Social CRM (customer relationship management) is still in its infancy, with hurdles for implementation, but industry observers and vendors expect burgeoning demand for the technology as the need to monitor and manage the flood of social data is critical to enhancing businesses' customer strategy.
Philip Soffer, product marketing vice president at social CRM provider Lithium Technologies, said one way to define social CRM is "to think of it as a form of CRM that builds on customers' public conversations and derives mutual benefits--for companies and customers--from those conversations".
"Traditional CRM is transaction-based rather than people-based, where it has been largely about gathering all the information you have about the transactions a customer has had with you [such as] purchases and support incidents", he explained to ZDNet Asia in an e-mail interview. However, there are a lot of interactions that are "conversational" and they happen between customers, not just between companies and customers, he pointed out.
"Traditional CRM misses those," Soffer noted.
Rob Begg, director of product marketing at Radian6, a social media monitoring provider, described today's customers as social characters.
"They are online and expect the brands they support to be present on the social Web too," he said in an e-mail. "They are researching, purchasing [and making] decisions online, [and] sharing feedback and ideas."
Begg noted that it is "because of this shift that social CRM helps fill in the gaps that exist in traditional CRM programs", by helping organizations open a new channel focused on building a relationship between their brand and their customers, while adding a dimension of real-time engagement.
"It means that organizations can manage the millions of conversations that are happening on the social Web, and respond with tailored strategies," he added.
Michel van Woudenberg, general manager for CRM On Demand at Oracle Asia-Pacific, said social CRM helps organizations to manage multiple channels of social media conversations as well as "leverage the insight gained from monitoring the social cloud".
Social CRM: Beneficial, not better
Despite the arrival of social CRM, traditional CRM tools still have their place in enterprises' customer management, said observers.
According to Carter Lusher, research fellow and chief analyst at Ovum, social CRM is "an extension rather than a replacement" of CRM. He noted in an e-mail that it is "not necessarily correct to [see] social CRM as better" than traditional customer tools.
Lithium Technologies' Soffer similarly argued that businesses should not focus on whether social CRM is more or less effective than traditional CRM. "They are different and, ultimately, most organizations will need to do both as each becomes part of a continuous social customer outreach program," he pointed out.
The biggest measurable benefits of a successful social CRM engagement, he added, are reduced support costs and increased overall quality of customer service, because customers can also engage with other customers to solve problems rather than contacting the company directly.
Another related benefit is increased follow-on purchases, due to more pre-sales recommendations from a customer's peers, because once a company creates an atmosphere of trust, customers start recommending products to one another, he said.
Begg of Radian6 concurred, noting that social CRM creates a community for a company's brand that "allows users to track and add their online interactions with customers". These details are captured in the CRM system, and thus provide a "full picture of all touch points with customers", he said.
Oracle's Van Woudenberg also pointed out that without active engagement through social CRM, a company could lose out on opportunities to generate business or solve customer issues through social media.
Firms need mindset shift
The Oracle executive added that there are firms struggling with social CRM in their strategy, as they realize that social media is not just a "niche" marketing or communication tool. Social media is integral to the marketing, sales and service departments and processes and therefore social CRM applications must also be leveraged by all these groups of users within an organization, he said.
While he acknowledged that social media monitoring can be relevant whether as a standalone system or integrated with a company's pre-existing CRM strategy, Van Woudenberg noted that it would be "difficult to understand, make good sense and use of customer data if the analytics tools are not fully integrated with overall CRM, since you have no context".
By bringing these conversations into a more structured context of a social CRM application, processes are streamlined, there is close insight to what end users are communicating, and the organization gains real business benefits from social media by increasing customer satisfaction or improving sales, he said.
Radian6's Begg noted: "Social CRM must begin with a shift in the mindset of an organization, that the role of customer service is no longer just the responsibility of one department; it scales across the organization.
"Employees must be able to speak with customers, and they need the tools and training to do so and [the] confidence that they are supported by the organization," he said. According to him, Radian6 offers integration with Salesforce.com that provides organizations with the tools to execute a social CRM strategy--one that combines social media monitoring, analytics and social CRM all in one platform.
Soffer from Lithium Technologies, however, pointed out having "everything [in] one system and all nicely integrated [is] the ideal state", but the option may not be practical due to the fast-changing nature of social tools.
"[While] waiting for everything to integrated, the social world is changing and is much more fluid than the systems world of SAP and Oracle. The rapidity and fluidity of change on the social side suggests that it may be a while before everything is standardized…Technology must follow practice, and most organizations don't know what the practice is yet", he said.
For Soffer, the biggest challenge is that "most organizations have never dealt with social customers--including those with bad comments--and want to treat them like employees". Hence, they often make "poor decisions about how to set up social CRM programs".
Ovum's Lusher also highlighted that adopting social CRM is more than simply installing a piece of software or outsourcing social monitoring to a public relations agency.
"From a practical point of view, adopting social CRM is a multi-phase project and it is critical to start a monitoring and analytics program as quickly as possible, even if it means doing it in standalone fashion from the traditional CRM program," he said, explaining that companies cannot risk not being aware of what is brewing in their customer bases as that may lead to lost revenue or reputation.
Lusher added that organizations can learn valuable lessons from these first steps and after ironing out what works and what doesn't, expand their CRM program to include the social aspects for their long-term infrastructure.
Social CRM will only get bigger
The Ovum analyst noted that as opposed to social media which has moved beyond a fad to become a permanent fixture in the communications landscape, social CRM is "still a very new business technique [and] more the subject of hype than actual implementations".
Nonetheless, with consumers today showing "an increasing propensity to express their opinions" with social media, social CRM is a not an option but a necessity for enterprises and public sector organizations, he said. Otherwise, there is an "extreme downside" in damage to corporate reputation and brand equity, he added.
Social CRM, when implemented well, can "prevent organizations from being sucked under by the [social] maelstrom", Lusher concluded.
CRM vendors are in agreement on the phenomenon. Oracle's Van Woudenberg observed that social media is "no longer just a novelty factor" for most organizations and has "a real seat at the [boardroom] in the overall formulation and execution of the customer strategy", he added.
Although he admitted he "would not go as far to say that social CRM is now a completely crystallized concept and that it's integral to all business strategies", Van Woudenberg stressed that he expects the need for social CRM in the enterprise realm to sustain.
"The more social media takes off, the more organizations will rely on, work with, and leverage social media in their customer strategies", he said.
Lithium Technologies' Soffer predicted social CRM will "grow vigorously", helped by the growing popularity of Facebook. "It is fast becoming inconceivable that a brand can exist without a Facebook page. All Facebook pages provide opportunities for social interaction among customers and companies will need to manage these interactions," he explained.
Radian6's Begg pointed out social CRM is just starting to emerge more and more within businesses as they see the "importance of bringing the voice of the customer inside the organization and develop strategies for company-wide engagement".
An earlier Ovum report this month revealed that despite the current immaturity of the social CRM market, there are companies in the telecommunications, travel and tourism and public sectors which have strong demand for social CRM. In particular, the report identified that social media monitoring, customer service and business development were the top functions required by such companies.