CRM, or customer relationship management, is an approach that businesses across all industries (but especially in retail) have been using for decades to engage with customers. By maintaining databases of customers and customer information (including surveys, purchasing histories, and more), brands can use that information to target different subsets of their consumer base with tailored marketing campaigns. Traditional CRM utilizes channels such as phone, snail mail, and email to communicate with customers. The approach has been used—variably—to resolve customer problems, answer questions, deliver product recommendations, distribute tailored promotions and coupon offers, and boost customer satisfaction.
The Problems with Traditional CRM
For many brands, traditional CRM has been a successful means of engaging with customers, reducing operating costs, and boosting profitability. However, the core “relationship” of customer relationship management has not always delivered the same benefits to the customers themselves. In traditional CRM communications, the customer was always passive, with the vendor controlling the conversation. As a result, marketing tactics posing as customer relationship management can often make a customer feel manipulated or assaulted with offers and promotions.
For instance, spamming a customer’s inbox or sending them mailers several times each month are technically CRM actions. However, they can actually do more harm than good to the relationship a brand shares with its customers, simply because they make the customer feel more like a prize than a person.
The Advent of Social CRM
With social media, though, the relationship between customers and brands has fundamentally changed. Customers have louder voices now than ever. They can easily unfollow or block any brand that they feel is spamming them, and they can directly communicate with brands to air their grievances about aggressive marketing campaigns.
One of the benefits of social CRM for brands is that they can keep better track of how audiences are responding to marketing and customer engagement tactics and in real time. To paraphrase Bloomberg Businessweek writer Steve McKee, social CRM enables two-way communications rather than one-way messaging. Where traditional CRM thrives on the illusion of a customer relationship, social CRM allows that relationship to become corporeal.
By giving consumers a voice, social media has also given them power in the vendor-customer relationship. In fact, in social CRM, customers have more control over the vendor-customer relationship than brands do—and not just because they can respond to marketing campaigns they find irritating.
In social CRM, the customer is no longer passive. Rather, he or she has the power to make posts and spread messages about a brand—positive or negative—that can impact that brand’s bottom line. A successful social CRM approach for businesses, therefore, is as much about encouraging customers to become “advocates” for a brand or product as it is about marketing that brand or product to the customer directly. By getting a customer to leverage his or her following to market a product or brand, a business increases its reach much more quickly and efficiently than traditional CRM would ever allow. Word-of-mouth, in other words, is more important than ever before.
Northwestern University’s Edward C. Malthouse (and four co-authors) described the differences between traditional CRM and social CRM best in a scholarly article published in a 2013 issue of the Journal of Interactive Marketing. In traditional CRM, the scholars explain, customers are most important for their “consumption and purchasing behavior.” In social CRM, customers “can contribute to firm growth in a multitude of ways,” with their voice and connections proving especially pivotal.
Designing an Effective Social CRM Strategy
With so much at stake with social CRM—and so much power placed back in the hands of customers—it can be difficult for businesses to design effective strategies for customer engagement. Part of the problem, it seems, is a diversion of viewpoints between brands and customers as to what social CRM should actually be. According to a recent survey by the IBM Institute for Business Value, the majority of CEOs see social media as a means of feeling closer to customers. This goal differs from what customers want, which is real or noticeable value.
The thing is, though, since customers control the conversation on social media, what they want is king. As a result, brands using social media simply to interact with customers, without offering tangible value, are not going to be successful because they are fundamentally misunderstanding what their customers want. According to the IBM survey, just 45 percent of consumer respondents interact with brands on social media. Most people view social media as a means of staying connected with friends and family; they aren’t interested in chatting with their favorite retailer or brand.
Of the 45 percent of social media users that are interacting with brands, most are looking for two primary things. First of all, consumers are only interesting in following and interacting with brands that they feel are honest and forthright. As a result, customers will typically only engage with companies they already trust—making it difficult for brands to boost their customer base using social platforms alone. Secondly, customers are looking for the aforementioned value—usually in the form of coupons, sales, exclusive offers, contests, and other similar promotions.
How can your brand leverage these findings? First off, leverage your existing customers. Encourage your customers to follow your brand on social sites like Twitter and Facebook, and promise coupons and other promotions with tangible value. Next, just follow through on those promises and deliver promotions that bring value to your followers. The more value you can provide to your customers on social media, the more likely those followers are to share your posts or spread the word about your brand to their followers. Only through this type of word of mouth will your brand start to gain more traction on social media.
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