In recent years many Internet-based companies have joined the "social" bandwagon, and have witnessed exponential growth in membership. Facebook (FB) for general networking, YouTube for videos, Digg for news, Twitter for microblogs, LinkedIn for careers, weRead for books—the list seems endless. Together, these sites have amassed staggering amount of data on user behavior, such as purchases made, movies watched, books read, and so on. For product marketers, social networking sites have generated wide interest for two reasons: First, in social sites people with similar background and interests are already organized into target groups via data relationships. Second, relevant marketing campaigns may be generated using "social conversations" that provide up-to-date insight into user interests and buying behavior.

Narinder Singh, chief product officer for Appirio, sums up FB: "If there are 150 million people in a room, you should probably go to that room." To explain this point, imagine I am a Harry Potter fan and I have added "friends" in FB who share my interest in Harry Potter books. My "friends," who also belong to a wider group of children's book readers, link me to other members of this group, some of whom have "chucked" me some recommended books. ("Chucking" is basically an application that enables you to send names of books with online reviews, ratings, etc. to "friends".) I have now updated few "chucks" with the status "like to buy." Any marketer with access to this "social" data will not only be able to find out what I'm interested in buying now, but can also obtain information about other people in my network, i.e. my "friends" who have similar interests (prospects).

 

Social Exchange:

Traditional CRM applications have the capability to assimilate data from different sources (including social data on Web), so how are social CRM applications different? The difference lies in whether you have access to a list of phone numbers, for example, and you do nothing with it, or whether you actually make conversation by calling those numbers (social exchange).

The term social exchange can be interpreted in two ways. First, in this kind of interaction, there are no explicit rules of engagement or guarantee of reward; there is only belief that "the other party will reciprocate as expected to" and will have "cooperative intentions." Second, social exchange deals with intangible benefits, such as respect, honor, and friendship. Social interaction improves performance and results in "mutual reinforcement," i.e. one person's behavior reinforcing another's behavior and vice versa. Further, during social exchange, actions that generate positive consequences are likely to be repeated by others. Some companies, such as Serena Software, have already seen benefits of social interactions after introducing FB as an alternative to their intranet. René Bonvanie, an SVP at Serena says that FB makes employees "communicate and collaborate more." Additionally, studies reveal that social exchanges during an ERP implementation between implementation team and end users have led to favorable view of implementation from end users.

It can thus be implied that social exchange may have the following benefits:

1. Improved collaboration between users
2. Repetition of success formula
3. Better expectation of outcome
4. Intangible benefits (respect, honor, friendship)

Hence, to leverage the benefits of social CRM, CRM applications should not only have access to social data, but should also enable social exchange between users through communities, blogs, wikis, and so on (Fig. 1).

 

Figure 1: Components of Social CRM

 

Social CRM Approaches:

CRM vendors are increasingly attempting to integrate their applications with social sites to enhance the core CRM functions of sales, marketing, service, and analytics. To fit the definition of social CRM described in the previous section, these applications must have access to social data, whether Internet-based or local, and must enable social exchange within the CRM application between a set of users, such as organizational members, external customers, and prospects. First, let us consider an approach where social exchange is enabled primarily by linking the CRM application with online social networks. A snapshot of features that may be offered:

1. Static data (of a lead or a contact) in CRM can be combined with dynamic data from social media like details of friends, activities, or status.
2. A knowledgebase generated from conversations taking place in online communities can be ranked based on votes received from community members. This knowledge may be shared with other online communities, with business partners, or on the public Internet.
3. Users may obtain personal information of leads/contacts, such as birthdays, anniversaries etc., and send "gifts" through social media. Also, "friends" may be targeted for marketing campaigns and the like.

 

Table 1: Social CRM – Approach I

This type of CRM application can be termed as a socialprise, which means enterprise applications linking with social sites, enabling social exchange directly with customers and prospects via social media.

Consider another approach where a CRM application can be connected to various data sources, including those from Internet-based social media, but social exchange takes place primarily through locally created social data. A snapshot of features that may be offered:

1. Multiple data sources, including those from the Internet, may be used to analyze customers with similar attributes and provide them with best mix of product offerings.
2. Users will be able to form communities to leverage the social nature of sales. For example, a sales organization might use a social network to improve sales presentations via a "sales library" – shared content that users can rate, rank, and comment on.

 

Table 2: Social CRM – Approach II

 

Conclusion:

The two strategies described in the above section provide best-in-class approaches to social CRM: the first engages directly with customers via integration with social websites such as FB; the other emphasizes less Web-based data, but enables social exchange through internal wikis, blogs, and communities between various teams in an organization. No one approach is good for everyone – the former may be useful for companies that are e-commerce and B2C centric, and for those who rely on generating quick sales by understanding customers' changing needs (for example, the book I am interested in buying now); the latter may be better for companies that have disjointed sales and marketing teams that can improve their performance through collaboration of ideas and assets.

The challenge in the first approach will be the over-reliance of CRM application on social websites such as FB, not really due to legal challenges, but due to members' unwillingness to part with personal data. So far, FB has been unsuccessful – due to member protests – in modifying data privacy rules that may allow it to sell user information to third-party vendors. This is why CRM vendors using the latter approach might eventually have a smoother entry into the social CRM space. For now, possibilities for social CRM are finite; it is here to stay, but it may well only be a feature that helps users to collaborate internally.

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About the Author: Arun George is a consultant with Infosys' Enterprise Solutions practice.