ROI,Social CRM

The Boardroom’s Tipping-Point for Social CRM Implementation

9 Sep , 2009  

Bob Warfield recently posted a great article with the title The Customer, as Social CRM, is the Fourth Pillar of CRM. I posted the following in reply, for you to muse over.

Customer-centricity is definitely the way forward, and I like the idea of the customer as a stakeholder in co-determining the company’s success. Enterprise 2.0 is potentially a great basis to promote collaboration between employees. CRM is the touchpoint between them and the outside world. Social CRM adds the dimension of opening up the company to the customers, allowing for better communication, mutual understanding and foremost enables a collaboration model to be put in place between internal employees and the customer community. Many benefits are expected, such as co-creation, peer-to-peer support, First Call Resolution, brand image improvement, opportunity detection…

The question that now arises would be up to which point we open up, just how much before it becomes counter-productive. When I go to a restaurant, I don’t expect them to open up the kitchen to me – I’m there to enjoy the great food that is prepared there (and I can’t cook as well as the Chef). You could reply that some fancy restaurants do actually showcase the kitchen and you can see your food whilst it is being prepared (great entertainment!), but that doesn’t mean I can just wonder in, touch the ingredients, fiddle with the stove and visit at leisure. Other patrons would not appreciate.

The biggest obstacle to change will be not come from the customers, but rather from the Boardroom. Defining where the tipping-point for Social CRM (and Enterprise 2.0) implementation is for Upper Management will be the next big hurdle. It is not just about the ROI of a Social CRM software solution and its pay-back, but rather a “remise en cause” of the entire Business Model with far-reaching consequences for the way the company goes about its affairs. How much investment will it take to retrain the workforce to “think customer”, to implement and use the tools effectively? How much resistance to change will be encountered and how to deal with it? What will the implementation timeframe be and the cost of starting off too late? And most essentially, what is the ultimate overall pay-off. The Boardroom needs to justify its action to its Shareholders, and more specifically justify the expenditure of Social CRM in conjunction with Enterprise 2.0. If the metrics of the costs and the expected benefits are not clear it will be tough to swallow.

To summarize, the Boardroom will need to determine where the the tipping-point is to implement Social CRM, what level of customer-company collaboration they’re after, and in exchange for which expected benefits, and this needs to be understood by the shareholders.


3 Responses

  1. smoothspan says:

    Mark, the good news is that while customers want and expect vendors to understand that they are in control, so few treat them that way that even a little bit of motion often makes them very happy.

    Cheers!

    BW

  2. Interesting perspective, but not sure I can agree 100%. I see the arguement you are making vis-a-vis the board and the executive suite having to justify the investment — but that is something i don’t think it is true. the bottom line: the customer is changing, fast, and the world is changing, even faster. You cannot try to justify an investment in infrastructure today so you can be ready for the unknown of tomorrow.

    the argument of justifying aligning your company to respond to a generational / paradigm shift (pick the word you like the most, basically same concept) is like trying to cost-justify buying phone service for your business based on how many phone calls you may get. True, maybe not enough people will call you to justify the cost of the service– but do you really want to miss those calls? Most people will just spring for the service assuming it is part of the costs of doing business.

    social crm is the cost of doing business with customers in the near future. do you really want to miss out on that?

  3. marktamis says:

    Thank you for your feedback, I much appreciate it! I posted this after having an discussion about Social CRM with Consultants from Net-7 who themselves are all former senior executives, and this was the main issue that came up (yes I know, mainland Europe has always been more resistant to change…).

    You’re absolutely right, customer-centricity and its implications are a business necessity and the executive suite will need to come around to adjusting to this paradigm shift. The comments I’m solliciting here are about what will it take to convince them to make the needed investment in the light of the accountability they have vis-à-vis the shareholders.

    Social CRM implementation should be well-thought through without just opening flood gates to let the water in. The Boardroom needs to be done responsably in order to not destroy existing shareholder value. Just think back to how many CRM efforts botched up because the executives decided to do a half-hearted effort just because their competitors were doing the same? Did everyone get the expected ROI, or more simply put, a better customer experience?

    The executive suite needs guidance on finding the balance that is right for them, and there is currently not a large well-established body of proven expertise or Best Practices out there to help them. Prem Kumar for example is busy working on a strategy for a Social CRM Practice – it will be interesting to see what he and others like him come up with.

    We’re still in the early adopter stage for sCRM, now how to take companies it to the critical mass stage, all to the benefit of improving the customer experience and raising the expectation level for the service that customers are asking for.

    Tell me what you think! I’m here to learn 🙂