Spending on social CRM is set to go through the roof – but there are major concerns that much of the investment will be as impetuous as in the early days of CRM. So are businesses set to repeat the same CRM mistakes as they did 10 years ago?
On the eve of the Gartner Customer Relationship Management Summit, Summit chair and research director Jim Davies, describes the present scenario as a "significant time of change" for CRM. With smartphone and tablet sales overtaking the PC, the mobile touchpoint is having an increasing influence on sales, marketing and customer service processes. Elsewhere, new developments in analytics trends are also forcing their way into a next generation customer strategies.
But it has been the social phenomenon that has attracted the most attention and the most hype. And expenditure is set to follow suit, with Gartner recently forecast that by 2013, spending on social software to support sales, marketing and customer service processes will exceed $1 billion worldwide.
According to the Gartner report 'Emerging Technology Analysis: Social CRM for Customer Service' most deployments of social CRM are taking place in corporate marketing departments as an exercise in brand management, whether that be maintaining a presence on Facebook or Twitter or monitoring activity relating to the brand on social networks.
"A lot of this [expenditure] comes down to the fact that all businesses are more paranoid about what people are saying about them and social media is a great way of finding out what people are saying about them and their competitors," says Davies. "So even as a starting point, social media monitoring is a massive investment area because it gives that really quick unbiased independent voice of the customer view."
But to a lesser extent expenditure is also being driven by sales ("there is an interesting opportunity with lead generation and even just finding contact details and network analysis – so if Fred knows Harry can we sell to Harry as well," says Davies) and customer service ("On the social media side it could be Jim from Widgets ‘R’ Us reaching out to a customer in Twitter to show how to resolve a problem or support via communities... also on the support side there is a growing trend for communities providing self-support, rather than the business doing it.")
Social media perception
Davies spent much of last month travelling around Europe talking to hundreds of clients and prospects about social CRM. The discussions have provided interesting insight into the perception of social media within the business community.
"A lot of companies view it as just another channel - it allows them to sell to the customers and market to customers and support their customers. It is like ‘email 2011’," he explains. "Then there is another portion of the market that views it a little bit more strategically and profoundly - it is creating an opportunity to start to have a relationship with the customers and work with them and listen to their ideas and listen to their challenges and you evolve the business and the products and processes based on that relationship. But irrespective of what side of the fence the company is on, whether it is the more collaborative deeper relationship side or just needing to do some social media monitoring as a tool, both sides need some technology and that is driving up the market."
But Davies has been left concerned by the course that the expenditure is taking in many cases, and particularly so given the fact that social media investment in 2011 is only the thin end of the wedge. One point he raises is that while marketing, sales and customer services departments have – to a greater or lesser extent – been involved in social CRM projects, one department that has been conspicuous by its absence is IT.
"It is interesting that the one department that hasn’t had much involvement [in social media] is IT," he says. "Seeing as it is a technology investment it is scary the degree of times that IT has been completely bypassed in the decision-making, both in terms of vendor selection and in terms of the ongoing support of the application. It is almost like rolling the clock back to when Salesforce.com emerged and salesforces were bypassing IT and buying Salesforce.com for their sales processes and the same is happening now for a lot of the social media monitoring and social applications. It is all software as a service so they just bypass IT."
Building blocks
This is a somewhat ironic development given the tendency for businesses to view CRM as purely an IT issue in the early days of customer relationship management (a tendency which Gartner noted a decade ago was significantly contributing to disaffection with CRM projects). But there are other mistakes being made that are more familiar to CRM territory.
"I spoke to some very large international banks and they had no overarching strategy, nothing apart from acknowledging that there is something going on socially and that they should take a look at it. So their whole social media approach was to set up a team of relatively junior people who are in touch with the social world, just to work out what is the role for social media for that organisation. And that is quite a common thing, and it’s not the way to go about it at all," says Davies. "A lot of organisations have gone into it without really thinking it through."
To address this challenge with CRM 10 years ago, Gartner developed its eight building blocks of CRM which consisted of steps such as vision from the board, implementation of strategy and changes to organisational structures, processes and culture. Davies subscribes to the same approach to ensure that investment in social CRM isn’t wasteful.
"I was recently giving social CRM scenario presentations and talking with hundreds of prospects and clients at those events and I really got the sense that a lot of companies that are doing social CRM have actually forgotten about the building blocks. They may have had a CRM strategy and metrics and done all that in the past, but now with social they have forgotten about it and instead it’s all about playing with social monitoring platforms.
"There was a real sense that there wasn’t a social strategy in place that could then help steer them in terms of what technologies they need, what metrics they should be tracking, what data they need to collect, and what analytical tools they need to buy. All of that hadn’t been thought through. It was more of a ‘kids in a sweet shop’ approach. On the back of that I published a research note which was basically eight building blocks again, but applying it to social media, because I think it is such an important finding that people have forgotten about it and they are not approaching this the way that they would approach CRM – but they absolutely should be."
Fragmented vendor landscape
While past CRM excellence certainly does not equate to future CRM success, a robust CRM strategy does provide a strong platform for social CRM – and, conversely, if they have done a poor job with CRM then the foundations of social CRM are critically compromised. Davies warns: "If you look at the reasons for CRM failure in 2002, I think the same thing will come around again now."
A fresh challenge also exists, however. While traditional CRM was driven by the emerging technology, with the strategies and processes playing catch-up, the social phenomenon is being driven by consumer adoption – and social CRM technology is yet to catch up with consumer behaviour.
As a result of this, the recent Gartner social CRM Magic Quadrant provided a portrait of a fragmented vendor landscape, populated by the likes of community builders and social media monitoring firms, with the only significant representation from the traditional CRM vendors coming in the form of RightNow.
Davies notes: "It was a very difficult Magic Quadrant to get a lot of value from because if you looking at who is the best at doing social CRM well actually none of them are because nobody has got a social CRM suite. They are all good in certain aspects because of their backgrounds. Next year the true social CRM suites will start to emerge. As acquisitions happen and as R&D happens then they will start to get broader in their capabilities."
A learning curve
So what is the message for businesses that have done their groundwork on social CRM building blocks including vision, strategy, processes and information and are now fully prepared to contribute to the soaring investment in social CRM technology?
"Ultimately they should be able to turn to their incumbent CRM vendor for that – and if they haven’t got an incumbent CRM vendor then they are probably not necessarily doing a good job with CRM in the first place. If they have got a CRM strategy and they have gone through the eight building blocks of CRM, and done that, and are living and breathing CRM, then the chances are that their vendors will ultimately have a social capability that they can use," suggests Davies.
"In the meantime, if those vendors haven’t got it, they absolutely should not wait. Because there is going to be value to be had by buying SaaS-based, pay-as-you-go service for a tool that may be acquired in a year’s time or they may not want to use in year or two’s time. So they need to think about it strategically and long-term, but don’t delay investment in the software because they are incumbent and can’t do it yet.
"It is a learning curve. If they are running vendor X for their core CRM platform and are going to wait until 2015 for that vendor to come to market with that offering then there are three years of learning that they are not going to have benefitted from. They are going to start to lose out from a competitive point of view because if all their competitors are having social activity, talking to customers socially, using it as a lead generation or marketing tool, then they are going to start slipping behind. So there is a risk of choosing a vendor now that isn’t going to be around in two years time but I think the benefits outweigh those risks."
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