Traditional CRM vs Social CRM: Expanded

Brent Leary, widely recognized expert on Social CRM, does a great job of summarizing the difference between Traditional CRM and Social CRM in the Inc. magazine Article below. I’ve added some of my additional thoughts.

Traditional CRM vs. Social CRM

By Brent Leary

Traditional customer relationship management’s strong suit has been improved operational effectiveness, easier access to data, and improved collaboration. Social media adds the dimension of connecting with potential customers.

Connecting with potential customers is one of the biggest challenges facing small businesses today. A recent study by Network Solutions and the University of Maryland shows that marketing/innovation is the single biggest competitive disadvantage confronting small business, after access to capital. In fact, converting marketing leads into buyers and finding efficient ways to promote and advertise, are two areas small businesses say they struggle the most with. This finding is supported by a recent Microsoft small business study, which found customer acquisition and retention to be the biggest challenges facing their small business partners.

To help overcome customer acquisition challenges, many small businesses are looking into customer relationship management (CRM) tools and strategies. In the past, many viewed CRM as being too complex and expensive to implement for the expected return on investment. But over the last couple of years, software-as-a-service (SaaS) offerings from the likes of Salesforce.com, NetSuite, and a host of others have allowed companies of all sizes to implement CRM products and services at a fraction of the cost, time and effort needed in the past.

Brian here. I would add the following to Brent’s statements:

The first being that many companies are now looking towards “Traditional CRM” solutions not only because they are interested in improving their customer acquisition efforts, but because they have realized that customer retention efforts are their best bet in an environment where there are fewer new and existing customers in the marketplace. This desire to improve customer retention is currently next to impossible because they don’t really even know who their customers are, and which ones would be the most beneficial to keep. CRM can help with that.

SaaS (Software as a Service) offerings have been steadily gaining traction over the past several years, but the argument that it saves cost, time, and effort has been a hotly debated topic. For some small businesses a SaaS solution certainly makes the most sense, but a good percentage of companies still choose an on-premise solution because of 1. Security/Privacy Concerns, 2. Ease of Integration with other applications 3. Lower long term TCO (Total Cost of Ownership).

Traditionally, CRM’s strong suit has been improved operational effectiveness, easier access to information, and improved interdepartmental collaboration. While these are critically important to the success of any business, the focal point of these areas are internal to the company. And while a more efficient company should have a positive impact on customer interaction and responsiveness, does it really help us to meaningfully connect with those potential customers empowered in a Web 2.0 world?

Social media adds this missing dimension to the traditional, operational areas of CRM. And according to a recent Nielsen Company study, two-thirds of the world’s Internet population visited a social networking site or blogging site — what they refer to as “member communities.” The integration of social media into CR strategy — called Social CRM — differs in focus from traditional customer relationship management in a few key ways.

Data-driven vs. content-driven

Businesses began investing in CRM applications in the ‘90s mainly to store contact data. Before contact management software was available, businesses had to store their valuable customer information in Rolodexes, spreadsheets, and even filing cabinets. It was important to have a central location to store the data that was also easily accessible to communicate effectively with contacts. And with multiple people “touching” the customer for various reasons, it quickly became important to be able to track activities, appointments, potential deals, notes, and other information. Consequently, traditional CRM grew out of this need to store, track, and report on critical information about customers and prospects.

Social CRM is growing out of a completely different need — the need to attract the attention of those using the Internet to find answers to business challenges they are trying to overcome. And nothing captivates the attention of searchers like relevant, compelling content. Having the right content, and enough of it, will help connect you with those needing your product or service. Creating content in formats that make it easy for your target audience to consume it increases the probability that you will move them to action — starting a conversation with you. Whether it be by developing a blog post, podcast, YouTube video, or Webinar, creating attractive content is a key pillar of social CRM strategy.

In addition to supporting and enabling marketing, lead generation, and customer acquisition efforts, Social Media and therefore Social CRM are also being leveraged by companies for customer service, brand monitoring, and customer retention efforts. The content production that Brent mentions is a great way of attracting eyeballs and filling the lead funnel, but companies are also integrating “listening” into their Social CRM strategy. Companies like Comcast have used Twitter to monitor negative comments about their brand and take a proactive approach at solving problems for disgruntled customers. Social Media and its integration with traditional CRM efforts have opened up new ways to turn an unhappy customer into a raving fan. Other companies like HelpStream and Lithium are pioneering new ground, using Social Technologies to build communities where customers and prospects interact with each other to solve problems and discuss ways to best leverage companies products and services.

Process-centric vs. conversation-centric

Traditional customer relationship management is heavily focused on implementing and automating processes. Companies looking to implement processes like lead and activity management would turn to CRM. Management would turn to CRM to standardize on sales processes to increase the accuracy of sales forecasts. And customer service requests could be tracked, routed, escalated, and resolved in a uniform fashion to ensure proper handling. Traditional CRM helped make it possible to ensure the proper activities and tasks would be performed by the appropriate people, in the correct sequences.

While there are processes involved in building a successful social CRM strategy, conversations are at the heart of it. Having meaningful conversations with those searching for the help you can provide is the turning point in transforming clicks into customers. The processes involved are aimed at making it easy for people to find us (through our content) and invite us into a conversation — on their terms. This may take the form of a comment left on a blog post, following your company on Twitter, or possibly embedding your PowerPoint presentation on their webpage. There are numerous ways to participate in meaningful conversations with people looking for help in solving challenges. Formalizing a strategy to increase the likelihood of engaging in these conversations is a tenant of social CRM.

Operationally-focused vs. people/community-focused

As mentioned above, managing customer information is a major concern to businesses of all sizes. It plays a key role in the ability of businesses to respond to customer requests, manage resources needed to close deals efficiently, and provide management with reports to keep track of sales performance. This helps executives achieve operational effectiveness, and is particularly important for businesses expanding their sales and marketing operations, needing to implement new processes to manage growth. Businesses have typically turned to CRM to improve communication between sales and marketing operations, as well as to improve data-access to positively impact decision making.

Whereas traditional CRM activity focused heavily on operational effectiveness and its impact — both internally and on the customer — social CRM is all about people and community. It’s about how your company intends to participate in the ongoing conversations taking place in the industry. How you embrace non-traditional influential people like popular industry bloggers, and social sites on the Web frequented by your audience. And fully understanding the importance of contributing to discussions, in a transparent manner, will help you build the kind of reputation needed to become a valued member of the online communities important to your business.

So if you’re turning to CRM to help bring on new customers, you’ll have to go beyond traditional CRM focuses by integrating social media infused tactics and strategies. But it’s important to remember social CRM is not a substitute, but a much needed complement to traditional areas of customer relationship management. It gets us close to what we’ve needed all along.

Brent Leary is a small-business technology analyst, adviser, and award-winning blogger. He is the co-author of Barack 2.0: Social Media Lessons for Small Business. His blog can be found at http://brentleary.com, or follow him on Twitter at http://twitter.com/brentleary

via Traditional CRM vs. Social CRM

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