Social networks and customer relationship management systems integration

Evolution of Business in the Information Age

Information Age: Power, Peril, and Promise of Social Network Integration with Customer Relationship Management Systems

Of the many areas where technology is significantly changing the value chains of a business is in the arena of customer relationships, marketing and the rapidly emerging area of social media. The triad of these factors is combining to create disruptive innovations that are in turn redefining customer relationships by bringing a much greater level of accuracy and clarity to expectations and experiences (Palmer, 196). The intent of this analysis is to evaluate the power, peril and promise of these technologies as they all revolve around customer relationships and trust, which is the new currency of business (Greenberg, 410). The power of combining social networks with Customer Relationship Management (CRM) and marketing systems and strategies is evident in how quickly and effectively Facebook Fan pages are generating revenues for new product introductions (Shih, 12). The power of having immediacy of data from social networks to populate CRM systems and drive marketing strategies at levels of accuracy and performance never before seen before as the entire process is digital also has potential for determining Return on Investment (ROI) to a level never seen before. There are also the perils of having so much data on customers that their privacy is intruded upon online, which is an ethical boundary marketers are continually running into and in some cases, crossing over (Cheng, 824). That is the peril of such insight into a consumers' behavior online through social networks, from their "likes" and friends on Facebook to the subject matter patterns in their Tweets on Twitter or the potentially perilous locational data in Foursquare and other location-based services. With oversharing being so prevalent on social networks there is the potential for marketers to know more about consumers than their acquaintances or friends as analytics can provide insights into motivations and interests (Bernoff, Li, 36 -- 42). Balancing the power, peril and promise of the integration of social networks, CRM and marketing is the focus of this paper.

Redefining the Customer Relationship with Real-Time Social Media Data

The power, peril and promise of using social media data in the context of selling, service and customer loyalty strategies is exemplified in how precise marketers today can be with their personalization of marketing to specific audiences of prospects and customers (Ku, 1085). The power of being able to target customers with such precision opens up ethical issues, which will be discussed later in this paper (Cheng, 824).

The contextual definition of customer relationships is drastically changing based on the availability of a massive amount of personal data being mined from social networks, and in the case of Facebook, sold by them as part of their advertising strategies (Beck, 38). There is great power in having this level of consumer data from social networks as for the first time, marketers who have invested millions in CRM systems can for the first time approach the ultimate goal they had in purchasing them, which is gaining a true 360-degree view of their customers (Dyche, et.al.). Dyche continues with her description of CRM as a technology-based platform that enables the definition and differentiation of core business processes that are aimed at attracting, selling and serving customers so they become loyal and increase in lifetime value over time (4). This mindset of customers being the catalyst of long-term value vs. being only the source of the next transaction has been accentuated and accelerated due to social networks. Using the Dyche definition it is apparent how powerful the role of CRM is as a catalyst of trust and the globalization of relationships, not just the attainment of a specific run rate of sales or the meeting of a quota (Sherwin, 72, 73).

The real power of integrating social networks, CRM and marketing together is in bringing the insights and requirements of the customer right into the value chain and making their unmet needs, requirements and preferences known (Chakravorti, 299). Many companies are quickly integrating analytics into the frameworks that are based on CRM systems, social networks and marketing systems integration. These analytics provide invaluable insights into trending and analysis of customer preferences and the direction of unmet needs over time. All of this data is invaluable for supporting new product development, redefining the value chains of an entire business to be more customer centric, and optimizing pricing over time. All of these factors are the basis of the greatest area of potential in integrating social networks, CRM, and marketing systems, which is social media and customer analytics. The competitive value of having a strong analytics application platform that can integrate to social media and CRM systems can be seen in the entertainment and casino industries for example, where Harrah's uses these systems to periodically find their most profitable customers and build sales promotions specifically to their needs (Doyle, 216, 217). Analytics have also successfully been used for planning new product introductions so that their execution is successfully synchronized across multiple selling and services channels at the same time (Ernst, Hoyer, Krafft, Krieger, 290). The development of integrated marketing communications (IMC) strategies at the companies who excel in this area of marketing strategy are increasingly be based on social media, CRM, and marketing system integration and process optimization. The use of analytics to synchronize all three systems in the development of an effective IMC strategy is a best practice that Nike, Walt Disney and others have been able to pursue because of the power of social media's insights delivered (Ling-yee, 139). Forward-thinking companies are using analytics to unify their strategies across social media platforms and CRM systems to create IMC strategies that are highly relevant to target audiences of prospects and customers, and also very measurable as the entire strategy is digital in scope -- implemented online (Bernoff, Li, 41).

Another area of significant promise in the integration of social network data to CRM and marketing systems is the advantages this delivers to streamlining customer processes that are heavily reliant on insights and experience to be made as accurate and efficient as possible (Lambert, 4). Data on individual customers from social networks can greatly streamline even the most complex selling or service process, as unnecessary steps in lead generation, product demonstrations, product samples or coupons and special deals can also be alleviated, increasing overall profess efficiency (Lambert, 4). Further, the use of social networking data on customers can also be used for designing more effective customer service processes as well (Babu, Kumar, 94). An example of this would be using data from social networks on a given customer to understand their preferences for how they learn about new products, product fixes and their relative level of satisfaction with previous experiences with all companies they interact with online. Having this depth of insight into customer preferences for how they learn about products, services and support shows promise for significantly increasing the effectiveness of service and support strategy definition and execution (Babu, Kumar, 97, 98). Mining social network data promises to provide significant insights into which electronic means of communication will also work best for communicating with a given audience of customers as well (Khurana, Chaudhary, 22, 23). These insights have significant promise in redefining each phase of how companies attract, sell, and serve prospects and customers. The real-time integration of social networking data into CRM has been labeled Social CRM by industry analysts and pundits (McKay, 15). The next section of this analysis explores how the traditional concepts of CRM systems are being redefined at the system and process level by the integration of social networking data. A subsequent section discusses how social networking data is used within the context of marketing systems and strategies today. Social networks are beginning to show the potential to re-order the accuracy, profitability and performance of forecasts and order fulfillment over the long-term as customers' preferences and needs are more well-understood and acted upon immediately rather than either not seen at all or ignored for lack of a process to capture and act on them (an, 157).

Creating Disruptive Innovation by Integrating Social Networking Data into CRM Systems

Today companies are not interested in just holding onto the status quo of results that their CRM systems and strategies are delivering, nearly every company is seeking a distributive innovation that can completely redefine the depth and value of their relationships with customers. In short, every company is looking at how best to create a competitive advantage in holding onto their existing customer base and gaining new prospects over time. The integration of social media data from social networks into CRM systems is today transforming the transaction-based mindset in many companies to a more trust-based one, leading to significantly greater profitability and sales as a result (Babu, Kumar, 93, 94).

One of the most promising technologies to emerge from the integration of social networking data and CRM systems is the development of Software-as-a-Service (SaaS) platforms (Lin, 70, 71). Industry analyst predict that nearly 75% of the CRM market will be SaaS-based by 2013 (Sims, 12). The major benefits to using a SaaS platform for integrating social networking, CRM and marketing systems are the significantly lower costs of operation, the pay-as-you-go approach to leasing only the application areas used, and the flexibility of scaling the computing workload up or down based on the unique requirements of a given company's strategy. SaaS has become the platform of choice for managing social networks, as Facebook, Twitter, Friendfeed, millions of blogs hosted on WordPress, and Foursquare are all hosted on the Amazon Web Services (AWS) platform which is the most popular SaaS-based computing platform in use today (Lin, 73). The SaaS platform has rapidly emerged as a dominant platform for CRM systems as Salesforce.com today has over 60,000 implementations in place, each one numbering over 100 users or more (McKay, 15).

With the emergence of SaaS as a dominant platform for hosting social network applications, CRM systems and marketing applications, there continues to be a corresponding growth in the depth, breadth and complexity of integration across these applications (Shih, 12). The dominance of the Facebook Application Programmer Interface (API) is evidence of just how pervasive this integration strategy of using SaaS as the galvanizing point of integration of social networking data, CRM, and marketing systems (Langlois, Elmer, McKelvey, Devereaux, 415). The power of these integrations is seen in the proliferation of applications that are launched on Facebook on a nearly daily basis, the business model of Facebook selling their customer data for advertising, and the eventuality of Facebook becoming a CRM system (Shih, 12). What's emerging as a powerful platform for social commerce that is going to redefine what e-commerce is for the foreseeable future (Bernoff, Li, 36). This shift in commerce online is going to also redistribute the power within online communities and the role of online retailers over time. There is also the power of a very popular and pervasive API that acts as the unifying integration point across literally thousands of applications over the Web at any given time (Langlois, Elmer, McKelvey, Devereaux, 434). The power of this to redefine CRM is discussed in the following section. It is apparent however from evaluating how pervasive the Facebook API is being adopted that a network effect is occurring within just the e-commerce areas of social networks today, sometimes called social commerce by Constellation Research, Gartner Group and others (McKay, 12). The creation of the long-awaited private trading exchanges which have been discussed for decades by industry analysts including QAMR Research, Gartner, Forrester and many others could eventually happen not due to specialized transaction workflows as many believed but due to the ubiquity of APIs from social networks creating entirely new trading networks (Langlois, Elmer, McKelvey, Devereaux, 420). The power of these networks would eventually rival and in some industries replace traditional e-commerce over time.

The perils of a pervasive use of APIs and the creation of social commerce networks is that once the identity of a consumer is compromised, the entire network of sellers and any hackers who have broken into the systems have that data (Even, Shankaranarayanan, Berger, 152). The costs of security for these social commerce systems is going to be significant and continually grow over time as the complexity and integration options of APIs for social networks continually improve and gain greater flexibility and agility to respond to company's needs over time. The perils of security only at the browser level of a social commerce platform is where many of the integrations of social networking, CRM and marketing systems are today due to the focus more on Web programming languages over server-based, enterprise-wide security for social networks (Even, Shankaranarayanan, Berger, 152). This will have to shift to be more focused on the needs of the social networks to create more resilient and hardened security layers in the areas of social commerce.

The promise of these systems however far outweigh the risks and the potential for very high levels of transaction velocity also outweigh their apparent costs as consumers shift to social networks as the preferred platform for buying (Bernoff, Li, 42). Not only are the APIs from Facebook and other social networks combining more relationship data with transaction support, they are also supporting catalog management and pricing variables with increasing regularity over time (Langlois, Elmer, McKelvey, Devereaux, 431). What is emerging as the promise of these systems is the ability to have a complete distributed order management system that unifies the traditional CRM structured data from legacy customer systems, insights from pricing and transactions from marketing systems, and the development of real-time personalization of the shopping experience. Social network data integration with CRM systems to support relationship-based selling could eventually become the next-generation Enterprise Resource Planning (ERP) system by quickly interpreting customer demand and reacting to it with perfect order performance over time (Columbus, 37). This in effect will completely redefine the value chain of a business. The ability to gain insights in real time from customers' and their orders while in a social network, interpret and act on the data using legacy CRM data and then use marketing systems for predictive analytics -- all taken together will re-order the value chain of any business (Chakravorti, 299). While the term disruptive innovation is often used to describe a new approach to doing business, this level of data integration across social networking, CRM, and marketing data is going to completely change what e-commerce is and where it is going as a selling and service strategy globally. This tight level of synchronization however will not occur there is a much stronger level of trust and focus on relationships instead of transactions in the businesses just now exploring these areas of modifying their value chains and business models as a result. The next section analyzes how the traditional definition of CRM is changing based on the integration of social networking-based data, which is often called Social CRM (McKay, 15).

Social CRM's Impact on Marketing: Fuel for Attracting, Selling and Serving Customers

As can be seen from Figure 1, Gartner predicts that CRM will increasingly become an integrated framework of data, process workflows, and applications including analytics to be used for defining effective strategies over time (Gartner, 2001). The impact of social networking on marketing systems and strategies is already a major disruptive force nearly every industry today. Of the many strategies marketing relies on for attracting, selling and serving clients, the most critical is lead generation and escalation. Many analyst and industry experts agree that social networks' greatest potential value is in providing a steady and highly qualified source of leads within companies. To date there has been limited success however with using social network data purely as a lead generation source (Shih, 12). Instead, social networks have become much more instrumental in creating a continual dialog with customers, listening to what their preferences, needs and wants are (Bernoff, Li, 37). The aspect of marketing has often been forgotten as companies attempt to create a science out of marketing when it is in fact the art of creating relationships with customers and earning their trust (Babu, Kumar, 98).

Social networking data integrated to marketing strategies is bringing a much-needed focus on authenticity, transparency and trust instead of just looking at metrics of key performance indicators to predict prospect behavior. The peril of social networking data being used in marketing strategies is that it will be misused as a means to spam or push prospects into buying when they aren't really interested. In a very real sense the peril of social media in marketing strategies is that marketers use it to annoy and not help prospects make the best possible decision given their needs. Best practices in integrating social networking data into a marketing system is the ability to gain a clearer, more immediate and focused view of just what the customers' needs are and where their decisions are going in the future. This is far more important than using the integration of social networking data and marketing systems as a means to span customers over time. Unfortunately this area of marketing has become area of worst practices, where the power of these systems integrated together deliver a perilous result for companies who choose to engage in this activity. Lost customers and a lack of credibility result when companies rely on social networking data as the basis of their continual assault on customers' Facebook, Twitter and e-mail in-boxes. Despite these challenges however, the promise of more precisely aligning marketing messages and the unique value propositions of a company to their potential prospects on social networks shows strong Return on Investment (ROI) (Shih, 12). This has to be done with more of a focus on listening and being a trusted advisor, less on hyping and pushing products and services on just anyone who happens to opt in to a social networking site (Greenberg, 410).

Conclusion

The power, perils and promises of integrating social networking data into CRM and marketing systems has been explored in this analysis. There is more of a focus today than ever before on having CRM systems capable of delivering a 360-ddgree view of the customers, which has led to the creation of APIs within social networking platforms to support real-time data integration to CRM systems (Langlois, Elmer, McKelvey, Devereaux, 430). The disruptive economic innovations of SaaS, specifically in the areas of OPEX spending models, is acting as an accelerator of these systems being adopted and engrained into the daily operations of companies as well. There is an evolving set of best practices in this area that Gartner Group and others are tracking, which will eventually serve as the basis of defining social CRM as a strategic platform for defining customer-based selling and services strategies over the long-term.