3CSI Social Media Paper-1210

Social Media and its Role in Customer Relationship

Management

Social Media and Its Role in Customer Relationship Management 2010 3CSI, LLC. All Rights Reserved.

3CSI Digital CRM December 2010

White Paper Analysis

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Social media is a powerful and

relevant communication channel,

and its importance is only going to grow

in relevance and reach.

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Executive Summary

Social media is a wide space with a rich

history. In real terms, social media was born

in the early days of the Internet in the BBSs

(Bulletin Board Systems) and Usenets of the

80s and 90s. And while these communities

were small, mostly underground and

composed almost entirely of a few hundred

highly technical individuals, they began laying

the groundwork for how social media would

develop in the future.

Fast forward to today, and social media is

highly accessible and widely accepted by the

mainstream. And while the full potential of

social media is still being explored and under-

stood, its already influencing the everyday

lives of millions of individuals across the globe.

If theres one thing companies need to

understand, its that social media is a powerful

and relevant communication channel, and its

importance is only going to grow in relevance

and reach.

Whenever a new technology arises,

companies are usually faced with a dilemma.

They can either become early adopters

(with all the rewards and challenges that

entails), or they can remain complacent,

wait and see what they can learn from the

competition. Because of the speed with which

social media is evolving, this becomes a

difficult choice. The fact is companies cant

afford to sit back and do nothing, especially

when the competition is achieving visible

results in real-time.

So the question becomes, Where are my

customers participating, and how can I

engage them in a meaningful and rewarding

way? But before we answer that question,

we must first explore a few others:

What is social media?

How do consumers use social media?

What has been the corporate response to

social media?

How can the Customer Relationship

Management activities of companies be

better served by social media engagement?


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Social Media: The Where, What and Why

According to a recent industry study,

nearly 1.5 billion consumers will

participate in social media in 2010.

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Weve all heard the buzzwords, be they

the brands or the lingo. Facebook. Twitter.

YouTube. Blogosphere. Post. Share.

Comment. Reply. But what does it all mean?

Social media can best be thought of as a virtual

version of the school commons, the company

water cooler, a family reunion or a cozy coffee

shop that serves a million cups of information

every minute. Its where many of us take our

interests, experiences and, most importantly,

commentary. Its where we listen, learn and

contribute.

While its true that a social network like

Facebook counts its membership in the

hundreds of millions (some 550 million at last

check), these numbers offer but a glimpse of

the true impact of social media on many

aspects of everyday life.

From brand preferences to social engagement

decisions, social media networks influence

people not only as members of a community,

but also as consumers.

Originally, social media was merely a commu-

nication space a place to exchange simple,

turn-based text-only messages. But before

long, technology allowed for the exchange of

rich media, digital destinations and apps of all

colors and stripes. It soon followed that social

media participants began using these capabili-

ties in ways that began to compliment and,

in some cases, challenge corporate branding

efforts. At the same time, social media opened

up a whole new communication channel,

giving corporations and brands a unique and

immediate way to speak with their customers.

The significance of Social Medias economical

impact becomes apparent when one considers

a recent finding that an estimated 75% of

online consumers will visit a Blog or Social

Network site in 2010, or roughly 1.5 billion

individuals. Equally impressive is that this

number represents a 24% increase over

2009 totals. The amount of time spent on

social sites is also showing astonishing

year-over-year growth.

In summation, social media is a media channel

corporations cant afford to overlook.


The Digital Groundswell Vast and Complex

Social Media Facts:

The average age of a Social Network user: 37

96% of Gen Y are already on Social Networks

80% of online conversation

takes place in 20% of total sites

Consumer participation in social media

is enormous, and its important for companies

to understand that many of these individuals

are their actual customers. Once this is

understood, we can begin to ask simple

questions, like, Where and how do my

customers participate online?

As you can imagine, most social media

traffic takes place within the Social channels

or websites. These networks include the likes

of Facebook, Twitter, MySpace and Yahoo.

Certainly it is important for brands to have

both an awareness of and presence in these

spaces, but it is equally important to note that

these sites represent only the outer most layer

of the social media sphere. Below these are

Sharing, Media and Opinion sites. Then

there are a myriad of forums, blogs and

bulletins. And in all of these locations,

consumers are talking about the brands they

know and the products they use.

Some illustrations:

Each day, Twitter has 2.2 million

Tweets dealing specifically with brands

and products*

Roughly 35% of bloggers regularly post

about brands and products they do this

on 64,000,000+ blogs

The conversations, as they pertain to brands

and products, tend to fall into one of three

categories: inquiries, questions or comments.

Knowing how consumers conduct their

conversations can help businesses segment

and respond to specific actionable items

and individuals.

Social Media participation is spread across a diverse web of channel types.

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*Source: Twitter.com


Consumer Trends and Digital CRM

Nearly 75% of consumers would

rather resolve issues online versus

traditional methods.

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In order to understand the significance of the

online conversation, its also important to

understand the psyche and behaviors of the

average consumer.

People have always been influenced by the

opinions of their friends, family and acquain-

tances. In fact, over 75% of consumers trust

peer recommendations. And now that we live

in a world of global and instantaneous com-

munication, influence marketing has taken on

a whole new flavor. Word-of-mouth (or in this

case, word-of-keyboard) should be top-of-mind

for companies that want to make the most of

every online channel.

And what about how consumers relate their

experiences? On average, consumers share

negative experiences with 13 other people.

That means the average consumer is already

a significant influencer. Set these observations

into a social media setting where they can be

viewed by dozens or even hundreds of other

individuals (the average Facebook user alone

has 130 friends), and the ramifications upon

brand opinion are made strikingly clear.

Furthermore, 90% of dissatisfied customers

will never return or repurchase, but they

will continue to negatively shape brands and

influence potential customers.

So whats the good news? Among those same

dissatisfied customers, 95% will return as

customers when their issues are resolved

quickly and with satisfaction. Moreover,

many of these individuals will become brand

loyalists, once again sharing their experiences

and impressions via social media, only now it

will be in a positive light. And when these

issues are resolved in the public world of social

media, the actions and responsiveness of the

brand is observed by hundreds of community

members who are taking note.

Also of interest is the fact that as more and

more consumers participate online, their

expectations and desires are transformed to

have a built-in digital bias. One concrete

example of this is contact preference as it

relates to issue resolution. As it stands, nearly

75% of consumers would rather resolve

customer issues online versus traditional

methods. And of those who have interacted

with a brand representative within the social

media setting, almost 75% have reported a

more positive impression. Whether or not your

brand is being proactive when trying to satisfy

these preferences says a lot.


Corporate Participation, and Early Results

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Shockingly, 80% of

companies recently

surveyed dont have

social media measurements

or targets in place.

When examining the corporate response to

social media, two themes seem to emerge

time and again:

Corporate efforts are concentrated within

only top tier social media networks and sites

(Facebook and Twitter have the highest

participation, for example)

The majority of companies take an all too

passive approach to social media, focusing

more on monitoring and tracking rather than

active engagement

In addition, there is often times a lack of

coordination between functions. Nearly 70%

of social media profiles are created and

maintained by either marketing and/or public

relations groups. While these divisions may be

fluent in managing brand image and corporate

messaging, their efforts might benefit

significantly from the involvement of the

organizations customer

care experts.

Another significant

hurdle in creating an

effective SM campaign

is a lack of leadership

buy-in. This goes hand-

in-hand with the fact

that a surprisingly large

number of companies

(80%) dont have any targets or measurement

tools in place for their social media efforts.

But what about when companies do make

a concerted effort at participating in Digital

CRM? The early results are encouraging.

The experiences of a company that recently

established a strong proactive presence in

third party forums had results that may prove

typical. After six months of proactive engage-

ment in these channels by customer care

specialists, publicly posted feedback to those

engagement activities proved to be 90%

positive, while 5% was image neutral, and the

remaining 5% was negative. Of the negative

responses, the bulk were classified under the

category of perceived misrepresentation

some people found it too hard to believe that

representatives from the company were taking

the time to address customer issues within

third party forums. The company also found

that more than half of responses from the

original poster contained an overt expression

of appreciation. Customers were pleased that

the brand and/or company would put in the

time and effort to pro-

actively assist customers

through third party

channels. And on

average, each response

thread was viewed

1,150 times by other

forum users.


A 2010 multi-industry benchmarking study

recently released by COPC Inc. provides

valuable insight into current corporate

attitudes and actions within the social media

domain. The most significant finding is that

80% of the entities surveyed monitor social

media an increase of 30% over 2009

findings. Furthermore, 57% of the entities

recognize social media as an important aspect

to their business.

Other interesting aspects of the study include

how corporations are describing their social

media involvement. Only 33% define their

involvement as Engaging, which means that

more than half of the companies involved in

social media are missing out on one of the

most essential aspects on social media

activity namely, proactive engagement.

Also uncovered in the COPC Social Media

Benchmark study is a glimpse into how

companies are utilizing social media efforts to

meet corporate communications objectives.

Many companies (34%) are using social

media to gather product comments and

issues, but few entities (only 6%) recognize

social media as the new communication

channel that it is. In other words, there is an

indication that companies lean on social

media efforts as a passive monitoring tool

rather than as a proactive engagement tool.

Of those companies surveyed, 75% actively

use tools to monitor brand mentions and

comments, with 34% hiring third party firms to

conduct monitoring and reporting.

COPC Inc. Social Media Benchmarking Results

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How important is Social Media activity to various aspects of your business?

Do you monitor Social Media?

What is your definition of Social Media?

Most common objective is to gather product comments and issues. Brand Awareness is the

second most common.

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Social media has clearly demonstrated its

value as a medium of mass communication.

The fact that 60% of companies that are active

in social media place emphasis on pre-sales,

marketing and PR (as discovered in the COPC

Social Media Benchmarking Study) bears

witness to this fact. Underlying these activities

is the profound opportunity for businesses to

supplement, and in some cases eclipse, their

customer care centers.

In a separate privately funded survey of corpo-

rate involvement in social media, it was found

that only 13% of respondents specified using

social media as a customer service resource.

So why does a customer care approach make

sense for social media? First and foremost,

and as discussed earlier in this paper, consum-

ers are demanding it 75% of those asked

would rather resolve issues online. While the

term online could encompass a few different

channels, the most direct path is to go where

the customers are. That means social media.

Additionally, resolving product and brand

image issues in a social media environment

has the effect of multiplying efforts. Recurring

issues that affect dozens or hundreds of

customers can often be resolved through a

single engagement because of the fact that

social media is not a one-to-one communica-

tion. Instead of fielding dozens of calls, a well

placed agent response can serve a whole

community instead of a single individual.

Another advantage of utilizing social media as

a customer care resource is one of cost.

Social media engagement as customer care

offers an immediacy that carries with it

inherent efficiencies. A customer care agent

set loose in social media can react and respond

to dozens of customer and prospect posts in

the time it takes to make contact via traditional

customer care methods, such as by phone.

A Fortune 50 company recently expanded

social media activities, supplementing cus-

tomer care resources by proactively engaging

customers online in social sites and on forums

across the internet. They realized incredible

savings. On average, the company spends

$45 per contact fielding customer calls at a

traditional customer care center. By engaging

customers online in a preexisting forum, many

would be calls have been averted.

While social media engagement is a sensible

accompaniment to traditional customer

care approaches, it shouldnt be seen as a

replacement. In instances of escalation

and facilitation of third party involvement,

traditional customer care methods are still

essential. But companies should make every

effort to appreciate the value that social

media can add to their existing customer

care resources.

Making the Case for a Customer Care Approach

10

Only 13% of respondents specified

using social media as a

customer service resource.

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About 3CSI, LLC

3CSI is a global leader in providing result-

driven Digital CRM solutions, including

implementation of Social Media Management

(SMM) strategies and processes, monitoring

and proactive Social Network engagement.

The products and services offered by 3CSI

are comprehensive, agile and fully scalable,

and can help companies connect with their

customers in a unique and powerful way.

3CSI is already helping a number of

Fortune 100 companies navigate this new

communication channel by expanding their

social media efforts, improve customer care

activities and connect with their customers

in an entirely new way.

For more information, visit 3csi.com or email

3CSI at [email protected].

About COPC Inc.

Customer Operations Performance Center Inc.

(COPC Inc.) is the worlds leading independent

authority on service-chain operations manage-

ment, including performance improvement

for buyers and providers of customer service,

customer contact center and business process

outsourcing operations. Since 1996, COPC Inc.

has helped more than 1,200 organizations

in over 50 countries improve the customer

experience as well as other key performance

indicators such as sales and cost by using the

COPC Family of Standards, the industrys first

and most comprehensive set of performance

management operating models for customer

service operations. Today, COPC Inc. remains

the only performance-driven and industry-

governed global best practices model that

simultaneously increases both customer

satisfaction and profitability.

For further information, visit copc.com or

email at [email protected].

About this White Paper

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3CSI Social Media Paper-1210