In-Depth

How Social Media is Changing CRM

With social media, consumers can spread their praise and condemnation. From blogs to video-rich sites, this new conversation is changing CRM, and enterprises and BI professionals must pay attention.

It used be that even the most extroverted consumers could spread their stories to only a handful of others. Meanwhile, companies eager to measure perceptions had only a few blunt tools, such as surveys, focus groups, and sales tallies. Now social media has opened a new kind of conversation full of expression and relevance that's changing CRM.

I found a good example without even trying. Early in February, one airline ruined TDWI instructor Mark Madsen's day. He was trying to fly out of San Francisco, but instead was sent traipsing from counter to counter, with hours of anxiety, confusion, and waiting. He told the world about it -- or at least me and his 234 other followers on Twitter. My acquaintance with him gives the experience more weight than, say, a newspaper story and much more than the airline's buttoned-down ads. Count me as now more reluctant to fly on that airline.

Twitter and the many other types of social media -- such as blogs, Facebook, YouTube, MySpace, and TripAdvisor that broadcast everything from everyday muses to extraordinary videos -- has thrown companies' focus back onto customers, according to Baseline Consulting partner Jill Dyché.

One reason is that social media is a goldmine of perceptions that's often more expressive than traditional methods, such as survey questionnaires. Another reason is fear; the competition might be using it to get an edge. "You can imagine the scenario," e-mails Dyché. "'Get me a social media, and fast!'"

The biggest change in behavior, she writes, is that "there are actually people charged with 'listening' to the social chatter about their companies." At the Zappos online shoe retailer, for example, that's the CEO's task.

Even listening isn't enough, however. "The hard part is that they have to marry the data gathered from these new sources with data gathered in more traditional ways." Only then can social-media awareness make a difference.

Several companies have had big success with social media. Starbucks managed to engage thousands of customers and collected many new ideas. Southwest Airlines -- which was not the airline that disappointed Madsen -- provides several ways (such as on Facebook) for customers to post itineraries and comments.

All this also raises customer expectations. DMG Consulting senior analyst Beth Eisenfeld says, "Companies better get with it." One airline recently e-mailed her with a promise of "fares as low as $39." She says, "They have my e-mail address and my phone number, and they know I live in Tampa. I looked at every single departure and there was not one $39 flight out of Tampa. Why are they sending me e-mail for something I can't buy?"

She complained on Twitter. "Not one person [from the airline] has bothered calling," and she knows the airline monitors social media. "It's been 10 hours now."

"Until this stuff is integrated," she says, "it's going to be clunky. It needs to be seamless." Businesses have to service each customer on the customer's preferred channel.

Monitoring often entails text analytics. Statistics and linguistics can extract text from large volumes of text quickly and inexpensively, says Seth Grimes, an analytics strategy consultant with Alta Plana Corp. Accuracy -- the term used instead of data quality -- can still be a challenge, he says, but text analytics is still very useful.

The cost is "somewhat similar" to traditional market research, wrote Tom H.C. Anderson of Anderson Analytics. Unlike questionnaires and other traditional research methods, which can only test researchers' best guesses, text analytics "finds order and insight within vastly unstructured and unfiltered information," he writes.

It seems to have paid off for Unilever Dove's pro-age project after TV networks rejected its ads portraying mature women in the nude. The company ran a check of customer attitudes, and executives wound up feeling vindicated. Anderson Analytics found widespread perception of Dove and pro-age as a champion of women over 50.

Sometimes the news is not so pleasant. Grocery chain Trader Joe's executives must have cringed to see one talented customer's sometimes-flattering take on their brand on YouTube, "If I Made a Commercial for Trader Joe's." It came to YouTube on January 27, and as of press time it's had over 247,000 views.

David Armano, vice president of marketing agency Critical Mass, loved the video. "It's catchy as hell and one of the best advertisements they never made," he writes in his blog. "Remember, a brand isn't what you say it is -- it's what they say it is."

Other social Web users are not so benign. Reviews by friends or enemies of book authors selling on Amazon would seem minor if artificial intelligence could spew out reviews on TripAdvisor and other sites. Hotel eMarketer blogger Jitendra Jain mentions Virtual Storyteller, a tool in development that can issue positive or negative reviews on command.

Dyché's also thinking about old media. Since publishing her book, The CRM Handbook (Addison Wesley, 2001), options for customer engagement have proliferated. She writes, "So, maybe it's time for that second edition after all."

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