Businesses are moving quickly to adopt social applications for sales, marketing and customer service purposes. One controversial category is social CRM, which combines social media with traditional customer relationship management tasks.
In early May, Gartner predicted that only 50 percent of the companies that deploy social CRM applications by the end of 2012 will see a "worthwhile" return on investment. Still, spending on the category will reach $2.1 billion for the year. We spoke with Alex Bard, CEO of social CRM pioneer Salesforce Desk.com, to help decipher the hype.
How do you define social CRM?
It's really a philosophy where the company puts the customer and customer success at the core of its mission. It starts with that philosophy, and then that philosophy manifests itself into tools and processes that support that philosophy. For me, it is when a company embraces the philosophy and engages with customers in a really collaborative way.
Gartner recently suggested it is hard to show ROI from social CRM. Your thoughts?
One reason for that is that bigger companies, especially Fortune 1000 companies, already have deeply rooted processes and tools and technologies in place. People are trained on this. So, it takes a longer time if you are going to make a pretty significant shift to this idea of social CRM if you are not already at the foreground of this. That investment is going to be a longer term investment. You have to invest today for where the future is going.
Where we are seeing the idea of social CRM play out much faster and showing ROI returns that are much faster is at the lower end of the market because [those companies] don't have the same sorts of deeply rooted process and tools in place. So, they are much more agile.
Why should businesses incorporate social media into customer service?
Think about it this way: if 30 percent of your customers were calling you, and you weren't picking up the phone, what type of customer service or loyalty do you think you would be creating?
The reality is that businesses, for the most part, whether they like it or not, don't control the conversation anymore. [Editor's note: See the infographic at the end of this file.] You used to be able to control the conversation when you published an email address or a 1-800 number. Those were the only ways that customers could contact you or maybe they could send a letter. Now, that dialogue is already happening whether you choose to participate or not through social media. The worst thing that you can do is not to participate. At least you should start by listening and understanding what people are saying.
Many companies view customer service as a cost center. Is that an outdated perspective?
Absolutely. I'll use Zappos as an example. Their tagline used to be "The World's Largest Shoestore." Now, their tagline is "Powered by Service." The core of their value and the reason that they have been able to build such a great business is that they believe in the power of service, and that investment turns into marketing. It turns customers into advocates and drives more business back to [the company]. So, [Zappos is] not thinking about customer service as a cost center.
When you think about customer service as a cost center, your primary measurements are average wait times, average handle time -- and that gives you an average cost per interaction. You are thinking about this in the wrong way. I'm not saying you should not be thinking about these measures, but your primary metrics should be customer success, customer happiness, customer satisfaction.
Who within an organization should use social CRM tools?
Everybody. The idea here is that customer service and social CRM shouldn't be a department, they should be a philosophy across the entire company.
How can social CRM drive sales growth?
It all comes back to customer experience and word of mouth. Historically, if you could turn a customer into an advocate and then that customer tells their friends about your product or service, that is the best possible marketing that you can have. The challenge has been how you scale that.
There is a great quote from [Amazon's] Jeff Bezos that is over a decade old but that has never been truer than today. It goes something along the lines of 'If you make a customer unhappy in the physical world, they will tell six people, but if you make someone unhappy on the Internet they will tell 6,000 friends.'
That's the negative part of it. But let's flip that quote and make it positive: If you make a customer really happy in the physical world, they will tell six people. If you make someone happy on the Internet, they will tell 6,000. That friend-to-friend marketing is much more powerful than when the brand does the marketing itself. If you delight your customers through social CRM, they will spread the message, which results in sales.
(Photo of Alex Bard and social CRM infographic courtesy of Desk.com)