Social Networking Meets CRM

Updated: August 20, 2012

Issue

Social-networking tools aren't just for Facebook fanatics anymore. These days, consumers are demanding a higher degree of interactivity from customer-service departments. As a result, companies are being challenged to add online capabilities to their CRM systems. Blogs, forums, wikis and other social-networking tools can all help companies reach out to customers and boost business.

Analysis

Today's social-networking technologies are invaluable to businesses hoping to stay on the cutting edge. By building a product-centric social network that encourages visitors to swap information and connect with other like-minded individuals, a company can gather crucial customer contact information and build a virtual community.

Then there is the blogging phenomenon. "For marketing, blogs work great to build brand equity and familiarity," said Timothy Hickernell, a senior research analyst at Info-Tech Research Group. Whether introduced as part of an existing product site or as a dedicated minisite for a particular product, a blog can serve as a casual and conversational approach to addressing consumer concerns and building product loyalty.

Companies can also use wikis to enhance customer relations. A wiki is a Web site that allows users to freely create and edit content using any Web browser — without requiring HTML or other technical skills. "Wikis can be a cheap way to maintain a product Web site for both marketing and for service," said Hickernell. Not to mention the value-add capabilities of wiki technology. For example, a food manufacturer can easily create a wiki-based Web site that allows customers to contribute to a recipe database.

Discussion forums, on the other hand, "are good for building customer communities around products and brands," said Hickernell. More than simply a destination for consumers to swap product information and tips, a discussion forum can be used to generate buzz around a product or service without a multimillion-dollar advertising budget. The right discussion forum can even increase sales revenue. According to research firms comScore Inc. and The Kelsey Group Inc., providing customers with online tools to review your company's site and products can boost sales. Consumers are willing to pay 20 percent more for a service that received an "excellent" rating from fellow consumers than they are for the same service that received a "good" rating. And respondents said that reviews generated by consumers had a greater influence than those written by professionals.

But while online tools can engender a sense of community and brand loyalty among consumers, there is also a downside. For starters, Hickernell advised, "You do need to have strong moderation when you offer user-support forums to make sure bad discussion threads are removed immediately." After all, foul language, racist comments and unflattering product reviews can "be very detrimental" to a company's customer relations, sales and image.

Furthermore, some companies fear that online tools wrest control of customer relations from the hands of seasoned sales representatives and account managers. "You would never want to learn that a $1-million-a-year customer is venting its service frustrations through your user forum. That's something the account manager needs to be on top of," said Hickernell.

Conclusion

It's no wonder, then, that industry stalwarts such as Oracle Corp and SAP have yet to introduce CRM solutions with built-in online functionalities. "The mainstream CRM vendors are still somewhat behind in some of these capabilities," said Hickernell. Nevertheless, today's online tools can deliver a greater degree of interactivity that can strengthen customer relations.