What’s your Social CRM ROI?
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Only 50% of Fortune 1000 companies that invest in Social CRM receive a worthwhile ROI.
Many organisations today are struggling to grasp the concept of Social Customer Relationship Management (CRM) and what it means to their brand. It appears to mean different things to different organisations as they attempt to interpret and draw boundaries around it. In our blog post on ‘The new rules for social CRM‘, we shared a handy infographic that discussed the key differences between Traditional and Social CRM. As many are aware, Traditional CRM is a system used by companies to collect and manage data relating to their customers, even though most see it as a tool to generate even more sales instead of nurturing the relationships they’ve established with customers to really understand their desires or needs. Today’s customers take ownership of conversations as they share their experiences with millions online. As a result, they expect brands to respond to them on the various platforms that they use. This shift in behaviour and expectations has induced the birth of Social CRM. Whilst traditional CRM is sales-driven, Social CRM is a strategy for customer engagement and is conversation-driven, where sales are a by-product.
Social CRM for an organisation could include not only the monitoring of social media platforms such as Facebook, Twitter and LinkedIn, but also engaging customers in building a strong community. Larger portions of a firm’s budget are increasingly spent on CRM software that assists with the management of a brand’s online presence and existing community, in addition to the analysis of trends and monitoring of brand sentiments. Tools like Radian6 are widely used for this very purpose.
Gartner analysts expect the Fortune 1000 companies to spend $2.1 billion in 2012 on software licenses and subscriptions as part of their Social CRM initiatives. This is a 40.48% increase in spending as compared to the $850 million spent in 2011. Despite such a rapid uptake in adoption of social applications, Gartner Inc said that only 50% of these companies will earn a worthwhile return on their investments (ROI).
Whilst these companies may be aware of the social objectives of their Social CRM initiatives, they are most often unable to correlate the social data to their organisations’ ultimate business objectives. There is a need for more than just social objectives as Adam Sarner, research director at Gartner points out: “Social data, such as numbers of fan pages and weekly Tweets, is not enough to correlate with the contribution of top business objectives”. Many of the organisations with an established social presence fail to create clear business performance matrix for their social CRM. Success of Social CRM depends on how well these initiatives can be coupled with measurable business objectives.
Recently, Citibank launched a product integrating Social Media in Singapore. The bank explained that its business value came not only in the form of an increase in market reach but also financial returns as by-products due to enhanced customer management within the online community they have nurtured. The bank’s credit card encompasses social networking features that is the first in Asia to earn virtual points through sharing and rating. Citi reported that retail spending via Internet sales increased by 25%. Similarly, OCBC targeted the same consumer group for its Frank cards via Facebook and Twitter last year and received a valuable return of attracting Gen-Y customers. Other small-scale social media initiatives include the Dove Weibo campaign in China that gave a remarkable return in the form of a whopping 47,000 retweets on Twitter and 34,000 comments. As a result, Dove also saw a 226% increase in sales during the Valentine’s Day period.
The potential financial benefits are particularly noteworthy: using social media to handle activities such as customer support can deliver significant cost savings. Sales via social commerce are expected to reach $30 billion within five years. There are also non-financial business value out of Social CRM such as improved response times, levels of customer satisfaction, stronger community presence and building goodwill. However, according to Gartner, out of the 50% of Fortune 1000 companies that failed to receive a worthwhile ROI, only 20% of the companies have the data to evaluate where their social strategy fell short. In our research on the future of social media – 12 provocations, we discussed the trends, predictions and implications of the business use of social media which included measurable business objectives such as these:
- Influence measurement becomes more sophisticated as marketers invest more in partnering with influencers. They understand the role influencers play in the audience’s purchase cycle. Hence, identify the influence metrics that matter most to the brand.
- Learning how to identify valuable audience segments and engaging them. Trial social research methods and focused crowd – sourcing aid in harness your most engaged consumers.
- Brands are increasingly playing an important role in making the world a better place. Corporate Social Responsibility (CSR) moves out of the annual report and into meaningful, real world activities. Organisations find ways to add value to communities that also build the brand and reinforce valuable relationships. Hence, they use social media to share details of CSR activities, involve relevant communities, and build goodwill.
It is evident that there is remarkable business value from Social CRM for a firm. However, many organisations either lack measurable business objectives to record ROI or they recognise the business value of it, but do not have the relevant data to evaluate their Social CRM strategies. Are you seeing an ROI from your Social CRM practices?