On authenticity:

Authenticity means give it to me straight and tell me the truth.

On CRM software and technology:

Successful customer relationships are based on interacting, cooperating, and collaborating with customers to provide mutual value. Technology is an important enabler but is secondary to relationship.

Even hard-core techies are human.

On defining Social CRM:

Social CRM is a collaboration strategy to achieve mutual value between customers and buyers. It includes components such as technology; processes and practices; customer experience; channels and pipes required to enable communication; and the corporate culture that drives decisions around dealing with customers.

The definition in short, twitter-friendly form: Social CRM is the company's response to the customer's control of the conversation.

[Photograph of Paul Greenberg by Michael Krigsman.]

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