Recently, I joined a new Google Group called Social CRM Pioneers created by two Altimeter partners Jeremiah Owyang and Ray Wang. There have been very interesting conversations about social CRM, what it is, what it can do, and the issues to be addressed in the area. Around the same time, these same individuals released an open report on 18 use cases of social CRM, a comprehensive analysis of how social CRM can be used in an enterprise environment (see figure below for the 18 uses). In less than a week, the report has been viewed over 15,000 times, showing the amount of interest in this topic. In this blog, I would like to offer a primer on social CRM (or sCRM for short) and discuss the opportunities and currently unresolved challenges associated with implementing sCRM in practice.

What is Social CRM?

Let’s start with what CRM or Customer Relationship Management is. CRM involves the management and enhancement of customer relationships with the help of a large quantity of data about individual customers and a set of tools to interpret and make use of such data. Putting a “social” hat on CRM, to me, it means to use information and communication/interaction in social media to enrich traditional CRM practices as described above. In other words, social CRM merges social media with traditional CRM, both to create a more 360-degree view of the customers and to interact with customers in a more proactive and engaging fashion.

What are the Benefits/Opportunities Presented by Social CRM?

Social CRM brings a slew of opportunities to enrich traditional CRM practices, as discussed in the 18 use cases report. I discuss only a few here:

1. A more complete view of your customers via what they say in social media. This is important because customers’ conversations with others in a naturalistic social media environment are more likely to reveal their true preference and opinions than self-reported data. Instead of forcing opinions out of consumers, consumers are volunteering all this information to companies who are willing to listen. This can be very helpful when it comes to offering support to customers, discovering new product opportunities, identifying brand advocates, etc.

2. Faster collection of information. Traditional feedback through the distribution channel is simply too slow in today’s environment, where consumers are fickle and their preferences are changing faster than ever. One advantage of social CRM is that it deals with real-time data. As a result, companies can gauge quickly how consumers are reacting to a marketing campaign, what they think of a newly announced product, etc. Using this year’s Oscar as an example, Jeff Bridges and Sandra Bullock could have predicted their own winning a week early if they had tallied up their online buzz in the social sphere like Nielsen did.

3. Faster support and response time to customers. Let’s face it, the Internet makes us an impatient generation. When we run into problems, we want them solved immediately. This is where social media can help a lot. It’s not uncommon to hear anecdotal evidence of consumers receiving laser-speed response from companies when they complain about problems in social media. My own experience with Delta Airlines is an example. When I twittered one day about some statement confusion, overnight I received an email from them addressing the issue. That is what I call a wonderful/well-managed customer experience.

4. Engaging Customers. Through better and faster understanding of customers and faster response time, social CRM can provide a more engaging experience to customers. As I discussed in another post about ING Direct’s social media practice, the company successfully uses a blog, Facebook fan page, and a Twitter account to engage a large number of frugal savers. As the Top 100 Brand Engagement Report shows, effective engagement with customers is correlated with financial measures, suggesting social media’s potential to affect companies’ bottom line.

What Are the Challenges?

As something still in development, there are plenty of challenges that can prevent effective social CRM implementation. Among them, I see the biggest obstacles as:

Scalability. As the 18 use cases report points out, 1:1 support is simply not doable for most B2C companies. How can a company enhance customer experience through social media but still remain scalable and cost-effective with its operations? This is definitely something that has to be addressed. Of course, there are automated tools to help streamline this process, but technical tools can only go so far. Eventually when it comes to facing individual customers, who do you listen to and talk to? Whose problems do you solve first? These will require smart prioritization and proper organizational structure to allow for agile response and operation.

Churning Data into Information. Data mining is not a simple science. Added to this the large quantity of real-time data available through social media, the challenges associated with mining social data for information becomes even greater. Scientists around the world are still working on efficient algorithms to make this happen, but the techniques are still nowhere near maturity yet. For those interested, a look at this INFORMS OR/MS Today article on social media analytics may offer some clues as to the challenges associated with (and potential solutions to) analyzing/mining one type of social media data — blogs.

ROI. This is something on everyone’s mind, isn’t it?  Earlier, I mentioned that brand engagement with consumers is correlated with financial performance. Note the words used — “is correlated with”, not “leads to”. In other words, the causal effect is less straightforward. How to measure return from social CRM efforts likely will depend on the goal of the deployment, and a single engagement measure is not going to be sufficient. Moreover, while Dell Outlet was able to pinpoint $3 million incremental revenue from its Twitter presence, for many companies, it won’t be straightforward to isolate the impact of social CRM from other strategies.

I hope you find this discussion helpful in getting you started on social CRM. If you want to dig deeper, I strongly recommend you to download and read the 18 social CRM use cases report, and join in the conversation at the Social CRM Pioneers Group.

New Year is a great time to look forward and to anticipate and prepare for what is to come.  So I thought I would use this blog to discuss a few important trends that I believe will impact the way we do business in the future.  This originated from a question asked of me on a fellowship application: “What do you think are the 3 most important trends affecting business, technology & communications?”  Below is my response.

1. Emergence of “Individual” Corporate Identity

As social media give companies an opportunity to step closer to their end customers, this new strategy also puts individual faces onto what used to be a collective corporate identity.  Two cases in point: Peter Cashmore for Mashable, Scott Monty for Ford, to name just a few.  While such corporate spokespersons have existed before, now they have a much more personal face that interact with consumers day in and day out. This new corporate “individual” identity can have important implications for corporate branding and even companies’ hiring practices.

2. Mobilization of communication via geo-enabled services and mobile devices

Foursquare, need I say more?  Undoubtedly this represents great business opportunities for many companies. But more than that, this finally arriving mobile market is going to create new consumer privacy concerns and will require new types of policy to regulate how consumers’ geographic information can be used and protected.  Coupled with the buzz on real-time search and interaction, business practice and public policy in this area can be complicated.

3. Real-time verbal and textual translation

Google recently added a real-time translation service that can be integrated into an online chat session or used via its new Google Wave service.  When the precision of this type of services improves, its impact on cross-cultural communication will be tremendous. With the help of the Internet and social media, individuals already collaborate in many areas such as R&D, open source applications, and cause advocacy.  Now only imagine magnifying this many times to a global scale.

In the spirit of this blog, I’d also like to refer my interested readers to the predictions made by a few other web and social media experts:

• Social media prediction for 2010 by Scott Monty (Ford social media expert)
• Trendspotting’s expert trend predictions in 140 characters
• Social marketing trends from reviewing 2009 by web strategist Jeremiah Owyang

What about you?  What do you expect to see in 2010? Whether you agree or disagree with all these predictions, I hope everyone has a happy and productive year!

Last week I blogged about a few research projects presented at the Wharton conference on user-generated content. In this second part of the conference summary series, I’d like to discuss one other interesting presentation that is not as directly related to user-generated content per se but I think can be of tremendous interest to online advertisers. Then to wrap up the series, I will list a few research questions raised by industry participants at the conference. This will probably be particularly interesting to researchers who are wondering what is on the practitioners’ mind. By the way, the conference has created a page with links to all the presentation slides.

http://www.flickr.com/photos/teofilo/ | CC BY 2.0

How to target ads to consumers without sacrificing their privacy?

The recent controversy surrounding Facebook’s privacy setting changes shows us that privacy issues are still very much on people’s mind these days, especially with a large amount of very personal data now available through online social networks. To advertisers, the increasing amount of social and personal information represents a great opportunity to offer very targeted ads to consumers.  But as we get closer to consumers’ personal domain of interests and friend networks, advertisers are also treading a very dangerous water of consumer privacy. This is why I find New York University Professor Foster Provost’s research to be particularly interesting, as it allows target advertising toward consumers while still protecting their privacy, or in the researchers’ term, “privacy-friendly” target advertising.

The basic idea is quite simple, although the actual implementation can become more complex and mathematical.  The underlying premise of the approach is that consumers who are more similar to each other are more likely to buy the same brands and share similar consumption habits. This is why social network information can be very powerful, because we are likely to buy the same things as our friends or at least have a good deal of influence on each other.  The problem with using such explicit social network information is the privacy issue. To circumvent this problem, Professor Provost’s approach uses anonymized browsing data instead.  It builds on two key sets of information: (1) a set of consumers who are considered brand actors; and (2) browsing data for these brand actors and other consumers whose brand affinity is not yet behaviorally demonstrated.

For the first set, one can use criterion such as having visited a brand’s website or fan page on Facebook to identify consumers who are brand actors. Notice that advertisers do not need to know who these consumers actually are in terms of names or demographics, but just that they are entities who have demonstrated certain desired behavior.  Then with this information, the brand proximity/affinity of other consumers can be calculated by analyzing how closely the content (brand and non-brand related) visited by those consumers resemble that of the brand actors.  Potential consumers can then be ranked based on this similarity to identify the ones that have the closest brand proximity. Professor Provost’s research shows that consumers picked in such a fashion have a much higher concentration of potential brand actors than random picking and that these consumers are much more likely to be linked to known brand actors.  A paper from this research project is available from Professor Provost’s website.

To me, the beauty of this research is two-fold. First, because the only data needed are browsing logs without personally identifiable information attached, it allows advertisers to selectively target consumers without having to worry about privacy issues. Second, because the approach is defined in a sufficiently general fashion, it allows for much tweaking and customization. For instance, various brand proximity measures can be used (this research itself suggests five measures), and different measures can be combined to most accurately gauge brand affinity. Moreover, the criteria used to spot brand actors can be customized based on an advertiser’s needs (e.g., visit to awareness page vs. conversion page depending on the goal of the campaign).  Such flexibility makes the approach applicable to a wide variety of situations.

What do practitioners want to know?

The conference organized a few industry panels to talk about their own experiences and their unanswered questions. Out of these industry participants, Mr. Gary Spangler, E-Marketing Manager from Dupont, spoke the most systematically about a set of research questions that need to be addressed from a practitioner’s standpoint. Many of these questions were echoed by other industry participants.  I list them here for the benefit of academics who are in search of practically relevant research questions.

1. There are more and more ways to reach/touch consumers. Is there a way to analyze the value of each electronic touch (e.g., email, social network, etc.)?
2. When lead time is relatively long (e.g., 1 year or more in the case of B2B marketing), how does one measure the ROI of online marketing investment?  (We all know that ROI has always been an issue, but longer lead time apparently posts an even greater challenge.)
3. How can a company use information from web queries (similar to the browsing information used in Professor Provost’s research described above) to identify potential sales leads?
4. When potential leads abound and resources available to respond to those leads are limited, can we develop a lead scoring system so that a company can properly filter out more important vs. less important leads?
5. Different online marketing approaches use different types of content as input. For example, a company’s website and its social network presence most likely require different content.  How can one measure the value of each content type to different segments and different industries?
6. Demonstrate the ROI of social media efforts to help marketers argue the value of social media participation to upper-level managers.

In us academics’ constant quest for new knowledge, questions such as these are very useful in guiding our research effort toward being more relevant and applicable to practice.  Here I send out a call to practitioners out there to supply us with more of these and to tell us the question marks in your head.  Please feel free to leave your comment here.  As the overarching goal for my blog, I would like to make Ping! an intersecting spot for practitioners and academic researchers.

This is going to be my last blog before Christmas. So here’s happy holidays to all my readers. Wish everyone a warm, safe and love-filled holiday!