Traditional CRM v. Social CRM: Is There a Difference?

Social CRM is one of the most discussed and debated strategies in the annals of 21st century business, as short term as they've existed. It has been defined and redefined and refined again because of its importance in the thinking of businesses when it comes to how they are going to approach the relationships they need to develop with customers who are more empowered than ever - and more attuned to their peers than to the businesses who want to interact with them.  

Traditional CRM has been successful in meeting the operational and transaction-based requirements of businesses when it comes to customers - but its a customer paradigm that now has to be expanded with new dimensions.  

What this brief will do is explain what the difference is between traditional and social CRM and why the difference is even created and discussed.

Making the Transition from CRM to Social CRM

Traditional CRM was defined as a strategy and philosophy that was based on how to manage customers using tools, processes and systems to both understand who your customer was and at the same time provide your business with ways of identifying the life cycle of those customers. It was focused on what have historically been the "customer-facing" departments - sales, marketing and customer support. The driver for its initial success was sales - how do we manage customers in a way that increases our chances of closing deals in the B2B environment or sell “stuff” in the B2C world.  Much of its value to sales was based on account information, opportunity management, and, one of the keys to distinguishing salesforce automation (SFA) from simple contact management - pipeline management. The latter gave management visibility into the sales pipeline of salespeople - something that made SFA suffer when it came to adoption. Sales people hated it because their managers had visibility into what they saw as their key assets - the relationships that they had with their customers. Because traditional CRM was largely driven by these sales strategies, processes and applications, it had a high failure rate in its early incarnation. But as companies scaled their expectations appropriately and the CRM industry began to mature, comfort levels with the systems used increased and the programs for success were crafted more and more around a proven set of practices, the rates of success increased commensurately.

Traditional CRM was defined by programs that addressed the departments typically called “customer facing” – sales, marketing and customer service.  Systems were created by software vendors to, for the most part, automate processes and analyze data that would, if used well increase the ability of the salesperson, marketing maven or customer service representative to do their job more effectively.  On the back end the analytics, when used properly, were able to provide a view of an individual customer that let the customer facing employee gain further insight into who the customer was and the likely value of that customer to the company.

But the world changed. The communications revolution that was characterized by the proliferation of Internet use and of mobile devices changed the way that people wanted to (and did) interact with each other and with the institutions that they dealt with.  In business this was a transformation of how customers dealt with businesses and with each other.  It was reflected by two statistics that are worth mentioning so that you can see why CRM is evolving into Social CRM.

Statistic #1: The Edelman Trust Barometer in 2003 said that when it came to “someone like me” (not necessarily someone you know), 22% saw that as their most “trusted source.”  In 2004, that number was 51% and it has never looked back.

Statistic #2:  The March 2009 Nielsen Online Global Survey found that for the first time, more people (those using the Internet) were communicating via social networks (66.8%) than via email (65.1%).

These are significant numbers because they are the left-brained statistical underpinning for the existence of the social customer.  That same social customer, by taking control of the public channels like Facebook, Twitter, the blogosphere, also took control of the business ecosystem, because they no longer had a dependency on the company to either get goods and services that the company provided - since there were so many other options and because they didn't need the company's channels to communicate about the company - they could do that in the public domain.

Social CRM is the response to this new kind of customer and the demands that they make on the company. The key difference (besides the ones below) is that it is based on a strategy for customer engagement rather than managing customers. That means that the company has to realize that what the customer wants from them now, as opposed to five years ago, is enough knowledge and enough tools to make intelligent decisions on how they are going to interact with the company that interests them.  There is little option but to provide these things - given the often many choices of similar or identical products and services that the customer has access to.

So what are some of the basic comparisons?

Comparing Traditional and Social CRM

1. Social CRM is an extension of CRM, not a replacement so some of the tenets of traditional CRM remain as important as ever.
2. Make no mistake about it though - even though the benefits will be mutual, to make this work, the business organization has to be realistic and acknowledge that the customer is now in the driver's seat.
3. It also changes the purpose of CRM from managing relationships with customers to engaging the customers.
4. That also means that the new business model is different too. The traditional model associated with CRM was based around providing better products and services to the customer - and also good customer service. It was a sales driven model to some degree - thus the first mover in CRM technology was salesforce automation. It was also transaction-focused, driven by purchases. The new model is interaction-driven (though transactions still matter, obviously) and with that, the most interaction-directed pillar, customer service, is emerging not only as the primary of the three pillars of CRM, but as a wrapper around all interactions in business.
5. This new model is no longer based on just the constant improvement of products and services. At this stage businesses need to be aggregators of products, services, tools and consumable experiences - so that the customer has what they need to sculpt their own involvement with the company that they've chosen to be involved with.
6. In the longer term, the model will be (hopefully) a company that's sufficiently transparent, institutionally structured and culturally ready to collaborate and innovate directly with the customers.
7. Social CRM differs too in that it is based on programs that provide both the operational needs of the company to manage the customer and the bidirectional channels of communication with the customer.  To make those channels effective, the company has to be culturally ready to give customers information that they are not used to giving such as visibility into a product development cycle - including some say in how the product is developed or what products are developed. Only one example, but you get the idea.

Those comparisons are just the tip of the iceberg but are the high level view of the fundamental differences between traditional CRM and contemporary Social CRM. And the similarities.

Let me conclude with two definitions - One of traditional CRM and one of Social CRM so you can see these similarities, the differences and something of the complexity that Social CRM adds to the customer engagement equation - in just a few short sentences.

Traditional CRM: “CRM is a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment.”

Social CRM: “Social CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It’s the company’s response to the customer’sownership of the conversation.”

If this doesn't explain it well enough to you, you can always reach me to ask me about something.  Start with Focus. I'm sure that you'll find me here.