Social CRM Comes of Age (PDF) - Oracle

2009 White Paper 

Social CRM Comes of Age 

By Paul Greenberg, 

Sponsored by Oracle

Social CRM Comes of Age, by Paul Greenberg 

Overview 

Since 2003, there has been a revolution in communications that impacts every institution. 

Social, political, economic, leisure and business organizations have been affected by a 

transformation that not only changes how people interact with the institutions they care to be 

involved with, but also changes what it takes to do business everywhere. 

This is a transformation driven by the Internet. It gave unknown U.S. Senator from Illinois, 

Barack Obama the presidency of the United States. Obama and his staff understood that the 

Web was not just a place to exhibit information, but instead was a vital integrated 

communications framework one that could and did drive volunteerism and donations to record 

levels e.g. in one month, $55 million raised via the Web. They understood the power of 

interaction in an era where people were emboldened by their ability to communicate in real time 

with their peers in ways that could move organizations, entire industries or even the political 

process. 

The change is a social change that affects all institutions including business. Unlike the past, 

business has no substantial or even marginal advantage over any social, political, economic, 

government, or other form of institution. In fact, business may be the least equipped to handle 

the transformation as of 2009. 

Over the past decade or more, Customer Relationship Management (CRM) has been the 

strategic approach that most companies had taken in trying to figure out how to supervise their 

customers’ behavior. Typically, it was via technology and processes and analytic algorithms that 

were tied to an often amorphous management strategy. Gathering data about the customer and 

tracking all customer transactions were the way that CRM was used to ascertain the individual 

customer’s thinking. Hopefully, the insight it provided about the customer and the effectiveness 

of the processes put into place led to some kind of increased level of purchasing or decreased 

costs. Additionally, CRM was (and is) used for making some sales and service processes more 

effective and for sales and service management tracking the customer facing activities ranging 

from qualifying a lead to closing a deal to servicing an order to solving an issue. The strategies, 

technologies, processes and workflows are all operational focused on the enterprise tracking the 

customer and capturing data. 

But that is CRM 1.0 traditional CRM. 

Since 2003, the impact of the social communications makeover has shifted ownership of the 

customer/company relationship to control in the hands of the customer which changes how 

businesses must respond to that customer. Discussions of the value of the company moved 

outside the company’s walls to the enclaves of the customer who publicly chatted about the 

company without participation of the company in any way. The customer’s conversations were 

no longer in control of any company. Additionally, the customer simply did not believe what 

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marketing departments told them. As social media favorite book “The Cluetrain Manifesto” 

(2001) put it: 

• “These networked conversations are enabling powerful new forms of social organization 

and knowledge exchange to emerge. 

• As a result, markets are getting smarter, more informed, more organized. Participation 

in a networked market changes people fundamentally. 

• People in networked markets have figured out that they get far better information and 

support from one another than from vendors. So much for corporate rhetoric about 

adding value to commoditized products.” 

As a result of the growth of this thinking among contemporary customers, review sites like Yelp 

or Epinions became their communities of choice. Customers went there to get information from 

their peers who had experience with the company. The customers were the ones who actually 

used the products and services, far more frequently than the companies that provided them. 

Consequently, those who hung out at the review sites were deemed more trustworthy than the 

marketers who were seen simply as corporate shills pushing a company line. 

Who is this “social customer”? What strategies and tools does the new breed of CRM provide to 

do something about this? Let’s go find out. 

The Era of the Social Customer: The Customer Rules the 

Ecosystem 

If this were 2003, you could easily make the case that the enterprise still owned the customer 

experience. The company remained the center of the business ecosystem. In 2003, the 

Edelman Trust Barometer, the venerable trusted annual survey on trust, pretty much said the 

same thing it had been saying for years previous. Experts with no vested interest in corporations 

remained the most trusted source and, after that, academics. This had been the status quo for 

many years. “Someone like me” a person with similar interests to you had the trust of only 

22% of the respondents surveyed. 

But in 2005, something changed. That year, in contrast to 2003, “a person like me” rose to 56% 

of the respondents taking a dramatic leap into a more dramatic lead as the most trusted 

source. Outside experts and corporate leaders fell precipitously. What did all that mean? It 

meant that the trust that the customers had for anyone outside their peers had been reduced to 

insignificance in the space of two years. More importantly, people who had similar ideas and 

interests adhered to each other in ways that created what is now an unshakeable bond. The “go 

to” source for trust became a peer. 

Why? 

There are several reasons, technological and societal. 

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Technology Advances Communication 

Multiple technologies advanced over the first decade of the millennium and dramatically 

impacted how people communicated with each other and how they were able to navigate that 

vast storehouse of the socalled “worldwide web.” 

By no means underestimate the importance of Google in this transformation. The exponential 

growth of Internet search, with Google alone reaching nearly 500 million unique visitors in just 

the month of November 2007, was a significant driver of change. How we accessed information 

changed forever. The searcher could now get what they looked for in less than a second. This 

eliminated the need for what had been expensive search products whose cost rose 

commensurately with the functional power of the search often to thousands of dollars for 

corporations and typically beyond the reach of the ordinary consumer. Google’s ability to find 

something from unstructured data became a powerful tool in the hands of anyone who chose to 

use it and at no cost for the product. The paradigm for search was no longer hours and even 

days of indexing time behind a corporate firewall and no apparent way to do much with 

unstructured data on the web. Anyone had access to incredible amounts of information at 

anytime at their fingertips in a format that, while not sexy, was easy to understand. 

In conjunction with that we saw significant advances in the use of mobile devices such as the 

Blackberry the first truly enterprisestrength mobile device. Mobile devices became more than 

cell phones. They handled email, SMS (text messaging) and internet access. This revolutionized 

the way that Generation Y in particular communicated. No longer did you have to call someone 

via the phone. You could email them or receive one and most importantly send and receive text 

messages. For the first time, a person could operate in a day to day way carrying out much of 

their communications untied to a desk or a home. They were free to move. Additionally, with 

SMS text messaging they could communicate directly without directly speaking with the other 

party and it was quick, easy and pretty cool. 

But these are just two of the technology tendrils. There are many more germane to the rise of the 

social customer such as the growth of web based communities, the explosion of threaded 

discussions on forums and the mainstreaming of the blogosphere all of which fit neatly into the 

Web 2.0 category. But search and mobility triggered much of the Web 2.0 growth. The societal 

changes were equally and perhaps even more important reasons for the evolution of the social 

customer that businesses are dealing with today. 

Irreversible Social Change 

If one had to point to two social factors that are responsible for the way that people now interact 

with each other and institutions, they would be: 

1. Corporate and financial scandals of 20012008 

2. The entrance of Gen Y into the workforce. 

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While probably needless to say, there are many more worthy of consideration, but these two 

have had a major impact on what business faces and what Social CRM can resolve. 

If Under 30, Never Trust Anything Worth More than a Billion Dollars 

The type of corporate financial scandals that were associated with the 2001 collapse of Enron, in 

combination with the more recent collapse of many of the formerly revered, now reviled, Wall 

Street financial services institutions, destroyed trust in companies and their leadership in a 

matter of a few short years. I won’t dwell on the details here because this is beyond the scope of 

this white paper, but what is relevant is that customers began to look elsewhere for who they 

trusted when it came to business relationships. In fact, the 2008 Edelman Trust Barometer 

found that when it came to information from the CEO of a company, only 23% of its U.S. 

respondents trusted the CEO. Not much better, 41% trusted product marketing or advertising 

materials. 

This came with the simultaneous entrance of Generation Y, also called the Millennials, into the 

workforce. These were the children of the baby boomers who were born in the very early 1980s. 

What makes this significant is that they are the first generation who grew up communicating via 

the Internet and were as comfortable with its use as their parents were with a telephone. Also, 

they were 76 million strong one of the largest generations in history. 

Gen Y was also a proactive generation. One that would do what it took to communicate in the 

form that they saw as “theirs” regardless of the rules. Studies done by multiple organizations 

found that even within the workplace, 59% of Gen Y communicated with their own tools 

ranging from SMS to social media regardless of corporate rules. 

This isn’t just technologysavvy. Millennials actively use technology for their daytoday, 

ordinary communication and personal productivity typically mobile without reservation or 

concern (See Table 1 for their communications skills). 

Gen Y Use of The Internet 

97% own a computer 

94% own a cell phone 

76% use Instant Messaging. 

15% of IM users are logged on 24 hours a day/7 days a week 

34% use websites as their primary source of news 

28% author a blog and 44% read blogs 

49% download music using peertopeer file sharing 

75% of college students have a Facebook account 

60% own some type of portable music and/or video device such as an iPod 

Table 1 How Generation Y uses the Web (Source: Connecting to the Net.Generation: What higher 

education professionals need to know about today's students, by Reynol Junco and Jeanna 

Mastrodicasa NASPA; 2007) 

A key word here is ordinary. Unlike the often awestruck older generations, this is just what the 

Gen Yers do. It doesn’t stand out. Its how they live which means it needs to be reckoned with 

by businesses because that very “ordinariness” is impacting every other customer out there. 

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For example, how often have you read about the impact of social media or text messaging or 

Web 2.0 on marketing departments or PR firms, who are scrambling to understand this socalled 

phenomenon or on mainstream media like newspapers or network TV? NBC Universal, 

in October 2006, laid off 750 employees and was forced to slash $750 million from its budget 

due to what the Washington Post called “the impact of YouTube, social networks, video games 

and other upstart media” on traditional networks. 

This is also a generation with different expectations. They expect to get what they need. They’ve 

been raised to think they will. More often than not, they do. 

Bruce Tulgan, author of Managing Generation Y, put it well in an interview with USA Today on 

Gen Y’s expectations at the workplace: 

“This is a generation of multitaskers, and they can juggle email on their 

BlackBerrys while talking on cell phones while trolling online. 

"They're like Generation X on steroids," Tulgan says. "They walk in with 

high expectations for themselves, their employer, their boss. If you 

thought you saw a clash when Generation X came into the workplace 

that was the fake punch. The haymaker is coming now." 

The Social Customer Arrives 

This combination of factors transformed the way that the customer thought about doing 

business not just how they did business. 

These social customers didn’t have to rely on corporate literature and selfinterested sales 

people any longer. They could rely on the web and each other for information on their potential 

purchases and for deeper knowledge about their common interests work or play. 

Take a review site such as Yelp as an example. These sites are easily available to the users of 

products, services, or visitors to institutions and they provided a means for those who wanted to 

participate to rate, usually 1 to 5 stars and comment on the products that they used so that there 

was all in all an unvarnished idea of: 

• How good was the product? 

• Did it meet the expectations the buyers had of it? 

• What did it do right? Wrong? 

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• Did the manufacturer or retailer product provide appropriate service around the 

product? 

• How did the company handle the order, shipping and, if need be customer service? 

These aren’t formal reviews with rigid specifications or review criteria. They are informal and 

their language is conversational. Certainly there are agendas being met by some of the reviewers 

some are shills for the companies that made or sold the products; others have a personal 

agenda usually a vendetta. But when taken as a whole and read granularly, each of the product 

reviews and the picture painted of the product affects whether or not someone reading the 

review would purchase the product. A study done by BigResearch in 2007 found that the most 

powerful form of influence is word of mouth (42% of respondents) once again, conversation 

among those who are “someone like me.” A 2007 study done by Doubleclick found that the 

Internet was the most influential medium among influencers (#1 at 39%) and noninfluencers 

(#1 at 28%) alike. 

Even putting this data together in a linear way, you can come up with the most powerful source 

for any business in how and where it engages its customers. A good guess would be word of 

mouth via the Internet. 

Translate that in pragmatic terms. What enterprises see is that social networks that are 

primarily review sites like Yelp or are customer feedback and action sites like Planetfeedback 

have become a primary source for the conversations among customer out of the hands of the 

company. Continue to translate and you find that the use of blogs, text messaging, participation 

in threaded discussions on forums, comments on the social sites, even satirical videos, are part 

of the mix of tools they use to communicate their thinking about those very same businesses. 

But a smart company, using similar tools, can use all this as a valuable place to learn from and 

engage with those same active customers. 

By themselves, CRM’s traditional tools don’t really provide the functionality to handle customer 

engagement in ways beneficial to the company but the addition of social functionality gives CRM 

a powerful new incarnation Social CRM. It is Social CRM that provides the enterprises with 

what they need to intersect all this independent activity. If having customers matters to you, 

using Social CRM helps you keep and even acquire them in good or bad economic times. 

CRM Morphs from the Traditional: What Differs? 

Just to be clear from the start, Social CRM does not substitute for traditional CRM it extends 

traditional CRM. Businesses still need to use technology, run processes, develop operational 

strategies, apply business rules, assign roles and responsibilities for those roles and develop the 

appropriate routing and workflow for their particular efforts. That hasn’t and will not change. 

Social CRM takes that traditional CRM set of functions and capabilities applicable to sales, 

marketing and customer support and extends it by integrating the social tools for 

communication with the customers and to allow you to capture even richer knowledge of that 

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particular customer or that deal opportunity. This additional capability not only provides the 

means to deeper customer insights but allows the customer to participate in the life of the 

company in ways that are mutually beneficial. 

To understand that, a quick look at the differences between traditional CRM and Social CRMwhich 

are there are in order. 

The Definitions 

Here’s the original definition of CRM as presented in CRM Magazine, October 2003 in a Reality 

Check column by the author. 

“CRM is a philosophy and a strategy supported by a system and a technology, designed to 

improve human interactions in a business environment.” 

Traditional CRM has been an operational, transactional approach to customer management that 

was focused around the customer facing departments sales, marketing and customer service. 

How do process modification, culture change, automation through technology and the use of 

data for customer insight support the management of customers. Typically, the objectives for 

traditional CRM might include increases in revenue or profitability, an increase in “selling time”, 

or campaign effectiveness, improved use of a sales process, or if you’re into customer service in 

particular, reduction in call queuing time as examples. 

Once you develop a CRM strategy and are able to plan appropriate programs, applying the newly 

defined or redefined processes and a well chosen technology would support your ability to 

manage those relationships. The customer’s benefit is better service, attention and support from 

the company. The more sophisticated companies use CRM to gain insight into particular 

customers. 

In theory, it was great and in practice, despite notable failures, as it matured and the thinking 

about it became clearer and the tools better, the success rates increased. The numbers 

supported that. But it didn’t start out that way. In 2002, when CRM was immature and still 

trying to find its legs, Gartner found that failure rates were apparently between 55% and 70%. 

Over the years the success rates have exceeded 50% befitting a mature CRM market. 

The kinds of solid ROI that many companies saw, sometimes spectacularly so, keeps CRM as an 

incredibly popular strategic option for most companies. In fact, despite all the initial glitches, it’s 

become something of a business requirement. In July 2008, AMR Research released their "The 

Customer Management Market Sizing Report, 20072012.” Their estimate just for the CRM 

software revenues in 2007 alone topped $14 billion, a 12 percent jump over 2006 revenues. 

They didn’t have the final numbers at the time they released the report. More amazing was the 

prospects again this is just for software. They projected a market size of more than $22 billion 

in 2012, a 36% growth rate with a poor economic outlook floating everywhere. If nothing else, 

this shows you the enthusiasm that CRM engenders even the traditional operational side. 

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Slightly less optimistic but still staggering were the Gartner July 2008 numbers which said that 

the 2007 CRM software license revenues were $8.8 billion and projected to be $13.3 billion by 

2012. These numbers are being revised downward due to the recession, but still remain, from 

all reports, substantial. 

But Social CRM, often called CRM 2.0, grew from the changes in the empowerment of the 

customer. Thus, it differs with traditional CRM: 

“Social CRM is a philosophy & a business strategy, supported by a technology platform, 

business rules, processes and 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.” 

This isn’t meaningless journalist’s wordsmithing. The need for a revamped CRM, Social CRM, 

implies the existence of a fundamentally different customer paradigm. It means that not only do 

the historic operational and transactionbased capabilities of CRM have to come into play but 

so do the social features, functions, processes, and characteristics that address the interactions 

between the customer and his or her peers and the customer and the company with its suppliers 

and partners. Everything, including the associated technologies and systems, has to support the 

strategies that companies need to address when it comes to customers and their recent bequest 

of empowerment. 

Rather than go through a series of convoluted paragraphs on CRM 1.0 and 2.0 distinctions, 

here’s Table 2, which gives you a quick comparative look at the granular differences between 

traditional CRM and Social CRM. 

Traditional CRM Features/Functions 

Definition: CRM is a philosophy & a 

business strategy, supported by a 

system and a technology, designed to 

improve human interactions in a 

business environment 

Tactical and operational: 

Customer strategy is part of corporate 

strategy 

Relationship between the company and 

the customer was seen as enterprise 

managing customer parent to child to 

a large extent 

Focus on Company Customer 

Relationship 

Social CRM Features/Functions 

Definition: Social CRM is a philosophy & a 

business strategy, supported by a system and a 

technology, designed to engage the customer in 

a collaborative interaction that provides 

mutually beneficial value in a trusted & 

transparent business environment 

Strategic: Customer strategy IS corporate 

strategy 

Relationship between the company and the 

customer are seen as a collaborative effort. And 

yet, the company must still be an enterprise in 

all other aspects 

Focus on all iterations of the relationships 

(among company, business partners, 

customers) and specifically focus on identifying, 

engaging and enabling the "influential" nodes 

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The company seeks to lead and shape 

customer opinions about products, 

services, and the companycustomer 

relationship. 

Business focus on products and 

services that satisfy customers 

Customer facing features sales, 

marketing & support. 

Marketing focused on processes that 

sent improved, targeted, highly specific 

corporate messages to customer 

Intellectual Property protected with all 

legal might available 

The customer is seen as a partner from the 

beginning in the development and 

improvement of products, services, and the 

companycustomer relationship 

Business focus on environments & experiences 

that engage customer 

Customer facing both features and the people 

who's in charge of developing and delivering 

those features 

Marketing focused on building relationship 

with customer engaging customer in activity 

and discussion, observing and redirecting 

conversations and activities among customers 

Intellectual property created and owned 

together with the customer, partner, supplier, 

problem solver 

Insights and effectiveness were 

optimally achieved by the single view of 

the customer (data) across all channels 

by those who needed to know. Based on 

"complete" customer record and data 

integration 

Resided in a customerfocused 

business ecosystem 

Technology focused around 

operational aspects of sales, 

marketing, support 

Tools are associated with automating 

functions 

Utilitarian, functional, operational 

mostly unidirectional 

Insights are a considerably more dynamic issue 

and are based on 1) customer data 2) customer 

personal profiles on the web and the social 

characteristics associated with them 3) 

customer participation in the activity 

acquisition of those insights 

Resides in a customer ecosystem 

Technology focused on both the operational and 

social aspects of the interaction 

Integrates social media tools into apps/services: 

blogs, wikis, podcasts, social networking tools, 

content sharing tools, user communities 

style and design also matter 

always bidirectional 

Table 2 Quick Look at Traditional CRM v. Social CRM (source: CRM 2.0 Wiki) 

Those are the functional differences between the two. Before we look at the tools and benefits, 

its important to understand the strategy. 

Social CRM Strategy 

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Social CRM’s customer strategy and associated business models 

are those defined by customer engagement, not customer 

management. While traditional CRM used data to track 

transactions with the customer be it sales data such as purchases 

or service data such as trouble tickets and the outcome the holy 

grail was the 360° view of that customer. That means a single 

customer record with all data pertaining to that customer 

regardless of department that is made available to all those who 

need to see it. But while that was considered the optimal 

achievement of a traditional CRM deployment, it is now a prerequisite 

for a truly successful CRM effort though only 38% of 

companies claim to have it. 

But Social CRM has a different holy grail. Rather than one that is 

transactionfriendly and data driven, the new grail is “a company 

like me.” This fits with a strategy for customer engagement. 

What it means is that each customer has the products, tools, 

services, and experiences he or she needs to sculpt an individual 

interactive relationship with the company in a way that satisfies 

each of their personal agendas. It means that the company is 

willing to be transparent enough and honest enough (goes by the 

term “authentic” nowadays) to be trusted by that customer. So 

the company becomes a “company like me.” The experience that 

the customer has with the company is positive enough to make 

that customer into at least loyal and at best, an advocate. 

When a customer engagement strategy is effective, with the 

successful support of social CRM tools and processes, there is a 

mutually derived benefit planned from the beginning. That 

success is characterized by a fundamental shift in the relationship 

between the company and the customer from producerclient to 

partners. This is not a small effort. This is a major cultural and 

behavioral change in how the customers interact with a company. 

If they see themselves as partners, they feel that they have a stake 

in the success of the company. They commit to the company in 

ways that go well beyond customer satisfaction. They become 

advocates for the company. As you can see in the Karmaloop case 

study (see sidebar), they can engage in community building and 

can even operate as an extension of the sales team for the 

company. 

Case Study: Karmaloop 

Bostonbased Karmaloop is a clothing 

site that sells name brand clothes and 

accessories skewed toward 2osomethings. 

These more traditional 

product lines are infused with a healthy 

mix of independent designer creations. 

Their business model is based on the 

encouragement of the growth of a 

community now some 800,000 strong 

who buy their clothes, design their indie 

lines and sell their clothes as members of 

“street teams.” The company encourages 

community members to upload their 

creative designs, if they are inclined to do 

so, and then have the community 

comment on them and rank them. The 

best of the indie designers are highlighted 

with profiles in an ezine. There is a webbased 

TV show that discusses youth 

fashion trends. They have an upcoming 

social network that is by invitationonly 

to trendsetters. 

But the crown jewel for Karmaloop is 

their street teams. This is roughly one 

percent of their total community 8000 

members who go and sell the clothes and 

accessories offered online. They are given 

a wide range of creative options and are 

encouraged to upload the fruits of their 

efforts to move the clothes with videos 

and photos and, of course, the 

community is encouraged to rank and 

rate and comment away on how they see 

each street team doing. 

The street teams are rewarded for two 

things sales and community 

participation. It matters if they (or any 

member of the community in fact) recruit 

to the community. It isn’t just an 

ordinary affiliates program. In return, 

they get cash, clothes and credits to buy 

“stuff.” 

Karmaloop’s ROI? Not only community 

growth, but that one percent drives 

fifteen percent of the company’s sales. 

But these engaged customers expect a return. They expect that 

they will have some visibility into the workings of the company so 

that they can make smart decisions. They expect that they will 

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have privileged and personalized treatment. That could take the form of greater discounts, 

loyalty program points, some other form of recognition; even access to management isn’t out of 

the question. They expect honesty also and while that may seem easy it isn’t easy for most 

companies and they know it. As we roil through 2009, corporate senior management doesn’t 

even think they know their customer or that they deserve their customer’s loyalty. 

Strativity, a customer experience consulting firm run by industry luminary Lior Arussy, does an 

annual survey on how senior management thinks about its customers. The findings are so 

frequently shocking that they are no longer shocking. 

The 2008 study found the traditional bit of lip service to CRM strategy with 80% of the surveyed 

executives saying that customer strategy is more important to their success than ever before. 

But what is not surprising, given the year over year results is the following from 2008: 

• 43.9% believe that their companies deserve their customers' loyalty. 

• 42.6% responded that their companies' products and services are NOT worth the price 

they charge. 

• 43.7% said their companies will take any customer that is willing to pay 

This outlook implies something rather disturbing, though not shocking something that 

reinforces the distrust of CEOs and marketing departments, outlined earlier. 

A huge percentage of senior executives doesn’t believe in their own efforts enough to think that 

they deserve a commitment from their customers and are desperate enough to say and do 

anything to get a paying customer. 

Harsh words, but the survey supports the contention. Add this to the already existing customer 

distrust and you can see the obstacles here. This is why creating a transparent and authentic or, 

if you’d rather, open and honest, interactive relationship between a company and a customer is 

not an easy thing to do. Given the above, how can you? 

Ah. This is where Social CRM shines. We’ve discussed the strategy now for the tools. 

The Social Tools 

To fully engage customers and to increase the chances of success with those either business to 

business (B2B) or business to consumer (B2C) customers, both the customers and the 

employees feel that the tools are integral to the effort. Oddly, where customers do trust the 

company is if they use social tools. 

Two studies that came out in mid and late 2008 confirm this seemingly peculiar notion. Cone 

released a study on “Business in Social Media” that found that 34% of Americans think that 

companies should have a social media presence. Even more telling, 56% of the total respondents 

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felt a stronger connection to the company and its brand when they could use social media tools 

to interact with that company and 57% of them felt “better served.” 

Contrast that to the Strativity study mentioned a short bit ago. If executives truly mean that 

customer strategy is more important than ever before and a huge amount of those executives 

think that they aren’t doing much for customer’s commitment then, given what the customers 

are saying, it would seem to be a no brainer to provide those tools to deepen the commitment 

and serve them better. 

Social CRM Tools Benefit the Enterprise 

But because there is so much more than just brand commitment and even customer loyalty that 

a business has to consider, the combination of traditional CRM and integrated social tools is 

where the real benefits begin to show themselves. Figure 1 shows the types of tools that we’re 

talking about for social CRM and the infrastructure and technology platform that it needs to sit 

on. It combines the operational strengths of traditional CRM tools with the power to reach out 

and capture external customer interaction and directly connect with customers. But Social 

CRM tools add an additional strength. 

If you focus on the middle pillar you’ll note that the traditional sales force automation, 

marketing automation and customer service tools (viewable on the left pillar) are replaced by 

social sales, social marketing, and customer service 2.0 tools. Replaced might not be the right 

word here enhanced is perhaps better. The midpillar tools are geared toward optimizing the 

successes for varying enterprise departments. 

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Transaction 

(Operational) 

Intersection 

Interaction 

(External) 

Feed 

• Salesforce 

automation (e.g. 

opportunity 

management) 

• Marketing automation 

(e.g. campaign 

management) 

• Customer service 

(call center) 

• Dashboards 

• Features and 

functions 

• Business intelligence 

• Blogs and podcasts 

• Wikis 

• Communities 

• User generated 

content (employee 

ratings, rankings, 

comments) 

• Enterprise 

widgets/gadgets 

• Internal messaging 

• Text/web behavior 

analysis 

• Social sales tools 

(e.g. opportunity 

optimization) 

• Social marketing 

tools (e.g. social 

network outreach) 

• Customer service 

2.0 tools (e.g. Twitter 

service issues 

analyzed) 

• Blogs and podcasts 

• Twitter/IM 

• Social networks/ 

communities 

• Forums/threaded 

discussions 

• User generated 

content – video 

upload, comment, 

ratings, rankings 

• Social tags and 

social bookmarks 

• Features, functions, 

characteristics 

Enterprise SOA: web services (or REST/WOA) 

Integration/APIs 

Master Data Management (MDM) 

Business rules engine 

Workflow 

RSS Feeds/Subscription services 

Traditional 

Social 

Figure 1: Social CRM Tools and Foundation 

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Social Sales 

The traditional sales force automation tool has been a tracking tool. Typically, it tracked 

accounts, leads, contacts, opportunity and gave sales management a view of each and all of the 

sales pipelines that were out there, and depending on the sales methodology used, the chances 

of success. But these were pat formulas that were built into the methodology as often as not 

and based on what steps you had achieved. Social sales tools far exceed that. They are designed 

to optimize the rate of success for deal closure by doing a number of things that will give you a 

better “best guess” than ever before. So they involve for example: 

1. The combination of internal histories with customers that 

can define similar deals and how they succeeded with 

external unstructured data that is pulled not only from 

the traditional Reuters/Hoovers corporate information, 

but nontraditional sources such as Jigsaw or profile 

information from LinkedIn or Facebook. This is then 

analyzed and compiled into a much richer, more 

comprehensive view of the opportunity and the factors 

that might affect it including the individuals and their 

profiles. 

2. Rather than the more traditional guesswork involved in 

identifying which presentations and which documents are 

best when dealing with a particular client, a combination 

of algorithms and user generated content meaning the 

rankings, ratings and comments from the other internal 

sales professional and perhaps the marketing staff, give 

a much better idea of the appropriate choice of 

presentation or document. 

3. Collaboration via wiki on a response to a request for 

proposal (RFP) and then the generation of that RFP 

response once the final result is signed off on, so that it is 

ready for delivery. 

Social Marketing 

Social Marketing tools are still in their early incarnations. 

1. Outreach These tools are designed to interact with 

Facebook or MySpace and similar huge membership, 

high activity volume social networks. The tools are 

focused on offer optimization that are based on how they 

interpret not just the activity of the individual on the 

social network, but the data in his or her profile. 

2. Mobility this is the one with incredible promise. 

Imagine giving your prospective customers access to the 

Social Marketing Metrics 

Social Marketing implies a whole new set 

of metrics. The percentage of responses of 

a customer to a compaign are no longer 

sufficient. Metrics will have to weigh the 

emotional and behavioral responses of 

individual customers and take the 

temperature of entire communities. While 

still nascent, PricewaterhouseCoopers 

(PwC) came up with some that present a 

useful start, what they call, “hearing 

whispers.” 

1. Volume –The amount 

something is mentioned v. its 

historic pattern. 

2. Tone – Is it positive, negative, 

neutral? 

3. Coverage The number of 

sources generating a particular 

conversation 

4. Authoritativeness – A 

qualitative ranking of the 

source’s reputation 

Source “How Consumer Conversation 

Will Transform Business” – PwC, 2007 

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catalog of goods and services offered by your retail operation via their iPhone or 

Blackberry or whichever phone they use (anytime, anywhere on any device). Not only 

will they have access to the comments and ratings of other customers for each item and 

can add theirs, but their real time activity is tracked and an optimized offer is texted to 

them, based on their histories and their real time activity. This all takes place on a mobile 

device. 

Customer Service 2.0 

Traditional customer service is easy to spot. It starts with a complaint to a customer service 

representative via a phone call to a call center rife with automated menu functions or via the 

Internet. While the problem may be eventually solved, the customer is usually more disgruntled 

than when they filed the complaint. It could be that the automated system was an impediment 

rather than a benefit or the person they spoke with was inadequately trained. One of the 

traditional ways of dealing with this CRM problem is to reduce the amount of time in call 

queues. But customer service 2.0 tools are based on a markedly different archetype: 

1. Services that scan communities that range from Facebook and Planetfeedback to Twitter 

to find customer complaints and then using analytic tools, determine the emotional 

depth good or bad of the complaint. Based on business rules and workflows that are 

embedded into the service application, the outcome triggers an alert sent to the 

appropriate person in the chain of command. 

2. If a customer has an issue and is willing to allow the community of other customers to 

help solve the problem, the trouble ticket is opened up for the community as one of the 

solution providers. If an answer is found, it becomes part of the company customer 

service knowledgebase. 

What is remarkable about social sales, marketing and customer service 2.0 is that none of the 

tools and their benefits are scenarios or future wishes. Each one exists now. Some in public 

beta, some complete product all functional and all with customers. Social CRM tools in 

combination with traditional CRM tools literally are the link between you and your customer 

from here forward. 

The Social CRM Value Proposition 

If you have a successful CRM strategy and use the right tools to support the strategy, then the 

value derived can be potentially remarkable. But, in order to actually extract the value that you 

might be looking for, it is important to understand what the benefits might be and what they 

won’t be. 

Social CRM provides you with the tools for true insight into customers that can be used to 

facilitate successful sales and better relationships with customers. It also provides the 

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capabilities for the customer to interact with you in a more effective way which transforms how 

the customer sees you and what the customer wants to do with you. 

Insight 

True insight into your individual customer has been an elusive goal for as long as CRM has been 

around. What normally was called “insight” was actually the accumulation of customer 

transaction data into a single record the 360° view of the customer and was seen as an end 

unto itself. This is coherent with the value proposition of traditional CRM a datadriven, 

process driven methodology, strategy, and business model. But, somewhere along the way, this 

single customer record became a substitute for insight. 

Social CRM provides you with what you need to get true customer insight which means insight 

into an individual, an account or into the combination of activities and objects needed to make 

an opportunity into a successful deal. It draws on history using internal and external 

knowledgebases, but also involves the intelligence of the others at the company. This is done 

typically through the use of tools like wikis, or what is universally called user generated content 

(UGC) which takes the form of comments, ratings and rankings more often than not. So not 

only is valuable data parsed but then the emotional and behavioral characteristics expressed 

through the UGC are taken into account, given a much richer picture of the subject matter in 

question. Typically there are three or possibly four pieces to gaining the level of insight needed 

to deal with the contemporary customer successfully. 

1. Data – This includes the now standard information that the company can gather 

through the transactions of the customer with the company. That means purchase 

histories, returns, visits to ecommerce or website and time spent on different pages; 

marketing response to campaigns and customer service inquiries and problems, among 

many others. This can also be data gathered from external sources about the 

company/prospect. So not only would data from Reuters be captured on the financial 

status of a company, but data about the company from threaded discussions, and social 

networks and user communities would also be parsed to add a much more important 

dimension to the more static transaction data and pure corporate information. 

2. Profiles – This is the “personal” information that is now so important in gaining 

customer insights into how a customer wants to interact with the company. This could be 

their movie and literary interests, their hobbies, their “style” likes and dislikes. It means 

their unstructured text comments in a community or social network e.g. Yelp for a 

restaurant or a geographically based retailer. With the growing interest in micro 

segmentation – the deep dive into the customer’s lives (without being intrusive) to 

understand their style and selection choices for predicting future sometimes apparently 

unrelated behaviors, profiles become essential for finding differentiable information 

about the customer you need. 

3. Customer Experience Maps Customer experience mapping fosters the insight into 

the customer because it overcomes the usually incorrect knowledge about the customer’s 

thinking. Typically, if you ask a marketing department about the customer, they can tell 

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you what the customer is thinking. However, their “insight” is more often wrong than 

not, because it’s based on presumptions about the customer either due to some 

generalized demographic or because of some survey that was taken in an environment 

that has nothing to do with either the natural interactions of the customer and the 

company at any one of a number of touchpoints or the actual thinking of the customer on 

the interactions themselves. They presume for the customer. However, customer 

experience mapping examines the granular interaction of individual customers in 

multiple environments at multiple touchpoints. It also looks at the expectations of the 

actual customers; the results of the interaction based on the expectations and the actual 

weight the customer places on the individual results. In other words, what the customer 

actually think. 

4. Social Network Analysis This is the breakdown of who is in a decision making 

position and who is influential and how they interact. A look at the interactions among 

social groups and individuals sometimes reveals influencers who otherwise wouldn’t be 

obvious, yet may be key to closing a deal. The visualization of this is called the social 

graph. This is particularly valuable in B2B environments. 

5. User Generated Content UGC is perhaps the newest piece in the insight puzzle. The 

deep store of comments, ratings, rankings and even rich media content that gives you 

further knowledge about your prospect or opportunity has been one of the untapped 

founts of invaluable wisdom that supports the other required components for insight. 

Social CRM tools provide the means to capture the data, the profiles and to create the 

experience maps which in turn help develop the real insights into customers that provide what is 

a genuinely personalized and delineable experience for individual customers. Historically, CRM 

couldn’t do this. It could gather all the transactional data but the emotional and behavioral 

knowledge of the customer that the profiles and the experience maps supply weren’t part of 

CRM’s value proposition until now. 

If used well, the insights gained, will support what a sales person in particular but also staff 

member interacting with a customer in general, craves. That would be an increase in positive 

reputation, which can lead to an increase in influence, which then can allow the newly reputable 

and influential salesperson to be more persuasive because they are more trusted. 

Interaction 

Enhanced insight is only one of the two active improvements that social CRM provides. Aside 

from its solo value, it plays a valuable role in the propagation of the other improvement 

customer/company interaction. Enhanced insight leads to trust which leads to the customer’s 

desire for either further or deeper (or both) interaction. But there is more to it than that. 

17


Two of the guiding characteristics of social customer strategy are corporate transparency and 

authenticity. Customers require greater visibility into both the daytoday workings of the 

companies they have an interest in and in acquiring the information they need to make 

intelligent decisions about their dealings with the company. They also require the capacity to 

honestly interact with the corporate leaders and appropriate parties without a lot of bureaucratic 

interference. 

While there are certainly nearly countless ways to do this, Social CRM provides a framework for 

interaction that allows not only the customer what they are looking for but also gives the 

company actionable data in return which of course provides for greater insight. 

The kind of interactions that customers are looking for are those that give them what they need 

to achieve their particular personal agendas. This goes beyond the normal utilitarian 

transactions where customers come to buy a product or service. These will still exist, but they 

don’t often provide enough interactions and relationship to create the optimal customer an 

advocate who will speak for you. 

Customer engagement strategies serve the need of customers who choose to interact with a 

company and expect that in return, they will get the products, services, tools and experiences 

they need to achieve their agenda. That agenda could be momentary to buy something with a 

particular configuration at a certain price that they would receive within a certain timeframe. it 

could be an ongoing subscriptionbased service such as on demand salesforce automation that 

might grow to multiple modules including customer service or marketing within a year or so. 

But these interaction strategies also serve the need of the sales person who is looking to turn a 

lead into an opportunity or an opportunity into a deal. 

It also serves the needs of customer service when the quick and accurate resolution of trouble 

tickets and real world problems of their customer become paramount, not just to maintain the 

customer but to sustain the good reputation of the company. Because it is easier than ever for 

one person either accidentally or deliberately to damage the reputation of the company as well. 

Just ask United Airlines. In September 2008, an erroneous Google search led to Bloomberg 

publishing a story that United had filed for bankruptcy. While true, this Google search had 

found a 2002 Chicago Tribune story and it was listed as current. Within hours, United’s stock 

price dropped 75%. Highly damaging to a company already damaged. 

However, trusted relationships, while perhaps not able to stop the error, go a long way to 

mitigating problems and overcoming issues in addition to propagating the good about a 

company. Continued interactions with customers that have great outcomes will reduce the bad 

and increase the good between company and customers. 

Concrete Benefits Are Alive and Well Now 

Okay all of this is good, but isn’t it hypothetical? There are clear cut benefits derived through 

the use of Social CRM tools. But is 2009 a point where a look back will see benefits from Social 

CRM outcomes? 

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Apparently it is. 

Coleman Parkes Research, in a study released by Avanade in 2008 called “CRM and Social 

Media: Creating Deeper Customer Relationships” found that companies were seeing real world 

benefits even a mere three years into the existence of Social CRM. 

Look at these numbers: 

• 78% found that integrating CRM and social media led to improved feedback 

• 75% found that it created a perception of the company as forwardlooking 

• 71% found that it led to a reduction in time to resolution for support issues 

• 66% found it led to greater customer satisfaction 

• 64% found it led improved market reputation 

• 40% found that they could see specific improvements and increases in sales 

Social CRM is not mature yet but it is evolved enough to give you the understanding of the social 

customer, the strategies you need to engage that social customer and the tools that will allow 

you to optimize your successes with that customer in healthy economic times or during a 

recession. 

Summary 

This is it. End of story this white paper’s story that is. The story of Social CRM is just 

beginning as customers continue their fastpaced jog on their road to owning their own 

relationships with companies. Social CRM gives the companies the strategies and tools to 

respond to those customers. You ready? 

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Social CRM Comes of Age (PDF) - Oracle

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