Social networking and CRM

Posted: August 29, 2007 in CRM

Social networking is another one of those technologies I have been watching with interest for a long time as the technology has slowly but steadily approached the front office.  The idea of using social networking technology to find a needle in a haystack was a kind of panacea.  Imagine being able to find a mutual contact you never knew existed who might be able to introduce you to a sales prospect. 

I think there’s a comparison between social networking and business intelligence.  About a decade ago the same use was made of business intelligence software — it was supposed to be the stuff that could help you zero in on market segments to find the right potential customers.  In both cases — business intelligence and social networking — early promoters of the technology were right but I wouldn’t say they were far sighted enough.

Social networking was supposed to be the next thing that would transform the way we sell but in the last couple of years, social networking seems to have stalled in no small part because no body likes or wants to be the target of introductory emails from virtual strangers looking for a favor.  That doesn’t mean social networking has no place in CRM, instead, I suspect we haven’t figured out how to use it properly. 

The same kind of thing happened with business intelligence, it worked well enough but the audience of senior marketing technical people was too small to support large market ambitions of the vendors.

Business intelligence worked out well enough for marketers but I think the technology found its voice and its market when vendors and users turned its focus inward and began examining a business’s data to find trends and what worked best.

So far, it seems to me that with few exceptions, companies have looked at social networking as if it was just another sales tool designed to help cram product into the market to help the sales team to once again make quota.  Unfortunately, larger and longer lasting marketplace trends give that approach decreasing likelihood of success. 

Customers are savvier about products today in part because the products on the market now are evolutions on original concepts.  People are buying their second, third or umpteenth cell phone, mp3 player, computer, PDA or whatever and are not as likely to buy the first thing they see.  Selling has risen to a new level of sophistication because customers have gone there first therefore technologies that simply aim to turbo-charge old selling habits will show diminishing results.  Using social networking for sales falls into this category.

Social networking — the methodology, not the technology — has been used effectively for a long time by companies interested in engaging customers in conversations aimed in part or in whole at improving products and services and people have been using social networking techniques much longer than they’ve been using computers.  My favorite example comes from Eric von Hippel’s book “Democratizing Innovation” in which he describes the rapid evolution of the steam engine from something that was barely useful at pumping water out of a coal mine to something that transformed mining.

According to von Hippel mine operators, who should have been natural antagonists and averse to helping each other, traded information about steam powered water pumps thus helping each other and the steam engine manufacturers to build better products.  These people used industry associations to transmit information, much as we use these associations today.

Where social networking techniques can help best, I think, is in bringing together virtual communities of interest, people who will share their ideas about products and especially about their needs and attitudes.  Using social networking this way has several advantages over using it to simply get a deal.  By using social networking within a community you have the opportunity to test ideas with users and see how they react.  The information you collect can then go into better product designs or whole new products.  Social networking can also be used to test and validate marketing ideas, Web site design and the like.  I call this “deep marketing” and it has an analog to older more labor intensive techniques such as the phone survey and the focus group.

This application of social networking comes in the nick of time if you ask me.  Vendors need ways to better understand customers — not simply better ways to identify them — for the simple reason that customers often don’t know what they want or need until there is a solution.  At that point customers wonder how they ever got along without a product like a better steam engine or that little thing that slips into your pocket and carries your music.

The fact that technologies like social networking or business intelligence should morph a bit between the time that they are introduced and the time when they can be said to be mature should surprise no one.  Early adopters frequently adjust a technology’s focus until it optimally suits some purpose and I suspect that’s happening in social networking even as I write this.  You could say that I am a believer in the power of social networking and I can’t wait to see what happens next.

So, what did you think?

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