Social Media Driving CRM Transformationdocs.media.bitpipe.com/io_10x/io_106377/item_581935... · Radian6, a social monitoring tool recently acquired by Salesforce.com, a beta version

Social Media Driving CRM Transformation

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Measuring the ROI of social CRM no easy task

Social monitoring tools give GNC marketing muscle

E-commerce, social media driving CRM, experts say

As e-commerce continues to grow, so does the gap between companies that are developing and implementing mobile and social CRM strategies – and those that aren’t. This E-Guide examines the “soft” and hard returns of social CRM, and how e-commerce and social media are driving the shift towards integrated CRM systems. Learn about how companies are targeting customers and leveraging new marketing tactics to win customer loyalty.

Measuring the ROI of social CRM no easy task By Sue Hildreth, Contributor As more enterprises wade into social channels like Facebook, YouTube, Twitter and the like, their executives must ask: “Is this worth it -- not just the time and money but the risk of failure?” After all, there are plenty of anecdotes of companies heading onto Facebook or Twitter only to find themselves ambushed by angry customers or embarrassed by an unwary employee's poor answer to a customer question. So the question of value is a real one for any business project. But in social media, like many new areas, ROI alone may not tell the value of the effort. So how can the value of an investment in social CRM be measured? A Forrester report in May 2009, The ROI of Online Customer Service Communities, noted that value or benefits to the business from the customer service approach to social CRM could be gauged by such things as the reduction in call volume or email volume, increase in productivity per agent, increase in an average customer’s lifetime value, lead conversion rates, and an increase in product idea generation. Ray Wang, formerly with Forrester and today a well-known social media analyst for the Altimeter Group, believes businesses need to judge social channels by usage as well as other types of outcomes. For instance, businesses might compare customer retention rates over the course of a



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year between the customers who were active in an online forum or had gotten customer service through Twitter vs. customers who had no activity in the company's social channels. If the customer satisfaction or retention rates are higher in the group that uses the social channels, one could assume that having a social media initiative is returning tangible value to the company. "My approach has been to use usage plus outcomes to measure, because we know there is a deferred benefit with social CRM," Wang said. "You can measure your social channels on a weekly basis and do quarterly reports on how we improved customer satisfaction or how we got a reduction in churn or here's indications of up-selling." The value of one complaint viewed by 1,000 prospects iRobot, a company in Bedford, Mass., which develops robotic devices for the home consumer and government market, measures the success of its online CRM efforts by the fact that 97% of customers using iRobot’s online support are able to solve their own problems. There has also been a 30% reduction in phone calls. To measure the success of social channel projects such as monitoring and engaging customers on Twitter, the customer service team is looking at things like the potential dollar impact of a single negative -- or positive -- customer comment. Maryellen Abreu, iRobot’s director of global technical support, notes that a typical home consumer spends around $200 with the company. So if that one person complains on Twitter or Facebook, and 1,000 prospective buyers view it, there could be a $200,000 theoretical loss involved – if one assumes that 100% of those prospects would actually have bought a Roomba. The key is figuring out what percentage of the viewers do, in fact, turn into customers. “Our customer base is an educated one, and they often do searches online before they buy,” she explained. “So those thousand hits on a negative posting could all be potential customers.” Abreu also tracks the percentage of angry complaints from all channels, including Twitter, and which ones are resolved positively.



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“The percentage of complaints that can be turned to a positive response is in the high nineties if we’re able to reach out to them,” she said. Abreu uses Google Alerts to keep tabs on what’s being said about the products, and RightNow Technologies’ Cloud Monitor to quantify the types of posts, both negative and positive. That enables her not only to have a measure of customer satisfaction and information on the types of problems commented on but to start putting dollar figures on the negative and positive comments. At Jupiter Networks, a project to get customers certified on its JUNOS software was conducted over the company's J-Net Community, which has online discussion forums, chat, member rankings based on their activity on the network, and video and blog postings. Last year, the company began a campaign on the J-Net community as well as on Twitter and Facebook urging people to get certified, according to Todd Shimizu, director of online communities at the Sunnyvale, Calif.-based networking company. Jupiter launched the program in July of 2009. Certifications increased from about 150 per week to more than 1,000 per week by the end of August 2009 -- an increase of 560%. However, Jacob Morgan, a consultant at Chess Media Group and author of the book Twittfaced, notes that while ROI is important, it isn’t always the best measure of a social media effort’s contribution to the company’s bottom line, especially in the short term, when start-up costs must be factored in. Morgan suggests using metrics that indicate return to the company, but he advises against looking for short-term ROI on a project that is, in reality, a long-term effort. For instance, if customer satisfaction ratings began to increase among those who were members of a company's online community, a business might consider that an indication of value returned. “Last year, we were pretty hell-bent on this notion of ROI and we wanted to focus solely on ROI,” Morgan said. “But over time, as we spoke to more and more companies in this space, we came to the conclusion that if they’re not



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getting a specific dollar amount back from a project, but they are [meeting] a specific business need or objective, then that is just as important." Social metrics: A mixed bag Allen Bonde, managing director at Evoke CRM Partners in Franklin, Mass., suggests using multiple types of metrics to gauge the value of any online social CRM effort. “The metrics I’d use are those used in general in the Internet world -- usage metrics, signing people up for premium content, and then blending those with more outcomes-based metrics such as customer satisfaction, or the percentage of calls handled in the online community vs. the call center,” Bonde said. Some of the measures that Morgan and others have used to gauge a social channel’s contribution to the enterprise include metrics in customer service, marketing, sales, and product development: Customer service:

• Increase in customer retention • Customer satisfaction ratings improved • Service calls deflected from call center to online forum • Reduction in overall customer service costs

Marketing:

• Product- or company-related postings • Positive product comments, reviews • Visitors following link from social channel to online store’s URL • Visitors referred to website from online friend

Sales:

• More sales leads with expressed interest or need • Increase in referrals



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• Reduce cost per lead acquired • Key social influencers identified and engaged (invited to write a blog,

for instance, or otherwise participate in a company’s online community)

• Overall increase in online sales and/or online customers • High response rate to coupon or promotion offered on Facebook or

other social channel • Increased purchasing from social channel visitors vs. regular online

visitors Product development:

• Product defects caught • New ideas for future products or services generated via contests or

“crowd sourcing,” in which online groups brainstorm and then vote on best ideas

• Responses to online surveys to vote on new product features or upgrades

Other types of return on investment aren’t so easily calculated, such as the public relations value of publicly handling a corporate scandal with skill and grace in front of 2 million online spectators. “Many things are financial, but many are not," Bonde said. "When people are playing catch-up in a market like this, the ROI takes a back seat to urgency, time to market."

Social monitoring tools give GNC marketing muscle By Rosemary Cafasso, Associate News and Site Editor Company: General Nutrition Centers Inc., a global retailer of nutritional products, such as vitamins, sports nutrition supplements, herbs and energy products, with 4,800 retail locations in the U.S.



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Social tools: Radian6, a social monitoring tool recently acquired by Salesforce.com, a beta version of Crowdbooster, a social media dashboard, and “all the free tools,’’ including Twitter and social media analytics tools. Social CRM goal: Extend customer service and engagement on social channels, serve as online “trusted adviser’’ and create “a net increase in the discussions about GNC,’’ according to Chris James, director of social media at GNC. GNC’s social strategy: James works with a few part-time community managers to monitor what is being said about the brand on a variety of social channels, from Facebook and Twitter to niche communities of bodybuilders. The community managers observe conversations in real time with Radian6 social monitoring tools. The Radian6 dashboard can be configured to present social data in various forms including verbatim comments and timelines, comment totals per channel and bar charts that illustrate activity. The software can also be used to identify key influencers -- the people that other people listen to -- based on followers and comments. But, “it is only as good as the eyeballs on it and the brain behind it,’’ James said. The community managers determine what comments warrant a response, which are best ignored and which ones get classified as potential problems that need a direct response from customer service. James, meanwhile, is handling what he calls the “50,000-foot view.’’ James can spot trends and tweak marketing strategies based on Radian6 reports. For example, James said he can connect a revenue change with a particular product based on activity around an online event, such as issuing a coupon. The company recently was able to quickly issue a coupon on coconut water because it had instantly seen such a huge spike in demand for the product.



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"We were really getting hit on margin on that,’’ James said. GNC is also using social monitoring tools to track online activity around the current cross fit trend. Cross fit is an intensive exercise and training program that involves calisthenics and various weightlifting techniques. Pariticipants work toward personal goals and compete against members of a group of peers. By listening to cross fit-related conversations, GNC plans to better target products to this community. “We are identifying the scope of this; the major players and are finding out where they are hanging out and what they consider [as nutritional] supplementation,’’ James said. “It’s a fundamental shift in how we are finding new customers and a lot faster than commissioning an expensive study.’’ James creates high-level summary reports that he forwards to GNC’s CEO to provide a big-picture take on market activity and opportunity. By looking at trends on different online channels, James can see where different customer segments are congregating. “It shows me where we are really kicking butt,’’ he said. “It has allowed me, for instance, to discover that Twitter was as much of an opportunity for us as Facebook.’’ Through social media monitoring, James has been able to better target engagements with customers by seeing who they are on each forum. For example, although he does not yet know why, James knows that the bulk of most GNC customers on Facebook are 18- to 25-year-old males, while more female and Latino GNC customers are using Twitter. From monitoring, James and the community managers have learned to step in and comment when someone is asking a general question, but to stay out of exchanges between friends. “If they are asking a friend, they want to hear from the friend, not us.’’



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E-commerce, social media driving CRM, experts say By Albert McKeon Companies should think twice before proceeding with the same old website. They should also pause before dismissing the value of mobile applications and social CRM. Those words of advice come from two e-commerce experts who predict that technologically empowered consumers will either support or ignore a business based on initial judgments of a company’s Web, mobile and social approaches. “The website experience is a major contributor to overall customer experience. If you do poorly at that, you don’t get a second shot,” said Gene Alvarez, a research vice president and e-commerce analyst at the Stamford, Conn., research firm Gartner Inc. And first impressions will matter as time passes and the technology flourishes, Alvarez said. Gartner predicts that by 2015, companies will generate 50% of their sales through mobile applications and from social networking references. Choice driving e-commerce, CRM Until recently, when commerce still flowed primarily in the brick-and-mortar world, a customer had only about two stores to choose from, Alvarez said. If a sales transaction went sour at one or even both of those stores, a customer had little recourse and at worst would tell only a few friends at a weekend barbecue about the bad experience, he said. In a day the story would be forgotten. Now, Alvarez said, with the Web and mobile applications, a customer not only has many more choices, but can also drive discussion about a business and its products through social media.



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“This is why commerce is playing a huge role in CRM,” Alvarez said. “With incredible customer choice, they can easily switch.” Businesses recognize that e-commerce drives CRM and vice versa, Alvarez said. In a recent Gartner survey of CEO concerns, CRM topped the list, with e-commerce placing second, he said. Executives often look to retail for clues on how to balance e-commerce and CRM, he added, citing how retailers such as Amazon set the bar high on the customer experience: from ease of shopping to shipping to tracking to delivery to returns. “Executives are understanding it,” Alvarez said. “You have the factor of choice with the Web. Then you have the feedback model, the social component where if you get it wrong, you’re hung publicly.” Understanding and doing are two different things, of course. That means businesses need to determine how they will approach e-commerce and CRM, according to Brian Walker, a vice president and analyst of e-commerce and multichannel technology at Forrester Research Inc. in Cambridge, Mass. “There are many systems challenges here. It will be difficult,” Walker said of businesses’ websites and other digital touchpoints. Companies continue to have a silo approach to customer experience management (CEM), making their e-commerce models unsustainable, Walker observed in a Forrester study on the subject last year. “To create a campaign, they may have to go to one system for campaign tracking, another for content creation, another for commerce, another to test the campaign and yet another to measure success and determine the next best action,” he wrote. Dealing with Web, mobile and social channels mean companies must make supplemental or wholesale changes when upgrading CRM systems to accept and process the outpouring of customer interactions, Walker said in a



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telephone interview. The increased use of these channels has even led to the thought that CRM could get sidelined, he added. Reviewing merge of social CRM, e-commerce Gartner clients that have sites which look more like brochures now want to make their Web presence transactional, Alvarez said. Nothing discourages a customer more than visiting a website that looks outdated and offers scant opportunity for interaction, he added. “You go there and say, ‘Ooh,’ ” he said. “Would you want to place your credit card information there? Would I want to do business with them?” But many other companies are improving their websites, Alvarez said. Where they still struggle, though, is social media, he said. They know they should use it, but they can’t figure out how, he said. “Companies will ask, ‘What if they say bad things?’ But that means you have to listen to the customer and win them back. If you don’t, guess what? They’ll tell their friends. They’ll move on. It’s too easy now.” Businesses also stumble over what customer personalization means, Walker said. It’s not a well-defined term. “Is it recommendations? Is it adapting to the customer who wants to be communicated with? Is it responding to something they just brought in from another channel?” Walker said. Companies can’t lose, though, when they give the customer control, he added. All customers like improved communication and, most of all, deals on products and services, he said. “But there will be mistakes made, typically when a company is not thinking of the customer,” Walker said.



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Social Media Driving CRM Transformationdocs.media.bitpipe.com/io_10x/io_106377/item_581935... · Radian6, a social monitoring tool recently acquired by Salesforce.com, a beta version