Customers are sick of being “managed”: they don’t trust call centres or automated phone lines; they don’t like giving away their personal details without a good reason; and they hate direct marketing; and, thanks to the internet, they have also come to expect a large degree of personal control over their relationships with organisations.
According to some marketing experts, the term customer relationship management (CRM) is, therefore, becoming a quaint misnomer. As more and more people use online technologies to dictate the terms of their relationships with brands, so they are coming to expect CMR, or “customer-managed relationships”, instead.
“In most industries, consumers can now go to a dozen different vendors and find roughly the same products and services,” says Paul Greenberg, a Washington DC-based CRM consultant and author of CRM at the Speed of Light. “The brand with which they will choose to develop a relationship is increasingly likely to be the one that offers them the most control over that relationship. It’s about trust. And about the fact that Generation X, Generation Y and even the baby boomers are now comfortable using online, collaborative technology.”
The main problem with traditional CRM, says Mr Greenberg, is that it is too “unidirectional”. In other words, it attempts to pull information from the customer base that can be used to identify cross-selling opportunities, then attempts to push products and services back towards the best prospects, via direct-marketing, point-of-sale initiatives and other unsolicited approaches. Like the “spin” of a well-organised political party, it doesn’t engender much trust.
What consumers really want, he argues, is a multidirectional way to interact with brands. That is, they want to exchange information freely with both company representatives and other customers in a dedicated, facilitative environment, to improve their experience of a brand’s offering and evaluate new purchasing decisions.
Many companies have taken a step in this direction by setting up online forums or message boards – for example, most manufacturers of electronic devices, software and other complex products. They have thereby created self-sustaining communities of users willing to advise one another, reducing pressure on in-house technical support teams and, more importantly, improving customer experiences by providing quick solutions to common problems. But forums are faceless places in which someone’s tone, point of view and nickname are the only indicators of their character. And they don’t provide much information that would be considered useful in the context of traditional CRM.
A growing number of companies are, therefore, going one step further and creating their own “social networks” – similar in structure to popular websites such as MySpace and Facebook, though smaller and with varying degrees of functionality. Here, consumers can provide more detail about themselves and exchange information about their experiences in the form of photographs, videos or even dedicated blogs.
For example, Campbell’s, the US manufacturer of canned soups and related products, has an online community of 600,000 registered users. Launched six years ago, the portal used to be a simple message board where users could swap recipes and advice. Then, in September last year, it became an advanced social network where people with “a passion for cooking” could describe themselves and their interests in more detail, post photographs of their dishes and comment on one another’s experiences.
The community is not only a marketing channel and an exercise in customer retention. It also gives Campbell’s insights into flavour and ingredient preferences, and a high volume of qualitative reaction to new product launches. It is, in effect, a huge, ongoing focus group.
“We knew there was a lot of conversation going on about our brand and we wanted to be able to observe that conversation more clearly,” says John Johnson, senior internet marketing manager at Campbell’s. He explains that when people first register to use the site, they are given the opportunity to become a “Campbell’s Cook” – a designation that gives access to special offers in return for helping the company with its research. “We ask them questions, we give them surveys to fill out and we gather them in specialised groups – in password-protected areas of the site – to gain insights into cooking trends and other things,” Mr Johnson says.
Across the community as a whole, valuable information is also gathered on behalf of Campbell’s by Liveworld, the external provider of the interactive software. Based in San Jose, California, Liveworld is one of several dozen companies now selling social network systems on a white-label basis. It maintains the Campbell’s Community site and reactively moderates the conversations that take place on it.
“We use a variety of methods to get actionable information from the community,” Mr Jones says. “For example, we have our marketers read through the site from time to time, and our moderators alert us to conversations that may be of interest to us.”
In contrast to traditional CRM, he says, this is “a progressive step towards a more direct relationship with the customers”. It also takes the effort out of many traditional CRM activities. Identifying key customers, for example, is now automatic as users sign up to become Campbell’s Cooks and generate content for the network.
The value of mining social network data over traditional CRM data, Mr Greenberg argues, is that it enables you to identify the most influential members of your customer base – the “mavens” popularised by Malcolm Gladwell in his best-selling book The Tipping Point.
Social networks are “self-segmenting,” he points out. If you give users the opportunity to declare a variety of tastes and interests then you can categorise them much more finely, and more easily, than would otherwise be possible. This is especially true in networks that allow “social tagging”, a system that allows individuals to associate themselves with keywords, or “tags”, that represent their tastes and interests, and to introduce new tags if they don’t already feature on the network.
Companies can also identify cross-selling opportunities that might otherwise never occur to them, in the same way that Amazon, the online retailer, will recommend products based on a user’s previous purchases and browsing activity.
And businesses can gauge reaction to marketing initiatives much more quickly, Mr Greenberg suggests. “Unlike the predictive analytics of traditional CRM, it allows you to capture data about what your customers like and don’t like in real-time, dynamically. You can see what they’re thinking at any given moment.”
He adds that, in retail, traditional CRM analytics rely on information about what customers have bought in the past. They inherently can’t tell you why a customer may have chosen to avoid one of your products in favour of someone else’s. But by studying a comment on a forum or a blog, you might find out.
“You could try to summarise all this information in an analytics report,” Mr Johnson says, referring to the growing number of companies that offer data-mining services for social networks, “but I think paying marketers to read through it qualitatively is how to get the most bang for your buck for now.”
The one big difference between traditional CRM and “CRM 2.0”, Mr Greenberg says, is that a consistent experience for the customer at every “touch-point” with the brand is no longer so important. In part, this is due to the fact that traditional CRM systems and the latest technologies are not fully integrated. You can’t call a company’s call centre and expect them to identify you by your nickname on their social network, for example. At the same time, you cannot expect them to take every facet of your online personality into account when dealing with your call.
Yet embracing CRM 2.0 actually means distancing yourself from customers in some respects, Mr Greenberg says. They want to discuss your offerings horizontally without any feeling of interference from above. In this environment, “authenticity is more important than consistency.”
Mr Johnson agrees. “If you were found to be disingenuous in any way then you’d lose your credibility with your customers and you would quickly lose them, too,” he says. “This means that if you participate in your own social network then you must identify yourself as a representative of the brand; you can’t fake them out.”
Traditional CRM will always have its place for transactional matters, Mr Greenberg concludes, but it is no longer sufficient in isolation. Your customers want you to shift to CRM 2.0. The bigger underlying issue is that you must be prepared to accept and act on the negative feedback this shift creates. “Marketing is now a conversation,” he says.
