Social CRM: What's Working, What Ain't

A computer company's research team puts their latest video up on Facebook rather than presenting it during a technical conference. A video game developer turns to Twitter to first break the news of a new release to the masses. A salesperson stays in touch with all professional relationships -- colleagues, mentors, proteges, former bosses, even friendly rivals -- through LinkedIn.

Welcome to business in the 21st century. The widespread acceptance of social networking sites like Facebook, Myspace and LinkedIn is changing the way individuals communicate. Friends lists have become prime currency in cyberspace today. "Since so many consumers have adopted social networks as a new way of interacting, businesses are trying to catch up and use it to increase awareness -- and ideally sales -- of their products and services," Paul Greenberg, president of The 56 Group, a strategic CRM consulting services firm, told CRM Buyer.

Consequently, companies have opened up the corporate walls to these new social networking sites and developed social networking pages. As this change takes place, the question becomes: How beneficial are these moves? Unfortunately, at the moment, no one can say with certainty. Corporations have linked themselves to social networking sites, but in an ad hoc rather than a systematic manner. Social networking information is largely segregated from customer data stored in CRM systems. Consequently, more work is needed before it becomes clear what companies can and should do to take advantage of this new phenomenon.

Social Networks Are Here to Stay

While few businesses are exactly sure how to maximize their social networking features, most are aware they cannot ignore these sites. Facebook has more than 150 million users, and LinkedIn has more than 35 million business professionals using its network. Daily, millions of individuals log onto these sites to express themselves. "Companies are constantly trying to understand what their customers are thinking and how they are feeling," Denis Pombriant of Beagle Research Group, told CRM Buyer. "Because social networking sites have become repositories for their thoughts and ideas, businesses are trying to tap into these sites."

Companies want to use these sites to increase awareness of their products and services. "Social networking is emerging as an integral tool in terms of maintaining customer relationships in an effective and cost conscious manner," Nikki Lamba, an associate at AMI Partners, told CRM Buyer.

In some cases, social networks are becoming a new form of media. Emory Health Care has started to send notices to its patients via Twitter, a service that supports simple text messages.

As a company with close to US$100 billion in revenue, IBM (NYSE: IBM) has often tended to move slowly to embrace emerging technologies, yet the vendor has opened up its Web site to social networks. Ron Ambrosio of IBM Research, for example, has used the company's Facebook page to discusses the company's views about the impact of smart utilities.

Another Way to Gather Customer Feedback

In addition to providing various services to companies, these sites have the potential to provide corporations with customer feedback. An offshoot from social networking is the influx of message boards and user forums. In some cases, corporations have tried to use them for two-way communications. Starbucks (Nasdaq: SBUX) has set up a users' forum where customers can discuss the company's products and services. One change that the advocates want to see: waiving the company's two-hour limit on Internet access.

Theoretically, the monitoring of social networks could lead to changes that increase customer loyalty and sales. One challenge has been that companies usually do not know which employee or customer may know another potential customer. Social networks offer them the ability to collect such data. Software is then needed to analyze each person's contacts, see if there's a match, and facilitates communication among the different parties.

However, to date, such capabilities are more theoretical than demonstrable. "In terms of linking CRM and social networking sites, the industry is in the very early days of understanding how to best use the technology," said Pombriant.

Facing a Number of Hurdles

To realize potential benefits, companies must overcome a number of logistical challenges, starting with collecting social networking information. In most cases, applications like CRM systems were designed to work with structured data, information that could be stored a certain way in a database. The information generated in the social networking sites usually is generated in more haphazard manner and therefore is difficult to capture and make sense of.

Where to channel this information is also unclear. Different groups in companies -- marketing , communications, or customer support -- are responsible for various types of customer interactions. As this stage, most companies have yet to put departments or individuals in charge of monitoring social network data.

The law can also present some challenges. Laws are now emerging about what companies can and cannot do with information generated on social networks. In addition, states have been trying to clarify appropriate and inappropriate uses of that data.

Consequently, most of these systems are in an early stage of deployment -- say, pre-beta beta tests. Rather than clear-cut hits and misses, companies are getting their feet wet and hoping they will be able to leverage their experiences further down the line. "Corporations are now starting to try and put the metrics in place so they can measure the effectiveness of their social networking initiatives," concluded The 56 Group's Greenberg. "Another year or two will pass before they understand the effectiveness of these initiatives."