Real-World Observations on the Social Media Hype

In 2001, I was speaking at one of our Roadshows in Zurich. Announcing and explaining the reason for our Inbound/Process/Outbound communication concept, I said: ‘The notion of a CRM database improving relationships is ignorant. Two-way communication, ideally person-to-person is the only thing that improves relationships.’ One of the CRM consultants in the audience jumped at me for interfering with his business and we had a hearty debate. I won. Or at least I didn’t give in. Ten years later CRM implementations are still in trouble and many have become expensive and useless legacy systems. American Express markets to me as a new prospect and not as a former card holder who canceled. Now the new thing is that everything goes ‘Social’. While nothing will stop the hype, one should consider the human aspects of control, influence and empowerment in the B2C arena.

What is a relationship?

It is a bond between humans as defined by time, intensity, trust, and reciprocity. But even the very weak relationships that might be maintained by businesses with their customers are created by a series of engagements only. What is an engagement? Engagements are the moments of truths in your sales and customer services effort. In too many cases there is contact, but NO engagement. By definition an engagement is a two-way thing, so sending out more messages using predictive analytics does not improve a relationship. Listening to a customer would be a lot more important. Current CRM systems have as much to do with human relationships as Business Intelligence with intelligence or Knowledge Management with knowledge. NOTHING!

The Dunbar Limit hypothesis proposes that we can only maintain at most 148 relationships due to time and the attention constraints of our brain. This is why we find the number 150 in community sizes with strong ties. But eventually humans developed the concept of the social and business contract with the related enforcement agencies of police and courts. That produces less incentive to build and maintain strong bonds. But even then salespeople still had their territory and stores their loyal shoppers. Global corporations with millions of customers have however no interest to hire tens of thousands of people as expensive sales or service people that maintain relationships with customers. CRM was supposed to solve that problem, but service quality has been in a constant decline since. How can anyone think that I will be a happier customer because a flight attendant greets me by reading my name from a list after I spent an unacceptable time waiting at check in? Social technology seems therefore like a glimmer of hope to solve the predicament of CRM not working as intended.

There is however a snag. Because the Dunbar limit already accounts for our ability to communicate by language, communication technology won’t increase the number of possible relationships even if they would be weaker ones.  The reduction in communication context and quality in Social Media further looses the most important and several times more effective elements of human interaction. Twitter is no-more than a worldwide soapbox for people with Attention Deficit Syndrome. Chat is just conference texting and worse than conference calls. Blogs and forums are at best personal newspapers or public diaries. They allow us to find more like-minded people and stay in touch with them, or help us to communicate with people we have relationships with, but they don’t build new relationships. On top of that only one percent of people blog and 10% communicate. The rest at best reads. Your only response that would blow my argument to smithereens is the admission that CRM and Social are not about human relationships. So does communication through the Internet actually build relationships? Can it really be considered as socializing? I propose not.

Adding Social to CRM:

Simply adding Social Media to a CRM strategy does not mean that a business is now improving its customer relationships. One reason why businesses  invest into social and CRM is to capture more of the communications with the customer. Now it is not only predictive analysis, but the magical promise of social network analysis! Both create knowledge illusions. Social networks are not defined by just any tie between individuals, but the TYPE of tie that we know absolutely nothing about from analyzing a Twitter stream. Natural Language Processing might achieve some sentiment scoring, but that does not yet type the network ties. But because Social Media allows customers to communicate between each other, businesses want to capture, control and influence the customer-to-customer communication. As this is potentially half the square of their number that will be impossible in a mass market. Things are different if a business sells into a B2B market, but I don’t know of any business, who can CONTROL its customers or their conversations. Customers always remain predictably irrational.

The other strategy of social is to turn customers into sales people or so-called INFLUENCERS. I said that people buy from people or buy the same thing as a trusted person. Yes, product advocates are good to have. But on the other hand, I wouldn’t buy a Harley Davidson just because the sales staff and customers in the store had the name tattooed all over. And I really don’t care what they do on Facebook or Twitter. If the sales staff in the store would have been less of an arrogant pr!€&, maybe I would have at least taken a test ride on a new V-Rod.

People buy the Harley image and not the product.

But turning customers into advocates or sales people is not something new at all. Hey, it seems that businesses who use Social Media turn into so-called network marketing organizations, in the likes of Amway, Tupperware and Mary Kay. I must say that this is an interesting development.

The true problem of CRM is another one. In most businesses customers face a number of different contacts and not just one. I doubt it that a Facebook page will solve that problem and can be the voice and face of a business. I see it as interactive advertising to improve branding and no more. To engage customers more holistically will require a change in your organization and technology that EMPOWERS management, employees and customers alike.

Thus the three approaches for human interaction CONTROL, INFLUENCE, and EMPOWERMENT are related and overlap, but they describe more than anything a mindset. Some believe that one can empower the influencers and utilize Social to improve sales. Yes, some businesses have used the Internet successfully this way, but it is all still anecdotal evidence. Others call Facebook the most effective destruction of productive time. I think that it is still better than watching TV, but I leave that to your judgment.

Conclusion:

One does not need to empower customers to become influencers. One simply has to empower customers. A business  needs to be authentic and honest in its sales and service engagements. That starts by listening to the voice of those customers very closely and begin a conversation with them. But that is not something new at all! Amazon has been pretty successful because of that. You search, read customer ratings, buy, try and return and it is all in your control. Amazon has even empowered it’s own competitors and invited them onto their platform to give their customers more choice.

So will a social CRM strategy improve anything? No, because in most businesses there is not even empowerment of the employees that need to deal with the now socially empowered customers. There is not even a common customer record. Most businesses are still internally in CONTROL mode and they want to expand it by means of BPM. Now many want to expand BPM into the CRM customer interaction to assert more control over the relationship. Is that empowerment or is that in any way Social? I don’t see it. The marketing department wants to expand its INFLUENCE mode by using predictive analysis to trick customers into spontaneous buying.  Some even pretend to be social, much in line with lame Corporate Social Responsibility marketing.

I propose however that a true Social CRM mindset manifests itself in empowerment only. You don’t see it? Ask yourself why Apple is so immensely successful with its Apple Stores. They make going to the store an experience of building a direct relationship with its customers, when all others are outsourcing customer contacts to India and to sales channels. Apple asks customers to PAY for one-on-one training and advice and they do it happily. My iPhone4 was broken, but within the service contract they replaced it with a new one in 24 hours by courier. At the T-Mobile shop the replacement of a phone takes at least SIX WEEKS! The clerk says: ‘Those are the rules.’

When you dare to ignore the hype, then personal contact and quality service are still in-fact the most successful ways of socializing in business! As a great add-on you can also offer Social Media.

About Max J. Pucher

I am the founder and Chief Technology Officer of Papyrus Software, a medium size software company offering solutions in communications and process management around the globe. I am also the owner and CEO of MJP Racing, a motorsports company focused on Rallycross or RX, a form of circuit racing on mixed surfaces that has been around for 40 years. I hold 8 national and international championship titles in RX. My team participates in the World Championship along Petter Solberg, Sebastian Loeb and Ken Block.

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Posted in Customer Relationship Management