CRM models must change

02 May 2011

NEW YORK: A new breed of "social consumer" means US brand owners need to transform customer relationship management models, a report from consultancy Booz & Company has argued.

"The days of the one-to-one relationship between companies and their customers are over," the company's study said.

"Now companies must contend with the huge and growing social web, where customer experiences and opinions are shared on a massive scale, and corporate reputations can be ruined almost instantaneously."

As nearly 75% of online adults engage in Web 2.0 pastimes like contributing to forums and writing product reviews, the necessity for action is pressing.

Similarly, approximately 25% of America's internet audience create content including video, blogs and audio material, and a third of bloggers express their attitudes about goods and services.

The resultant challenges facing marketers incorporate embracing tools for interacting with shoppers, ensuring transparency and pursuing collaboration across a range of fields.

"This new relationship will have two goals: to develop the credibility needed in the social web and to use this web to boost sales," Booz & Co said.

Among the "reactive" competencies to be addressed in protecting the bottom line are public relations, complaints management, customer support and gathering insights.

Equally, "proactive" functions - for example lead generation, sales, marketing, promotions, loyalty programmes and awareness-building - may all be achieved using sites like Facebook and Twitter.

Oil giant BP was named as one organisation that failed to embark on such activities, and thus lacked any "social web credibility" before the Gulf of Mexico crisis, meaning attempts to mitigate the fallout proved largely unsuccessful.

More positively, IT specialist Dell has used Twitter to push unique offers, and also forged a partnership with Intel on a scheme called "Dell Swarm".

Under the auspice of this platform, Dell leveraged the collective buying ethos utilised by Groupon, and reduced prices as the size of the buyer "swarm" built up over social networks increased.

"Dell sold out the inventories allotted to the campaign, taking in more than $6.5m (€4.4m £3.9m) in incremental revenues," Booz & Co said.

Additionally, 200 blogs and 500 tweets praised this effort, enhancing brand equity, as prequalified leads rose 15% and 80% of participants opted-in to receive future communications.

Elsewhere, electronics retailer Best Buy formed an online community via which consumers respond to questions posted by their peers, while the firm's 114,000 staff can solve unanswered queries.

This digital hub also houses bespoke pages prior to the launch of high-interest products, such as the iPhone.

In 2009, this property secured 2.5m visitors, reading 80m messages, and Best Buy's employees only had to deal with 5% of enquiries.

Complaint levels fell 20%, and the cost savings provided by this and parallel social initiatives are estimated to have reached $5m.

Booz & Co further suggested that SeaWorld showed how to handle potentially negative coverage after a trainer was killed by killer whale in front of a live crowd in early 2010.

It immediately made posts to Twitter and Facebook, the company's chief executive had composed a blog piece in hours, which was left open for comments to be added, and tribute videos were soon uploaded to YouTube.

"A rising tide of comments on Facebook advocating the closing of the theme park and freeing the whales was countered primarily by thousands of SeaWorld Facebook fans," Booz & Co said.

"At present, thanks to its rapid and sympathetic response, SeaWorld's theme part operations are continuing normally."

Data sourced from Booz & Co; additional content by Warc staff