My commentary on social media and the real-time Web

Is CRM obsolete?

2009 February 2
tags: ,
by tjtee

If social media is about people and relationships, and people who matter most to a business are (generally) its customers – shouldn’t we be using CRM (Customer Relationship Management) systems to manage business relationships in the social media space?

A quick check with the top CRM brands in the business – Oracle, SalesForce.com and Microsoft revealed that none(!) of their solutions provide the ability to create or manage social media programs (Campaign management is limited to search marketing, email marketing and direct mail).

Why is this a problem?

  1. Speed and Reach of communication (or rather, a lack thereof) – Customers are interacting in ways that are faster and further reaching than ever before. It’s no longer effective to track client interactions via email or phone logs. The lines are open for us to reach our customers through new and creative ways; we can now engage our audience through Facebook and Ning, or manage customer service through Twitter and Get Satisfaction.
  2. Whether you like it or not, customers are sometimes connected with one another – Social media breaks down barriers and it’s no longer practical to manage relationships in silos. We’ve seen how fast information can travel online – if bad news about your company creeps its way into Twitter, expect it to reach your audience faster than you can say “wildfire” (Motrin Mom and Walmart come to mind). Compound that with the virality of social networks and what you get is nothing short of a PR nightmare.
  3. With CRM systems, we define relationships – premium customers, hot/cold leads, etc. On the social Web, relationships are defined by people (the strength of those relationships is greatly influenced by 3 factors: Visibility, Engagement and Trust). This disparity may cause us to have a false sense of security with our customers, allowing our better-equipped competitors to creep up on them without us even knowing.

Current CRM systems aren’t designed to handle the new rules of customer engagement. Unless a new and improved model for CRM is developed, I believe it no longer works.

Your thoughts?

from → Social media

  • Hi TJ,

    Perhaps I am a few months late with this but I should share anyway. But firstly, just to be clear, i am an Oracle employee who is very interested in what we're doing in the Web 2.0 front (I am not in a sales function, PR or development, just a social media enthusiast :)

    About your post and Steve's reply, I think there 2 completely different tools/systems in discussion here. CRM as an enterprise selling tool and CRM as customer management/communication tool. In the first instance, CRM is really a tool to help sales folks in an enterprise to sell together AND socially. An updated way of working through shared resources, in a collaborative manner. That is in itself a revolution in the way we work in a Web 2.0 manner. There is a product called Oracle Social CRM that works like this http://www.oracle.com/applications/socialcrm/in...

    The other CRM as relationship management tool (the one I am interested in) is much harder to integrate, especially in a Web 2.0 way. How much of this sort of system can be exposed? Say you are managing and building relationships and conversations with your best customers, its great, but for any real benefit, it has to be a closed network, much like Facebook. Otherwise, with competitors peeking in, its not much fun. But building something more open, would certainly mean you will not be able to focus on your best customers. Back to square one.

    I think you may have been refering more to CRM as relationship and community building yes? In that case, an Oracle reference would be Oracle MIX https://mix.oracle.com/, a Facebook-like network open to anyone. There are some real conversations out there but it is really a CRM on a general level.

    I, for one, strongly advocate doing CRM via social media as a Customer Service function. There's real value in engaging very closely, through Twitter for eg. (Compete.com does this really well), forums, facebook. That's how I feel real CRM will work, when somebody on the other side actually responds (but must remember to track data too). And best of all, the tools are free. Its only the enterprise that has to wise up and look into it, train the Customer Service angels in social media and integrate it with its processes. In Customer Service (the people who actually KNOW your customers). NOT PR :) This in my opinion is the best solution to an open CRM community building system, with data tracking and logging of course. It is not pushy and customers do want to speak to brands (especially to complain).

    One best example, Zappos. I had posted a link to their vid on my blog here: http://groovygenie.wordpress.com/2009/08/11/zap...

    Another good article (by Tamar Weinberg) tuned to the same wavelength: http://www.techipedia.com/2009/customer-service...
  • TJ
    Looks like Gist (gist.com) is taking some baby steps in the right direction.
  • TJ
    Thanks for the thoughtful analysis, Steve!

    Through this post, I'm suggesting that the entire CRM model be redesigned from the ground-up. I think businesses could use features such as brand monitoring, noise filters and crowdsourced customer support to equip them for the new business landscape. Perhaps not today nor this year, but I believe they'll become essential in the not-too-distant future. Btw, I'm planning a follow-up post to discuss the framework for "CRM 2.0" - it's still up the air at the moment, but I'll try to pin down some loose ideas that are swooshing around in my head :)

    "...far too many bureaucrats controlling what’s going on in processes. They aren’t going to hand over control to relationship people." - I couldn't agree more with you. It's an excellent opportunity for agile small-medium businesses to level the playing field and it's great that your company is targeting this segment.

    "So the question is whether social media adds transaction capability or CRM adds more relationship capability." - You know which camp I'm in. I believe it's in the CRM companies' best interests to adapt to the social Web. Evolve or be left behind, I say.

    Companies can choose to manage parts of their social profiles through CRM, or closely integrate their business with the networks (of course with noise filtered). The more integrated the business is, the clearer the picture it gets. Look what Davos taught us about Facebook.
  • TJ

    you raise some interesting points here, and are in good company. This is becoming quite a topic between social media types.

    Seems to me that typical CRM systems aren't about relationships at all. Really they're about transactions - either sales or customer service

    Whereas social media is all about relationships (as we all know).

    In the old industrial model aka CRM we used relationships to "enable" those transactions.

    Now whats happening with infinite competition enabled by the web we're moving to a model where we conduct transactions to "enable" the relationships.

    This is a fundamental change in the way people interact, but the big companies aren't going to implement the thinking anytime soon. There are far too many bureaucrats controlling what's going on in processes. They aren't going to hand over control to relationship people.

    Having said that, we're already seeing smaller businesses (like ours) focus much more on real relationships - it helps them compete with the bigger companies.

    We don't like to think of ourselves in the CRM space but that's where lots of people like to put us. We do manage relationships, but not in the way generally described by the term CRM.

    I guess that means we agree with you BUT we don't see social media as having any transaction capability.

    So the question is whether social media adds transaction capability or CRM adds more relationship capability.

    We don't think many businesses will want to manage parts of their business on Facebook or Linked In, but will definitely want to build in access to the profiles and networks we're all building there.
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