Customer Relationship Management and Social Networks—They're Related How, Again?

By now, there isn't a soul reading this who hasn't heard of SAP.

By now, there isn't a soul reading this who hasn't heard of salesforce.com.

By now, there isn't a soul reading this who hasn't heard of MySpace.

Or YouTube, or LinkedIn, or Friendster, or

Many of you may know that both SAP and salesforce.com use blogs, podcasts, and user communities to communicate with their customers and their employees. But neither SAP nor salesforce.com nor, in fact, any of the vendors involved with customer relationship management (CRM) as we know it, integrates social networking tools with their CRM and enterprise platforms yet.

"But why not," you ask?

Well, why should they? They don't really understand the value of social networking. Nor do I imagine do you for the most part.

So, let's answer the question so that both the CRM vendors and integrators—and you—will get it and be comfortable with the idea that it's time to move ahead with the new business models that this portends.

The Question

What the heck is social networking, besides being a giant online gathering place for teens or college students (or, if of age, a virtual bar), or a monster repository for sharing videos and photos that has no particular monetary value that anyone can see within a (metaphorical) thousand miles of it.

In fact, using social networks is a major business initiative, and it is becoming a huge factor in how successful (or not) businesses will be with their customers in this part of the twenty-first century.

Let's take a look at the premise behind social networking and how it relates to CRM—especially the next incarnation of CRM, currently being called CRM 2.0.

Starting at the Root

Human beings are inherently social. Human beings also tend to organize socially into hierarchies. Level playing fields are pretty much only the product of a zamboni between periods at a hockey game—not a product of human evolution.

What makes the growth of these social hierarchies interesting (and not at all the same as those found in traditional corporate bureaucracies) is that the "top of the heap" tends to be naturally evolved and organic as opposed to the leaders in the bureaucracies that we know and love. Leaders in corporations are more often than not appointed based on their titles, not on their actual leadership skills. Equally intriguing is that these social hierarchies can be nested within a company as well as the personal side of human life.

Now you may be asking, "What does this have to do with CRM?"

Be patient; you'll see very soon.

Don't think that social leaders come organically? Think again. Do you know someone at work that you go to who provides you with down-home advice on what to do about that terrible day you're having? Or someone who isn't associated with information technology (IT), but who helps you with your computer problems? Or someone who will cheerfully edit something you're writing for work because you're nervous about what you're saying or how you're saying it, and you trust that person's judgment on these things?

These people are the departmental "mommies" or "daddies." You and I both know that they not only exist, but that they are necessary parts of the social structure of a company.

Outside the company, is there someone who organizes your neighborhood block parties, even if you don't have an association around to do it? Or someone whom others trust to take care of "x, y, or z" when "x, y, or z" has to be taken care of?

These are the leaders of your social networks—organic networks that grow out of moral authority and a variety of other factors that are too numerous to consider in such a short article.

Suffice to say that Kurt Lewin, often referred to as the father of organizational change, did experiments in the 1940s on identifying the natural growth of leadership in these organic hierarchies. The validation of these hierarchies has existed since then, if you need something other than me saying it to believe it. Google him and you'll find his experiments at the University of Iowa.

"Okay," you might be saying, "but how does this apply to CRM, again?"

Don't worry, we're getting closer to the answer.

Now We're Getting There

Chris Carfi, in his work Social Networking for Executives and Associations, sees online social networks as the migration of what humans do:

In both professional and personal life, human beings naturally form groups based on affinities and expertise. We gravitate to others with whom we share interests.

Most of you are familiar with the many (popular) social networks such as MySpace for the younger crowd, Facebook for the college crew, and LinkedIn for us older types. But these networks are much richer and more important as a trend that can dramatically impact business. If recognized for their worth, they can become part of the business environment and be immensely profitable and beneficial to the businesses that are savvy about using them.

For example, Procter and Gamble (P&G), one of the most customer-centric and foresighted companies on the planet, understands the value of the social network. They have formed a group called Vocalpoint, which consists of 600,000 moms. That's a formidable number, n'est ce pas? But it becomes much more formidable when you find that the most important criterion for "membership" in Vocalpoint is that each member has to have a social network of at least twenty-five other moms associated with her.

Do the math. That amounts to a minimum reach of fifteen-million people who are interacting with the power of the group and its leader—meaning with moral authority. That's a minimum.

What do they do? The 600,000 moms are given product samples for distribution among their social networks. The lead moms then give the samples out in their informal environment to the identified groupings. They are responsible for gathering feedback on the good and the bad about those products and getting that feedback to P&G. The best of them are called into meetings with P&G to discuss how to modify, add, subtract, etc. from the product that they distributed.

So what does the mom get from this? Prestige and products. Prestige because they are the ones that P&G is trusting to receive and distribute the products—chief in hierarchy. They get the products to use—before others do. Plus, they have the knowledge that they collaborated with P&G to make those products better, or to reduce the price, or something else with emotional value.

What does P&G get? Incredible levels of feedback and marketing buzz from a trusted social network that was in place around each mom prior to P&G coming into the picture. So, P&G products are trusted because they are distributed to and tested by the natural leader within the social network.

Do you see the power of this? A trusted network, established for reasons unrelated to the company, that is involved in collaborating with the company on products that the company is selling to them, and that they as members of the social network are likely to use. The data captured through this network's feedback and the marketing buzz around the product are invaluable.

Thing is, the twenty-first century customer is just doing what humans always do—attempting to participate in the decisions, large and small, that affect their lives at all levels. When a business is able to engage these networks, or in other words, make them involved and collaborating customers, we all win. And we all know that we all love to win, don't we?

So, in a nutshell, here is the answer to your question on what social networks have to do with CRM. The customer collaborates with the company to improve the product and spread the word—advocate, in other words, through the engagement of the leaders of the social groupings most likely to use the products, services, and tools of the business.

About the Author

Paul Greenberg is president of The 56Group, LLC, and chief customer officer of BPT Partners. He is an internationally renowned expert on CRM and one of CRM's most influential authors. His best-selling book, CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, is now in eight languages and is used as a textbook in over sixty universities across multiple continents. It was named "the number 1 CRM book" by SearchCRM.com. Greenberg is the co-chairman of Rutgers University's CRM Research Center and executive vice president of the CRM Association. His blog, PGreenblog, won SearchCRM's first annual "CRM Blog of the Year" in 2005 and was given a "WhatIs.com Editor's Award" by TechTarget as favorite CRM blog. He can be reached at paul-greenberg3@comcast.net.