FedEx learns Social CRM lesson, the hard way!

Here’s an excellent example of the importance of responding to a Social Media crisis before it is too late. On December 19th, 2011, a YouTube user (username “goobie55″) uploaded video of a FedEx delivery person throwing a video monitor into his/her yard.

This YouTube video has created a Social Media storm of sorts and as I write this post, it has been viewed 3,576,412 times for this one YouTube post alone. I have seen it on my local TV news too here in Dallas, Texas.

Well, before it was too late (remember United Breaks Guitars YouTube video), FedEx  posted its own response to customer’s video with the following statement by Matthew Thornton III, Senior Vice President, US Operations, FedEx Express:

“Along with many of you, we’ve seen the video showing one of our couriers carelessly and improperly delivering a package the other day. As the leader of our pickup and delivery operations across America, I want you to know that I was upset, embarrassed, and very sorry for our customer’s poor experience. This goes directly against everything we have always taught our people and expect of them. It was just very disappointing.”

(YouTube video response by FedEx embedded below):

This incident of Social Media brand crisis underscores the importance of having 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 as FedEx seems to have done here. What do you think?

Why ‘Social’ will drive growth in 2012

Time flies! Here we are just a few days before Christmas and looking back at 2011, I cannot help but wonder at the amazing speed with which the year flew by! 2011 will be remembered for the effective role Social Media played in activist movements across the globe.

Looking at the future, one can see dark clouds on economic horizon given the debt and deficit crisis in Europe and North America. Consumer spending, which has driven economic growth for past several decades given easy availability of inexpensive credit, is drying up as consumers are reluctant to spend given the economic and political uncertainty. As a result, economic growth is almost 0% if not negative and with rising inflation, there is real risk of dreaded ‘stagflation‘ (economic stagnation with high inflation resulting in stubborn high unemployment).

In this scenario, companies are fighting hard for share of customers’ wallet/spend to meet their top line/revenue growth targets at the cost of bottom line/profits. As a proof of this, just note the amount of discounts large retailers and leading brands offered to customers this holiday season. And this is not just limited to budget brands for value conscious customers but also includes luxury brands  targeted at affluent customers.

So how can companies not only survive, but thrive in an economic environment characterized by stagnation, high unemployment, eroding purchasing power because of inflation and when customers are unwilling to spend because of economic uncertainty? In economic parlance, this is a perfect storm and it requires some out of the box thinking on the part of companies.

Companies need to use emerging technological tools such as Social Media, Mobile and Cloud computing to drive down cost of doing business and at the same time, maximize value delivered to customers. Remember, it is not about price of a product or service but value perceived by the customer and price he/she is willing to pay for the perceived value of the product or service.

As I highlighted in one of my previous post titled Why Industrial Era Marketing Won’t Work in the Age of Social Media, not involving customers during product/service creation and delivery, and very limited after-sale support via phone is not going to work any more. Companies need to use social media channels and collaborate with their customers at every step of product or service creation and delivery.

To survive and grow in the age of social media, companies will have to re-engineer their product design, manufacturing, delivery and support processes, and not just their marketing processes, in order to involve customers at every stage of product/service creation and delivery. Companies that succeed in involving customers at every step of product/service creation and delivery will thrive and grow in this tough economic climate.

My suggestion to senior executives is that instead of viewing this tough economic climate as a challenge or a problem to overcome, why not view it as an opportunity for change by re-engineering business processes to take advantage of emerging technological tools such as social media and involve or engage customers at every stage of product or service creation and delivery. It can be as simple as a factory manager posting a YouTube video on how the product is made or a hotel employee tweeting about new mattress in all rooms in the hotel. By engaging customers on Social Media channels, companies can win greater mind-share of customers and as we all know, mind-share results in purchase and greater share of the wallet!

And before I end my post, I want to wish readers of this blog Merry Christmas and Happy Holidays.

(Picture courtesy: The well lit Christmas tree that you see above is from my apartment in Dallas, Texas)

Forget Black Friday, how about “Social Media Saturday”?

Halloween is just a few days away and before we know, it will be Thanksgiving and more importantly for business, Black Friday and Cyber Monday (for those not familiar with the term Black Friday, see this).

But on the economic front, all seems to be ‘gloom and doom’ and ‘economic’ forecast for this holiday season seems to be dark, damp and cloudy with possibilities of storms – some severe. Question is can social media help marketers cheer up their holiday sales this season? or specifically, how can social media help boost sales on Thanksgiving weekend, which traditionally is the start of the Christmas shopping season.

Answer is yes, social media can be used very effectively for promoting sale of merchandise this holiday season. For example, how about announcing deals on company’s or store’s Facebook page rather than newspaper advertisements or promotional flyers? And to get the deal, customers will have to “Like” the deal. Better still, a customer can avail of the deal only if few of of his/her Facebook friends buy the product. More the number of Facebook friends who buy a product, higher the discount a customer get. Just imagine the excitement this will generate on Social Media and resultant free publicity.

And most online stores have option of Gift Shipping but what about having similar options on Facebook page of the company or the store, where a customer can select what items he/she want as Christmas Gift and this will be displayed on Customer’s Facebook profile letting friends and family know so that they can buy the desired gifts rather than something that is not going to be used or even worse, is going to be returned to store for refund/exchange – a big problem for retailers.

As I wrote in one of my previous post titled Social CRM: Thinking Outside the “Call Center” Box, we need fresh outside the box thinking to take advantage of unique characteristics of Social Media and Social Networks. Companies must leverage unique characteristics of Social Networks and re-engineer their business processes to derive full benefits from it.

If used properly Social Media can drive sales to such an extent that volume of sale on Social Media Saturday will be far greater than volume of sale on ‘traditional’ Black Friday with promotion only through flyers and advertisements.

What do you think? Do you agree that Social Media can help marketers cheer up their holiday sales this season? Please do share your thoughts. Would love to hear from you:

 

Why Industrial Era Marketing Won’t Work in the Age of Social Media

In the industrial age, companies mass produced goods and promoted their products and services through mass media in order to sell them. Customers had little involvement in product creation (other than occasional feedback they provided through marketing research). And if customers had any problem, they contacted a support agent via mail or telephone.

Social media have radically changed this equation between companies and their customers by empowering customers like never before. Customers can discuss about products on social media channels and companies have no control over what customers are saying about their brands.

But instead of engaging customers on social media, most companies still rely on marketing the old fashioned way – a vestige from the industrial age! Marketing processes being followed today by most companies are still very similar to what was done in the industrial age.

Companies need to realize that when it comes to creation and delivery of products and services, expectation of “Social” customers are vastly different from that of customers in industrial age. “Social” customers expect companies to “listen” to them and take appropriate action on their comments regarding products and services they purchase and pay for.

Social media have provided tools for customers to express their opinion and customers are using Twitter and Facebook for the purpose. We see comments about brands/products on Twitter and Facebook all the time. For example, delayed flight or bad experience at a restaurant. But instead of listening to customers’ feedback on Social Media channels and engaging them, companies still expect them to call or write to them if they need any help. In a nut shell, companies are still living in the industrial age when customers have moved on into the social age.

In fact, I wrote about this almost two years’ back in a blog post titled “How Customer Engagement will determine winning brands in Social Era” In this post, I explained that level of customer engagement will determine mind-share and market-share for a brand. ONLY those companies that effectively engage their customers and prospects will emerge as winners and those that are not good in customer engagement will lose market share.

Unlike in industrial age, not involving customers during product/service creation and delivery, and very limited after-sale support via phone is not going to work any more. Companies need to use social media channels and collaborate with their customers at every step of product or service creation and delivery.

To survive and grow in the age of social media, companies will have to re-engineer their product design, manufacturing, delivery and support processes, and not just their marketing processes, in order to involve customers at every stage of product/service creation and delivery.

Companies that succeed in involving customers at every step of product/service creation and delivery will thrive and grow. Rest will become history. Question is how many senior executive realize the challenge that is in front of them and are prepared to make this transition?

 

Key to Social CRM success: Go Local!

Marketing is never a zero sum game. Companies don’t have to lose for customers to win and customers don’t have to lose for companies to win. In fact, marketing is the art and science of finding a win-win approach to business transactions in which both the company and customers win.

Social Media can play a major role in finding this “win-win” equation between companies and customers, by helping companies better understand their customers’ needs (not wants or desires) and customers can better collaborate with companies using social media channels to design and co-create products or services that fulfill their needs. One key challenge facing all large and medium sized companies in this regard is how to engage tens of thousands of customers across the world on social media channels.

Well, solutions to this problem is to “Go Local”. Meaning, companies must engage their customers on social media channels at a “local” level. So if a company segments or classifies customers “geographically” or at a “store” level, they should engage their customers on social media channels at a store level. This means that companies need to have a Social CRM team for engaging customers at every local unit (like geography or store).

Unlike traditional CRM, which was all about centralization of information into a database for decision making at the top, Social CRM is all about engaging customers at a “local” level and empowering front-line managers for decision making where it matters the most – at the local level in a decentralized way. Because companies cannot collaborate with thousands of customers in a centralized way.

Here’s an example of this approach: Retail giant, Walmart recently announced that any one of Walmart’s facebook fans can get information from their “local” store by clicking on the Local Walmart tab on the Walmart’s Facebook page. “Liking” a local store will enable customers see local promotions for that particular store and a map of the store with exact location of advertised specials (for more, see this and this).

This strategy of “Going Local when it comes to Social CRM” is applicable to companies across all industries, be it retailers, restaurants or banks. Companies need to form Social CRM teams at a “local” level to engage customers and build win-win relationship with them.

What do you think? Do you agree that key to Social CRM success is Going Local?

Remembering Steve Jobs (1955-2011)

Life of Steven Paul Jobs (popularly called Steve Jobs), the co-founder, former Chairman and CEO of Apple Computers, who died recently has been described in glorious terms. In the past few days, much has been written about his life and legacy, and I don’t think I can add anything new to what has already been said.

But I will definitely add this, Steve Jobs was more than an innovator and a visionary. He was not Thomas Edison of our times as many have said. I think he was an artist – a Michelangelo or a Leonardo da Vinci of our times. Technology was his canvas and iMac, iPod, iPhone and IPad his masterpieces. He approached technology with an artist’s “open” mindset rather than a technologist’s or scientist’s “Do’s and Don’ts” conditioned approach. As a result, what he achieved is truly breathtaking and his creations speak for themselves. I don’t think we are going to see any one similar to him in our life-time. It is often said that those whom the gods love die young. This surely seems to be true in case for Steve Jobs.

During Stanford University’s commencement speech in 2005, he said that “You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.” So true. If only we can find a little bit of Steve Jobs within our heart and soul, our life will be so much richer and fulfilling!

Finally, to end this post I want to share this Bloomberg video on life and work of Steve Jobs. I am sure you will find it informative and inspiring. In case if you don’t see embedded video below, please click on this link for the video.

Rest in Peace Steve, you will be missed! You made it possible for me to video chat with my friends and family members on the other side of world at push of a button from a device that a 3 year old or a 85 year old person, and all age groups in between, find it not only easy to use, but also enjoy using it.

Social CRM Case Study: Netflix Vs. Blockbuster

In one of my previous post titled Social Media: The New Front End of CRM System, I highlighted that 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 brand. Moreover, as this discussion is “public” – visible to all, including other customers, potential customers and competitors, it is critical that companies engage their customers on social media, else their competitors will and damage to the brand will be immense.

Well, we have a great case study on this subject. Netflix, Inc., the provider of online video streaming and DVD by mail service seems to have misjudged the negative impact of price increase and other service changes they announced “unilaterally” this summer and as a result dissatisfied customers have leveraged social media tools to express their disapproval (for more, read this).

But instead of fighting fire with fire and using Social Media channels to engage customers for building trust and loyalty, Netflix has maintained a low profile on Social Media channels. Guess what? Blockbuster, a competitor of Netflix has seized the initiative by engaging Netflix’s customers using Social Media channels. Blockbuster not only offered a “30 day free trial geared at Netflix customer” on Twitter but also “started a new Twitter contest promising a free year of service for the four best Netflix breakup stories” (for more, read this).

Key takeaway from Netflix’s CRM crisis is that it pays to engage customers on Social Media channels because if you don’t, your competitor will. In that case, you will not only be sorry about not engaging your customers but as a double whammy, will also be sorry about your competitor leveraging the opportunity and walking away with your customers.

Life for companies that don’t care about their customers is tough indeed in Social Age. Don’t you think so?

Netflix’s self-made CRM crisis and how Social CRM can help

Netflix, Inc., the provider of online video streaming and DVD by mail service, has fallen from customers’ grace hard and fast. Once a darling of its customers, Netflix management seems to have misjudged the negative impact of price increase and other service changes they announced “unilaterally” this summer and as a result have lost many customers.

Netflix’s CRM fiasco underscores the importance of not taking your customers for granted, especially in this day and age of Social Media. Dissatisfied customers can not only take their business elsewhere, but can also leverage Social Media tools to express their disapproval in a way that can have big impact on other customers and towards the brand. Just see the impact of Social Media firestorm generated by this CRM fiasco on Netflix stock for example (see this link).

Social media has empowered customers like never before to connect and communicate with other like minded individuals ‘publicly’ and the last thing any marketer should be doing in this Social Media age is to take important decisions impacting customers unilaterally and without explaining the rationale or motives behind such decisions. In other words, customers expect to be involved in such decision making or atleast expect a rationale explanation before any changes are made.

So what can Netflix do to recover from self-made CRM crisis. Answer is to fight fire with fire, that is use Social Media channels to engage customers and build (should I say regain) trust and loyalty (for more, see definition of Social CRM here).

For example, how about using Youtube to explain why these changes were made in the first place. How about using Facebook and blog postings to respond to customers’ criticism about price hike and services changes already announced. Key is taking customers’ into confidence in such a way that they feel that they have been involved in taking important decisions concerning the service they receive and pay for. Netflix doesn’t have to respond to comments from each and every customer, but if they respond to few customers in a fair and transparent way, other customers would appreciate and would be much more supportive of Netflix’s position.

Netflix can use this CRM crisis and turn it into a Social CRM success regaining its past glory (and stock price) if they can engage their customers on Social Media to (re)build Trust and Loyalty.

I want to end this post by sharing with you this excellent Bloomberg video on Netflix and profile of Reed Hastings, co-founder and chief executive officer of Netflix Inc. In case if you don’t see embedded video below, please click on this link for the video.

Social Media and the Rise of Consumer to Consumer (C2C) Marketing

I have seen several examples of marketers in both,  Business to Business (B2B) and Business to Consumer (B2C) segments, trying to use the same old B2B or B2C strategies when it comes to Social Media marketing. Marketers are failing to take advantage of unique characteristics of Social Networks by not modifying or re-engineering their business processes for Social Media and are merely “fitting” Social engine to their existing business processes instead and this is bound to fail. In fact, i wrote about this more than a year back in a post titled Social CRM: Thinking Outside the “Call Center” Box.

Companies must understand that Social Media channels empower customers to find & connect with other like minded individuals, interact with them in a “public” way and this is Consumer to Consumer interaction (C2C). Companies must leverage this C2C interaction for marketing rather than using B2B or B2C marketing techniques on consumers who are interacting with other consumers (C2C) on Social Media channels.

We need fresh outside the box thinking to take advantage of unique characteristics of Social Media and C2C interactions. For example, instead of trying to respond to each and every tweet or Facebook posting by customers, something not practical for a medium or large business, the emphasis should be on creating advocacy and building trust among consumers, keeping in mind the “Social Context” and C2C potential of the medium. No where this is more evident than in support communities, where brand advocates/loyal customers help other customers out by answering their questions or suggesting solution (C2C) rather than company Reps trying to answer all the question.

What do you think? Do you agree that marketers need to re-engineer their business processes to take advantage of Social Media’s C2C marketing potential or can they continue to use their “good old” B2B or B2C methods for Social media marketing?

 

Social CRM Market Size Undervalued?

Gartner, Inc., the Stamford, Connecticut based IT research and advisory firm recently reiterated its guidance that “market for Social CRM is on Pace to Surpass $1 Billion in Revenue by Year-End 2012″ (for more, see this). I have seen similar estimates regarding size of Social CRM market from other research and analyst firms in recent past.

Such crystal gazing for estimating market potential for Social CRM software and services reminds me of the story of two shoe salesmen in Africa trying to assess size of the market for shoes. One salesman reported that there is no potential for selling shoes as no one wears them. Second salesman reported that there is tremendous potential for selling shoes as no one wears them. It’s all in the perspective!

In my opinion, the magic revenue number of $ 1 Billion for Social CRM is an under-estimate and true size of the market or potential for Social CRM software and services is much higher than ‘just’ a billion dollar. This is because Social CRM is an indispensable part of any CRM system due to the fact that Social Media has empowered customers like never before, 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, marketers have to 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. As a result, CRM ain’t CRM if it isn’t Social!

And if CRM ain’t CRM if it isn’t Social, size of Social CRM market is equivalent to the size of CRM market in terms of number of installations (this includes large/enterprise class and SME/Small and Medium sized installations of CRM system). In terms of dollar amount, size of Social CRM market is equivalent to a substantial % of CRM market (atleast 25% of CRM market in my opinion). There is tremendous pent up demand for Social CRM software and services, not only among large enterprises but also small and medium ones. The only reason why it is not manifesting in terms of $$$ or revenue for Social CRM vendors is that software/services offered by existing vendors don’t address the pent up demand for Social CRM.

In other words, most Social CRM vendors don’t have a good product/service offering to address this demand. The moment any Social CRM software/services vendor offers a comprehensive solution for this pent up demand, marketers are going to lap it up the way customers lap up Apple’s iPad or iPhone for example. What I am trying to highlight here is that underlying demand for Social CRM software and services is very strong, but software vendors and service providers have not risen to the occasion to meet that demand and hence haven’t been able to tap into it. Hence to say that “market for Social CRM is on Pace to Surpass $1 Billion in Revenue by Year-End 2012″ does not truly reflect the size of Social CRM market. It is substantially more than $1 Billion in my opinion, in fact many times more than that.

What do you think? Do you agree with Gartner that “market for Social CRM is on Pace to Surpass $1 Billion in Revenue by Year-End 2012″ or you, like me think that it is substantially more than $1 Billion? Please take the following survey and share your opinion. (in case if survey question box is not visible below, you can Click here to take survey

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  • About Dr. Harish Kotadia


    That's me with photo gear,  taking snaps of Texas wild flowers. #texas

  • Dr. Harish Kotadia

  • Dr. Harish Kotadia is an industry recognized thought leader on Big Data and Analytics with more than fifteen years' experience as a hands-on Big Data, Analytics and BI Program/Project Manager implementing Enterprise Solutions for Fortune 500 clients in the US.

    He also has five years' work experience as a Research Executive in Marketing Research and Consulting industry working for leading MR organizations such as Gallup.

    Dr. Harish Kotadia's educational qualification includes Ph.D. in Marketing Management. Subject of his doctoral thesis was Customer Satisfaction and it involved building a statistical model for predicting satisfaction of clients with services of their ad agency.

    His educational qualification also includes M.B.A. and B.B.A. with specialization in Marketing Management and Diploma in Computer Applications.

    Dr. Harish Kotadia currently works as Principal Data Scientist and Client Partner, Big Data and Analytics at a Global Consulting Company. Views and opinion expressed in this blog are his own.



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