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CRM vs Social CRM – What is the difference?

Thomas Wieberneit, National Manager CRM Practice  :  09 July 2010 / 12:09 PM  :  0

Just looking at the terms, Customer Relationship Management and Social Customer Relationship Management are sharing the same roots; Social CRM is either a limitation to or an enhancement of (traditional) CRM – or is it something entirely different?

Let me take a brief view at what CRM and Social CRM are and are not and then come to a conclusion.

CRM – Customer Relationship Management – is a business strategy. If you do research on the web you will find many definitions with their own tweaks. What most of them have in common is that they all say that the strategy is about the customer and about how to engage a customer so that the company applying the strategy

• gets the most knowledge about the customer (groups)
• and is able to take action upon this knowledge to maximize the results (be it market share, revenue, margin, win, ...)

As such, a CRM strategy covers all relevant actions to market the right products to customers, sell the products and potentially provide service afterwards.

CRM by no means is a technology, although sometimes this is still in the minds of people. A CRM application/system merely enables and supports the business in pursuing its CRM strategy. The system does this by providing the necessary tools to perform the necessary tasks and by providing the data that is necessary to control processes and to take necessary action.

Something that is not explicitly said is that one fundamental underlying premise of pursuing a CRM strategy is that the business owns and/or governs the communication with the customers.

This premise is fundamentally flawed, and always was!

For quite a while the fundamental quality of this flaw was not recognized or didn’t need to be addressed.

This is mainly a technology issue. Although businesses never really owned the communication with their customers it often was good enough to assume ownership of the communication because ultimately a business appeared to have the stronger voice and the better information.

This changed over the past ten or so years at an increasing pace, initially very gradually through the growth and adoption of the World Wide Web. The web empowered customers to gather relevant information about businesses and their products, as well as competing products and businesses. This information increasingly did not only come from the businesses themselves but from other sources These sources often are more trusted than the businesses themselves, because they seem to be independent or simply because customers know them. A business by definition is biased, so not fully trustworthy.

The tipping point was hit around 2005 with the widespread adoption of communities on the web and mobile technologies. The number of acquaintances or “trustworthy” sources increased manifold and still increases. All of the sudden it was very easy to spread and gain information in a network of trust and on the spot.

Businesses regularly are outside this network of trust.

While the concept, strategies and tactics of embracing the customer hold true it became more and more apparent to businesses that something needs to be done to accommodate for this fundamental flaw.

Social CRM is the reaction of businesses to address the fundamental flaw. So, Social CRM is an enhancement to (traditional) CRM.

Social CRM is an enhancement of CRM strategies based on the premise that a business does not own the communication with the customer and, moreover, cannot even control it. They, however, are able to influence it.

They are doing this by listening to discussions between customers, even fostering them, and, as appropriate, participating in them as and where they are happening. This may be in a community that is driven by the business (e.g. on their own web site or a Facebook fan page) or in a totally uncontrolled world like a foreign community or Twitter.

The ultimate goal is to become and stay trustworthy and an important member of relevant networks of trust.

As the purpose of a business is selling products to customers, the definition of CRM that is given above still holds true: A CRM strategy covers all relevant actions to market the right products to customers, sell the products and potentially provide service afterwards.

Just that the relevant actions have changed following a changed mindset.

Of course, with this also the technology needs to take pace as businesses need to cover more channels than before, actively as well as passively. Still, again, technology enables and supports businesses in pursuing their strategies.

In summary, the main differences between CRM and Social CRM are:

• first and foremost a mindset change from business owning the communication to customers owning the communication in Social CRM
• The importance and, moreover, relative importance of communication channels and –media changed from traditional CRM to Social CRM, moving away from platforms that are owned by the business to the “places” that the customers use
• Social CRM has an even higher bi-directional component than traditional CRM in Social CRM the necessity for fast reactivity is even more important than in traditional CRM

Posted in CRM on 09 July 2010
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Tagged: CRM  Multi-Channel  Retail  Social Networking  

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