Social CRM - another crock?

Social CRM - another crock?

Summary: I can't think of any plausible use case where such crowdsourcing will have anything other than a marginal impact. There will always be that spark of invention that no one's heard about -- but does it make sense to consider SCRM as the way to find that needle in a haystack?

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Gartner analyst Michael Moaz provides an all too familiar tale of process gone screwy in customer experience. It is as my buddy Sigurd Rinde might say: a classic case of a barely repeatable process. In other words it happens but with low frequency in a complex environment. He starts with:

What fun to be an analyst and a consumer!  I was shopping last week in a very prominent retail chain that has spent millions on customer processes and, more recently, a lot on facebook,Twitter and their own web site.

...and then goes on to describe how disconnected systems contributed to the retailer having the wrong shipping address and how he had to fix it:

Alright, this should be an easy recovery, yes? No. Not so fast. Of course this is a global package delivery company that operates 24/7. But the polite and courteous assistant tells me that they have a “special arrangement” with the company, and they, the Retailer, are only allowed to call Monday through Friday. I remind him that by Monday the package will have arrived at a place I haven’t lived at in quite a while. How do I know that this will happen? Because as the two of us are speaking on the telephone, I am simultaneously looking at the tracking status on the shipper’s website - something the assistant can’t do.

Stay with me. What happened? Well, I called the shipper, got an equally charming and courteous Customer Service Agent on the phone, and she said that only the sender can alter the address, not the customer. This last part was fun: I set up a three way conference call between myself, the shipper, and the retailer, and Presto! My shoes will arrive Tuesday morning.

As Michael correctly points out:

Maybe, because a part of my job is to analyze customer processes for clients, I have a leg up on some other consumers – or at least I am patient and understanding. But what do you think these process disconnects do for the feeling of confidence, trust and goodwill for the relationship with the general consumer?

Some consumers? I suspect Michael is in the 1% of people who know enough to figure out a solution, albeit this is a temporary fix. 99% would be hard pressed to understand the connections he was able to make.

Bear in mind this is a Gartner piece so it's likely that a modest number - say 2,000 people - will likely see the post. Most may make a mental note but it is likely that only a very small number will wonder what this means for their business systems and processes. To get that message across, I suspect Michael will need to stand up at a lot of customer conferences and meetings.

In the reality distortion field called Social CRM we hear that businesses will want to crowdsource from customers. Really? I wonder how many other customers have faced Michael's problem but were left stumped? Or how many retail assistants dutifully wait for the screwy process to take its course and then initiate a pre-canned correction? How would any organization crowdsource a solution to this common problem?

One way would be for 20 or so analysts who would have had to be affected in similar manner to rise up on their haunches and write this up ad nauseum until somebody 'gets it.' Even then it might not work. After all - who's listening? Right now, Michael is a crowd of one.

Instead, what we have are a bevvy of analysts and vested interests yelling as loudly as possible that SCRM creates the environment for crowdsourcing all manner of wonderful things, including improvements to customer service.

Hutch Carpenter VP of product at Spigit sees SCRM as a way to crowdsource open innovation:

The idea of bringing customers into the process of defining the products and service of your organization is one that is gaining a lot of steam. One manifestation of that is the increased interest in Social CRM. In this scenario, companies engage their social customers for feedback and marketing purposes. Taking it a step further, Mark Tamis and Esteban Kolsky see the higher purpose as organizing the business around the newly social customers...

OK and despite Michael's example, you've got me hooked. Hutch expands this thoughtstream into 'open innovation,' citing P&G as a stand out example:

....And what is the value of taking open innovation to a more integrated, advanced level? Procter & Gamble illustrates the benefit. In 2000, P&G CEO A.G Lafley set a goal of having 50% of the company’s products derived from external sources. To accomplish this, the company consciously engaged external parties through its Connect + Develop initiative. Through Connect + Develop, P&G conducted a two-way exchange of ideas and feedback with industry, leveraging a dedicated staff of over 50 people. The results?

  • In 2000, the success rate of new products was 15-20%. By 2008, the new product success rate rose to between 50 – 60%. (pdf)
  • R&D investment as a percentage of sales is down from 4.8% in 2000 to 3.4% in 2006. (link)

The company attributes its success to its open innovation model. And the advantage continues. Diversified, globally-based P&G’s stock price is up 7% over the past 5 years, while the diversified, globally-based businesses of the S&P 500 are down 2%. That’s a 9 percentage point spread.

I'm impressed except for one thing. This isn't about Social CRM but about collaborative co-innovation among like minded scientists. Read the Harvard report from 2006 and in particular the piece where it says:

As we studied outside sources of innovation, we estimated that for every P&G researcher there were 200 scientists or engineers elsewhere in the world who were just as good—a total of perhaps 1.5 million people whose talents we could potentially use.

Scientists who may well be P&G customers but who are not motivated as customers. Is this new? Not at all. Automotive manufacturers have been working with engine makers, gearbox makers, computer systems designers and on and on for many years. Boeing has partnerships with engine makers going back decades. In Vinnie Michandani's book The New Polymath, he expends a considerable amount of verbiage on describing and discussing GE's approach to innovation and the way it spans multiple business lines and investments. There is nary a mention of SCRM but plenty about collaboration. But lets just think for a moment about this notion of customers joining in the innovation process:

  • Would you want your house design crowdsourced?
  • How about the next new foodstuffs?
  • Or the next new wonder drug?
  • Your 2011 car design?
  • The next season's wardrobe of clothes?

Do you think I am taking a reactionary viewpoint. Statistics in 2008 reveal that sales of sewing machines in the UK were on an upward trajectory. Among other reasons:

Experts say the boom is driven by a greater awareness of social and environmental issues and a desire to stand out from the crowd, which encourages shoppers to make and customise their own clothes.

[My emphasis added] How many tricked out cars do you see? What about individually designed homes? And despite the near legalisation of medicinal use marijuana (wink, wink) in the state of California, I am pretty sure that's the last place I'm going to find an orthopedic surgeon when I've got treatable back pain. Unless I prefer to be stoned.

I can't think of any plausible use case where crowdsourcing of the kind that directly involves customers will have anything other than a marginal impact. There will always be that spark of invention that no-one's heard about but does it make sense to consider SCRM as the way to find that needle in a haystack? Even if you can persuade that camel to go through the eye of this rather small needle then where will these people come from?

Maggie Fox puts it succinctly:

Foursquare has just over three million users and you need a smartphone to use it. It is far, far from “mainstream”. And the article in Mashable feels like something I’ve been seeing a lot of lately – mistaking a brand using a niche and emerging web service (the “shiny object” in the title of this post) as a way of positioning themselves as cool and hep, for some sort of validation of something as “mainstream”.

From where I sit, Foursquare and other location-based applications will be mainstream when they have 500 million users globally. Even Twitter, with 87% of American consumers aware of it but only 7% using it, is not mainstream (see: FacebookGoogle).

As far as I am concerned SCRM expressed in terms of crowdsourcing is yet another case of a bloviating crowd of vested interests yelling as loud as they can in the Twitter circle jerk. Desperately seeking attention for something that is far removed from reality while tenuously linking to things already done rather than things in the future.

Solve Michael's delivery problem first and then maybe we can talk by listening to experts who know what's what.

Topic: Enterprise Software

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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10 comments
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  • RE: Social CRM - another crock?

    Social CRM is much more than crowdsourcing. The business case for sCRM is mapping social data with transactional data so an organization has a holistic view of the customer online and offline. Crowdsourcing is only a fraction of what you can do with a social base. Obviously, as your example above depicts, processes for customer service and data connection must be in place prior to adding any social layers. Do not write off the value of sCRM, but recognize that social will not be a bandaid for CRM processes that are not solid.

    Lauren Vargas
    Sr. Community Manager at Radian6
    @VargasL
    VargasL
    • RE: Social CRM - another crock?

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    • RE: Social CRM - another crock?

      @VargasL - the case for SCRM seems to be whatever the mavens want it to be that week - ergo my critique. How the heck are CXO's expected to understand the value prop when there are so many 'versions' kicking around. Strikes me as the desperate gasp of the unfocused mind.
      dahowlett
  • RE: Social CRM - another crock?

    Social CRM is as easy as herding cats.
    In the main, people want the next great popular thing - to feel part of the crowd, but also want their version of the next great thing to be uniquely better than anybody else's because it was made just for them.
    Mass produced personalized products fits the bill.
    Agnostic_OS
  • Social CRM isn't crowdsourcing

    Social CRM definitely doesn't equal crowdsourcing: it certainly isn't another way to make the customer useful to serve your goals (at least, not that directly obvious)

    SCRM is about the Social Customer. And the Social Customer is:

    * What does the Social Customer want? Creativity, innovation, collaboration, to be valued
    * What does the Social Customer give? Improved product, better advertising, great WOM
    * How can you please the Social Customer? Listen, be supportive, converse meaningfully
    * How can you displease the Social Customer? Broadcast, empty promises, spam

    (http://www.martijnlinssen.com/2010/07/social-hiccup-crm-tools.html)

    SCRM is not about dragging the customer into the enterprise cave and them club him to death, it's about reaching out and deal with their problems on their terms, circumstances, conveniences and location

    That's why I don't see much added value in tools that lure the customer into the company's forums, blogs, chatrooms and all that: that is sooooooo 20th century and not at all SCRM

    Still, what's missing from SCRM is the link to oldfashioned CRM. Your example of Michael btw is about badly implemented or thought-out processes, as much as Hutch's example is indeed about co-innovation

    I think the value of involving the Social Customer will be in pleasing her in the first place and get some WOM or decreased damage in return, then sucking it all in on a highly fragmented basis and connect the dots inside the enterprise - or with the help of some crowds maybe ;-)
    Martijn Linssen
    • Does the Social Customer think of themselves as "Social Customers"?

      @Martijn Linssen Otherwise I agree with you Martijn.
      fidelman
  • RE: Social CRM - another crock?

    In the example that you mentioned, this type of service disconnect will definitely put a negative taste in a consumers mouth. Customers shouldn?t be forced to weave through the maze to accomplish the task at hand. In my opinion I would be less likely to use this company in future and better spend my time finding a more reliable company to buy my products from.

    This example is a prime reason why companies need to stay on top of their processes and re-visit them every so often and adjust as needed. In addition when engaging in SocialCRM, we need to ensure that the data we collect can be cycled back into those processes to better serve our clients. When we use social media tools properly, common problems should no longer be common problems but a learning curve from the past. I believe that?s the whole idea around using social tools???. No?

    It may be true that crowdsourcing that directly involves customers may only have a marginal impact to your products, however I believe the impact to the client to have a voice and be heard is what we need to focus on. Everyone likes to be heard and regardless of the impact to existing or future products acknowledging the customer voice will go a long way. And besides if your strategy is to use social tools to acquire great new innovative ideas then maybe your engagement should be broadened.
    Intelestream
  • RE: Social CRM - another crock?

    I think SCRM might be good for businesses wherein your main focus are the customers. Like in the <a href="http://www.homesground.com">homes for sale</a> or <a href="http://www.movingrental.ca">moving truck rental<br></a> business wherein you reach out and identify customer's needs and wants in order to satisfy them. I wonder if I could use the techniques in SCRM in <a href="http://www.daters.ru<br>">dating forum</a>.
    mesophia
  • RE: Social CRM - another crock?

    This example is a prime reason why companies need to stay on top of their processes and re-visit them every so often and adjust as needed. In addition when engaging in SocialCRM, we need to ensure that the data we collect can be cycled back into those processes to better serve our clients. When we use social media tools properly, common problems should no longer be common problems but a learning curve from the past. I believe that?s the whole idea around using social tools???. No?
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