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Social CRM Changes the Definition of Customer Relationship Management

By Drew Robb     Feedback

Thanks to social media, consumers now control the dialogue with companies, and CRM systems must adapt.

Customer relationship management (CRM) Guru Paul Greenberg said in a recent webinar that traditional CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment.

Social CRM, he said, is a philosophy and a business strategy, supported by a technology platform, business rules, workflow, processes and social characteristics. It is designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment.

"CRM is no longer just a model for managing customers, but one of customer engagement," said Greenberg. "Social CRM is the company's programmatic response to the customer's ownership of the conversation."

What are the implications of this shift moving forward? And how is CRM ultimately changing in the enterprise? Greenberg pointed out the difference between true CRM and social media applications such as Lithium and Jive, which are called CRM but have no real operational capability in the CRM realm. Therefore, he believes that sales, marketing, customer service, operational, transactional and customer databases should underpin CRM while social applications extend that functionality.


CRM definition changes

Richard Hughes, director of product strategy at BroadVision, concurs with Greenberg that while CRM was about managing the customer, Social CRM is about engaging with the customer.

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"It is therefore wrong to think of social CRM as the next generation of CRM — CRM and social CRM are actually doing different things," said Hughes. "Some CRM vendors will try to evolve their products into also being social CRM solutions, but it is by no means certain that this is the best thing to do."

To his mind, CRM is typically an internal-facing system providing employees the information they need about a customer, whereas Social CRM is fundamentally an external-facing system where employees engage with customers, but also where customers engage with each other. Obviously, he said, the dynamics of each are quite different.

So how should CRM be defined these days? In much the same way as it always has been, said Hughes.

"Social CRM doesn't change the definition of CRM, it supplements it," he said.

One of the biggest problems he sees facing social CRM at the moment is a lack of common understanding about what it really is. To some people, social CRM is nothing more than talking to customers on Facebook and Twitter. While that might be a crucial part of it — go where your customers are — social CRM is much more than that.

Social networking has enabled customers to get together to put pressure on businesses, said Hughes. It's much harder to ignore a coordinated group of customers than lots of isolated individuals. If a business doesn't provide a place for customers to exchange their views, the internet provides plenty of other sites for them to do it, usually in a far less constructive manner. Put simply, businesses need to be seen to be listening to their customers.

"They might find that listening to customers is valuable in all sorts of ways," said Hughes. "For example, taking customer opinions into account when designing new products or identifying problems in products."


This article was originally published on February 15, 2011
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