Business Velocity - The Value of Networks

Bob Metcalfe introduced his theory of the value of a growing network around 1980, saying that Value ≈ n². While Metcalfe was at that time trying to sell the concept of Ethernet to potential investors and the formula is heavily discussed by experts in the past years, it can still be applied in many areas of Web 2.0 growth.

Especially the “Critical Mass Crossover” is valid for communities within the social web. While there are thousands of social networking platforms available, the value for users exponentially increases with the number of registered members. Only a few platforms reach a critical mass of users that encourage others to follow and create a vicious circle resulting in market dominance. Being first is the guiding principle because consumers see very little value to sign up and actively engage in a social network that is just a copy of another one having an already grown community.

This results in a high pressure of fast implementation and dispersion of new ideas in order to pass the critical mass and fill the respective segment. The entry barrier for followers is relatively high, although there are usually niches to occupy in terms of uncovered regional or thematic territories.
Ebay is a good example for a company that pretty much completely occupied the global auction market for individuals. Although eBay fees eat up a substantial part of the auction returns for sellers, it is still the number one network because of the large number of potential buyers that do not see the value of searching on other platforms that are cheaper or free for the seller. This creates a tremendous entry barrier for followers and make eBay a company with a revenue of 14.07 billion US$ in 2012.

To gain such a competitive advantage, it is necessary to be fast to market and sometimes sacrifice quality product maturity in order to be first. Going to market with unstable or unfinished products is a difficult and risky endeavor – especially for large corporations that have an established and high valued brand. To avoid any damage to the brand, it is crucial to have an ongoing conversation with customers and let them know about the ongoing development and the existing issues. When communicating honestly, not only can brand damage be avoided, but also interested customers get involved and actively contribute to enhance and develop products and services. These users are more likely to become advocates for a brand or company.

CRM is not about “managing” customers (anymore…)

CRM 2.0 is the move away from the transaction based “management” of customers (one way pushing marketing information) towards a real two way dialogue that is based on trust on both sides. To discover the full benefits of a changing customer behavior that is arising with new technologies, it is necessary for companies to open up, share information and start listening to customers instead of just pushing marketing messages out into the market. Engaging in such a meaningful conversation will help to discover new ideas and align products and services with the customer demand. It further leverages the willingness of users to contribute to the development and enhancement of products, services or ideas.

It has to be kept in mind that CRM 2.0 is not just a technology or software tool but consists of several components that all need to be considered and eventually implemented.

The underlying technology is only a minor matter but has to support the shown elements. Open Source software and Software as a Service (SaaS) can help to reduce the cost for the IT infrastructure in order to set the clear focus on the strategically more important parts like the required change in corporate culture.

Technorati Tags: CRM 2.0,Social CRM

The new 360° view (of customers)

Can you remember back in the year 2000, when all the CRM vendors started to preach the “360 degree view of the customer” vision? Although this is twelve years ago, the adoption and implementation of this concept has only been completed recently in many corporations.

And now – after having combined all the internal data sources and delivered the relevant customer information to the applications and users that need it (in real-time) – the game has changed again!

With the rise of social networks and the internet of things, there is so much more information available than just the internal customer database.
Especially the tech-savvy and younger generations are divulging many details about their preferences for products and services that can be used to tailor the often praised Customer Experience.
In addition, the rise of smartphones and RFID helps tracking customers and their behavior (consider privacy here!).

Ok – all these information is out there to be found… but HOW?

There are some Basics that have to be in place before you should add all the social media and machine data:

• Master Data Management (MDM)
• Customer Data Integration (CDI)
• Storage (lots of it – be prepared for Big Data)

The next step is to get hands on all the new data:

• Create a Facebook page and get many “Likers” – that’s how you get hold on their personal information
• Text analytics – analyze all public available sources like twitter, blogs, forums, etc.
• Have your customers opt-in to your marketing activities – ideally at first contact
• Do excessive click-streaming on your web page(s)
• Include offline shopping activities (if any)
• Build a social graph and bring external data together with you customer database – it will be a challenge to tie together the multiple identities of your customers.
• Decide where a decision needs to be real-time or where post-analysis is sufficient (not everything has to be real-time!)
• Include the new data to calculate a more accurate customer value 
• Integrate the external customer information into frontend(s) – e.g. CRM, Integrated Marketing Management (IMM), (Web-)Shops, etc.
• Allow communication on all channels – you can still push customers to your preferred channel, but do not force them!

Are you already touching these new sources of customer data? Are you thinking of extending the variety of channels for the customer hub?
I am curious to hear your experiences, successes or failures in doing so. Feel free to comment or drop me a message.

Interactive Chat as a support (and sales) channel

I just read an internal memo about the huge success of our (SAS) “proactive chat” feature and was thinking about my masters' thesis, where I stated that the standard triple of telephone, mail and email might not be sufficient anymore and additional channels help to establish a better relationship with customers.

I cannot disclose the numbers here, but in terms of revenue generation, I was actually stunned how the chat feature helps to make money and generate leads. Now given this success, one can only anticipate how this helps improving customer relationships through an outstanding support experience.

While SAS putting a lot of effort into this – like a real-time decision when and how to present the chat feature – and has a large Inside Sales team to handle these incoming chat requests, it is also possible for very small companies to extend their list of channels by a chat.

I recently bought a new TV and while looking for the best price I was stumbling across a very small shop (probably a one-man show) that had a very good price and was pretty close, so I could go there and get the TV the same day while saving the shipping cost.
I had some questions and wanted to get a better feeling (since the price was really low), but writing an email was taking too long and I felt calling him might be a bad idea because it might interrupt too much and I would need several calls to answer questions that were coming up while I was still reading about the TV in the internet and comparing other prices.

The intermediate between a telephone call and an email was a chat. There was no fancy web-chat feature on the store’s website, but he had simply put a Skype-Button on it that was showing if he was online and available..

Cost free and still very convenient!

He could answer my questions, make me feel good about his business and got the deal… simple as that.

Bottom line is that there are many ways to use technology to help build a better / trusted relationship with your customers and improving the customer experience.

Chat is one of the channels that is increasingly getting popular as it fills the gap between phone calls and emails. Chat messages are more interactive and faster than email while still not as interruptive as a phone call.

Have you had a similar experience? Is your company also supporting chat as a medium the get in contact with customers?

Technorati Tags: chat,customer experience,CRM20

Avoid Social Media Failures

I just came across a blog post from Jeff Stibel where he talks about ways how to stay out of trouble when it comes to social media (both from a corporate as well as from a personal perspective).

While most of the issues that can arise with the Web 2.0 technologies and the “Social Web” are easily predictable with common sense, it is alarming how many people still make fundamental errors in dealing with these platforms.
CRM 2.0 (Social CRM) has to make sure doing these things right! It is a good idea to built a customer relationship on trust and transparency rather than blow out exaggerated marketing messages that have a massive negative impact on the brand when customers realize the truth.
Corporations have to keep in mind that customers are talking about them and (in our days) basically the whole world can read along.

Jeff actually brings it to the point when he says:
“…the most foolproof way to stay safe on social media is simply to be who you say you are. Pretending to be something you're not, or attempting to conceal or manipulate the truth is a surefire way to lose.”

…nothing more to say I guess.

Master-Thesis about CRM 2.0

I am thinking of putting my thesis online - would anyone be interested?

The End of Management

You have to read this very nice article about management and how it doesn’t fit into the 21st century:

http://online.wsj.com/article/SB10001424052748704476104575439723695579664.html

Very good research collection on how the model of large managed corporations will be obsolete in the future and Enterprise 2.0 will get successful.

We can see many examples in the corporate landscape that follow the path of Enterprise 2.0 like

• SAS (listed in the article)
• Dell and Starbucks (collecting ideas from outside the company)
• Nike (design your own products)
• Zappos (flat management structure and motivated employees)

I am sure the list goes on and on (feel free to add examples in the comments section) and shows that there is a need for change in our thinking in regards to management and the way we (want to) work. That is why I wrote about the “Customer Relationship Model 2.0” and not referring to it as “Management” anymore…

What do you think about this? Another hype that will be forgotten in 5 years? Traditional Management is about to die? Or something in the middle?

Technorati Tags: Enterprise 2.0,CRM 2.0,Management

Does every company need CRM?

If you listen to the CRM tool vendors, it is crucial for every business (independent of its size) to use a CRM software in order to streamline its processes and collaborate effectively with customers and across the organization.

But is this really true for all kind of businesses and all sizes?

First off – I do not think that there is something like a “one fits all” solution for CRM. Even the vertical solutions from some vendors cannot immediately fulfill all the needs without adaption and customization.
And if you think of CRM as a Philosophy rather than a piece of software, installing a CRM tool will not provide a competitive edge anyway. The “me too” approach does not differentiate and thus is limited in its ability to deliver value to the company and its customers. Focus usually is around cost savings and process automation – nothing that will dramatically increase the customer satisfaction or the customer experience.

So what to do with small businesses (SMBs) that think about CRM and do not want to spend a large amount of money into licenses and consulting / implementation projects?
Good news is that there are so many free (or low cost) options out there that it makes sense to think about creating a CRM strategy that does not rely on a fully integrated CRM suite with a high price tag. With a limited number of users it is possible to create an outstanding customer experience by using the tools that customers use (which are usually the ones that are available without cost) and streamline the activities solely by outlining and communicating a CRM 2.0 strategy.

Ideally the used tools offer some kind of integration to avoid the creation of application or data silos. With the emerging standards, more and more applications will offer the possibility to take part in workflows that span multiple applications, departments or locations. But even if there is no possibility to automate this integration, I truly believe that it is not a big issue to do some of the internal collaboration manually.

Again, if the strategy is clearly set and communicated, it is no big deal to export and import some data and send it around via email… Crucial is that the people (i.e. employees) collaborate and pull together.
With smaller companies this is more important than a highly integrated CRM suite and well defined (but rather inflexible) automated business processes. The attitude of collaboration and co-creation will also help engaging better with customers and thus take the Customer Relationship Model to the next level…

Another side effect is that the employees are able to use the tools the know and love – this Enterprise 2.0 approach will also attract and maintain talent within a company.

In the next post I will outline some free or low-cost alternatives for SMBs when it comes to CRM – stay tuned…

Technorati Tags: CRM 2.0,Customer Relationship Management,SMB,CRM suite

Portability of (social) profiles

Create and maintain one single online identity and log on to the various social networking platforms wit a single logon?
Choose which information is seen by which platform and let them exchange messages and information (after allowing them to do so)?

While we are currently far away from this scenario and everybody has to deal with many user accounts on various social networks (and the associated logins), I truly believe that there will be mechanisms in the future to be able to streamline this mess and finally make our lives much easier.

Concepts like OpenID and Google’s OpenSocial might be an option to do this – if they will reach the critical mass. OpenID is already widely adopted (e.g. Google, Yahoo, Facebook, myspace, etc.). OpenSocial is a open API that can be used to exchange data between several social networks but is heavily competing with Facebooks proprietary API (Facebook Platform).

Recently I see data exchange happening more often, especially when it comes to find existing friends on a new network. On the long term I think there will be only few social networks in every niche, which will make the integration between them and platforms in other niches a little easier.

Not only will the life for users become easier, but also CRM 2.0 will profit from having standardized APIs and Authentication mechanisms. Next generation CRM tools will be able to access user data (after they have agreed to do so…) and will be able to provide much better and more personalized services to every single consumer. With this information, a corporation will be able to have meaningful conversations even with millions of customers around the world.

Of course I hear you shouting for security and warnings around the surveillance society – and actually I think this will become a big issue. For sure there will be fraud (just imagine what Google could do with the massive amount of information it has from every single user…), but as the hype settles and the technology becomes more stable, so will the security and trust in companies will rise. Many people will be fine with companies having access to their personal data in order to provide better service and a unique customer experience.

Technorati Tags: Social CRM,sCRM,CRM 2.0,OpenID,OpenSocial

Service Cloud2 – Salesforce.com taking Customer support into the cloud?!

Salesforce.com has always been very visionary and successfully pushing the SaaS model into the market for sales force automation (SFA).

In their presentation of the “Service Cloud2” yesterday, they showed that the same SaaS model can also work for customer service and support.
Marc Benioff said that the average service and support applications are about a decade old – and I would totally agree with that. Having seen some installations and the associated data centers behind these applications, I can imagine the potential that Benioff sees in this market and that customers see in potential savings.

SFDC presented some very important new modules of the Service Cloud2 that are indispensable for high quality customer support:

• A knowledgebase (competing with RightNow)
• CTI integration (powered by CISCO?)
• Integration to social networks (like Facebook and twitter)
• Customer portals and communities (competing with Jive SBS)

While all these elements are not new and there are solutions out there to handle them, SFDC is probably the first one that is able to deliver a fully integrated solution (including crowdsourcing) out of one hand and paid solely per usage. This will allow small and medium sized companies to deliver a great customer experience with very little upfront investments in infrastructure and licenses.

Very obvious that putting all CRM in the hands of SFDC also has the risk of a vendor lock-in. And realistically, even if they call this a cloud, it is still not what I would call true cloud computing and it will not be possible to easily switch parts of the CRM to some other vendors or ‘in-source’ the application in the future.

But still, this is a very nice vision that Benioff and his team are bringing to a life and I am very sure that it will be as successful as the SFA module was.

Technorati Tags: CRM 2.0,Salesforce.com,Service Cloud,Customer Support