Cloud CRM Software Forum

Analytics for CRM: the Real Measure of Success

At the CRM Evolution show last week, one of the things that stood out was the prominence of the idea of CRM analytics. Unlike almost every other technology-driven trend in the past, which seemed to discover analytics only after considerable pain had been suffered by the earliest adopters, social CRM is moving almost hand in hand with the development of analytics for social CRM.

Part of that can be attributed to the pause many organizations took in leaping into social CRM; that uncertainty tempered exuberance and allowed the analytics vendors to catch up to the pace of those who would otherwise be racing ahead. Another significant part also owes itself to that uncertainty; without a way of measuring and evaluating their effects, early social CRM efforts could become victims of executive skepticism, imprecise ROI calculations or legitimate problems that aren't solved until they've wrecked the initiative.

So the analytics vendors are working hard to meet this need. While there have been some major leaps in analytical processes in the last few years (not the least of which has been a realization that everyone in the organization ought to be able to use them, not just a highly-trained analyst), when it comes to social CRM these vendors face the same issue that dogs the practitioners of social CRM.

I've said it many times – even in public, on the closing panel of the CRM Evolution event – that there's no one set of best practices for social CRM, because just as every company's customer set is unique, what will work for those customers in the social realm is unique. That doesn't mean things are impossible; it just means that you have to understand your customers if you want your social efforts to be effective (and, thus, need to have a solid "traditional" CRM foundation in place to collect that data).

How does that impact analytics? Well, if every company's customers are different, shouldn't the analytics used to gauge the effectiveness of social efforts be different as well?

I'm not talking about the basics, of course, but I am talking about a few unique measurements that allow you to fine tune what you're doing, to tease out that one critical insight, and to make analytics less like a yardstick and more like a secret weapon that gives you critical insight.

The analytics vendor that succeeds in this era will be the one that understands that analytics can be a competitive advantage. That will mean a flexible analytics platform that allows users to set up their own metrics in addition to the basics, and it also means a bit of evangelism by the analytics vendors to spread the word that in this new era how you think about what you're measuring is critical to really understanding what's happening with your social efforts.

We hear many people asking for social CRM success stories. Could it be that what people are really asking for are successful analytics stories that validate social CRM?

Social media use and business success: some numbers

Everyone likes survey numbers. They can confirm what you believe to be true, or, if they fail to do that, you can turn on the source and claim the methodology is wrong. Win-win!

Last week, the Harvard Business Review posted some social media numbers on its blog from a new Babson Executive Education survey about the use of social media as it relates to the relative success of the companies who engage in its use.

Out of a field of 900 people, the survey identified what it called "Social Media Customer Leaders" by their response to the statement "Our organization has embraced social media (like Twitter, blogs and Facebook) to improve its responsiveness to customer needs." The people who strongly agreed got to be SMC leaders; those who strongly disagreed were deemed SMC laggards.

The survey then compared business fortunes of leaders to laggards and came up with some interesting data. In 2009, 21 percent of the leaders' businesses experienced flat or declining sales, versus 31 percent of the laggards. Only five percent of SMC leaders' organizations grew by more than 25 percent in 2009, but that rate is twice that of the laggards. And two-thirds of the leaders strongly agreed with the statement "We are more effective meeting customer needs today compared to 18 months ago," while only a third as many laggards said the same thing.

As is said correctly on the Harvard Business Review's blog, this does not mean that embracing social media leads to better performance. But I'm inclined to think that it's a sign of an organization that understands that customers like to have contact with the companies they buy from delivered in the form of their choosing. That may be Twitter, or a blog, or Facebook, or something else – but if your company is serious about being customer-centric, it'll make an effort to be there when the customer wants to speak in whatever format that may be. Customer-centricty can lead to better performance. And it makes sense that laggards don't get this and want to keep behaving in business-centric ways, expecting the customer conversation to come to them.

Not surprisingly, the survey found that leaders strongly agreed with the statement "My company puts more emphasis on innovation and growth today than before the recession" 43 percent of the time, versus 17 percent for the laggards, indicating that there needs to be a culture in place to nurture and encourage the use of social media (and social CRM, one would expect).

Does your organization have a culture that's set up for social CRM success – and would that culture change if you could show numbers that indicate that change equals success?

Walking Before You Run, Social CRM-Style

We all know how incredibly useful social CRM is today for those who have figured out how to use it, and it will continue to grow in usefulness as methodologies for its use is developed – although there will always be pioneers who use it better and differently from the pack and thus find greater value in it. Those organizations exist today, and they'll continue to exist in the future; I wonder if this new world will lead to social CRM "all stars," either consultants or employees, who end up as highly in-demand pros that companies will woo to give their CRM efforts a boost of imagination and effectiveness.

For all organizations, however, this social CRM revolution is going to come only after the basics have been mastered. An immense part of the business world still does not have a fundamentally sound CRM 1.0 foundation in place, and many more who do are struggling with the pitfalls that have plagued the discipline for the past decade. Social CRM is the upper-division course; CRM 1.0 is the pre-requisite.

However, since social media is an increasingly pervasive technology, I suspect that many of the business leaders who need to grasp the criticality of CRM may be more familiar with the components of social CRM than they are with the basics of CRM. We're going to see many organizations try to run before they walk this year, with often unpleasant results. If you're a leader in your organization and you're trying to get a handle on the entirety of CRM as it exists in 2010, be careful of the conclusions you draw from these missteps. Anecdotally, they can suggest that business - especially small and medium-sized business – can't handle CRM in its new, more social incarnation. That's not true. Rather, you need to first walk before you run.

You have to understand how to collect and organize customer data – for sales, for marketing, for service, and for creating customer loyalty through all three branches – and as a leader, you have to understand that in the context of your organization's processes. That's job one, but it's only part of the job. The next important thing is to make sure your people all understand the value of participating in this effort, and that your IT staff understands their value in the process. You're talking about a business-transforming concept, but that concept can't be sold as one big idea – it's got to be broken down into specific concepts for the constituents who will make it work and who will reap the rewards when it does.

Note that there was nothing in there about buying technology. The baby steps of CRM should not be based around technology; CRM's not an IT buy. I know that businesses would love to buy some software, get everyone trained up and have the technology solve all the problems. It doesn't work that way, because CRM is a discipline, not a technology. The technology helps you master that discipline. Once you have the right people in your business aligned around the idea of CRM, then you can start evaluating technologies, select a CRM solution and implement it.

Once that foundation is in place, then you can start folding in aspect of social media to your sales, marketing and service operations. My guess is that the brighter people in each of those areas will already have some great ideas about what channels to use. Tap into those ideas – this is a social effort, after all, and sales, marketing and service are all closer to customers than other parts of the organization. But all of this has to be built on a CRM foundation in order to have organization-wide impact. Ad hoc solutions that result in non-repeatable successes are nice, but they don't have the same sort of resonance as ideas built into that underlying CRM structure that the entire company can then employ.

This is not a knock on social CRM – it will be what defines truly effective customer-centric organizations in the next decade. But you can't have social CRM without CRM – and if you don't have CRM yet, this is the time to start building your foundation.