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Social Networking and the Future of CRM

Ed Thompson

What Is Socialization of IT?

Socialization of IT: The increasing willingness to use technology to collaborate with others in a virtual environment. It has enabled the growth of global communities with unprecedented reach and influence, often without easily identifiable leaders.

Understanding the power of these communities, the multiple personas of their members, their expectations,

their aspirations and how to interact with them will become essential skills for companies in the 21st century.

Key Issues

1. What are the drivers fueling the growthof the socialization of IT?

2. How can companies develop customer relationships by deploying the right engagement technologies to fit the right business purpose?

3. How will technology change to supportthe socialization of IT?

Socialization Is Fulfilling an Innate Need

Source: Gartner and "A Theory of Human Motivation," A.H. Maslow

To fulfill his innate hierarchy of needs

Biological and Physiological Needs

Safety Needs

Love/Belonging

Esteem

Self-Actualization

Web 1.0

Web 2.0

VirtualPersonal growth and fulfillment

Security of body, employment, health and property

Food, clothing, shelter

Friendship, intimacy, support groups

Morality, creativity, spontaneity, problem solving

Need to be respected, to haveself-respect and to respect others

Shift Toward Socialization for Engagement and Accountability

Blogs

Customer Feedback

Message Boards

Customer-Driven Content

WOM, Referrals

Community Marketing

Display Advertising

Podcasts

Videocasts

Virtual Worlds

In-Game Advertising

Addressable Branding/Advertising

Arrows indicate increase, decrease or maintaining of investments during the next three to five years.

Online Dialogue

Cross-Sell, Upsell

Gift Registry

E-Mail Marketing

Catalog

Transactional Marketing

Contextual Marketing

Search Marketing

Local Marketing (GPS)

RSS Marketing

Preference Mgmt.

Event-Triggered/Inbound

Three Realms of Social Software

Collaborative designCollaborative designVeracity of dataVeracity of dataTrust validationTrust validationCustomer selfCustomer self--serviceserviceLearningLearning

Product validationProduct validationSpeed of collaborationSpeed of collaborationEfficiencyEfficiencyRole in Role in Channel Channel StrategyStrategy

Phone/cable systemPhone/cable systemObservationObservationLearningLearningCollaborationCollaborationCommunicationCommunication

Information gatheringInformation gatheringSelfSelf--serviceserviceCollaborationCollaborationWhy TheyWhy They

Use ItUse It

Key customersKey customersBoardBoardAd hoc customersAd hoc customersSuppliersSuppliersExecutivesExecutives

PublicPublicPartnersPartnersWorkersWorkersWho Uses ItWho Uses It

(Public) (Semiprivate) (Private) Internet Extranet Intranet

Failure to use feedbackFailure to use feedbackto enhance brand and to enhance brand and identify brand faultsidentify brand faults

Failure to monitor and Failure to monitor and experiment to determine experiment to determine

highesthighest--value applications value applications

Failure to experiment to Failure to experiment to determine highestdetermine highest--value value

internal applicationsinternal applications

RiskRisk

Manage supply/demandManage supply/demandfor applications for applications

Inability to leverage Inability to leverage content and networks content and networks

created by social created by social networknetwork--aware aware

employees employees Opportunity Opportunity

Anytime, Anyplace: The Interactive EnterpriseJanuary 2008

Socialization Initiatives:Five Top Questions to Start With

1. What is it?- Many definitions, major hype

2. Purpose- Determining how businesses will make money

3. Applications- What type of social application for which purpose

4. Ownership- Determining levels of control to the community

5. Manageable- How the technology is deployed and managed

Strategic imperative: The biggest challenge by far will be an overall, balanced purpose. Every successful socialization project will needa mutual purpose, from the customer side (motivation for participating) and from the company side (actual measurable business need). Many communities fail from an imbalance or a complete lack of purpose.

Key Issues

1. What are the drivers fueling the growthof the socialization of IT?

2. How can companies develop customer relationships by deploying the right engagement technologies to fit the right business purpose?

3. How will technology change to supportthe socialization of IT?

Defining Social Applications

Social applications encourage, capture and share data among users, ceding levels of control to a community by user-controlled organization

mechanisms. These applications share characteristics, such as open APIs, service-oriented

design, and the ability to upload data and media.

2. Information Search

3. Evaluation

4. Purchase

1. Need/Want Recognition

Social Applications Are Relevant to Each Stage of the Customer's Buying Process

Engagement

Context

Trust

Transactions

Customer Buying Process Social Opportunity

5. Post-Purchase Satisfaction

Virtual Worlds:Social Need/Want Recognition

• Problem: Establish and increase brand awareness for future segments of customers.

• Objective: Connect with hard-to-reach, younger demographics and help them begin aligning future needs with banking products, services and money management.

• Approach: Wells Fargo bought virtual real estate (Stagecoach Island) within the MORPG Second Life, complete with virtual money, bank, mall and recreational services.

• Results: Visitors spend more than an hour per session. Second Life members spend 35 hours a week on average. The world attracts a diverse audience — 43% female.

Source: Wells Fargo

2. Information Search

3. Evaluation

4. Purchase

1. Need/Want Recognition

5. Post-Purchase

Content Management:Social Information Search

Source: New York Times

• Challenge: Make The New York Times Web site more relevant to readers' interests.

• Objective: Cater to the needs of a readership that wants more control over the digital experience (e.g., access to social media features and content outside the nytimes.com Web site), while maintaining the authorityof The New York Times brand.

• Approach: "Open up" the brand to desired content through prominent links to the most popular and blogged articles; allow readersto create personalized pages (MyTimes) with RSS feeds from the Times and other sites.

• Results: Unique visitors have increasedfrom 12.1 million in January 2006 to nearly19 million in March 2008; site is a winnerof a Webby for home page design. Since site was redesigned in 2006, the "most popular" features have been emulated throughout the industry.

2. Information Search

3. Evaluation

4. Purchase

1. Need/Want Recognition

5. Post-Purchase

Product Reviews and E-Commerce: Social Evaluation and Purchase

• More than 130,000 customer product reviews

• More than 55,000 four-sided product pictures

• Highly detailed product specifications

• At least 13,000 company testimonials

• More than 550 manufacturer links

• More than 550 expert opinion articles

• At least 1,000 item intelligence/rich media

Source: Newegg.com

2. Information Search

3. Evaluation

4. Purchase

1. Need/Want Recognition

5. Post-Purchase

Community Forums:Social Post Purchase

2. Information Search

3. Evaluation

4. Purchase

1. Need/Want Recognition

5. Post-Purchase

Five Techniques for Successful Community Management

Balance Risk and Reward

Solicit Feedback

Relinquish Control With Ground Rules

Enable Company Advocates

Assign a Community Advocate

Company BenefitsBest Practice

Access to Data

Develop Trust

Promote Engagement

Foster Loyalty

Customer Voice

Key Issues

1. What are the drivers fueling the growthof the socialization of IT?

2. How can companies develop customer relationships by deploying the right engagement technologies to fit the right business purpose?

3. How will technology change to supportthe socialization of IT?

The Purpose and Level of Engagement Will Determine Technology

• Review a product• Answer a question• Contribute to the community

• Click, transact• Read product reviews• Read blog/message boards

• Provide purchase feedback • Vote • Ask a question• Forward to others

• Establish a community • Create blog/podcast• Upload video content

Contributors (3% to 10%) Creators (0% to 3%)

The Lurkers (80%+) The Opportunists(10% - 20%)

"I'll reap the rewards."

"I want to be a part of this." "I want to own this."

"Since I'm here …"

Leve

l of C

usto

mer

Eng

agem

ent

Level of Company Engagement

The Purpose and Level of Engagement Will Determine Technology

Contributors (3% to 10%) Creators (0% to 3%)

The Lurkers (80%+) The Opportunists(10% - 20%)"I'll reap the rewards."

"I want to be a part of this." "I want to own this."

"Since I'm here …"

Leve

l of C

usto

mer

Eng

agem

ent

Level of Company Engagement

Social Reputation Technologies Will Be Critical: Dynamics of a Reputation Engine

Source: Fixya.com

Recognition Authority and Value Ranking

Community Voting Guidelines

Innovative CRM Vendors: New Focus, New Model and Largely Disposable Newcomers Will Plug Gaps Order

Pay

Upgrade/Extend

Customer Data IntegrationPartner Mgmt.

Web 2.0E-Commerce

Contract Mgmt.Marketing Resource Mgmt.Upsell Analytics

Large Vendor Specialty

If TraditionalistsLeave Gaps …

Market Research

Field ServiceCustomer Service and Support

Ad Mgmt.Campaign Mgmt.

Product Config.Sales AutomationOrder Mgmt.

E-Commerce

E-LearningWFO

Catalogs

Warranty Mgmt.

SearchAware

Select

Learn

Use/ConsumeSupport

ShareExperience

Feedback

Secret Agents and Avatars

Intelligent Device Management/Monitoring, Self-Healing SystemsKnowledge Management Social Support

Personal Tools Message BoardsCustomer-Driven ContentReferrals, Word of Mouth

Performance Mgmt.Service Adoption Mgmt.

EnterpriseFeedback Mgmt.Social Network Analysis

Location-Based Comparison Shopping

Communities VlogWikis

Set UpRegistrationActivation Service

Today: Social Markets in Transition —Do Not Expect One Solution

Web Analytics

Search Engines

E-Mail Marketing

AdNetworks

Gaming

E-Commerce

Marketing Service

Providers

CRM

Ad Agencies

Offline

Online

Service Technology

CommunityE-Service

Recommendations

Every successful socialization project will need mutual purpose,from the customer side (motivation for participating) and fromthe company side (measurable business need). When planning to harness socialization technologies, alignwith the customer's buying process.When planning to host, create or contribute to a community, consider the four types of community engagement, and planto provide social applications for all four.Use reputation mechanisms for creators and contributors,for ranking quality input and differentiating from other input. Encourage participation (rewards), and provide a content filter for the community. Plan on disposable applications for innovation and to meet social application needs. Do not expect one solution.

Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via e-mail: vendor.relations@gartner.com. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Social Networking and the Future of CRM

Ed Thompson

Notes accompany this presentation. Please select Notes Page view. These materials can be reproduced only with written approval from Gartner. Such approvals must be requested via e-mail: vendor.relations@gartner.com. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

Social Networking and the Future of CRM

Ed Thompson