Social media and customer

relationship management:
THE TIPPING POINT IS JUST AROUND THE CORNER
Social media has radically changed the way people meet and interact. Huge crowds
from all over the world gather into a handful of social networks where they connect,
share, collaborate, and influence. Conversations are immediate, and ideas, emotions,
and information can spread globally within minutes. This new landscape poses both
great challenges and tremendous opportunities for businesses, organizations,
and brands.
Two data points tell a powerful story about the shifting landscape of CRM:
- According to a Conscore report Fron Iune :o, social nedia activity now accounts
For out oF every 6 ninutes spent online.

- Spending on digital advertising, by one Forecast

:
, will account For only :% oF total
spending, with social nedia accounting For only % oF spending by :o.
If this forecast is accurate, then marketing practices and the majority of ad spend
are out of sync with the way most customers prefer to be engaged - especially the
customer of tomorrow.
Buyers are more and more engaged with social media, yet CRM is not. The companies
that embrace the totality of social CRM will have a competitive advantage over those
who remain with outdated practices. The tremendous shift in consumer behavior
shows that despite the recent hyperventilation by the media and the financial
community, social media is much more than just hype.
. 1he Network FFFect: Facebook, Linkedin, 1witter & 1unblr Reach New Heights in May Conscore
Blog, Iune , :o http://blog.comscore.com/2011/06/facebook_linkedin_twitter_tumblr.html
: . BIAJIelsey Forecasts Social Media Ad Spending to Reach S8. Billion in :o, BIAJIelsey press
release, May :, :o, www.biakelsey.com/Company/Press-Releases/110502-Social-Media-Ad-Spendingto-
Reach-$8.3-Billion-in-2015.asp
$180
$160
$140
$120
$100
$80
$60
$40
$20
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$

B
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2010 2011 2012 2013 2014 201 5
$9
$8
$7
$6
$5
$4
$3
$2
$1
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S
$

B
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2010 2011 2012 2013 2014 2015
Steady Shift Toward Digital Media Social Ad Spend: Five-Year Forecast
$136.0
$116.8
$19.2
$136.2
$22.3
$113.9
$141.5
$25.7
$115.8
$144.3
$29.4
$114.9
$149.8
$33.7
$116.1
$153.5
$37.9
$115.7
$2.1
$2.1
$0.0
$3.4
$0.1
$3.3
$4.5
$4.7
$0.2
$5.9
$0.3
$5.6
$7.9
$0.4
$6.6
$8.3
$0.6
$7.7
Traditional Online/Digital Social Display Social Non-displa y
Note: Numbers are rounded
Proprietary and confidential. Copyright 2011 IBIA/Kelsey. All rights reserved
Note: Numbers are rounded
Proprietary and confidential. Copyright 2011 IBIA/Kelsey. All rights reserved
THE EFFECT OF social media
ON CRM has just begun
vhen looking at technological innovation, Anara's Law states that nost people
have a tendency to overestimate the effect of a technology in the short run, and
underestinate its eFFect in the long run.
Today, the business media is fueling a frenzied obsession with the power of social
media, adding a great amount of hype and driving mythical stock valuations of
sone oF the nain networks. Legions oF well-neaning anateurs have declared
thenselves social nedia experts. Marketing consultancies oFFer services to help
conpanies engage. And, as with so nany trends oF this sort, the naysayers are
finally appearing, declaring that social media and social CRM are both hyped-up
buzzwords whose return on investnent are negligible, and that we should all get
back to real work.
Since the inception oF Conpetitive Futures as strategic Forecasters during Dot
Con .o, we have heard this kind oF declaration about overly-hyped technologies
before:
- 1he use oF websites as narketing tools {Not enough people have conputers!)
- F-connerce {Nobody will trust their noney to people they can't see!)
- Digital currency transactions la PayPal, {Nobody will work with an online bank
without tellers and branch nanagers.)
- Blogs {vho cares what sone idiot thinks?)
- vikis {Nobody will give authority to sone crowd oF losers who don't work in a building
with narble colunns!)
And so it is with social nedia. vhile Facebook, 1witter, LinkedIn, Ning, and other
platforms have become globally-recognized, their long-term effects are yet to be
seen. That is because this most recent phase of growth is only the beginning of
the new way in which the world connunicates. 1he incredible reach & inpact oF
Facebook & 1witter alone show that digital proFiles and social networks will be the
norm for the customers of the future all over the world.
And yet the conventional Forecasts on ad spending indicate that nost conpanies
perceive that the practices of tomorrow will look largely like they do today, despite the
fact that their customers will not be waiting in the same places for their marketing
messages and customer service agents and sales people.
Clearly, there is a difference between perception of the future of CRM, and reality.
SOME STATISTICS TO INDICATE
the shift towards SOCIAL CRM
AS A DRIVER OF BUSINESS VALUE
The sheer numbers behind social media suggest the permanent shift in technological
usage among customers in every possible market.
Conpare the anount oF tine it took Facebook to reach a network oF oo nillion
users compared with older technologies: a scant five years, compared with fourteen
years For the cell phone and thirty-eight years For television. {And check out Skype:
two years! But the Future oF voIP and telepresence are For another white paper.)
In the same way that television created permanent change in consumer patterns, so
shall it be with social media which maintains its value proposition irrespective of the
device you use For its access: desktop, laptop, phone, iPad, television, or reFrigerator

.
The media is the message, and the message is that social interaction will forever
replace the one-way, mass communications employed by most major brands.
Additional statistics prove the size and explosive growth oF this branch oF inFornation
technologies.
- Facebook has over 6oo nillion regular users with over oo nillion unique
visitors every day. It is the nost visited website in the world reaching o% oF
web users globally.
- Facebook currently registers between o and oo nillion ad inpressions every day.
- 1witter counts over ) nillion users sharing over billion tweets per week.
. As wild as it sounds, coning soon: http://bit.ly/iXk0Mt
2004-2006 Google Earth & Skype
1994-1998 The Internet (WWW)
2004-2009 Facebook
2001-2008 iPod
1983-1997 Cell Phone
1928-1966 Television
1876-1965 Telephone
2 years
4 years
5 years
7 years
14 years
38 years
89 years
- In a recent study oF :ooo users by InboxQ
4
, 6z% oF respondents said they were nore
likely to buy Fron a conpany which answered their questions via 1witter.
- A :o study Fron the Center For Marketing at the University oF Massachusetts
Dartnouth shows that 1witter users are tines nore likely to share content than an
average nenber oF the U.S. population.

- According to research Firn BIAJIelsey, anong Fortune oo conpanies )% have

Facebook pages, j% have corporate accounts on 1witter, and 6% said social nedia
is very inportant to their business & narketing strategy.
And yet, no natter how big a deal this appears to be, best practices are not clear.
According to a recent study by Capgenini, )z% oF executives polled were unable
to identify how many people in their company were responsible for customer
relationships via social media.
6
What this means for business is that current customers, former customers, and
potential custoners are gathered into the top social networks - Facebook, 1witter,
LinkedIn, Google Plus, and Foursquare - and they are building extended international
networks and talking loudly about their brand experiences, sharing solutions and
disappointments, demanding customer service and satisfaction, and manipulating
the brand narrative away from the company caretakers.
What about traditional
CRM practices?
Customer relationship management is already a multi-billion dollar activity, whose
soFtware narket in North Anerica alone counts For approxinately So billion per
year. It is impossible to separate out the total number of jobs in CRM, since customer
relationships are handled at so many different levels, though anecdotally we see that
the practice is mainstreamed throughout businesses around the world.
But...is it working?
z . Users say they're nore likely to buy iF a business answers their question on 1witter, 1echcrunch.con,
May :j, :o, http://techcrunch.com/2011/05/29/users-say-theyre-more-likely-to-buy-if-a-businessanswers-
their-question-on-twitter/
. 1he :oo Inc. oo Update: Most Blog, Friend And 1weet But Sone Industries Still Shun Social Media,
UMass Dartnouth Center For Marketing Research, http://www.umassd.edu/cmr/studiesandresearch/
industriesstillshunsocialmedia/
6 . Capgenini Survey Reveals the Rising Inportance oF Social Media to Custoner Care, CapGenini
press release, Iuly :, :o, http://www.us.capgemini.com/news-events/press-releases/capgemini-survey-
reveals-the-risingimportance-of-social-media-t/
One telling stat that junped out courtesy oF ZDNet was about the sheer anount
oF Failure conpanies have had in the way oF traditional CRM
)
. 1he Following
organizations conducted studies with major firms regarding the failure rate of
projects undertaken for CRM:
- :oo Gartner Group: o% Failure rate
- :oo: Butler Group: )o%
- :oo: Selling Power, CSO Forun: 6j.%
- :oo AMR Research: 8%
- :oo6 AMR Research: %
- :oo) AMR Research: :j%
- :oo) Fcononist Intelligence Unit: 6%
- :ooj Forrester Research: z)%
For such a nainstrean part oF nodern narketing, it seens that a surprising najority
oF people Find traditional CRM to be ineFFective in the new digital landscape. And
now, with the advent of social media giving the customer an infinitely wider range
of technologies with which to engage firms, things are likely about to get even
more challenging.
Does the diFFiculty oF a challenge nean that businesses can sinply throw up their
hands and walk away? It depends on what kinds oF results a business is looking
to achieve through its custoner relationship nanagenent. Mediocrity? Industry
standard? Fxcellence?
What should companies do
about social crm today?
Businesses once had the luxury oF broadcasting Finely-craFted nessages out to passive
markets but now face much more difficult goals such as attention, engagement, and
authenticity, all based on peer relationships nore than :oth century public relations.
Competitors are moving aggressively into this new social landscape, building brand
capital and revealing pathways towards greater efficiency through effective social
engagenent & analytics.
Since time is of the essence, what is the current conventional wisdom conventional
wisdom about how organizations can capitalize on social media and customer
relationship nanagenent?
) . CRM Failure rates: :oo-:ooj, ZDNet, August , :ooj, http://www.zdnet.com/blog/projectfailures/
crmfailure-rates-2001-2009/4967
- Get involved. Investigate social nedia directly through participation. Start using
Facebook, 1witter, LinkedIn, and Google Plus. 1alk to your custoners about their
social nedia experiences & expectations.
- Develop internal guidelines For engaging with social nedia platForns in ways that
are consistent with strategic objectives, legal constraints, and brand development,
yet allow for authenticity and direct engagement.
- Contribute useful content to your networks to increase engagement, sharing, and
brand sentinent. Don't just push out ads. Create social nedia canpaigns around
events, milestones, contests, and user content.
- Design online content For nobile consunption. Use location data & platForns like
Foursquare to reveal nore inFornation about consuner habits and to drive traFFic
to brick-and-mortar destinations.
- Investigate the use of analytics tools for active listening, profiling, sentiment
analysis, inFluencer identiFication, and netrics oF click-thruJconversionJpurchase.
- If budgets allow, investigate social enterprise platforms. The same workflows
that have made social media so powerful are being brought into organizations to
enable greater eFFiciency oF internal connunication & collaboration. Many oF these
integrate into existing FRP systens.
IF THAT IS THE PRESENT, What
is the future of SOCIAL CRM
out to 2022?
Nobody knows, but at Conpetitive Futures, we intend to Find out. 1his is why
we are launching a private, proprietary multi-client research project on the
future of social CRM for businesses around the world.
Your organization can be part of a select group that will learn about scenarios
for the future of this inevitable change in practice and work with peers to
discover the competitive advantage of tomorrow.
Log onto: http:JJwww.conpetitiveFutures.conJprojectsJsocialCRM:o:: to
download a project prospectus, or call us directly at 8)).z.66.