Using CRM Software is a solitary experience. It doesn’t have to be that way.

 

Last Sunday I posted in Twitter a statement I first heard from @johnlima a few days ago. It generated a wave of responses.

In CRM, we have solitary experience, engaging with a database. In SCRM, we collaborate and engage with real people.

The first part of that tweet matches my experience using classical CRM tools and what I hear from sales people. Classical CRM software excels in process automation and storing transactional data but provides a poor user experience because it is designed primarily with the needs of management in mind. The user feels they are feeding data to the CRM system so that it can produce reports, but it doesn’t help sales to do their job.

Social CRM (both the processes and the tools) is a response to changes in the business environment and the shift in control from companies to customers. Whether it is a cause or a side-effect of the change, well-implemented Social CRM software should help sales people to engage with customers and, as a result, sell better.

Anyone who believes in software as good solutions for both user and business problems share that perception and expectation. That explains why so many people expressed opinion on a sleepy Sunday afternoon.

Now, most of the responses that did not agree with the tweet interpreted it as saying “front end instead of back end”. They focused on the fact that the structured portion of CRM continues to be important. Providing a better user experiences does not negate the analytical and transaction strengths of classical CRM.

The challenge for CRM systems in the future is this: Can we help Sales people to sell and feel the tool helps them to maintain relationship with customers? Can we, at the same time, reduce the burden on the sales people filling up forms to feed a static database? Can we, while doing that, keep allowing for structured and transactional data to be captured for analysis?

Yes, we can. That is the challenge CRM software vendors need to focus on, whether they call themselves “CRM” or “Social CRM”.

How Social Media is bringing us back to the future

In a recent series of Social CRM seminars, I asked several audiences to complete this sentence:

The closing of a sales deal depends on….

Not once did they fail to answer on the first attempt and in unison: Relationships. We all have this deep intuition that the sales process has always been social.

But the prevalent Sales Model and Customer Relationship (CRM) processes used by companies today is not consistent with that intuition. We try to automate and reverse the natural sales process into an marketing-driven analytical/statistical exercise.

Sell, Keep Customers Happy

Let’s go back in time, before mass marketing, when we lived in smaller communities. If I want to sell something, my first task is to develop a product or service that solves someone else’s problem.

Then I search my network of relationships for people who (a) have the problem I address and (b) are ready to use my product. Once the sales transaction occurs, I stay engaged with the customer and make sure they are happy. Happy customers will not only come back for more, but would also connect me to new customers in their network of connections to grow my business.

The Emergence of Marketing

Then mass communication media (print medium first, then broadcasting, then e-mail) became available and changed the world. These media made it possible to communicate with a very large number of people at very low cost.

But classical media had characteristics that were different from direct interaction: it was unidirectional (did not support engagement) and was controlled by the corporation.

The game changed and a new sales model that is marketing-driven emerged.

We turned the natural sales process upside down. Marketing leverages media to broadcast to the largest possible number of people. Because the majority of people either do not need the product or are not ready to consume it, only the very few who were poked exactly at the right time respond.

Those who respond become “leads” and are handed over to Sales. Once the transaction occurs, the company has little incentive to stay engaged. That explains the disregard most classical companies have towards Customer Service. We then just repeat the process (poke a thousand, watch for the two or three who happen to be ready, complete transaction, disengage).

That analytical/statistical model works well and a model that works well wins. That is how we moved away from the natural social sales model towards a marketing-driven model. But a model lasts only until the parameters that made it a winner change again.

Enter Social Media

While Social Media is not equal, it has two interesting characteristics that are similar to direct interaction: (a) it is bi-directional, allows personal engagement, (b) it enables peer-to-peer communication outside of the control of the corporation. It also promises to scale better than direct interactions.

The possibility that is now open is that companies can return to the natural sales process: create good products, sell it. Maintain the engagement with customers and make sure they are satisfied. Happy customers come back for more and, because they can communicate peer-to-peer, bring new customers within their network of social connections.

If the social model with social media can be more efficient than the classical model, the pendulum will move again.

Back To The Future

Marshall McLuhan explained us that “The Medium is the Message”. The medium we use not only affects our communication, but has the potential to change the way we think and behave and shift underlying business models.

Are we switching Sales model overnight? Unlikely. Are we shifting to a Sales Model that is less analytical/probabilistic and more social? I am very confident we are. Are you?

The world has changed (again). It is time to adapt.

CRM vs. Social CRM – The reason why we need “Social CRM” terminology

This post captures my response to a question posted by Jeremiah Owyang in the Social CRM Pioneer Discussion Group.

His question was: What is the upside and downside of SCRM branding?

My answer follows.

Social CRM is CRM (I think that has already been settled). The differentiated terminology reflects the significant changes in the business environment and CRM evolution in response to them. Until that evolution consolidates, “Social CRM” is the future of CRM.

It is natural that incumbents stick to “CRM” and new entrants highlight the differences by calling themselves “Social”.

For how long we will continue to discuss terminology will depend on how successful the new entrants are carving a position in the CRM market. Will the “SCRM vendors” be able to maintain  momentum through the inevitable disillusionment that follows the Social-anything hype?

If those vendors can capture a significant portion of the market in the next couple of years, the CRM/SCRM differentiation will survive for a long time. If they don’t, then SCRM blends back into CRM.

Electric cars are cars. If Tesla survives and grows independently, they will continue to represent the “electric car” (even if GM sells more electrics than them). If the big car makers swallow the small ones, electric cars will just be “cars” very soon.

So for new entrants, the advantage of associating themselves to ”Social CRM” is to highlight the differences.I don’t think that
creates the expectation by business users of delivery of a revolution (that demand only exist among  us, searching for a formal definition of the difference).

At Coffee Bean Technology we have had that discussion and, as it is obvious, we decided to position as something different from Classical CRM. So Social CRM we are. There are benefits and risks in that choice.

Evolution happen when we focus on what is new and to draw that focus new terminology is needed. That doesn’t mean the status quo is not important. It is just not interesting.

Being Strategic means considering whether our current actions move us towards a desired scenario in the future.

I have led corporate strategy for a large company and have always though strange that a 2000-people organization would dedicate 6 people to strategy. Does that mean the other 1994 are not?

Unfortunately, it does.

The CEO says: strategy is very important, but…. we really need to close this quarter, so would like us to focus on delivering the results we need.

Because the cost of communication through the hierarchical layers and collaboration across functional silos is very high, it is more efficient to break the vision into smaller partial goals and ask people to ignore vision and focus on partial metrics of performance.

Because the data workflows are serial and the measurement and analytical methods are primitive, the strategic loop has a long time lag and vision and strategies can only be revised in the long-term (typically in intervals of 6 months or a year).

Strategy is about making decisions that are thoughtful and deliberate, based on the vision of desired results. Strategy is not meant to be inefficient or long-term. The classical business model imposes that.

Adoption of social computing technologies promise to reduce the cost of communication/collaboration and deliver analytical data in real-time to people making decisions at any level.

Social Computing technologies can shorten the strategic loop, break the information silos and let everyone make decisions with visibility.

Being strategic every day keeps the doctor away.

Functional Departments are like Social Networks, Projects are like Communities

Events such the Haiti Earthquake or the Chilean miners rescue have the power to bring people from around the world together to collaborate on a common goal. That happens quickly and without central coordination when all undertand unequivocally what the priorities are.

“People from all walks of life that seem to have no relationship at all, held together by a common interest.” That is exactly how Dr. Michael Wu defines Social Communities.

Still according to Dr. Wu, in a Social Network, on the other hand, “people are held together by pre-established interpersonal relationships, such as kinship, friendship, classmates, colleagues, business partners, etc”.

In real-life social environments, people move from one community to another as their interests change over time. They belong to multiple communities at the same time as every human being is multi-dimensional and has multiple interests to share with different groups.

As we think about implementing Social Business models, it makes sense to map and relate current corporate organizations into social organizations.

• In corporate structures, Functional Departments are like Corporate Networks of employees  held together by pre-established common set of skills and domain knowledge, organized in a relatively fixed and unequivocal hierarchical management structure.

• When people from different  functional areas are brought together into a Project (say, design, develop, market and sell a specific product), they form something like a Corporate Community collaborating towards a common interest and pursuing a common goal.

In a Classical Company we organize primarily along Corporate Networks of professionals grouped by domain knowledge. By using classical planning strategies of decomposition of the mission into objectives aligned to the organizational lines, we hope to maximize efficiency by leveraging specialization and minimizing the need for inter-area collaboration to get the job done.

But, as competitive pressures increase, innovation accelerates, and information spreads faster,  companies are required to respond in real-time, the classical strategic planning process modeled after functional or managerial networks falls apart and communities become the most effective model of primary corporate organization.

Social Business seeks to make the classical corporate structures more flexible and fluid so that they can better leverage collaboration. To embrace Social Business, corporations will have to adapt their structure (less hierarchical, fluid organization charts), attitude (let information flow, empower and react in real-time), and process (more reliance on collaboration, less on linear workflows).

Embracing Social Business is prioritizing Communities over Networks. It is a move from tactical discipline  towards real-time response. It is deciding what is important and then organizing to do it (like in the international rescue effort in Chile) instead of organizing first and then define what is the goal of each party (like in classical business or regular diplomatic circles).

You have heard it before: “You cannot improve what you cannot measure”. For the past few decades, we have strived to model and analyze all the aspects of business so that we can continuously create more efficiency and improve its performance.

Metrics are important, but not if they are the wrong ones

As we look at the shift towards business that is more social, many have argued that it is very important to continue measuring performance. Processes and tools will have to change to promote more engagement and capture conversations, but they need to continue to model and measure for business monitoring and improvement.

Of course, I agree with that. But I argue that current metrics used by business are not as useful in a Social Business environment. For analytics to continue to be valuable as business models change, metrics have to change accordingly.

Example: Measuring performance of Customer Service

When we measure Customer Service as a stand-alone organization, all we find are costs. There is no tangible value creation. A CEO looking at a KPI dashboard will be rightly compelled to take talent out of that cost center, reduce costs, outsource.

“But we measure Customer Satisfaction”.

That, my friends, is a fallacy. The accountant cannot place a dollar value on “Satisfaction” and it gets ignored by decision makers. We don’t need to argue, it is enough to look at how customer service is regarded in the majority of companies today.

“Customer Service is the New PR.” “Zappos is showing the way.” We all agree that Customer Service is a key element for Social Business success. But how to measure its performance?

Happy customer generates more revenue by influencing other prospects. That has always been true and is even more important in a world where consumers are empowered by peer-to-peer interaction through Social Media.

To evaluate performance of Customer Service, we need to measure new business generated through influence. The accountant can measure that in dollars and the CEO can make more informed decisions.

Now, if you keep current analytical models, try to tell Sales and Marketing that revenues from new business are no longer credited to their account, but to Customer Service.

It is not about who or which department is creating value, but understanding and correctly modeling business performance. Then getting people to collaborate towards business goals with less focus on personal and departmental accountability.

It requires less Management and more Leadership. That is the challenge of Social Business.

Conclusion

Metrics are important. But we need to shift from measurement that is primarily designed to provide accountability to more holistic metrics that evaluate the reality of business. Until we internalize the shift in business model, no metrics might be better than bad metrics.