The debate and discussion about what defines Social CRM a.k.a. CRM 2.0 vs. its traditional parent has been going on for about 2 years pretty regularly and started, according to thought leader Graham Hill almost a decade before that.
Personally, I'm done defining it and am moving on. I think enough time has been spent trying to decide what we're calling it and what it is. I think that we've reached the point that though there is no one point of view, there is a general idea of what we have. So this post, which will be on ZDNET and PGreenblog is my stake in the ground for the definition of Social CRM. If anyone asks me what the definition is, they are going to be referred to this post on either blog. I'm putting it on both blogs, but it has implications for each blog that are somewhat different. Check toward the end of the post where I'll discuss how I'm going to approach each one.
Also, for this post, I still will welcome comments and discussion on the definition if you want. But I'm really ready personally to move on.
Why?
First, there seems to be a consensus on the definition already. We all agree on its general characteristics. We see it as the use of social and traditional CRM tools and processes to support a strategy of customer engagement. Or some permutation of that.
Second, there's too much other work on Social CRM to do. Its time to start figuring out and documenting the business models, policies, practices, processes, social characteristics, applications, and the methodologies that we need to actually carry it out. There is some great work going on in those Social CRM areas already with folks like Graham Hill, Denis Pombriant, Thomas Vander Wal, Brent Leary, Prem Kumar, Chris Carfi, Bill Band, Natalie Petouhoff, Mike Fauscette, Michael Maoz and Ray Wang, among others (please forgive me if I didn't mention you. There are many others). But we need to create a repository for all this work - and an institution that can represent it agnostically. Right now, the body of practice out there is all over the place. Even with this, the work on Social CRM's "how" needs a dramatic escalation now.
So, I'm providing one last aggregate look at what I see Social CRM to be. When the 4th edition of CRM at the Speed of Light comes out, you'll see a lot of the what and how in that nearly 800 pages. This is the condensed - black hole condensed - version of that.
I hope that I'm reflecting the consensus. If not, I'm sure the discussion will go on. But as far as I go, I'm interested in the more substantive discussions on what we actually have to do - not how it differs from traditional CRM nor what we're talking about when it comes to "social" and whether or not we are going to call it CRM 2.0 or social CRM.
My Take On It
Okay, here's my take on Social CRM's definition.
- I'm conceding to "Social CRM" as the term of choice, rather than CRM 2.0. If ZDNET will let me, I'll change the name of the blog to "Social CRM: The Conversation" CRM 2.0 has been a placeholder at best and obscuring at worst - it doesn't reflect the customer's control of the business ecosystem all that well. Social CRM is a better, though not great, reflection of what we're talking about. Let's use the acronym of the Twitterverse group for it - SCRM or sCRM. I don't care which.
- The customer controls the business ecosystem and the conversation, but not the business a.k.a. company a.k.a. enterprise itself. What that means is that while customers have much greater control over their destinies in how they interact with businesses, make no mistake about it, they don't run the business, nor does the business have to concede everything to the customer.
- What this means is that SCRM is an extension of CRM, not a replacement for CRM. Its a dramatic change in what it adds to the features, functions and characteristics of CRM but it is still based on the time honored principle that a business needs its customers and prefers them profitable and that same business needs to run itself effectively too.
- The transformation that's sparked the need for Social CRM seems to have occurred in 2004. It has been a social revolution in how we communicate, not a revolution in how we do business per se. All institutions that humans interact with have been affected by things like the cellphone/smartphone, the new social web tools and the instant availability of information in an aggregated and organized way that provides intelligence to the person on the street, not just the enterprise.
- Part of that transformation affects how we trust and thus who we trust. Since 2004, "someone like me" is the most trusted source, not businesses, NGOs, government agencies or corporate leaders. That means that peer trust is how influence and impact germinates and then propagates most effectively - at least as of now.
- The lesson for business, in terms of Social CRM is that we are now at a point that the customers' expectations are so great and their demands so empowered that our SCRM business strategy needs to be built around collaboration and customer engagement, not traditional operational customer management.
- We've moved from the transaction to the interaction with customers, though we haven't eliminated the transaction - or the data associated with it.
- Businesses still need to run their operations, set goals that are cognizant of what the customer wants and needs, but not determined by that. They need to map their goals and objectives to the customers' goals and objectives to make it work for all concerned.
- That means that we need to recognize that there is an extended enterprise value chain which consists of the company, its suppliers, vendors and agencies that the enterprise has to deal with. There is a separate "personal value chain" which is the total greater than the sum of its parts of what an individual customer needs to achieve whatever their personal agenda is.
- For the company to succeed, since they cannot control the personal value chain of the customer, nor should they want to, they can only provide what the customer needs to satisfy that part of the customer's personal agenda that is associated with their enterprise. That means products, services, tools and experiences that allow the customer that satisfying interaction.
- The intersection of the extended enterprise value chain and the customer's use of part of his personal value chain to satisfy that personal agenda creates the possibility for a collaborative value chain that engages the customer in the activities of the business sufficiently to provide each (the company and the customer) with what they need from the other to derive individual and mutually beneficial value.
- That means that transparency and authenticity become more than buzzwords because in order for the customer to make intelligent decisions on how they are going to interact with the company and the level of that interaction, they need that visibility and honesty from the company.
- That also means that the companies need to make the decision that its a good thing to allow the customer to have that increased level of knowledge, access and honesty - it can help the company immensely in their engagements with their customers. That's a cultural issue that has to be resolved for Social CRM to work.
- If these aforementioned conditions are met, the customer is afforded the ability to co-create by the company. What that means is not all that pat. It can mean anything from customers and the company collaborating on product development, to customer suggestions on how to improve a company process, to customers helping other customers solve customer service issues, to even doing what gamers do and modifying game play using tools for scenario creation which adds value to the game. Co-creation is the ability of the company and customer to create additional value for each other - what form it takes is not always THE BIG THING. But co-creation, mutually derived value, is at the core of SCRM.
- SCRM differs from Enterprise 2.0 though is integrally related to it. Enterprise 2.0 is organized around increasing the productivity of the workforce in all that it does utilizing new collaborative tools to do so. It uses those tools to aggregate and organize information and systems. However, though different, Enterprise 2.0 is integrally related because part of that improvement in productivity increases the effectiveness of employee-customer interactions. It also increases the company's ability to capture useful information and knowledge about customers, not just boatloads of data. But what it doesn't do is provide avenues for the customers to engage themselves with the company. That's not its purpose. That is the purpose of SCRM.
- SCRM also changes the nature of what kind of customer is optimal for you. Rather than aiming at a satisfied customer (an increasingly useless metric) and even rather than thinking that a loyal customer is your best customer, your objective should be to create advocates and settle for loyal customers.
- How you measure customer value changes when you're thinking about SCRM. Rather than just Customer Lifetime Value (CLV) - which reflects the direct financial value of a customer to a company over the life of his relationship to that company, think too about Customer Referral Value (CRV) which measures how valuable influential customers are when they tell others about your company, not just promise to.
- When you look at the SCRM applications out there - there are no actual SCRM suites, no matter what the claims of any company on either the CRM or social tools side. What you do have are effective and important applications that increase the ability of employees to interact with customers - though they are not tools that facilitate the actual interaction. You also have the integration of social media and community building tools with traditional CRM tools which are providing effective combinations which are leading toward SCRM. I want to emphasize. These are all good tools. They are worthy of any company's consideration. There is just no SCRM suite out there - as of yet or in the near future. Which doesn't matter one iota.
I'd say that covers the basics.
A Shorter Definition
For a shorter definition of SCRM, I'd say:
"CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It's the company's response to the customer's ownership of the conversation."
Well, it may not be tweetable but it's shorter.
A Tweetable Definition
"The company's response to the customer's control of the conversation."
With the quotes and the period, its 71 characters. Get rid of the period and you can just write it twice.
What's Next?
Let me reiterate something. This is my stake in the ground. It would be presumptuous of me to assume I can halt a discussion that I no longer want to participate in. That said, in presentations etc. I'm going to continue to give the definition of SCRM because people will be asking. But I'm not going to try to define it anymore. I know what it is. I think that most people who read my stuff know it too - and many who don't, also know it. I also am no longer going to engage in discussions or defenses of whether or not it's "necessary" or "marketing hype" or any of that. Again, stake in the ground. While there is plenty of room for traditional CRM strategies, the change in the customer necessitates some sort of commitment to social CRM to succeed with that neo-customer.
So, here's what I'm going to be doing and not doing from here on.
- No more debates on what Social CRM is, though I certainly will discuss what it is in presentations and when else it makes sense. But I'm not trying to define it any more
- No more detailed defenses on whether or not its necessary. Its existence is always necessary. Its use is necessary in appropriate situations.
- No more calling it CRM 2.0 for me. Its Social CRM.
- In all the venues I have when it comes to discussing Social CRM, it will be the new business models, the processes, the methodologies, the practices, reviews of the applications that are part of the SCRM universe - and debunking the claims of those apps if need be. I'll be providing as many success and failure stories as I humanly can so we can develop a body of practice.
- For ZDNET, now that the book is done, I'm going to focus on what the ZDNET audience loves the best - the technology and processes of Social CRM - related or otherwise. Plus the practitioner stories of successful implementation. There will be deviations from that but that's my ZDNET primary direction. Plus I'm going to try to change the blog name, if it doesn't wreak too much havoc to Social CRM: The Conversation
- For PGreenblog, the focus will be on the discussions ranging from the business models, the social psychology, the economics to the theoretical concepts and the practical strategies. I'll look at the culture of the companies, the nature of the customer's thinking, the effect of style on all of this, etc. I'll do the best I can with what the line of business person needs to know and what the academician needs to explore.
- I'm going to spend some time trying to create an institution to capture all of this called the Institute for the Future of Business and the Customer (IFBC) which will include the actual B2B and B2C and B2G customer on its leadership body with the company leaders. Unlike any other institution of its kind that I know of. This is not an easy task. I've been trying for two years to do this already and have made some progress but it needs a good academic institution and an endowed chair and a couple of companies to underwrite it. It is an agnostic body that will attempt to aggregate and organize all this incredible knowledge on how companies and customers engage and establish what the new business world looks like going forth. Ambitious, even grandiose? Maybe. But I'm going to try or go down in flames trying.
That's it. Stake is in the ground. Comments on the definition per se are welcome this one last time on either of the blogs that you see this.
But I'm done. AND I'm just starting.
Pretty much CRM is just following the same movement as traditional media uses are moving to online/the internet. And SCRM is just the evolution which keeps a firm tab on the strength and value of relationships
Posted by: Dynamics CRM Training | March 26, 2013 at 06:37 AM
systems that will rely on Social CRM but be lots more. And they are coming in the next 5-8 years (before you laugh, remember that I wrote about collaborative customer service, social-powered customer service, and real-time customer service some 5-6 years ago Sección Amarilla
Posted by: Sección Amarilla | December 18, 2012 at 03:29 AM
I think that the trying to choose what I have phoning it. I also think that I arrived at the position that though there is no one perspective, there is a common strategy of what I have.
Posted by: חברת סופרדסק | November 30, 2011 at 01:45 PM
Hey Paul,
Great post! I especially like your short definition of what sCRM is. I think it is important to do this since it seems like if you ask 10 people to define what CRM is you get 10 definitions.
Posted by: Rick Bellefond | August 10, 2010 at 05:21 AM
that's really a fantastic post ! added to my favourite blogs list.. I have been reading your blog last couple of weeks and enjoy every bit. Thanks.
Posted by: laguardia airport cab service | August 06, 2010 at 05:50 AM
Here is my attempt to be short. I think you have nailed the definition and the current state, and the state in the next 2-3 years, of CRM. Social CRM is as good a term as any (I never liked CRM 2.0, albeit in my recollection of the Gartner days we should be at 6.0 or something by now). And it clearly defines where we are going for the next 2-3 years.
Posted by: louis | July 27, 2010 at 03:27 AM
Well said - it's a good time to move on, and I agree from your definition that SCRM is not CRM. SCRM has already morphed some basic principles of CRM, but the paradigm shift has yet to happen. Just as Cloud computing was a paradigm shift from mainframe to client–server technologies, in this case, scrm send us the message that we may not have to wait for vendors, the enterprise or Gartner's Magic quadrant, to actually determine how we manage interactions to the customer's influence outside of traditional boundaries. MIB anyway?
Posted by: patrickdh | July 14, 2010 at 07:37 AM
I have the opinion that CRM gathers customer information from customer transactions, but SCRM takes customer information from customer interactions. This means SCRM has the wider and deeper information source than CRM.
Posted by: Paul Sunny Park | July 06, 2010 at 11:28 AM
I find it really interesting how a lot of people are so intent on tying Social Media to CRM. This might come down to CRM vendors biting off more than they can chew is what I am thinking.
Posted by: Derek Major | June 04, 2010 at 03:54 PM
I think that is not the the real problem, after all theres more important thing in this situation.
Posted by: sildenafil citrate | May 13, 2010 at 12:25 PM
SocialCRM is definitely gaining ground. Intelestream just published a whitepaper that deals with Social CRM in the context of small businesses. Read it at http://www.intelestream.net/en/whitepapers/the-power-of-social-crm.html
Posted by: Intelestream Inc | May 05, 2010 at 09:58 PM
CRM should be implemented in all companies, should be a general rule ...
Posted by: thyroid t4 | May 05, 2010 at 11:45 AM
Here is my attempt to be short. I think you have nailed the definition and the current state, and the state in the next 2-3 years, of CRM. Social CRM is as good a term as any (I never liked CRM 2.0, albeit in my recollection of the Gartner days we should be at 6.0 or something by now). And it clearly defines where we are going for the next 2-3 years.
Posted by: foreplay techniques | April 30, 2010 at 06:18 PM
Hi Paul,
Interesting post. Social CRM is a fascinating topic.
Thanks for you insight. It is very helpful for those of us trying to help our clients plan for the future.
Posted by: GoldMine Software | April 04, 2010 at 05:41 PM
Social CRM arise after evolution of Web 2.0 social networking sites. I guess it is more useful for e-commerce sites rather than b2b...
Posted by: Microsoft CRM Implementation | March 24, 2010 at 03:47 AM
Paul how is Social CRM different from Network Relationship Management ? I would like to have a deep discussion with you about this if possible
Marco ten Vaanholt
SAP Community Network
Posted by: marco ten vaanholt | December 21, 2009 at 08:58 PM
Exquisite post, Paul ...
I'm a firm believer in the "art of CRM" - into the business models under execution, linked across to the social psychology of company & the people to whom they sell.
To me, it's obvious. Any CRM strategy needs to be company-wide & have employees at its' heart. Anything less just dilutes strategic effort & spend.
-= David
http://dpp.sagecrm.com/blogs/talking_about_customers/
Posted by: David Beard | September 13, 2009 at 09:21 AM
Excellent post. Shortest and clearest explanation to date.
Posted by: Mickey Brazeal | July 10, 2009 at 05:41 PM
Hi Paul
Really great post.
A few supporting comments, based on your numbering:
2. Customers have always talked to other customers about their experiences with companies’ products and services. The internet and particularly, the mobile internet have simply turbocharged what has been going on all along.
3. Social CRM provides companies with tools to listen-in on some of these conversations and to harness customers for marketing, sales and service. It extends CRM from being something predominantly inside-out, to something that extends out into the conversations that customers are having between themselves.
5. Marketers haven’t helped this by continuing to spam customers with increasingly irrelevant communications. This ‘tragedy of the marketing commons’ means that marketers have to try even harder to reach a dwindling audience with communications no-one believes. No wonder that customers prefer to trust their friends and family.
8. If we want to engage customers we need to really understand what they need. And I don’t mean VoC programmes. Evidence suggests VoC doesn’t work. I mean understanding the jobs customers are trying to do and the outcomes they are trying to achieve by doing them. This is best practice in understanding customer needs today.
10. Once we understand what customers need, we can innovate around delivering exactly that using customer-centric innovation approaches such as that developed by Strategyn. And we can use service-dominant logic to provide experience platforms that allow customers to co-create value together with companies. Co-creating value with customers is the modern definition of customer-centricity.
13. Once companies start to think about co-creating value with customers, they must also think about improving their customers’ knowledge so that they can co-create more value and also, embedding skills and experience in the design of products and services themselves so that they are much easier to use. This is where Design Thinking comes in.
15. Just as in traditional CRM, information about customers is key. That obviously includes the usual Social CRM sources like blogs, tweets and what not. But more importantly, it also includes information about customer social networks. Mobile telcos have been working with SNA analysts like Xtract to identify the most influential customers and their calling communities. And to greatly increase the effectiveness of retention campaigns and new product introductions.
17. Customer value obviously changes in a networked world. The customer’s own CLV is supplemented by their Customer Referral Value. But a customer’s CRV has only a weak relationship to their CLV. And there is an even weaker relationship between referred customers and incremental value. Take note all you NPS promoters. And that’s not the whole story. CLV and CRV are also supplemented by the value of the network to attract other customers and sellers to it. Especially in today’s multi-sided markets.
As I said at the beginning. Great post. I look forward to continuing the conversation. Through Social media of course, what else.
Graham Hill
Customer-centric Innovator
Posted by: Graham Hill | July 06, 2009 at 04:25 PM
Great post Paul. We know what it is and we know what it's called. Now we can put all our collective energy into making it work!
Posted by: Anthony Nemelka | July 06, 2009 at 04:16 PM
I am going to try to be short, but will probably fail. I read your post three times, took notes, and made comments on my notes. Yes, I am that geeky -- and yes, this is a defining moment for SCRM the way I see it. You are one of the most influential minds in this small world of enterprise apps, your word carries more weight than you can probably imagine (although I am certain you know that already).
Now, let me tell you where you are wrong (just kidding).
Here is my attempt to be short. I think you have nailed the definition and the current state, and the state in the next 2-3 years, of CRM. Social CRM is as good a term as any (I never liked CRM 2.0, albeit in my recollection of the Gartner days we should be at 6.0 or something by now). And it clearly defines where we are going for the next 2-3 years.
However, I am trained and always think a little bit ahead of that. Five years. Why? I am a strategist, that is what I do. I don't know why, I always start focusing on the 5+ years.
And it is at that time that I see some cracks on this. Let me explain. I see lots of changes happening, in societies, in world economies, in culture, in the way we act, talk, and conduct ourselves. All this is leading to a Paradigm Shift in the world, demonstrated by three trends.
Trend one is the change in societal models. In the early 1800s we had the industrial revolution, which brought the ability to work more with the same or less effort. Then in the early 1900s we had the manufacturing revolution, which made all that work better focused and easier to produce mass products cheaper, easier, faster. Of course, with mass production we also had the coming of Customer Service - assisting customers that had extraordinary problems that manufacturing could not solve. LAter, in the late 1970s, early 1980s we had the Service revolution, where products were no longer relevant, the service that accompanied them was. This is the time when mega-corporations grew to control the world, globalization started (yes, the financial meltdown that we are experiencing today started then as well - but no relation). Technology has been progressing along with each of these revolutions. Then the internet became massively adopted (1995-1996), which culminated with three key things: aggregate knowledge, universal access, and group-think. Which brings us to where we are today: a dying service economy, or at least one we mastered, with great technologies and in need of cultural changes to take advantage of that.
Which brings us to Trend two -- the cultural and generational shift happening right now. In the late 1980s we saw the first people who had been trained in college with computers enter the workforce. That changed the nature of business ever since. Productivity has been increasing for the USA since then, even through recessions, wars, and other disasters. Which is quite amazing considering the decline of productivity during WWII and Vietnam wars. Similar progress has been seen since then across the world, as measured in GDP growth for some of the poorer countries in the world. That was part of the Gen-X / Gen-Y generational shift. Today we are starting to see the first digital citizens enter the workforce (people who grew up their entire conscientious life with access to technology and the internet). These digital citizens will change the nature of business ever more rapidly and more dramatically than the previous generations - if anything by the nature of the Internet. They are used to the things that the internet brought about: knowledge, access, community-mentality. This is a very important shift in culture that brings us to trend number three.
Trend three is a shift in business and commerce models. The old one-to-one merchant-customer relationship no longer exists. It is being replaced with a many-to-many model that relies on communities, knowledge, influence, trust, reputation -- and the individual power aggregated multiple times (a community mentality). It is this community mentality that will span a brand new set of systems that will rely on Social CRM but be lots more. And they are coming in the next 5-8 years (before you laugh, remember that I wrote about collaborative customer service, social-powered customer service, and real-time customer service some 5-6 years ago).
So, I think that the Social CRM model is a great model for the interim that is going to take to go from today's management of relationships, to tomorrow's community interaction. Alas, once we get to that, the data models we have today, the systems, the way they work won't be that good anymore. I do have a model in mind, a Community Enablement Platform, but that is fodder for another dicussion - not on Social CRM.
I really like the way you rationalized the transition, and I think you make great points along the way (point #2, the customer does not own the organization, point #5, regarding trust). And I am not going to argue the definition or berate you for participating or not in it. I am fine, as I said, with you being the flag-bearer on this as you are more qualified than most other people.
I am trying to focus more on the "what we need to do make this happen" thing you mentioned in your blog. I think that we need to take a longer-term view of what it means to be social, and focus a little bit more on the community.
Thanks for posting this, and for providing the platform for my ramblings (feel free to delete if you don't like it).
Posted by: Esteban Kolsky | July 06, 2009 at 03:51 PM
Social CRM acknowledges that company equity is created or destroyed by processes outside of the traditional corporate boundaries. Have I shown you my Five Forces of Customer Experience? The takeaway is MIB: Manage what you can, influence what you cannot directly manage, and balance what you can neither manage nor influence. These three need to be core corporate competences (management, partner and customer attitudes and beliefs often using social media tools, and crisis communications).
Posted by: Paul Ward | July 06, 2009 at 01:51 PM