Why CRM needs to turn around

This guest post is by Charles Oppenheimer, creator of Prizzm and Mightbuy.it

CRM (customer relationship management ) are systems that companies use to track their customers.  The hope for most companies that invest in CRM is that their  investment will produce happier customers, that loyal customers will produce more profits.

To some extent CRM investment has worked for companies that have made long term investments in CRM processes, despite the flaws with these systems.     Apple is a decent example, they invest in very high end  CRM systems – but no amount of money they spent on customer service is too much, they are wildly profitable, and probably just want to spend more to make customers happier.   But many customers  feel that the investment hasn’t worked, they aren’t happy, or often outraged and appalled by terrible service and awful ads  and marketing.  Here is a recent one about United Airlines – one of the few cases where terrible customer service is almost life threatening. Usually it’s not that bad, but as customers we have the right to express ourselves if we don’t like our vendor, either by taking our business elsewhere or complaining – or both.

There are a number of problems with  CRM promise:

1. CRM doesn’t work.  CRM doesn’t “manage” relationships with customers. Oops.  They are databases that track a few data points and transactions – at best. Often they fail to do that too. Oops again.

2. They are inefficient – they can cost an enormous amount of money, smaller businesses generally don’t use them at all.  The cloud/saas has reduced some of the costs, but many costs are organizational and haven’t fallen that far.

That isn’t stoping the CRM industry, many players are growing as fast as ever. Who doesn’t want happier customers?  But there is a shift going on in CRM  – powered by the proveribal social media firehose.  Although there is a lot of hype, it’s true, things have changed, both in marketing sideand service side of CRM. Customers now have systems of their own and public voices. For every corporate dashboard showing stack ranking of satisfied customers, there is likely to be an outraged blog post, or tweets or facebook messages about the company for all the world to see.  The fact that each person is a publisher has changed the way many companies see their customers.  They are a bit scared, and excited by the opportunity, the changes in what’s going on with social media.

Companies are excited about social media because it may produce new revenue channels, and they are scared because customers can say anything they want about any company, with better reach than most marketing campaigns.   And indeed, the fastest growing segment of CRM is those parts that deal with social media. Systems that publish tweets, that monitor sentiment, scanning twitter and responding – these systems are flying off the shelf.

CRM systems have always been fancy databases. Databases of first name, last name, middle name, multiple addresses.  Companies fill that information out themselves,  and hundreds of different companies track the same people, often inaccurately across multiple systems they spend billions on.  And that doesn’t tend to make  happier customers.

The problem with the Social Media investments in CRM is companies are making investments in the same the traditional database CRM model – companies owning the data. They scan social networks and import the data into their CRM system, and believe they know customers better.

Proposal.  Here is where CRM needs to go: Customers need to track companies, and use their own systems to do it.  A model that is the reverse of the current system, companies tracking and marketing to their own customers.  A system that the fundamental data model radiates from the individual, each customer tracking multiple companies.

It’s not how CRM systems are built now. It should be.

Each customer should have records of companies and products they deal with, what they think about them, what issues they have, what they recommend.  That is already happening to some extent – how many of your friends have complained about companies on facebook, how many times do you turn to Yelp for a review instead of the yellow pages? This trend isn’t stopping there needs to be more tools that support customers more efficiently, so each customer will have evolving tools that hopefully work more like Facebook than Oracle.

A question of intent

The concepts behind Facebook’s rumored “WANT” button are rooted in the idea of the “intention economy” and are generalizable beyond the Facebook ecosystem. Both customers and enterprises, using today’s existing infrastructure and conventions, can create and listen for intention signals using open, lightweight mechanisms, with customers creating those signals and enterprises listening for them. The approach described here outlines one such mechanism.

The Facebook “WANT” button is the canary in the coal mine for the “intention economy”

On June 27, 2012, blogger Tom Waddington discovered that Facebook had included the ability to create a “WANT” button in its software development kit (SDK). According to reports from Waddington, as well as others including Inside FacebookGizmodoVentureBeat and Mashable, the button will be a way for individuals to indicate their desire to purchase a product.

Inside Facebook had the following to say:

“Just as the Like button allowed Facebook to collect massive amounts of data about users’ interests, the Want button could be a key way for the social network to collect desire-based data. A Want button plugin will make it easy for e-commerce and other sites to implement this type of Facebook functionality without having to build their own apps.”

The fact that Facebook may be testing the “WANT” button is the clearest indication to date that we are on the path to the “intention economy.” Doc Searls has described the intention economy as “an economy driven by consumer intent, where vendors must respond to the actual intentions of customers.” Others, such as John Hagel, have stated that this thinking around the intention economy “is a graphic demonstration of the shift from push to pull that is disrupting our business world.

The “WANT” button, however, is hobbled by the fact that it only works in the Facebook ecosystem and, more importantly, appears as if it’s going to require a non-trivial bit of work to implement. Additionally, the “WANT” button is 100% driven by vendors who are selling items – if the vendor hasn’t indicated through a bit of arcane code that the “WANT” button is available for an item, the button will not appear. There is no way for an individual to initiate the conversation around desire for an arbitrary product or service.

Although definitely a step in the right direction, indicating interest through the proprietary “WANT” button within Facebook is a relatively coarse-grained way for a customer to signal intent.

Internet culture has already created conventions for signaling

That said, there are other pieces of the intention puzzle already in place that can be used. The expression of intention is, at its core, a signal. For the past few decades in particular, however, most of the “signaling” between vendors and customers has come from the vendor in the form of advertising, PR and the like. (In fact, one could argue that the whole discipline around creating “messaging platforms” for large enterprises is, at its core, an attempt to create clear, differentiated signals from the vendor side.) However, as more customer-driven publishing and communication methods have been created, first with blogs and more recently with customer-created conventions on top of proprietary platforms such as Twitter, Facebook, Instagram and Pinterest, individuals have started to introduce their own signaling mechanisms into the fray. Here are two examples:

The hashtag (#) is a signal of topic, organization or keyword. For instance, including a hashtag of #bacon in a post or tweet makes it easy to search for posts that are about bacon.

In the example above, the #bacon hashtag makes it easy to find this post.

The interesting thing about the hashtag construct is that is was created organically. It wasn’t created by a committee, it wasn’t designed by an organization, it wasn’t created as part of a marketing campaign. The hashtag was simply proposed by Chris Messina (@chrismessina) in a single tweet in 2007 as a way to easily find related conversations about BarCamp that were happening online at that time.

You can learn more about the history of the hashtag here.

Since then, the humble hashtag has become the de facto signal that the text that follows it is related to a topic or is a concept of importance to the author of that post. In contrast to the “WANT” button, which needs to be supported by Facebook and explicitly supported by the vendors of products or services that a customer might “want,” it’s important to note that there is no central organization that creates or approves hashtags. Hashtags follow the “NEA” protocol of the open internet:

 

  • Nobody owns them
  • Everybody can use them, and
  • Anybody can improve them

The NEA concept is important. If something conforms to NEA, it can scale, grow, evolve and morph as a market evolves, without constraint. This enables the possibility of a very fast, very efficient process of innovation and improvement.

If the hashtag is a signal of topic and organization, then the at-reply (@reply) is the de facto signal of social connection. The at-reply convention has evolved to signal that the message contains information that is of particular interest to a particular individual or entity.

Lou really, really loves Zappos and wants to make sure that Zappos knows it.

Like the hashtag, the concept of an “at-reply” evolved organically, though a conversation of individuals on Twitter. You can learn more about the history of the at-reply here.

Sometimes these conventions get combined. For example, Micah Baldwin (@micahproposed the concept of a “Follow Friday” online event, when he sent a tweet and named a number of individuals with the at-reply notation. In doing so, he started a ritual that many people invoke every week on Friday. Now, every week tens or hundreds of thousands of people recommend others in their networks as individuals who are worthwhile to follow on the Twitter service using the #followfriday and #ff hashtags coupled with those individuals’ Twitter handles.

Although both the hashtag and at-reply conventions were initially invoked on Twitter, they are concepts that are platform agnostic at their core. Since then, both concepts have jumped to other platforms including Facebook, Pinterest, Instagram and Google+, underlining the fact that useful, simple solutions to individuals’ needs are not constrained to any one technology silo.

A question of intent

In the same way that the hashtag is a signal of organization and the at-reply is a signal of connection, the question mark (?) could be a signal of intent. For example, including ?rentalcar in a post could indicate that the poster has intent to procure a rental car, the inclusion of ?flight could indicate that the poster is looking for airfares for an upcoming trip, and so forth.

The first example of this I’ve seen in the wild occurred earlier this week.

For vendors, this approach triggers a number of things, the first of which is that it turns on a lead-generation mechanism with extremely high fidelity. If an individual has explicitly stated intent via this mechanism, that individual is the hottest possible prospect. This mechanism is beacon to vendors: “Here is a customer who wants to buy what you’re selling.”

Organizations are already using tools such as Radian6, Sysomos, Attensity, and even free tools such as Tweetdeck and basic Twitter search to seek out individuals who are mentioning their brands. The extension of those listening efforts to additionally listen for intent signals of this type are nominal. (Listening tools like NeedTagger are already starting to move in this direction.) From the customer’s side, there is a similarly minimal learning curve required. Anyone can state intent in this manner using existing tools in a matter of moments.

We saw that explicit technical support for concepts such as the hashtag and at-reply did, after a period of time, eventually become a part of the systems upon which they were built. It is a similarly straightforward effort for platforms such as Twitter, Facebook and Pinterest to support this question mark based notation for intent. In doing so, those platforms would be also able to generate highly valuable trend information on the types of intention signals that are “trending” across various geographies and demographics, in the same way that Twitter and Google+ today highlight trending topics within their services based on the frequency of use of particular hashtags.

A statement of permission

There’s a flip side to this idea of unambiguously indicating intent with a statement such as ?flight. By explicitly indicating intent, an individual is indicating interest and is also explicitly giving permission for vendors to contact them. This is the grail for marketers. In the current state of affairs, there is still a huge differential between what vendors, advertisers and publishers of information believe that a particular individual is interested in, and the actual reality of the situation. We’ve all received “targeted” ads on social platforms that are so off the mark to be laughable. With clear intention signals, however, that guesswork is reduced to near-zero; the interaction is all signal and no noise. (Huge kudos to @lisastone for this insight on how the flip side of intention is permission.)

So…what do folks think about using the ? as an indicator of intent, in the same way that we’ve used other signaling mechanisms as noted above?

This post originally appeared at http://socialcustomer.com

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