Social networking has collided with customer relationship management (CRM), and it's turning the relationship between businesses and their customers upside down. No longer are businesses simply tracking customer buying habits and attitudes through the use of surveys, focus groups, and traditional CRM solutions. Today, businesses are using social networking sites like Facebook and MySpace, or developing their own social networks—as is the case with Procter & Gamble—to create organic, online, highly “niched” customer communities.
It's the ultimate feedback loop, allowing customers to directly express their needs and desires, and it represents an outstanding opportunity for progressive marketers to get deeper into the hearts and minds of their customers than has ever been possible.
Download the latest TEC podcast to find out more about how social networks are revolutionizing the world of CRM, as TEC's director of research, Wayne Thompson, sits down with Paul Greenberg, author and internationally renowned expert on customer relationship management.
They'll discuss the latest trends, which industries are best suited to take advantage of social networking, and what stops more companies from engaging in social networking or using its potential.
Download Social Networks: How They're Turning CRM Upside Down today.
This podcast examines the following questions:
- How are companies using social networks to reach, influence, and service their customers?
- What's stopping more companies from exploiting the business potential of social networks?
- Which industries are best positioned to take advantage of social networks?
- How are mobile devices, such as iPhones, helping to drive the social networking phenomenon?
Listen to the entire 11:35 minute podcast
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Podcast Transcript
Welcome to TEC Radio. I'm Wayne Thompson, director of research for Technology Evaluation Centers [TEC], and I'll be your host for today's show.
In this episode, we'll be exploring social networking and its impact on customer relationship management [CRM]. To help, Paul Greenberg will be joining me in the discussion.
Paul Greenberg is an internationally renowned expert on customer relationship management. His best-selling book, CRM at the Speed of Light: Essential Customer Strategies for the 21st Century, is available in eight languages and is used as a university textbook in over 60 countries. He regularly writes for publications such as CRM Magazine, SearchCRM.com, CRMGuru, and The New York Times. Paul is also a founding principal and executive director at BPT Partners.
Wayne Thompson: We all know about Facebook and MySpace, but how are companies using social networks to reach, influence, and service their customers?
Paul Greenberg: There are two ways this is being seen pretty dramatically. On the one hand, it's the use of Facebook by companies, and on the other hand is the creation of their own social networks.
I'll give you a couple of examples. If you go to Facebook right now, which has become a platform, you're finding business people are beginning to populate Facebook in a dramatic fashion. In fact, the age of Facebook members has gone up to around 35 years old, which is hardly college age. The thing that's interesting about that is that you will find that [chief executive officers] CEOs of many companies—many practitioner companies—are part of it and have their own networks and groups. And you get invited into these networks and groups, and get invitations to these groups via Facebook. So, on the one hand, they're using existing social networks, and on the other hand, you have companies like Procter & Gamble, who are creating their own social networks.
For example, they have VocalPoint, which is [made up of] 600,000 mothers, and each of them has a network of 25 other mothers, of whom they are the head of the pecking order. And what Procter & Gamble does is that it gives products to the lead 600,000 moms, and through natural behavior—not through focus groups, not through surveys—through their natural day-to-day activities, [they] spread the word about the products. They use the products and give feedback, which is then fed back to Procter & Gamble. And then Procter & Gamble will modify the products, change them, or price them differently, accordingly.
[There are] two value points to understand about how these social networks are being used in this specific forum: the amount of feedback that is being given is invaluable because you are getting it through real-life situations, and it's a real-life group of real-life humans, as opposed to a focus group ... This is natural behavior, so the feedback tends to be quite real. It also empowers the moms—the lead moms especially—and they get validated as the leader of the pack, and they are the ones who are getting and distributing the products.
But there's one other thing. Now, think of this: 600,000 times 25, and you get at least 15 million. That means that your potential reach for a product is 15 million [prospective customers] without a dime spent beyond the actual distribution of that product to the moms. It's a huge marketing potential. This is something you're seeing more and more frequently with companies that are being successful—on the one hand, utilizing existing social networks, and on the other hand, creating their own social networks and their own user communities, either privately or publicly, for facilitated activities that involve feedback and marketing reach, which are phenomenal results. Profit and revenue are their benefit.
WT: Paul, given the value you just outlined with that example, why do you think that more organizations aren't doing social networking or utilizing its potential?
PG: Because in order to do it effectively—and this is the tough part—the company needs to make a cultural transition that says, "We are ceding control of the business ecosystem to the customer." In other words, it's recognition of the fact that the customer is already doing this stuff, the customer is going to continue to do it with or without them, and in fact, the customer is actually creating the demands and commands that the business has to adhere to. The customer is saying, "This is what I want. Show me you can give it to me." It's no longer, "Oh, you've got this great product. Thank you for producing it." It's the other way around. That is a very difficult cultural transition for the company to make, because it overthrows everything they've done in the 20th century and the earliest part of this century. You have a dramatic move that has to be made in order to do it well. Companies like Procter & Gamble have made that move. Others just simply can't or refuse to.
WT: Paul, in what industries do you see the biggest potential for social networking, and why?
PG: In the high tech industry as a whole, there is a tremendous amount of opportunity from both a [business to business] B2B and a [business to consumer] B2C standpoint. High tech tends to be prone to that to begin with, and is actually the one producing the tools. We've seen it [being done] in the enterprise 2.0 fashion, meaning internally to the businesses, and we've seen a lot of use of social networks at companies like SAP, or IBM, and so forth. ...The retail industry is another one that has a very big potential [for social networks] because it is a consummate B2C experience. It is a direct customer-to-store kind of experience. At the same time, there's a virtual side that becomes very useful because a lot of the social review sites, for example, are geographic. When you look at Yelp, it's not just based on Nordstrom's. It's based on Nordstrom's in Atlanta, Georgia [US], or ... San Francisco, California [US], Mission Street .... Because the retail experience is so direct and potentially emotional, it's another area where that kind of potential exists.
Financial services … is an area that shows some promise. And in fact, Microsoft and other companies are building out financial services–related communities right now, but it's a little more difficult in areas like that, although there is some real promise there because of the capability to discuss financial approaches and things going on—different deals out there. But on the other hand, there are strictures, and governance, and other corporate responsibility issues that are a little bit restraining. So you have a sort of a mixed bag in an industry like that. …The reality is that it's a peer-to-peer revolution, or evolution, to start, so it's a matter of which industries get smart.
The biggest thing to me, besides high tech, is always going to be retail. Retail's going to be gigantic. The retail customer experience is a primary one, and is something we all do on a B2C level as individuals. That's where you're going to see a tremendous amount of growth, and you're already seeing it. What you're seeing is how retail will respond to what's already going on.
WT: Paul, given the proliferation of mobile or portable devices, what types of technologies or uses have you seen to extend social networking or social media to those platforms as well?
PG: Actually, several. For the iPhone or any mobile device, you can go on to, for example, your Facebook account, and get a very good representation of your actual Facebook account. You can see what's going on, respond and answer, and pretty well be functionally active on Facebook via your mobile device. It's got a particularly good implementation for the iPhone, and generally good implementation for other mobile devices.
Another interesting example, which I've always found fascinating, is a company that many of us know called Neighborhood America, that has a mobile platform that they use. World Vision is doing something ... and here's how it's working, so you can see how you can almost, on the fly, build a social network. World Vision is trying to build social networks called "Communities of Interest," meaning that they are common areas of interest that these communities are built around. They can be built geographically or otherwise, but they're still common areas.
What they do is, for example, send out a million text messages (literally, not figuratively) … based on some fundamental area of interest. Let's say 5 or 10 percent respond; they get back 50,000, or 100,000 responses. Then they send out a further series of opt-in text messages, and eventually what happens is it coagulates into groups that are built around this particular interest, with more and more in-depth information being gotten about the different people, and they're geographically located so you'll know you've got 72 people in Portland, Oregon [US] committed to this Community of Interest.
The interesting thing is that this is being done entirely via mobile devices.... It can be brought to standard desktop kind of Web service, based online, of course, but the reality is that this starts with a text message and ends with text messages. As a result of this, you get a social network built around a community of interest that you can geographically identify with the names of the individuals in those areas, so that if you need to activate them, you can.
These are some of the more interesting approaches that the social networks are being utilized for, and entirely in a mobile fashion.
WT: Thank you so much for joining us today.
PG: Take care.
Thank your for listening to TEC Radio. Hope you enjoyed our show. If you'd like to learn more about customer relationship management or social networking, please check out http://www.bptpartners.com and http://www.technologyevaluation.com/. See you next time.
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