Amazing customer service from Flightcentre!

I thought that I had written my last post of 2010. I thought that by this time I would be in New Zealand on my honeymoon. Sadly the weather, airports and airlines have conspired against me and, like 1m other travellers hoping to get away for Christmas, I’ve been stuck in London for the last few days waiting for a rescheduled flight.

Having spent nearly 15 years working with Marketing, Sales and Customer Service organisations I’ve seen my fair share of good and bad customer experiences. A crisis is often the best way to stress test a customer-facing organisation; it can shake Customer Service to its core. It would be easy to write a post describing how over the last few days I’ve seen many examples of customer service organisations being totally unprepared for a crisis and delivering appalling service to their customers, but I wanted to take a moment to describe one of the best customer experiences I think I’ve seen.

I’ve always said that its people that make the difference within Customer Service. Sure you can buy expensive technology (and that can help) but if your people are not motivated to help customers then your investment is probably wasted (see my previous post “Software doesn’t build relationships; people do”). People certainly made the difference in the recent chaos at Heathrow. Let me take a step back and explain how Flightcentre dealt with the crisis.

I had booked my flight with Flightcentre nearly 12 months ago and had been looking forward to going on honeymoon and catching up with old friends in New Zealand. The fact that I had booked at a high street travel agent at all (rather than direct online) had originally surprised me. But Flightcentre had been able to get me a much better deal than I could find myself online and Dave Lister, the manager at Flightcentre in Richmond had personally visited some of the destinations I was planning to go to and had made some great recommendations on hotels and restaurants.

Fast forward 12 months and on Saturday evening I arrived at Heathrow to find what could only be described as total chaos. A sudden, heavy snowfall had brought the airport to a complete standstill and unsurprisingly I received a text message from my airline telling me that my flight was cancelled. Within 60 SECONDS of receiving that news my phone rang - It was Dave from Flight Centre. He remembered that I was off on honeymoon and phoned me out of office hours to check if I needed any help re-booking my flights. I was shocked. It would have been so easy for the travel agent to simply pass the buck on to the airline and ask me to deal with the airline direct.

In the end we couldn’t find anything to re-book on Saturday night so Dave and his colleague Jois Christie came into their Richmond office on Sunday morning (their day off!) to help us (and of course their other customers) find alternative flights. In the end they spent around 2 hours with us working through different options until we found a flight that (I hope!) leaves tomorrow. Their knowledge, customer focus and passion for helping their customers was truly outstanding. I certainly won’t be booking my travel anywhere else in the future and I hope Flightcentre recognise what great people they have!

My learning from this - you only get moments of customer delight within Customer Service when people make the effort to go the extra mile.

Disclaimer and disclosure: Flightcentre have no idea that I write a blog on customer-centricty. They have not paid or incentivised me in any way to write this post and have not contributed anything to the content.

The fast & easy path to social media success

You could take any number of easy decisions with Social Media, all of which you could get up and running fast. You could, for example try any of the following:

1. Ignore it and hope that your customers will too

2. Outsource it to a Social Media agency and marvel at the pretty weekly sentiment dashboards that they send to you

3. Set up a Twitter account and Tweet out special offers and press releases

4. Hire a social media guru and pay them to find you more Twitter followers

5. Ask your CEO to write a blog

6. Set up a Facebook fan page so that your customers can “like” you

7. Siphon off a small team of contact centre agents and have them monitor Twitter and reply to angry complaints

8. Create a video of a donkey water-skiing up the River Thames and post that onto YouTube

Sure... you could make any of those easy decisions and implement them pretty quickly. But what happens if:

1. Your customers start to use your Facebook fan page to post customer support issues

2. An environmental movement launches an orchestrated attack on your social sites

3. People start to question the accuracy and usefulness of the weekly sentiment dashboards from your agency and begin to “file them away”

4. Your competitors use insight gained from social listening and analytics to actually improve their core propositions and better tailor those to target your customers

5. Your competitors start to provide their customers with tools that actually help them to do the jobs that they are trying to do

6. The small team of agents you set up to monitor Twitter starts to grow into a much bigger team

7. Your customers start to learn that the only way to get great service from you is to shout loudly at their friends on social networking sites

8. No one forwards the video of your water-skiing donkey

An easy decision is not always a sound decision. Just because you can do something fast, that doesn’t necessarily mean it’s the right thing to do. The speed, ease and transparency of social media bring both opportunity and threat.

GiffGaff – a case study of customers in control

It’s relatively easy these days to find point examples of social CRM in action across marketing, sales or customer service; but few organisations have a holistic Social CRM strategy in place. Paul Greenberg recently wrote a case study on Proctor & Gamble, who seem to come the closest (despite not calling what they do “Social CRM”).

One of the best case studies I’ve come across is a UK-based Mobile Virtual Network Operator (MVNO) called GiffGaff. I was lucky enough to recently meet some of their staff who talked me through the business model.

The GiffGaff story is one of David vs. Goliath. GiffGaff are part of the Telefonica Group. They rent their mobile network from O2 and sell pre-pay SIM cards and actively compete against the traditional Telco companies. Unlike most mobile operators with large fire-fighting call centres, GiffGaff have just 14 employees and no call centre. They challenged the traditional MVNO model by handing control over to their customers. Here’s how:

Product co-creation - right from set-up GiffGaff engaged their target market in 2 way dialogue, asking potential customers and early adopters to decide on how best to structure their tariffs. Similar to Dell IdeaStorm, GiffGaff have continued their Ideas page and at the point of writing they have implemented 112 ideas direct from their community.

Community support – the GiffGaff community is perhaps best shown within customer service. All of GiffGaff’s customer service is online. They pro-actively push information out to their notice boards page e.g. service issues. They publish customer-generated tips and tricks and FAQs. They also make extensive use of their community forum for peer to peer support (supported by intervention and moderation by GiffGaff employees when required).The community has radically cut customer support costs compared to the traditional contact centre-centric model. GiffGaff estimated that if O2 could replicate the model with just 25% of their customers participating, they could save c£20m per year.

Payback Scheme - Perhaps the most innovative aspect of the community forum is that users are incentivised to participate through the use of a payback scheme. The payback scheme rewards GiffGaff members for helping GiffGaff out with Kudos points which can either be redeemed for pre-pay credit, or donated to charity (of course a charity of the community’s choice!).

Social Marketing – GiffGaff’s above the line marketing is minimal for a Telco company. Instead they prefer their customers to spread the word on their behalf. Again they use Kudos points as an incentive - customer’s get 50 points each time they e-mail a friend or 500 points for each SIM card they send to a friend that is activated (where 1 point = 1p). That’s not a bad cost of acquisition and advocacy generates 25% of new customer connections.

GiffGaff’s results so far have been impressive and pretty interesting:

• 50% of customer questions are answered via the community (as opposed to online self service or GiffGaff employee moderation).
• The average response time for any question posted in the forum (24x7) is under 3 minutes and 95% of all questions are answered within an hour. I suspect most Telco call centre customers would still be navigating an IVR after 3 minutes, let along speaking to an agent or having their problem resolved!
• GiffGaff‘s NPS score is 75 - way above the industry average and approaching that of Google or Apple. They publish their customer satisfaction scores here.
• GiffGaff have found that the traditional 90-9-1 model of participation (See Michael Wu’s blog for an explanation) has changed with their rewards system. They estimate that they have a  1-25-74 model i.e. a much higher percentage of occasional forum users.
• GiffGaff found that their top ten super-users spend an average of 9.5 hours per day on the community site. Some super users have gone to extreme lengths to support GiffGaff; stepping in to quash negative complaints and building their own status badges for the forum. GiffGaff’s customers even built them an iPhone app.
• Because of the exceptional levels of support within the community, GiffGaff have also found that some users have started to donate their points back to the super-users who have helped out most within the forum.

Now clearly as a start-up, GiffGaff have some unique advantages. They do not have an existing large and diverse customer base or existing investments in call centres. They can afford to target a very specific niche of customers who are happy for their relationship to be conducted entirely online. However, that’s certainly not to say that traditional contact centre-centric companies cannot learn anything from the GiffGaff model.

Disclaimed and disclosure: I have no affiliation with GiffGaff, either as a customer or as a client. They have not paid me for writing this article (or given me kudos points!).

Fighting fires or building firewalls

Why is it that we often reward fighting fires rather than building firewalls?

The sales person who pulls in a last-hour, unforecasted deal at the end of Q4 is treated as a hero, whereas the relationship manager who signs another deal on time with a long term customer is dull and boring.

The customer service agent who works all hours to react to customer complaints and has a brilliant ability to calm down angry customers is revered; whereas the agent who suggests making a change in a process because it keeps causing customer’s problems is often ignored.

In the world of social CRM, customers tweet, blog & post angry videos to YouTube because they have something to say and they want to be heard. You cannot possible scale to respond to the volume of social content using traditional channels and processes. So instead of constant fire-fighting, why not listen and fix the problem (or opportunity) at source.

Build firewalls instead of fighting fires.

Sailing towards the island of Social bliss

Michael Maoz wrote a terrific post this week: “You failed at Customer Service, so now try Social Processes”. As ever, his post is short, succinct and to the point: "over $75bn spent on CRM-related business applications to date", yet “over the past ten years the level of customer satisfaction has edged up only slightly – for most industries in the vicinity of 3-5 percent”. He continues “along comes everything “Social” to cure the malady of poor service...”

There are no short cuts to customer success. I wrote an article with friend and colleague Reg Price ten years ago in which we called for back to basics thinking in CRM. We wrote in 2000:

“In next generation CRM, customer relationship management practices and software solutions must reach deep into the most fundamental processes of a firm, like order entry, invoicing and ensure that promises made (whether implicit or explicit) are met. It is superficial (indeed futile!) to try for customer delight if customers are being let down by the basics.”

We commissioned a cartoonist to draw up the cartoon shown below of an organisation sailing towards the “island of customer delight” promised by their shiny new CRM system, whist of course forgetting about the basics of customer relationships:

- Understanding and meeting customer needs

- Orders being delivered on time and correct

- Bills being accurate

- Customer privacy being respected

- Front line staff having the right incentives in place

- etc

It’s interesting to note that in many respects, little has changed in the last 10 years. The cartoon above could easily be applied to Social CRM:

- Let’s not worry about customer service issues – our customers will fix problems on our behalf in our forum!

- Forget about traditional marketing – Customers will forward our blogs, re-tweet our Tweets  and “like” us on Facebook!

- Why bother generating new product ideas? – Customers will suggest ideas on our ideas site

Of course, Social CRM offers organisations huge potential to listen and respond to the direct and authentic voice of the customer. I’ve argued previously that in many ways it represents the missing piece of the CRM puzzle. And of course, there are many examples of organisations like GiffGaff, Threadless, Dell & Starbucks  who are successfully harnessing the power of the social customer to get their customers working on their behalf. But simply adopting the tools, without the mindset, the processes, the incentives is a recipe for disaster. Surely we remember that from the boom and bust of CRM?

Characterising different approaches to social media.

I gave a presentation today at the Exact Target Connections conference in London. The purpose of the presentation was to take a light-hearted look at the different approaches organisations are taking towards social media. The slides are in the slideshare presentation below:

Structures for authentic social media engagement

View more presentations from Laurence Buchanan.

In Summary, I described eight different approaches to social media. Although these could be seen as evolutionary steps, in fact, I emphasised during my presentation that there is no “right” approach per se. Different approaches will work for different organisations, with different requirements in different industries.

Approach 1- The ostrich approach

As the name suggests, the ostrich approach is one where the organisation chooses to simply ignore social media, either through fear, or simply lack of relevance or perceived value. The ostrich buries its head in the sand and hope that the danger will soon pass.

Approach 2 – The megaphone approach

This is one of the most common approaches that I see with organisations that have only dabbled with social media. Typically they start in Marketing / PR and view social media as another outbound channel to Tweet special offers, or link to press releases. Normally organisations that take this approach are poorly set up to handle two-way interactions when customers comment or complain. They assume that peer to peer simply means that people will forward on or re-tweet their broadcast content.

Approach 3 – The chameleon approach

If there’s one thing guaranteed to whip up a social media storm its deceit and a lack of transparency. Amazon incurred the wrath of bloggers when some of its product reviews were exposed as being written by authors, promoting their own books. The chameleon approach (also known as the “wolf in sheep’s clothing” approach) is one where the organisation tries to disguise itself and blend into a “public” forum, posting suspiciously positive comments and reviews...

Approach 4 – The dancing dad approach

I borrowed this one from a colleague of mine at Capgemini. The antithesis of the chameleon approach, the dancing dad stands out like sore thumb. Think about the industrial German manufacturer who sets up a Facebook Fan page so that its customers can “like” it. Not cool.

Approach 5 – The command and control approach

Often an approach embraced by organisations that have been burnt by social media. The command and control approach is one where only a select few can engage in social media and their participation is governed by strict guidelines of what they can say. Every blog, every Tweet, every video posted is heavily audited and in strict alignment with brand guidelines. Usually only a select few are allowed to participate.

Approach 6 – The hare and tortoise approach

This is one of the most common approaches to social media that I come across. The hare and tortoise approach is one where some parts of the organisation race ahead to set up new social channels, grab followers and “engage” with customers. Other departments lag far behind creating a disjointed customer experience both across different departments and also across new media and traditional CRM channels.

Approach 7 – The joined up approach

Clearly a tough approach to master. As its name suggests, the joined up approach demands the breaking down of silos across departments and across channels. Organisations that aspire to this aim typically show outside-in, customer-centric thinking and consider the customer’s cross-channel experience.

Approach 8 – Handing over control

A small number of organisations, typically start-ups, have found considerable success with this approach.  The organisation hands over control of product development ideas, recommendations, customer service etc to its customers via social channels. Threadless.com is probably the most famous example (t-shirts are printed based on user-generated designs and votes). GiffGaff is another good example; the UK-based MVNO in effect outsources its marketing, sales and customer service to its customers. Customers are rewarded with points that can be redeemed for pre-pay credit (or donated to a charity voted for by the community!) in exchange for their participation in the GiffGaff community.

This is far from an exhaustive list and clearly each organisation will have different needs and objectives. Can you think of any others?

Facebook Connect & Social Commerce – examples from the consumer world

Mark Zukerberg, CEO of Facebook first talked about Social Graph at the Facebook f8 conference in May 2007. Since then Facebook has quietly extended across the web, in the first instance, embedding Facebook Connect and the Facebook “Like” button into consumer web sites.

I logged onto Amazon.com the other day with Facebook Connect and it’s hard not to be impressed with the depth of Amazon’s integration into Facebook. When I logged onto the site, I gave Amazon access to my Facebook profile, from which Amazon picked up my favourite books, CDs and movies (supplementing their knowledge of my previous purchases to improve the recommendations they presented to me). I could also see what my friends had liked on the site and see recommendations from them. In addition, Amazon picked up the dates of my friend’s birthdays and gave me ideas for birthday presents to buy for them. Scary? Big brother? Maybe... However, Amazon.com is certainly one of the early examples of social commerce in action.

Similarly, on holiday last month I noticed that Tripadvisor had caught the Facebook Connect-bug. By logging in with Facebook connect I could see which cities my Facebook friends had visited, post questions to my friends, asking them to recommend a hotel or restaurant and update my own traveller profile to give back to the community. In effect I could leverage 2 networks – my direct friends and the wider, unknown peer community.

The consumer world, unsurprisingly, is currently leading the way in Social Commerce. Here are just a few other examples of social commerce in action:

Dominos Pizza offer each “Major of Foursqure” in their local branches with a free pizza each week when they spend over £10.

Futureshop.ca, the Canadian arm of Best Buy, use a video avatar called Aaron to answer questions based on knowledge summated by other customers on their Lithium customer forum.

Seesaw.com allows users to post status updates of TV content they have downloaded to Twitter and Facebook (e.g. Laurence has just downloaded “Top Gear” and rated it 8/10). They also crowd-source recommendations using Baynote e.g. “people who liked Top Gear also liked Fifth Gear”).

Levis launched a Facebook friends store on their US site, allowing users to view what jeans were popular amongst their friends.

Sephora set up a Beautytalk forum for their customers to exchange beauty tips. Customers can watch YouTube videos of how to best use their products, rate advice, vote on their favourite products and post questions to the community.

Of course this space is emerging at great speed. The examples above are accurate today, but most likely out of date tomorrow. It will be interesting to see how they evolve and how the two worlds of social collaboration and privacy collide.

If you’re interested in social commerce, Altimeter Group are hosting a conference on The Rise of Social Commerce on October 6-7^th.

Lies, lies and dammed statistics – do social media storms really affect a stock price?

I was reading some provocative headlines the other day about “United Breaks Guitars”. One from the Daily Mail stood out: “The sweet music of revenge: Singer pens YouTube hit after United Airlines breaks his guitar... and shares plunge 10%”.

Somewhat sceptical, I decided to look at the United’s share price during the social media storm to see whether the facts backed up the headline, or whether this was simply over-zealous reporting. My workings are in this Google spreadsheet (I’m no financial analyst so if you find any errors please feel free to let me know and I’ll update accordingly!).

Dave Carroll posted his video on YouTube on Sunday  05^th July 2009. Previously United’s share price had closed at $3.31 on 2^nd July (before the holiday weekend). The day after the video was posted the share price rose to close on $3.34 (+0.91%). The story then hit the national press on 8^th July and the share price closed that day on $3.25 (-1.81%). In the following few days the share price reached a low fluctuation of $3.07 on 10^th July (-7.25%), but it closed on the same day at $3.26 (just a -1.51% drop from 2^nd July). One month later the price had soared to $6.04 (+84.5%), hardly a “10% plunge in value”.

In addition, there were most likely lots of other issues affecting United’s share price during the period in question. Correlation of events certainly does not mean causation, particularly in an industry that has been greatly strained over the last few years and has seen huge fluctuations in stock prices. In this case, at best “United Breaks Guitars” might have been one contributing factor to a temporary dip in United’s stock price; a PR storm in a teacup that the company quickly overcame (at least from the perspective of their stock price).

I started to wonder whether the same pattern played out in other social media storms so I tracked the stock price of BT (after Patrick Askin’s YouTube video complaint), M&S (after Bra wars), Nestle (after their Greenpeace attack) and Dell (after Dell Hell). If you have any other interesting examples please let me know.

In the case of both BT and Nestle, both saw a minor drop in their share prices in the week following their media storms. Nestle’s low point fluctuation was -1.88% (19/03/2010), BT’s was -1.5% (25/06/2010). One month later BT’s stock price had jumped back (+3.39% on 20/07/2007), Nestle’s had dropped further (-2.08% on 17/04/2010); still nothing to suggest that social media storms have anything other than a minor impact on short term stock performance.

M&S and Dell however, experienced slightly larger drops in share price in the period after their respective social media storms. Following (but clearly not necessarily because of) their customer petition against their pricing policy on bras, M&S saw their share price drop by -6.47%, at the lowest point during the first week . One month later the stock had dropped -15.88%. However, we should remember for context that the UK was deep in recession at the time and most high street retailers were suffering.

The day before Jeff Jarvis published “Dell lies; Dell Sucks”, Dell’s share price stood at $40.45 (20/06/2005). The story was somewhat slower moving than the Twitter-storms of today. Various articles appeared on “Dell Hell” over the next few months, including The Guardian and Business week on 29/08/2005. Through that period, Dell’s share price certainly did fall: -2.92% in the first week, followed by a bounce back of +2.78% in the first month, followed by consecutive month by month falls. On 19^th August the price was down -9.7% ($36.39 on 19/08/2005 from the original $40.45 on 20/06-05), in September -18.27% (20/09/2005) and October -25.15% (20/10/2005).

So what can we learn from any of this? Firstly, attention-grabbing headlines aren’t always what they appear. Secondly, in the few case studies I’ve covered (which is clearly nothing like enough to draw out a pattern), the only constant in all the cases is a single-figure percentage point drop during the first week of the social media storm; certainly painful, but not necessarily disastrous.

Perhaps the best learning is that a social media storm can act as a wakeup call to senior management, alerting them of key issues that customers care about. In the case of Dell, these were quite fundamental issues relating to product quality and service and Dell’s response and embrace of all things social has been well documented. In the case of M&S, they responded to their customer petition by publically acknowledging their mistake and changing their pricing policy on bras. Similarly BT, hit by the Patrick Askins video (and indeed often criticised for their customer service) have embraced social media relatively extensively. They have a customer forum where customers can submit questions or ideas, they monitor Twitter for negative sentiment and their last TV campaign featured a “what happens next? You decide” online vote. Many of the companies who have experienced the wrath of the social customer have seen temporary pain but have then turned their negative into a positive.

Disclaimer and Disclosure – I have not worked with any of the companies mentioned, not have I analysed anything other than their share price and the dates of their social media storms. Share prices are affected by a huge range of factors (earnings reports, new product releases, acquisition rumours etc). I have not traced any of these major events to the stock prices above.

How is Social CRM relevant for B2B organisations?

Most content produced around Social CRM relates to B2C scenarios and describes the shift in the balance of power from provider to consumer. Recently I've been working with some B2B organizations who understand the concept of Social CRM but have pushed me to define how specifically the topic can be applied to B2B organizations. Below are some initial thoughts.


Perhaps the most obvious fit for Social CRM within B2B is with those organizations that in effect sell B2B2C, for example Consumer Products companies, selling to retailers, who in turn sell their products to consumers. Historically the Consumer Products company's primary relationship has been with the retailer. However, as consumer demand drives retailer demand, many Consumer Products companies have seen an opportunity presented by Social Media channels to build a direct relationship with the consumer in order to capture consumer sentiment and feedback and feed this back into product development, marketing and sales. For example, an ice cream manufacturer allows it's consumers to vote on new recipe ideas on its Facebook fan page. Those recipes that receive the most votes are put into production, and the level of consumer participation gives the ice cream manufacturer an immediate audience receptive to marketing offers, as well as a feel for the likely level of consumer demand; valuable information which in turn can be used to support retailer (B2B) negotiation.

What about pure B2B? Selling accounting software or professional services to an industrial manufacturer or selling electronics components to an aerospace company. To date most discussion around Social CRM in B2B has focussed on three potential uses of Social CRM:

1. Social Sales - this is perhaps the category that receives the most focus. Most SFA solutions capture transactional information that can be greatly enriched with social information. For example, relationship or profile information from Linkedin, or information services like Hoovers, can provide valuable insights for an account manager trying to build relationships with new stakeholders within an account. New conversations are much easier if the account manager can find a mutual contact or at least show that he/she has come to the meeting prepared, having done some background research.

2. Sales Genius - Some vendors like Oracle have built Sales Genius functionality into their SFA solutions. the basic idea behind Sales Genius is to identify "similar customers who might want to purchase", in theory helping a sales person to hunt for new leads within their installed base and maximise up-sell opportunities.

3. Internal collaboration - I tend to categorize internal collaboration tools like Yammer or Salesforce Chatter more as Enterprise 2.0 tools, rather than Social CRM; but definitions aside, there can certainly be value in applying the same principles or technologies more commonly associated with consumer social networks to internal or partner collaboration. My own company, Capgemini, are extensive users of Yammer which can be used for Facebook-style status updates, or to crowd-source answers to questions.

The danger I see with the above three categories is that they ignore the fundamental inside-out to outside-in mindset shift that Social CRM demands. Social CRM is not about technology tools; these are merely one enabler for a customer-driven, outside-in strategy. The danger in leaping straight to tools, is that this simple principle is often ignored; social sales tools, for example, could conceivably provide sales people with more Linkedin contacts to cold call and bombard with offers; doing nothing to change the core sales approach towards one of listening first and understanding the customers wants and needs, before creating a customised proposition to meet those needs. Recruitment companies and corporate events companies are often particularly guilty of this; seeing Linkedin as a potential goldmine of contact information that can be used for cold calling, but failing to engage, build relationships and understanding before pushing product. B2B customers are just as intolerant to irrelevant marketing spam and privacy invasion, as consumers are!

We can argue and debate whether "Social CRM" is a worthy term or whether it should really just be part of "CRM". I don't particularly care much for these debates. I've been happy to adopt Social CRM as a term (as defined in Paul Greenberg’s “Stake in the Ground Post”) as I think that it brings to life a key distinction from the CRM of the last 10 or so years; namely a clear shift in the balance of power between buyer and seller, enabled by social communication channels. Social CRM compliments an organisation's investments in CRM by capturing the true, authentic and unstructured voice of the customer, enabling them to be customer-driven and not simply pay lip service to customer-centricity.

If we then apply Social CRM to B2B in this wider sense, encompassing the shift to outside-in, more usage categories emerge than those that have received the headlines to date.

1. Social lead generation - one of the tenets of Social CRM is the shift within Marketing from outbound-blast campaigns (Seth Godin calls this interruption marketing) to conversations with customers and prospects. Customers are more likely to engage in a conversation if they feel listened to and if the individual or company they are conversing with has established credibility and subject matter expertise. Gary Vaynerchuck's book, "Crush It", describes this concept pretty well. Gary advises anyone starting a business to first establish credibility through blogging, commenting and engaging in discussions. This is true across both B2B and B2C. Kachiwachi, an IT consultant and Logitech customer who I have written about previously, has established himself as a subject matter expert in Logitech's products through extensive participation in Logitech's online customer support forum (he has single handedly answered over 40,000 customer questions on Logitech's behalf). In turn I suspect that Kachiwachi is in great demand as an IT consultant - if you were a business looking to set up web conferencing using Logitech's products who would you turn to? Kachiwachi or XYZ consulting firm? By participating in online discussions, blogging, contributing and sharing you can establish credibility, start conversations and create leads. 

2. Communities - I've come across a few B2B organizations who have started to set up B2B communities. SAP's software developer network is one of the best examples with around 1.8m members. The community allows SAP to give it's customers a voice - allowing them to blog, participate in discussion groups, download training material etc. The community is powered by Jive Software who also practice what they preach, setting up dedicated collaboration portals for their partners to share leads, request information etc 

3. Product innovation - one of the benefits of a healthy B2B community is that customers can start to participate in the product innovation process, ensuring that their requirements are gathered and fed into product development funnel. Salesforce.com, for example, use their Ideas platform in this way to capture ideas for product enhancements from their customers. Dell do the same with Dell Idea Storm, this is just as relevant to B2B as it is to B2C. 

4. Social support - Wim Rampen's recent series of posts on the Future of Marketing reminded me of the sound principle that from the customer's perspective, value is not created at the point of contract, it is only created as an outcome of usage. B2B organisations who wish to ensure that their customers generate value from their purchases can use communities to keep in touch with their customers and ensure they are receiving value from their purchase. They can also facilitate non-competitive introductions between their clients. One organisations embarking on a difficult or challenging project may gain a great deal from building a relationship with a similar organisation who has worked through the same challenges. Of course social channels like wikis, community sites etc make this collaboration much easier.

What have I missed? What other key usage scenarios exist for Social CRM in B2B?

Three lessons from Paul Greenberg's Social CRM Summit

Paul Greenberg’s inaugural Social CRM summit earlier this year was severely disrupted by a snow storm. It was volcanic ash and a BA cabin crew strike that threatened to disrupt my visit to the second summit, held at Kennesaw State University, in balmy Georgia.

The event was something of a gathering of minds in the SCRM space with distinguished thinkers like Paul Greenberg, Dr Jeff Tanner &  Jeff Pedowitz  presenting and thought leaders like Esteban Kolsky, Marshall Lager,  and Jacob Morgan driving a lively discussion and tweeting live from the event. It was a uniquely social event with an extended audience following the #SCRMsummit hashtag on Twitter.

Two of my fellow participants have already published excellent posts on the event. Lauren Hall-Stigerts wrote a comprehensive summary of the event here and Jacob Morgan covered the more social side of the event here! I don’t aim to repeat anything they have already written. Instead I wanted to focus on 3 key learnings I look away from the summit.

1. CRM remains the foundation of Social CRM

Although the summit focussed on the “S” in SCRM; Paul emphasised a number of times that CRM does not disappear. Companies still need to answer phones, take orders, handle complaints etc... SCRM does not replace CRM, it compliments CRM. In some ways it represents the final missing piece of the CRM puzzle. The piece that acknowledges the customer’s control of the conversation; the piece that encourages listening and responding to the direct and authentic voice of the customer (and the customer’s community); and the piece that forces companies to embrace outside-in thinking and not simply focus on internal command and control mechanisms. Many SCRM vendors and practitioners still have some way to go in articulating a strong CRM integration story, but the 2 must be treated as one.

2. Embracing Social Media does not mean you have embraced Social CRM

Setting up a Facebook fan page or Tweeting special offers to your customers is easy, but let’s be clear; that does not mean you have embraced Social CRM, you have merely adopted some new channels. Adopting social channels without a wider framework can be dangerous. Social media can give marketers more data than they ever dreamed of; the danger of which is that inside-out thinking is perpetuated and increasingly granular customer segments are bombarded with direct messages, tweets, notifications etc.  The force has both a light and a dark side! See my post on Star Wars and Social CRM.

3. The concept of “someone (or a company) like me” is central to what drives customer trust and advocacy and LTV is no longer enough

This was an interesting idea that Paul introduced at the event. The idea of “someone like me” has been told many times. Customer’s trust advice and guidance from people they perceive to be similar to themselves, far more than they trust corporate marketing, PR or a smooth-talking salesman. “A company like me” extends this concept through the alignment of a company’s brand values to those of its customers. Customer advocacy is not just driven by successful transactions; it’s a product of an emotional connection that the customer has made to the company and its brand. Co-creation is a powerful mechanism to help establish a customer’s emotional connection, as customer’s can be made to feel part of the brand. When a customer feels part of the brand and starts acting as an advocate, traditional metrics like LTV are no longer enough; the social customer can have positive or negative value far outside their direct revenue-generating transactions. See Paul’s recent post on Measuring the Social Customer.

It was a pleasure to attend the Social CRM summit and connect with many of the friends and colleagues that I have been working with for a while. A Transcript of the Tweets from the event can be found here.

Disclaimer and disclosure: I attended the Social CRM summit as a guest of Paul Greenberg and BTP Partners but my company Capgemini paid my travel costs.

What's driving Social CRM - opportunity or fear?

Most clients that I have discussed Social CRM with so far have fallen into one of two camps: those motivated by the opportunity presented by Social CRM and those motivated by their fear of the social customer. Let me say from the outset that I recognise that this is quite a crude split, that there are grey areas in between, and that over time it's certainly possible for a client to move from one camp towards another; but for the moment let me explain my thinking.

First, a reminder that Social CRM is "the company's response to the customer's control of the conversation" (Paul Greenberg "Time to put a stake in the ground on Social CRM"). Those driven by the opportunity of Social CRM see customer control of the conversation as a positive thing as it provides knowledge, insight and engagement that they might otherwise have missed.  If we take a Consumer Goods company as an example, most have long been separated (and as a result frustrated) from their end consumers by retailers. For Consumer Goods companies Social CRM represents a unique opportunity to engage, listen, capture and respond to the direct and authentic voice of the consumer. Consumer Products companies can leverage Social CRM to build deeper relationships with the end users of their products, create new products (or re-design old ones) based on direct community feedback, adjust promotions or test new markets based on real consumer insight.

Those motivated by fear of the customer's new found control of the conversation, on the other hand, think quite differently. These are organisations whose relationship with their customers is typically defined by negative moments of truth. Take a water utility, for example. Now I have no desire to have any sort of interaction with my water utility other than when I sign up, when I leave, or if something goes wrong in between. My relationship with my water utility is defined purely by how easy it is for me to set up or close my account, the cost of my bill, how many things go wrong and how well they are dealt with. If things do go wrong (for example, if my bill is incorrect, my water pressure is low, or if sewage is pumped into my street) them my relationship with my water company is determined by how well they deal with that negative moment of truth. If my water utility can't fix the problem in a manner I deem to be appropriate, through the channel of my choice, then the chances are that I will eventually turn to social channels to vent my frustration. I will tweet, I will blog, I will write negative reviews etc. If my negative sentiment resonates with others, then it will gain viral momentum, causing embarrassment and potentially lost customers. If you think about many of the headline-grabbing Social failures like United breaks guitars, Eurostar's Twitter storm, or BT's YouTube complaint; many have been driven by an inability to spot and deal with a negative moment of truth. Hence for some organisations, their primary driver for Social CRM (at least in the first instance) is simply to be able to better listen and respond to angry customers; putting out sparks and flames before they become fires.

Currently most commentary on Social CRM is directed towards the opportunity camp. I don't dispute that, or the logic that goes with it - the opportunity camp is where the excitement happens; where organisations can become truly customer-centric / customer-driven. But the opportunity camp is not necessarily an easy starting point for all organisations; improving customer service to quench flames of discontent is far more tangible for some. Over time I suspect companies starting in either camp will evolve their thinking and usage of Social CRM. Those who start by trying to listen and respond out of fear for the social customer may find an opportunity to better understand their customers (their desired outcomes and their value creation processes). This insight in turn may lead them to spot new opportunities for product or service enhancement.

What's your view?

Measuring the ROI of Social CRM

For some reason ROI is often a dirty word when used in the context of a Social CRM initiative. Metrics are abundant but dollars are often harder to find. It’s easy to point to a metric like number of followers, page impressions, percentage of positive sentiment etc but ultimately all of these are just leading indicators. Every board room I have been in to have asked the tough questions:

•    How much is this going to cost me?
•    What cash flows will I get in return?
•    How will this enable me to achieve my strategic objectives?
•    What are the risks?
•    How does the proposed course of action compare against other (viable) alternatives that I have?

I couldn’t imagine facing off to a hard-nosed exec without having answers to these questions and responses like “we need to join the conversation” simply don’t cut the mustard. Kathy Herrmann nails this point in her presentation on “What Social Business ROI really means”:

“There are folks who seem to view social media initiatives as a special class of corporate initiative that’s exempt from Business 101 fundamentals. That astounds me, especially when you consider how the costs for social media can climb...It is unrealistic not to expect execs to demand an ROI on any major corporate initiative. Companies run on money, not on tweets or the number of friends they have.”

Twitter may be a free tool, but Social CRM has real costs: People, Process, Technology and Management. It can also create tangible benefits; increasing revenues (e.g. through word of mouth marketing, up-selling or cross-selling), or reducing operational costs (e.g. through call deflection via an online community, or reduced cost of lead acquisition). Logitech for example deflect around 120,000 cases per month from their online community. Dell famously sell around $3m per annum via Twitter (tiny in the context of their overall revenues, but nevertheless growing).  As such, why shouldn’t the Board be entitled to understand the likely cash flows from their investment? Natalie L. Petouhoff, Ph.D. from Forrester has done a terrific job of detailing some of these costs and revenue as they relate to online communities in “The ROI of Online Customer Service Communities”. The Social CRM vendor, Lithium, has gone a step further and has built some of this thinking into their product.

The real question in my mind is not whether ROI is measurable or valid (it is), it’s whether ROI is the only metric worth evaluating? I would suggest that ROI as an isolated metric is not enough. In fact nothing like enough. All companies aim to create shareholder value (or “Stakeholder” in a public company); but each will have different methods of achieving that goal. For example a low-cost retailer might focus all its energies on growing revenue and market share during a time of economic recession. The retailer will actively hire and spend marketing budget to achieve those aims. Other companies may focus on earnings during the same climate of economic distress; consciously sacrificing risky revenue growth opportunities to concentrate on cost-saving. A decision to invest in Social CRM needs to be based on ROI but also on alignment to strategic objectives. This is a point Wim Rampen makes clearly:

“If the goal of your strategy is to double your market-share in 10 years... I would think that any investment you are doing should be aimed at meeting that strategic goal, hence any business cases should not only be measured against financial ROI, but against strategic-outcomes too”

Don Peppers and Martha Rogers take strategic thinking about customer-investments one step further with their comprehensive work on Return on Customer (ROC). They suggest that customer’s are the surest route to business growth:

“Most business executives would agree, intellectually, that customers represent the surest route to business growth – getting more customers, keeping them longer, and making them more profitable. Most understand that the customer base itself is a revenue-producing asset for their company – and that the value it throws off ultimately drives the company’s economic worth. Nevertheless, when companies measure their financial results, they rarely if ever take into account any changes in the value of this underlying asset, with the result that they are blind – and financial analysts are blind – to one of the most significant factors driving business success.”

This way of thinking balances short and long term objectives in a meaningful way and offers something complimentary to ROI:

“Return on investment quantifies how well a firm creates value from a given investment. But what quantifies how well a company creates value from its customers? For this you need the metric of Return on Customer (ROC). The ROC equation has the same form as an ROI equation. ROC

equals a firm’s current-period cash flow from its customers plus any changes in the underlying customer equity, divided by the total customer equity at the beginning of the period.”

What I like most about ROC is that it treats customers as an asset (the sum of all customer lifetime value) and it takes into account changes to the capital value of that asset, instead of simply looking at the dividends produced by the asset in the current quarter i.e. current quarterly revenues. The capital value of the customer asset is not just their transactional worth it is also their “social” worth. As my Capgemini colleague Mark Walton-Hayfield points out:

“Having reward mechanisms that are based on more than just what the customer spends with the company will become more important. Reward mechanisms need to develop to be based on the value that customers bring to the organisation through co-creation and customer advocacy as well as their attitude to the company brand. This could be based on the contributions they make to an online community or knowledge base, for example, and the additional customers the business may obtain through existing customers’ recommendations or positive comments made by an existing customer.”

On that basis therefore, whilst I would suggest that looking at the ROI of a Social CRM initiative is mandatory, I do not believe it should be looked at in isolation. A decision to invest in social CRM needs to be aligned to an organisation’s corporate objectives and needs to consider both short and long terms value drivers.

Further reading and presentation material:

A huge amount of work has been done on ROI in Social CRM. I’d recommend the following:

Natalie L. Petouhoff, Ph.D. (Forrester) - “The ROI of Online Customer Service Communities”

Kathy Herrmann - “What Social Business ROI really means”

Mike Boysen - The ROI of CRM (and Social CRM)

Olivier Blanchard - Basics Of Social Media ROI

Don Peppers & Martha Rogers PH. D. – “Return on Customer”

This article was first published on myCustomer.com