Saturday, October 12, 2019

“Social” vs “Traditional” CRM: The “new thing” or symptom of backasswards?

“Social” vs “Traditional” CRM: The “new thing” or symptom of backasswards?

A lot is being written recently about the emergence of “Social CRM.” How is this different from the CRM that went before?

One article defines it as follows:

Traditional CRM is a business strategy that materialised in a set of applications. The software enhances data management, automates sales and marketing processes, and helps to oversee customers’ behavior and communication histories. The core of this CRM model is expressed in the standardised performance that uses input data as a basis.
Social CRM is an innovative approach to fulfilling the strategy of business processes facilitation and cultivation of trustworthy relationships with existing and future customers. The uniqueness of this CRM consists in the modifying the content into a full-scale and meaningful conversation with a prospect that is handed out via social networks and digital channels.
So, the dynamic engagement with the leads and prospects, instead of uninvolved messages, is the striking difference of social CRM. (Article)

I was going to let the suspense build a little before giving my two cents, but I can’t. The above is too way off in its perspective to resist.

First- Traditional CRM materialized before most applications existed. In the  late ’90’s, Gerhard Raab wrote, “Customer Relationship Management: A Global Perspective,” in which he defined 6 stages of CRM which I would call “Traditional:”
1. Customer Orientation
2. Product Quality
3. Customer Satisfaction
4. Customer Retention
5. Customer Value
6. Company success

which, as I teach, formed the core foundation of today’s CRM. 

Raab included technology in his Three Pillars, but it is one of 3:
1. Personnel
2 .Technology
3. Organization

Jeff Bezos, who founded Amazon in 1994, when interviewed by CNBC in 1999, used the words “internet schminternet” and insisted that the foundation of his company was not its technology, but its prioritizing the customer. 

An article written in 2017 by Michael Haenlein and published by the Kelley School of Business was entitled, “How to date your clients in the 21st century: Challenges in managing customer relationships in today’s world” In the article, the author argues that firms that are not taking the social nature of CRM into account are managing like 30 years ago (’80s and ’90s) and are relying on “outdated rules.” He disparages the “linear process consisting of acquisition, development and retention” and suggests that CRM be moved toward concepts like social influence, opinion leadership and word-of-mouth. And here’s the worst part: He calls the mantra, “the customer is always right “nonsenical”. If the customer isn’t always right, who is?

So here’s my point and the WTF moment that inspired this writing: What these author’s call “Social CRM”- word of mouth, social influence, companies paying attention to the words and actions of customers- predates even the origins of the modern CRM practice as written by Raab and others; it goes back as far as there were marketplaces, to the Agora of Greece, or for one still in existence and more familiar the Grand Bazaar of Istanbul. As I remember the retail business in the 60’s and 70’s, we had no technology to rely on, so what did we do? We talked to the customers! 

Once TV could influence customers, that was the medium of choice. But the intelligence gained from the advertising itself was nil, so what did companies do? Talked to customers!

Fast forward to the 80’s and 90’s where the new new thing were infomercials. Broadcasters talked to customers directly, and the customers called in to talk back. Social CRM? Of course!

It is true that the social media technology has altered the landscape of customer relationships. With it, the ability to measure Customer Social Value, Customer Lifetime Social Value, and Customer Equity presents an opportunity for greater insight into the customer’s mind and helps us to understand and predict their actions.

But, to me, that capability does not present a new aspect of CRM. It clearly tells us that we went astray for the last (?) years where companies sat in their offices and relied on IT to tell them what the customer was thinking instead of getting the answer for themselves.

Most authors that I have read in pursuing the subject of CRM as a professor, as well as competitive strategy, warn that, if a company allows IT to dominate the CRM process and be strictly or chiefly responsible for the results, it is wrongfooted and making a (costly) mistake.

So, if this Social CRM “revolution” can accomplish anything useful, it will be to get IT off the head of the table and put it in its rightful place, as data support to confirm, on a statistical basis, what we learned from the customer in the FIRST place.

Do you want to know why I think the customer is always right? Because the customer is the CEO, and the BOSS is always right..

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