Introduction

“One face to the customer, one face of the customer” is a guideline, which takes us to our understanding of Customer Relationship Management. The last decade witnessed a major shift through the emergence of the social web in the behavior from companies to customers and vice versa. Not only as a matter of IT-processes and calculation, CRM should now be understood as a mutual “trust-driver”. This is pointed out in Robert Morgan’s and Shelby Hunt’s Trust-Commitment-Theory of Relationship Marketing: “The efficiency, adjustment, and even survival of any social group depends upon the presence or absence of such trust.” (Morgan/Hunt, 1994) Especially as we are facing the so called Social Media Revolution, companies have to focus on the new possibilities of how to improve their customer relationship. Besides the matters of trust and commitment, the main strategic, analytical and operative factors of CRM are still valid, of course.

Strategic CRM

The strategic part of CRM deals with the planning and management of an appropriate customer service. The main goal behind this task is to increase the individual lifetime value of all the company’s clients. This is realizable by optimizing the internal processes, the workflow and providing an efficient back office. Concerning the customer data management in this new media era, it is important not only to collect data; from a strategic perspective all data has to be relevant, predefined and up-to-date. New in this era is the analysis of social media channels, which are higly relevant to the company. Very important is how the relevant data from this social media channels is collected and filtered. This may be possible by targeting and monitoring certain social media channels (e.g. blogs, facebook fansites, twitter channels) and deriving a strategy on how to tackle the users of those channels. All of the gained information will have to be analyzed, interpreted and operationalized to provide a perfect match of data management, customer interface and finally retail.

Operative CRM

Operative Customer Relationship Management is the operational part of the CRM-Strategy. The primary goal is the monetarization of relationships with the customers. Operative CRM allows to improve customer touch point, therefore CRM must assist all business units with customers contact. Thus CRM is necessary in marketing, sales and customer service departments. CRM provides tools to automate and optimize every  process interfering with customers, customer activities as well as marketing campaigns targeting customers. Every communication and interaction with the customers interacts through customer touch points such as classical call-centres, sales forces or the website. CRM tools provide the agents working at this customer touch points with information about the customer like customer profile or buying behavior. Newly gained information, is added to the customer profiles to close the loop in the CRM process. Lately information obtained from social media is gaining importance. It provides the employes with very personal information. Bidirectional communication is simplified, customer oppinions and feedback can be drawn out of social media through social CRM. This gives companies a unprecedented glimpse of their customers.

Analytical CRM

Analytical Customer Relationship Management records systematically customer contacts and customer reactions in one comprehensive database. The data is subjected to continuous optimization of customer related business processes through different analysis-tools. CRM is the learning system, in which data is used systematically to coordinate customer communications, products and services (Hippner/Martin/Wilde, 2011). In the analysis process, a complex volume of data is searched for patterns to discover new customer profiles and new cohesions. Tools include shopping basket analysis, customer segmentation, credit analysis etc. At the moment, analysis of customers social network profiles is becoming increasingly important. It allows to easily gain information about any specific customer such as personal opinions, which was never been possible before. Nevertheless, the social media analysis requires a lot of thorough monitoring and strongly influences the operative CRM, as it is important to continue the dialogue with the customer. Other classical customer assessment tools are ABC analysis, customer lifetime value, scoring models and the portfolio analysis. The analysis allows to measure the effects of given discounts, marketing activities or individual customer contact programs.

Strengths and weaknesses of CRM

The three areas – strategic, operational and analytical CRM – are connected to each other through a closed loop system. This loop symbolizes the data circulation within the company. Through this „architecture“ a learning CRM system is created. Therefore a close relationship of the three areas is essential for a well working CRM.

It’s important to keep in mind that CRM is not just an IT application. CRM is furthermore an organizational approach. Before introducing the software, the strategic goals and the necessary customer-facing business processes in a company have to be clearly implemented. CRM is used to align the company to the customer. In the course of increasing importance of social media, companies have to determine in which sector Social CRM is useful. Strengths of a Social CRM are huge amounts of data and clear customer profiles which can be used in the CRM loop. But at the same time, the CRM system has to deal with semantic ambiguities and sensitive customer opinions.

CRM solutions are often the source of great change and innovation within an organization. By using CRM, business processes become more efficient. The coordination of individual customer interfaces gets easier. Competitive advantages can be achieved through CRM systems. Differentiated customer approach improves satisfaction, helps in building customer loyalty and decreases customer resentment. Furthermore it allows understand the customers better. This results in a higher „Customer Lifetime Value“.

Despite all advantages there are key risks by using CRM. As mentioned, especially in Social CRM, data privacy has to be ensured at any time. Possible consequences otherwise are dissatisfaction and distrust among customers. Implementing CRM often comes along with technical problems and high costs, thus the good intentions of CRM shall be kept by keeping the data quality high. Accurate and current data are therefore absolutely essential.

How can CRM make the invisible hand of the market visible?

How can a company make the invisible hand of the market visible? CRM is used in the operative business in marketing, sales and service processes. Instead of only collecting data the thee departments should gain a competitive advantage through CRM. For this purpose a company should establish a scheme consisting of four parts:

  1. Monitoring of the customers
     According to the Cluetrain Manifest of David Weinberger and others from the year 2000 markets are conversations. These conversations must be observed by a company.
  2. Interaction with the customers
     Monitoring only is not enough. Stepping further a company has to take part in the conversations and interact with the customers.
  3. Collection and generation of knowledge
     To receive benefits from conversations, a company has to systematically collect and analyze them. Later it can use the results for marketing, sales and services.
  4. Right handling with critique
     Successful CRM is based on transparent, authentic and constructive approach with critical voices. Every critique is a chance to understand the customers better and to adapt the products to their demands.

Social CRM: Conclusion

Especially in social media it is very easy for companies to establish contact with individual customers without them feeling bugged. It can be assumed that companies will turn their attention towards multiplicators in the social web, who recommend their products to other users, in near future. It will be very important for companies to connect with these multiplicators and to have them on their side. So future CRM will be characterized by personal relationships between a company and particularly valuable customers in the social web . One one side it is important to collect data on the other side it is even more important to initiate conversations. This is exactly what social media is meant for. Concluding, social media will play a major role in CRM, but won’t be an independent CRM-system.

Authors

  • Saskia Egger
  • Manuel Fink
  • Britta Neugebauer
  • Corinna Kramm
  • Kathrin Kurz
  • Anna Vorderdörfler

Sources:

  • Business Intelligence Group/Gentsch, P. (2010): Social CRM – Kundenbeziehungsmanagement im Zeitalter des Web 2.0. Präsentation auf dem CRM-Symposium im November.
  • Detecon International GmbH/Munich Business School (2010): Studie: Kundenservice der Zukunft.
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  • Hippner, H./ Martin, S./ Wilde, K. D. (2011): Customer Relationship Management. In: WiST Heft 8: 417-422.
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