This presents an excellent opportunity for business to tap into Cognitive Surplus, world’s spare brain power so to speak, and leverage it in a way that it is beneficial to all concerned (see this link for an excellent visualization of the size of Cognitive Surplus and refer to my earlier post titled Cognitive Surplus: Implications for Social CRM for more on the subject).

Quirky, a Social product development company is a very good example of not only collaborative work, but also of how influencers can be rewarded for their contribution (see the last column of any product’s page on Quirky’s online store for share of each influencer in total price of the product).

Watch the following videos to learn more about how Quirky taps into Cognitive Surplus of Influencers and rewards them for their contribution, a win-win strategy indeed.

Well, we may get as many different answers as the number of Social Media gurus and Advertising pundits out there, which by the way is not a small number!

Watch this excellent panel discussion and listen to what four real experts have to say on this subject. The experts are:

• Mark Pincus, Founder & CEO, Zynga
• Jeff Weiner, CEO LinkedIn
• Irwin Gotlieb, Global CEO, GroupM
• Dick Costolo, COO, Twitter

I like what Irwin Gotlieb says: “Nature of commercial message is not going to look like a display ad, it’s going to provide functionality and a different kind of interface for the user to act on something. People in Social context don’t want to be interrupted, instead want continue to be engaged and want  functionality that eases a task they are about to engage in.”

Enjoy the video and do share your thoughts on what advertising will look like in Social Age.

Old Spice Social Media campaign that has generated tremendous buzz, not only in Social Media but in traditional media channels as well, is a great example of Social CRM campaign where Procter & Gamble, the company that owns the brand, has very effectively engaged customers (and prospects) through Social Media with goal of building trust and brand loyalty. Watch this excellent CNN video on the subject:

But before settling down to Business As Usual model of pre-recession days, IT services companies should look at changing tech landscape and “Clouds” on tech horizon – Cloud Computing that is! In the words of Irving Wladawsky-Berger, “IT is undergoing its biggest changes since the advent of client/server computing in the 1980s.  These changes are being driven by many factors, chief amongst them the emergence of a different model of computing – cloud computing.  We are entering the Age of the Cloud.” (for more, read his excellent blog post titled IT in the Age of the Cloud)

In his post, Irving Wladawsky-Berger has quoted findings of study on The Future of Corporate IT by The Corporate Executive Board. After interviewing and surveying hundreds of IT and business leaders, this study concluded that “The IT function of 2015 will bear little resemblance to its current state. Many activities will devolve to business units, be consolidated with other central functions such as HR and Finance, or be externally sourced. Fewer than 25% of employees currently within IT will remain, while CIOs face the choice of expanding to lead a business shared service group, or seeing their position shrink to managing technology delivery.”

The Corporate Executive Board study has further identified five emerging shifts in IT value and role. These are:

• Shift 1: Information Over Process
• Shift 2: IT Embedded in Business Services
• Shift 3: Externalized Service Delivery
• Shift 4: Greater Business Partner Responsibility
• Shift 5: Diminished Standalone IT Role

IT Services companies need to prepare for these emerging shifts and incredible opportunity they present by expanding their “Cloud” service offerings.

Unlike product companies, one of the issues many IT service providers (and especially those that operate in the lower end of price spectrum) face is that their revenue is directly linked to “billable” headcount. And to grow their revenue beyond certain point, these companies need to have a “product” or “license” based revenue model rather than “headcount” based model. Cloud computing offers an excellent opportunity for IT services companies to develop service offerings that can be offered to client under Software as a Service (SaaS) model.

Talking specifically about CRM and Social CRM, IT Services companies should extend their CRM and BPO service offering to cloud based services in following areas:

• Development of Engagement Platforms and Communities
• Integration of “On-premise” CRM apps with “Cloud based” Social CRM apps for 360 degree “view of customer”
• Cloud based Social Media Monitoring, Reporting and Analytics
• Cloud based Social Media and Network Analytics solution

Affiliated Computer Services, a leading service provider recently launched “Community as a Strategy” – a suite of social CRM services that captures customer insights from social media sites to improve service and responsiveness of organizations. Other IT and BPO Service Providers should take notice of this development and follow ACS’ lead in this direction.

What do you think? How IT and BPO Service Providers can can Thrive in the Age of Cloud? Please do share your thoughts and opinion:

Listen to to his inspiring TED@State talk about how cellphones, Twitter and Facebook can make history and his talk at TED@Cannes on how cognitive surplus will change the world. Thinkers and practitioner of Social CRM can learn many valuable lessons from these two TED Talks.

Enjoy the videos and share your thoughts and comments on how we can leverage Cognitive Surplus in business, especially marketing.

What should Google do to continue its dominance in the Social Age? Think outside the box, “Search” box that is! Google has done a great job focusing on its core competency of indexing content on the web and displaying most relevant search results without any “noise” or “clutter” on the screen. And this is what made Google so popular in the first place.

But this strategy of indexing web content and displaying most relevant search results will no longer work in Social Age as users rely more on Social Media channels and less on search engines to get relevant information. Google should shift its strategy from Search to Share, to continue its dominance in the Social Age as people are more likely to pay attention to content from those they trust rather than ones suggested by search engines. 

Facebook recently introduced some great changes to its service in order to leverage the power of Open Graph and “create a smarter, personalized web that gets better with every action taken” (for more, see Mark Zuckerberg’s blog post here). Google should up the ante on Facebook by introducing “Social Plugins” that will help collect, index and display content based on Social links. And this transformation from Search to Share involves thinking outside the Search box.

I want to end this post by sharing with you this great CNBC Video titled Inside the Mind of Google that explains very well Google’s success story. Enjoy the video!

Social Media channels can generate tremendous amount of information and customers decide the format and content of information. It is no longer enough just to have a database as in traditional CRM systems since companies don’t control content and format of information. We need Knowledge-base to effectively learn from customers and engage them on Social Media channel. Social Media monitoring is not enough and companies need to invest in Knowledge Management tools to continuously learn and evolve. Knowledge Management comprises of ‘a range of strategies and practices used to identify, create, represent, distribute and enable adoption of insights and experiences’.

Knowledge Management tools are critical in learning from customers and adapting to change. And unless companies learn and adapt on the basis of inputs received from their customers, it is very difficult to engage them and build trust and brand loyalty, the essence of Social CRM. Only companies that learn and evolve continuously, and engage and respond to their customers’ needs will thrive in Social Age.

What do you think? Do you agree that Knowledge Management is critical in Social CRM? Or you think that is not the case. Please do share your thoughts. Look forward to hearing from you:

But in spite of this technological transformation and progress in system architecture, all CRM systems essentially record transactional information using pre-determined fields on the screen (front-end) to capture information in the database, and company is in total control of conversation (should I say interrogation) with customer at every stage.

Thanks to rapid expansion of reach and effectiveness of Social Media channels, this is about to change. Social Media has empowered customers like never before as they can discuss about brands/products on Social Media channels and companies have no control over what customers are saying about their brands/products. This discussion is visible to all including other customers, potential customers and competitors.

The best any marketer can do is to Listen and Learn from what customers are saying and Engage them in meaningful conversations. In other words, treat Social Media channels as the front-end of CRM system, capture all relevant information from Social Media channels in the database and use Predictive Analytics and Knowledge Management tools to derive insights and help in decision making.

What is important to note here is that “Social” is not a middle-ware or another layer in the architecture of CRM systems, but is the front-end of CRM system, where customers decide the format and content of information.

It is responsibility of the company to record and store all relevant information from Social Media channels and derive value from it by using Predictive Analytics and Knowledge Management tools for effectively engaging customers.

What do you think? Do you agree that Social Media is the new front-end of the CRM system? Or is it middle-ware? Please do share your thoughts:

But inspite of the fact that SaaS CRM has been around for a decade, it is not as popular or widespread as what some might have expected it to be by now. I think this is about to change. As I noted in my previous post, four independent trends, namely Social Media, Smart Phones, Predictive Analytics and SaaS are now converging to bring about a Paradigm Shift in CRM.

In particular, Social Media will drive adoption of cloud computing/SaaS CRM going forward. Some of the key reasons why I think this is likely to happen are as follows:

• Social Media channels (like Twitter and Facebook) generate tremendous volume of user generated content created by millions of users. Not possible for CRM system to import/store the data “locally”. This is unlike “traditional” CRM, where data was generated by few users and stored in “local” database. SaaS Model makes it possible to store information in the “cloud” (shared space) and access it from (Social) CRM application “on-demand”

• Social Media space is changing and evolving rapidly. New Social Media channels and tools are being added almost every day. Very difficult, if not impossible, for any CRM vendor to incorporate all new channels and feeds “locally” for every installation of CRM system. Under the SaaS model, it is not difficult to add new Social Media channels/feeds to the “hosted” (Social) CRM application and make it available to users “on-demand”

• Service Oriented Architecture and Cloud Computing not only make it easy to integrate applications, but also facilitate “plug and play” modules and add-ons that can dramatically reduce time and cost involved in extending functionality of the application. This can be of great help in Social CRM as Social Media space is changing and evolving rapidly.
  “plug and play” modules and add-ons can dramatically reduce time and cost involved in extending functionality of the application. 

CRM and Analytics application vendors such as Oracle, SAP and SAS should take note of this trend towards SaaS and should extend their service offerings to include CRM SaaS.

What do you think? Please do share your thoughts and comments on impact of Social Media on SaaS CRM.

• Social Media
• Smart Phones/Portable Devices
• Cloud Computing/SaaS
• Predictive Analytics

All these four independent trends are now converging to bring about a Paradigm Shift in CRM.

“Managing” customer relationships till now involved recording “transactions” between company and the customer over phone, email and web-site besides “snail” mail and face-to-face exchanges and using the “historical” or “past” information to better serve the customers. Company was in total control of this conversation with customer at every stage. Information was recorded using pre-determined fields in the database, by company employees (or by contractors trained by the company) using script in CRM application controlled by the company. Thanks to the convergence of cloud computing, social media, predictive analytics and smart phones, this comfortable existence of marketers (and CIOs, CTOs as well) is about to come to an end.

Social Media has empowered customers like never before and they can discuss about brands/products on Social Media channels. This discussion is visible to all including other customers, potential customers and competitors.

Smart Phones/Portable devices with high speed internet access, geo-location tools and camera have ensured that customers can use information gained from Social Networks and Internet to maximum advantage. For example, scanning product bar codes to ascertain the lowest price of a product in geographical vicinity.

Software as a Service (SaaS) has made “on-demand” full functionality CRM application possible, with no large scale investments requirement upfront. CRM system’s integration with multiple other systems was one of the biggest challenges, requiring substantial investment in terms of time and cost. No more, thanks to Cloud computing/SaaS model. It is possible to integrate SaaS and cloud applications with enterprise apps in days, what used to take weeks or even months earlier. This has further lowered entry barriers and made available complex, full featured CRM applications to small and medium sized firms – what so far was available to only companies with large IT/Marketing budgets, empowering smaller firms to compete with their larger rivals on equal footing.

And last but not least, predictive analytics has made it possible not only to analyse past customer behavior, but predict future behavior too based on statistical models. When combined with real-time Social Network data feed, it is THE killer app for next gen CRM system. Predictive analytics can help in identifying minor issues and help in taking corrective action before they become a crisis. For example, if a customer (or a group of customers) tweet about their dissatisfaction with a product or service, predictive analytics can help in identifying who among them are most likely to defect so that company can take corrective action before it is too late. Better still, if they happen to be customer(s) of a competitor, company can make an attractive offer and win them over. And thanks to SaaS model, this level of analytics functionality is available to small and medium sized companies with no large scale investments requirement upfront.

Given this CRM Paradigm Shift, how well your organization is prepared? Will it effectively engage “empowered” Social Customer? Will it compete against competitors who use low-cost “SaaS” model? Is your CRM system smart enough to predict customer behavior and help in taking corrective action before minor issues become crisis? Would love to hear from you on this Paradigm Shift.

To answer some of the questions, here is a list of eight must read blog posts on Social CRM. Happy Reading!

• 2010: Year of Social CRM
• Definition of Social CRM – Explained!
• Definition of Social CRM – Questions & Answers
• How Customer Engagement Will Determine Winning Brands in Social Era
• Social CRM: Take the Leap of Faith
• Brand Crisis and Social Media
• Social CRM: Don’t wait for Social Media “Oil Slick”
• 5 Lessons Social CRM can Learn from CRM

Given this extensive hands-on experience as program and project manager implementing CRM solutions for some of the largest corporations in the world and having witnessed the CRM revolution from close quarters, right from its inception as eCRM, through growth and maturity phases and the rise of Social CRM now, what lessons can I think of that we learn to avoid some of the common pitfalls associated with CRM?

We can learn five important lessons before we start implementing Social CRM solutions:

Lesson 1: Social CRM is a Strategy

Social CRM is a business strategy, it is not technology, tools or platform. Social CRM can be defined as the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty.

CRM too started out as a business strategy, but once software vendors came out with application to address CRM requirement and called it “CRM Application”, CRM became more of a tool than strategy. As a result, limitations and failures of tools became that of CRM – earning CRM its bad name.

So the first lesson is that Social CRM is a business strategy. Strategy is a plan of action designed to achieve a particular goal. Social CRM is a plan of action to build Trust and Loyalty. Calling Social CRM “technology”, “system” and “processes” is a misnomer. While executing Social CRM (strategy), technological tools will be used to achieve the goal – but tools are different from plan. It is very important to remember this distinction between Strategy (plan) and Tools (technology, systems). For more, see this and this.

It is important to have clearly defined and objective goals before selecting tools and technology. Not other way around, else limitation of tools will become limitation of your goals and strategy.

Lesson 2: Optimize Business Processes

Reason why many of the CRM implementations failed over the last decade is that the underlying CRM related business processes were not re-engineered or optimized for the CRM system.

As a result, CRM systems became more of a drag on the employees using it. And to force them to use it, many of the companies resorted to “carrot and stick” policy to force employees to enter information in the CRM system. Naturally, the word “CRM” quickly became unpopular. This could have been avoided had the underlying business processes been re-engineered or optimized before implementing CRM solution.

Lesson 3: Data Quality is Very, Very (and Very) Important

Any information system is only as good as data in it. We have all heard of the phrase “Garbage in, Garbage out” and this aptly describes why some of the CRM implementations failed. Not enough care was taken to ensure data quality.

Quality is critically important for both, transactional and non-transactional data. This is especially true for Social CRM as the volume of data emanating from Social Networks can be huge and as people use multiple accounts & profiles on Social Media channels. It is very important to have data governance framework and best practices in place before implementing a Social CRM solution.

Lesson 4: Leverage Analytics

Another key lesson we can learn is to leverage analytics. Thanks to their CRM systems, organizations were able to collect vast amount of data and have 360 degree view of their customers, but the same data could have been used much more effectively by applying Predictive Analytics.

Before implementing Social CRM solution, we should have a clear idea of how we are going to use the information collected and how we can apply advanced analytics not only to analyze the past, but also predict the future consumer behavior and fix problems before they become crisis.

Lesson 5: Project Ownership and Leadership

While discussing about project ownership and execution of CRM projects, I am reminded of this maxim: “a camel is a horse designed by committee”. In any large and complex project with multiple stake-holders, it is very important to have a clearly identified “owner” and an effective “leader” who will be responsible for the success of the project.

Absence of “clear” ownership and “effective” leadership is a recipe for disaster. This may sound common-sense, but you will be surprised to learn how many organizations attempt implementing CRM solution without first having in place a project owner and/or effective leader. This is all the more important for Social CRM as multiple stake-holders like Marketing, PR, IT, Legal are involved. It is very important to clearly highlight roles and responsibilities, procedure and protocols for each involved department/person before implementing a Social CRM solution.

What do you think? Would love to hear your views on common pitfalls associated with (Social) CRM implementation. I look forward to your comments:

First step is to understand how customers of clients are using various Social Media channels (like Facebook or Twitter). And since this varies by the industry, IT services companies will need to come up with industry specific Social CRM approach and solution. Domain experts in each industry segment (called Verticals) need to evaluate ways their clients can:

• integrate social media channels into websites
• integrate the new channels into their Sales, Marketing & Support processes and systems
• include social media metrics in performance dashboards and SLAs

Next step for IT services companies is to develop delivery capability to address Social CRM requirements of their clients. They should partner with leading vendors in key areas of Social CRM, namely:

• Social Media Measurement & Monitoring
• Customer Community Platforms
• Social Media and Network Analytics

And finally, once the team has good understanding of the requirements (step 1) and tools (step 2), they should execute prototype or pilot projects with reference to each industry segment (or Vertical) that will demonstrate their capability in the area.

Given the buzz about Social CRM in the industry, I expect demand for “Social CRM” tools and services to pick up substantially in the near future. Those IT services companies who demonstrate thought leadership and build their delivery capability in this area “Proactively” will emerge as winners. Moreover, Social CRM offers a great opportunity for smaller IT services companies to “leap-frog” their larger rivals in this area who might be slow in responding to this opportunity.

What do you think? How should IT Services Companies prepare for Social CRM opportunity?

Real game changer will be acquisition by Enterprise Solutions major like Oracle or SAP of vendors offering Community Platforms, Social Media Monitoring and Social Network Analytics functionality to extend their Enterprise Solutions capability in this area.

As I predicted in my first post of this year published on January 2nd, 2010 is surely turning out to be the Year of Social CRM.

What do you think? Who’s next in this M&A spree?

Negative publicity on Social Media channels like Twitter or Facebook, whether spontaneous or organized, is like “Oil Spill”. Looking at the potential for harm to brand image or reputation, one hopes it never happens and prevention is the best strategy. And if there is a brand crisis on Social Media channels, it is best contained as early as possible just like the infamous “Oil Spill”. Two famous case studies of Social Media brand crisis that come to mind are United Breaks Guitars and Nestlé. In both cases, company’s response was little slow and situation quickly turned ugly. This underscores the importance Social CRM.

Social CRM is defined as the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty. It is important for a company or brand manager to engage customers and prospects on Social Media and build trust in the brand or company BEFORE any Social Media Brand crisis, as it will not only help in preventing a crisis in the first place but even if there is a crisis, company will have “trusted” and “recognized” representation on Social Media channels for communicating company’s side of the story, possibly preventing a “blow out”.

It is also very important to have a Social Media Crisis Management Plan. It should clearly highlight roles and responsibilities, procedure and protocols to be followed in the event of a brand crisis. Because the first step in solving any crisis is to identify and respond to it, and respond FAST when it comes to Social Media.

So here is a question for you. Will you wait for a Social Media “Oil Slick” before adopting Social CRM? And Do you have a Social Media Crisis Management Plan for your organization? If there is a crisis, will you handle it effectively or be caught napping and search for excuses? The choice is yours!

According to a recent survey by Technology Services Industry Association (TSIA) among its members, it was found that:

• Only 17% of members have integrated social media channels into the corporate website. Accessing an online community requires a different log-on and password, and uses a different UI than the corporate website.
• Only 8% of members have integrated the new channels into their CRM/incident management system. After a decade of trying to build the “360 degree view of the customer,” none of the social media interactions are being tracked.
• Only 8% of members include social media channels in performance dashboards. So if you suddenly start neglecting a social media channel, no alarms or notifications exist.
• Only 3% of members address social media channels in SLAs. If you aren’t setting customer expectations for service levels, achieving high customer satisfaction will be challenging as traffic via these channels increases.

Also refer to the following presentation titled Effectively Leveraging Social Media as a Support Channel by John Ragsdale. Some note-worthy stats in this presentation are:

• Slide #12 Low usage of Social Media channels for providing Customer Service & Support
• Slide #22 By 2011, a significant % of customer issues will be resolved using Social Media and Communities as compared to Self-service, Web-chat, Email and Phone.

IT Service Providers can capitalize on this opportunity by:

• Development and Maintenance of Engagement Platforms and Communities
• Integration of “Traditional” CRM apps with Social CRM functionality for 360 degree “view of customer”
• Master Data Management – A major issue in CRM projects, more so in Social CRM

BPO and KPO Service Providers can leverage this opportunities by providing:

• Social Media based Customer Support in addition to traditional channels such as Phone, Web and Email
• Social Media Monitoring, Reporting and Analytics
• Creation of brand specific Social Media Content
• Social Network Analysis

Social media are bringing about a dramatic shift in Marketing and Customer Support processes. Those IT and BPO service providers who build competency to address this change and offer services to their clients will benefit. And first movers will benefit the most from it!

What do you think? How should IT and BPO service providers should leverage this opportunity? Please do share your thoughts:

And as companies start spending their marketing and IT budgets on Social CRM initiatives, not only large CRM and Analytics software companies such as Oracle, SAP, SAS, but many mid & small sized software vendors are gearing up for what promises to be the next phase of CRM “evolution” – though looking at the speed with which this change is coming about, some may choose to describe it as Social CRM “revolution”.

Thanks to this Social CRM (R)Evolution, IT and BPO Service providers too have an incredible opportunity. They should extend their CRM and BPO service offering to include following key areas to capitalize on this emerging opportunity:

• Development of Engagement Platforms and Communities
• Integration of “Traditional” CRM apps with Social CRM functionality for 360 degree “view of customer”
• Master Data Management – A major issue in CRM projects, more so in Social CRM
• Social Media Monitoring, Reporting and Analytics
• Creation of brand specific Social Media Content
• Social Network Analysis

Sooner companies realize the untapped potential of Social CRM opportunity and act on it by building their competency, better for them.

For IT & BPO service providers who operate on lower end of price spectrum, this is a unique opportunity for offering value-added services and moving up the price spectrum, improving their revenue and margins.

Affiliated Computer Services, a leading service provider recently launched “Community as a Strategy” – a suite of social CRM services that captures customer insights from social media sites to improve service and responsiveness of organizations. For ACS, this is a step in the right direction. Hope other IT and BPO Service Providers take notice of this development and follow ACS’ lead in this direction.

What do you think? How IT and BPO Service Providers can profit from emerging Social CRM opportunity? Please do share your thoughts and opinion.

To begin with let me reiterate the definition of Social CRM:

Social CRM is the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty.

Loyalty is defined as attitude towards a brand that inclines a customer to repurchase it and/or recommend it to others. Social CRM and Social Media are more about building trust and managing loyalty with customers than about managing relationships or transactions, which are focus areas of “traditional” CRM.

Now on to the questions:

Q: Why this definition refers to Social CRM as a business strategy and not calling it technology, system, processes etc.. etc..?

A: Strategy is a plan of action designed to achieve a particular goal. Social CRM is a plan of action to build Trust and Loyalty. Calling Social CRM “technology”, “system” and “processes” is a misnomer. While executing Social CRM (strategy), technological tools will be used to achieve the goal – but tools are different from plan. It is very important to remember this distinction between Strategy (plan) and Tools (technology, systems).

Q: If Social CRM is a strategy, why mention Social Media in the definition?

A: It is very important to mention Social Media in the definition because Social Media has introduced the “trust” dimension to marketing equation. Before the Social Media age, Trust in marketing relationship was limited to face-to-face interactions (like friendly neighborhood coffee shop or grocery shop). What Social Media has done is to make it possible for any one to have the same sort of one-to-one relationship irrespective of geography. This kind of one-to-one relationships based on mutual “trust” are not possible through “traditional” CRM channels like phone, mail or emails. Moreover, interactions via Social Media are not only “public”, but are indexed and displayed by most search engines in “real time”, thereby having the potential to influence consumer behavior on a massive scale. Effective use of Social Media channels and tools are critical to successful execution of Social CRM strategy, hence I have included Social Media in my definition.

Q: sCRM helps companies make sense of and act on data that they collect from social customer interactions. This can be via phone, email, feedback forms, or anything else. Companies don’t have to use Social Media to do this.

A: Social CRM strategy can help companies “make sense of and act on data that they collect from social customer interactions”. But that is only part of the equation (Listen and Learn). Social Media is much more powerful than being just a medium for listening and learning. It provides a platform for engaging customers in a meaningful conversation for building Trust and Loyalty, and that is what Social CRM is about. Not just for “recording” or “managing transactions” of Customers’ Social Interactions.

Q: What is in it for the consumer?

A: Loyalty, Trust and Engagement. Company has to “earn” trust and loyalty of its Customers through Engagement. And to earn that trust and loyalty – a company has to consistently delight/exceed expectation of customers. This is the big deal for customers. Company doing all it can to earn that Loyalty (providing great product, service at competitive prices – Value for money). This is what is in there for the Customers. Customer is the King (or Queen) in Social Age!

Q: Why your definition is company and business centric?

A: Social CRM is for companies as companies are going to engage customers – not other way around. You have to view customer engagement from stand point of the company not customer.

Hope this post answers many common questions relating to Social CRM. Would love to hear from you, so please share your thoughts and opinion on what is Social CRM.

Social CRM is the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty. Loyalty is defined as attitude towards a brand that inclines a customer to repurchase it and/or recommend it to others. Social CRM and Social Media are more about building trust and managing loyalty with customers than about managing relationships or transactions, which are focus areas of “traditional” CRM.

I received a lot of great feedback on this definition and want to elaborate further on it to answer some of the questions raised by readers of this blog.

Let’s break-down the definition to its individual components:

1) Social CRM is the business strategy: It is not technology, tools or platform. Fundamentally, Social CRM is a business strategy. It is widely accepted by Social CRM practitioners and SMEs that Social CRM is a business strategy.

2) Engaging Customers through Social Media: Engagement through Social Media is the most important aspect of my definition. Any CRM related activity through existing channels like the telephone, email, snail mail etc.. will continue to be part of “traditional” CRM and will not be replaced by Social CRM (unless the Customer prefers to use Social Media instead of “traditional” channels).

Thus, Social CRM will augment “traditional” CRM, but will not replace it. And for some industries like health care or financial services, emphasis will continue to be more on “traditional” channels and not on Social ones for privacy related issues (who would want to tweet about their bank account or health condition). Traditional CRM channels will offer more private communication as compared to “public” Social CRM channels.

Having said Social CRM will augment traditional CRM and not replace it – let me add that Social CRM will be well integrated into overall CRM platform and systems with a 360 degree view of the Customer with feeds from all major Social channels. Customer will have a choice on what channels to use and organizations will reach out to the Customer based on that choice.

3) with goal of building trust and brand loyalty: Ultimate goal of Customer Engagement through Social Media is to build (a) Trust and (b) Brand Loyalty. I have used the word “Trust” before “Loyalty” for a reason because Social Media has introduced the “trust” dimension to marketing equation.

Before the Social Media age, Trust in marketing relationship was limited to face-to-face interactions (like friendly neighbourhood coffee shop or grocery shop). What Social Media has done is to make it possible for any one to have the same sort of one-to-one relationship irrespective of geography. This kind of one-to-one relationships based on mutual “trust” are not possible through “traditional” CRM channels like phone, mail or emails.

While “traditional” CRM helped manage Customer Relationships on a massive scale, it did not help in building mutual trust between buyers and sellers as it is impossible to build “trust” with thousands of customers over phone or mail. For building Trust, you need to know your partner well and not just be limited to mere “transactions” as was the case with “traditional” CRM. Social Media provides the opportunity to marketers to become “personal”, interact with thousands of customers spread across geography on one-to-one basis so that marketer and the customer get to know each other so well as to trust each other – the essence of a true relationship.

Second most important goal of Social CRM is to build Customer Loyalty – the ultimate goal of any business! Some have interpreted my definition as not being “customer focused” or “customer centric” or being “Social Media Centric”. This is not correct. The very fact that goal of Social CRM in my definition is to build Customer Loyalty implies that it is “Customer Centric” – as you cannot build loyalty without having a customer focus.

Hope this clarifies many questions that were raised regarding my definition of Social CRM. Would love to hear your thoughts and feedback.

Some of the more interesting points mentioned by Jeff are:

• Currently LinkedIn is used by 60+ Million professionals out of estimated 500 Million professionals world-wide
• LinkedIn is profitable (rare for a valley start-up these days), so far raised close to $100 Million, all of it still in the bank
• Has three lines of business, Premium Subscriptions, Ad Sales and Enterprise Licensing – growth fastest for Enterprise Licensing
• LinkedIn a “Professional Network”, calling it “Social Network” is a misnomer

Jeff also mentioned that no matter where in the world they talked to LinkedIn customers, people always mention that they want to keep their personal lives and professional lives separate. This is not surprising, but given the “always on” nature of Social Networking coupled with high speed internet access from smart phones and portable devices, lines between personal and professional lives are getting blurred all the time.

It will be interesting to see how work-life balance evolves over the next 2-5 years time frame. In my opinion, employers should take a lead and make work fun to the extend possible in order to keep employees engaged and productive.

I think the biggest argument in favor of Social Media is that it provides great tools for “engaging” the customer. Unlike traditional media channels where the information flow is one way, one to many – where consumer or target audience group is “passive”, Social media communication is not only two-way, one-to-one, but consumer is active participant and “owns” the conversation.

Moreover, conversations over Social Media channels are public – visible to all. And customers and potential customers are discussing about products and brands on Social Media channels whether the marketer is participating in the discussion or not.This is why it is utmost important for marketer to have a Social CRM strategy and invest in Social Media tools for effectively engaging customers and prospects. Gone are the days of one way “passive” advertising, thanks to Social Media (for definition of Social CRM, see my earlier post titled What is Social CRM?)

Level of customer engagement will determine mind-share and market-share for a brand. Those marketers who effectively engage their customers and prospects will emerge as winners and those who are not good in customer engagement will lose market share. If any one wants proof of importance of Social Media engagement to performance, here it is!

Engagementdb has published a study that shows strong evidence that Social Media Engagement correlates to Financial Performance (see report on The world’s most valuable brands. Who’s most engaged?)

According to this study “”Engagement via social media IS important — and we CAN quantify it. There is statistically significant correlation between social media engagement and the two most meaningful financial performance metrics – revenue and profit”. This study further states that:

• It pays to engage meaningfully in social media. Emphasize quality, not just quantity.

• Engagement is more than just setting up a blog or Facebook profile and letting viewers post comments,  it’s keeping your content fresh and replying to comments; it’s building your friends network and updating your profile status.

• To scale engagement, make social media part of everyone’s job. You must do something, else risk falling far behind other brands, not only in your industry, but across your customers’ general online experience.

• Engagement can’t be skin-deep, nor is it a campaign that can be turned on and off. True engagement means full engagement in the channels where you choose to invest.

This clearly illustrates the importance of engaging customers via Social Media for building trust and loyalty towards the brand – the essence of Social CRM (for more see What is Social CRM and why it is important and Dear CMOs, Wake up to Social Media challenge).

What do you think? Are you convinced that customer engagement will determine winning brands in Social Era? Please share your comments:

There are three important reasons for the phenomenal growth and popularity of Foursquare as compared to rivals such as Gowalla or Yelp.

• Technology: Although just one year old, Foursquare has stayed on top of technological aspects and made sure that its app is user friendly and efficient in leveraging location based info from mobile devices. Its latest release, Ver. 1.7 features many enhancements such a new design, faster check-ins besides an easy way to view check-in history.

• Ease of Use: Foursquare is very intuitive, easy to use and the latest release is a big step in this direction. (see this CNN video on how easy it is to use Foursquare)

• Creative Design and Promotion Strategy: Foursquare has been very creative in its design – badges for example and the way you earn them. Also important is how Foursquare (and participating establishments) have promoted the service. For example, Starbucks recently teamed up with Foursquare to offer customer rewards (for more, see this link). And when other companies have spent hundreds of thousands of dollars on marketing to reach target audience, Foursquare has relied on buzz generated by creative promotion strategy. At the  South by South West (SXSW), 2010 taking place in Austin, Texas, Foursquare had people lined up to play this game of four square with one of its founders, Dennis Crowley, outside SXSW venue, with people walking by and talking about it. This is great buzz for Foursquare, with total investment of around $5.99 for a box of sidewalk chalk, that other companies paid tens of thousands of dollars to generate inside the venue! Isn’t that cool? (watch the following video)

To summarize, Foursquare is the hottest Social Network on the web because it is technically efficient, easy to use and creatively brilliant in design and promotion.

What do you think are the reasons for Foursquare’s success?

Few other examples of successful Social Media initiatives by Ford include Summer of Taurus, the2010Mustang.com,  WeddingRoadTrip.com and FiestaMovement.com (See this excellent blog post by Lee Odden for more).

To learn more about Ford’s Social Media success, watch this interview by Lee Odden with Scott Monty, Head of Social Media at Ford.

According to Scott, even the CEO of Ford understands how important Social Media is to the success of the company! Scott also emphasized the importance of having a good product, listening to customers and providing them with necessary tools for engagement.

Great advice in my opinion and a success story that other brands should try to emulate.

In this excellent TED Talk, James Cameron describes his childhood fascination with the fantastic — from reading Sci-Fi to deep-sea diving, and how it contributed to success of his blockbuster hits “Aliens,” “The Terminator,” “Titanic” and “Avatar.” Also listen to him on why he made Titanic.

I like what he says about Curiosity, Imagination, Respect for team, Risk taking, Leap of faith and fear not being an option – rather than failure!

After listening to James Cameron, I was wondering if he directs Avatar like movie on Enterprise 2.0 technologies and Social CRM, how the story line might play out? What do you think? Please do share your comments on what the story line might look like …. let the imagination fly!

• When it comes to Social Media, CEOs and CMOs should lead from the front

• Dear CMOs, Wake up to Social Media challenge

• What is Social CRM and why it is important

• Why NOW is the time to invest in Social CRM

• 2010: Year of Social CRM

• Social CRM: Top priority for CMOs

But inspite of all the attention Social CRM has received in mainstream and social media, many companies are reluctant to invest in Social media initiatives and programs. This is confirmed by findings of a recent study by Burson-Marsteller titled Global Social Media Checkup. It was found that only 20% of those surveyed used all the four Social Media channels, namely Twitter, Facebook, Youtube and Blogs to engage their stakeholders. Social Media involvement of these companies can best be described as “minimal” (see following slideshare presentation for more). And if this is the level of involvement of companies on Fortune’s Global 100 list given all their resources and marketing budget, one can imagine the Social Media involvement of lesser known companies and those with smaller marketing spend!

It is high time for marketers to take a leap of faith and invest in Social CRM initiatives in order to engage customers through Social Media channels, because customers and potential customers are on social media channels discussing about products and brands – whether the marketer is represented in the discussion or not.

Moreover, according to a recent “The CMO Survey” from Duke University’s Fuqua School of Business and the American Marketing Association (AMA), marketers will devote nearly one-fifth of their marketing budgets to social media in the next five years (for more, see this link). Those marketers who take this leap of faith and move first in this direction will not only have first mover’s advantage, but will define standards, procedures and rules of the game.

NOW is the time for marketers to start Social Media initiatives for customer engagement and emerge as winners, rest will be laggards.

Dear CMOs, do you want to be a winner or laggard? The choice is yours!