Tuesday, September 4, 2007

Social Networking and CRM:
Still Searching For A Fit

By Denis Pombriant, Managing Principal, Beagle Research Group

Social Networking (SN) is another one of those things I have been watching for a long time as the technology has slowly but steadily approached the front office. The idea of using SN 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.
Interestingly, 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.

In both cases 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, SN 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 SN 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 was supposed to help you segment your potential customer base into groups you could construct specialized target messages for.
Business intelligence worked out well enough for marketers but I think the technology found its voice 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 SN as if it was just another sales tool designed to help cram product into the market thus helping 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 SN for sales falls into this category.
Social networking has been used effectively for a long time by companies interested in engaging customers in a conversation aimed in part or in total at improving products and services. People have been using SN techniques much longer than they’ve been using computers. My favorite example comes from Eric von Hippel’s book http://mitworld.mit.edu/video/262
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 SN 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 SN this way has several advantages over using it to get a deal. By using SN 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. SN 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 a long without a product like a better steam engine.
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.

Denis Pombriant founded Beagle Research Group, LLC in 2004 after a successful career in enterprise software sales and marketing. Pombriant is widely quoted throughout the industry and he is a member of the Editorial Advisory Board for CRM Magazine. Pombriant’s writings appear regularly in print and online journals such as CRM Magazine, DestinationCRM.com, CRMBuyer.com and SearchCRM.com .