Living in the Era of CRM 2.0

CRM 2.0While sitting in a plush board room, the CEO of a company looks at the performance figures. He announces to the forum, “Ravi has closed so many deals for us this last quarter. Let’s reward him and give him a raise”. The members started whispering and everyone seemed flustered. Then one of the members politely informed the CEO, “Sir, But Ravi is a customer, not an employee”. This is an era where customers are significantly contributing to the way a company is segmented and positioned: the age of Customer Relationship Management (CRM) 2.0 is here.

Companies are struggling to find a trade-off between managing cost and customer satisfaction. While the time has come for them to strategize and make customer experience their foremost priority, they are still focusing on reducing costs. Thus, it does not come as a shock that customers are left wanting. In this age of Web 2.0, where customers have access to Blogs, Wiki, forums etc., they are not afraid to put forth their opinion, and that opinion gets magnified through the magic of Web 2.0. Any small piece of information can spread like wildfire and deteriorates the brand value of the company.

The pattern of customer behavior is changing. The tech-savvy generation uses different modes of communication including phone, e-mails and social forums. They expect to interact with companies using all these tools and be able to switch-over between different modes as and when it suits them. They expect the communication to be consistent across all channels. Customers now demand that organisations, companies, innovations, technology and business methodologies adapt to their requirements accordingly. Thus, CRM 2.0 necessitates a social metamorphosis of the industry. CRM solutions should not only be oriented towards sales, marketing and services but should also focus on customer loyalty, online commerce and the enhanced Web 2.0 guided worth of “social CRM”.

evolution of business process modelling

While traditional CRM was focused on one-to-one communications with customers, using phone, chat, messenger, chats, media etc., social CRM (also referred to as CRM 2.0) has added new and efficient channels to interact with the customer. Engaging the customers over social media, in an unconventional manner is a powerful tool that can replace hours of time and dollar resources spent on gauging an honest, real-time feedback of the customer. The traditional CRM believed in managing the customers but social CRM believes in collaborating with the customers. CRM 2.0 engages customer as an equal partner from the initial phase of product development to the next phase of product improvement. Business orientation in a traditional CRM focussed on products and services as a tool to satisfy customers. In a social CRM, the orientation has been totally changed to a focus to co-operate and co-create with the customer to provide a pleasant ambience and experience.

enter social crm

The real question is how to productively utilize the integration of Web 2.0 and CRM. A social media channel such as a blog can be effectively used as a marketing tool to promote articles written by senior executives of a company and promote leadership, as a sales tool to engage with members of the forum regarding products offered as well as a service tool to keep a real-time check on claims, comments and suggestions offered by the customer. Similarly, personal social networks like Facebook can be used as a launch pad for advertising campaigns within client communities as well as gathering opinions of the product users. Thus, social networks, coupled with the technological explosion of Web 2.0 have the power to significantly influence customer behaviour.

social CRM matrix

The usage of social CRM, whether to enhance customer experience or achieve cross-selling, can be justified only if the businesses are earning profits. With the application of social CRM in sales department, productivity has jumped up by 25 % (Gartner, 2011). It has also lead to better understanding of relevant information about consumer habits. Post-purchase, a customer’s satisfaction can be easily traced using this new alliance of Web 2.0 and CRM. There is an expected hike in global revenues in CRM 2.0 from 820 million last year to the 1 billion mark at the end of 2012 (Gartner, 2011). The success of CRM 2.0 lies in its amazingly high adoption rate among companies, which thus, leads to a high “social Return on Investment”.

While the initial fear of adoption might be understandable, CRM 2.0 needs to be envisaged as a ladder to a communication revolution with abundant business opportunities. Companies need to move in the direction where customer, not the technology, becomes the focus of the strategy. Social networks have transformed the relationship between businesses and customers from transactional to personal. A change is marketing and sales strategy of the companies is warranted. The organizations that sooner rather than later, inculcate CRM 2.0 will surely have a first mover advantage and a competitive edge in the coming years.

Yatin Kamat is a PGP student at IIM Ahmedabad and a member of the Consult Club.