Published by MBA Skool Team, Published on July 12, 2013
With the explosion of Web 2.0 and the propagation of end user participatory platforms, businesses are grappling with the issue of leveraging this new technology. A Web 2.0 enhanced Customer Relationship Management (CRM), popularly known as a Social CRM,can provide businesses witha competitive advantage by cutting costs and increasing automation. It can offer myriad avenues to CEOs to increase the customer-centricity of their organisations and strengthen core business functions by multiplying opportunities for collaboration. With the power balance shifting towards the consumer, firms must adapt by developing Web 2.0 trends that best alignwith their business goals.
Consider these scenarios. A fast food chain uses Facebook to find out what patrons enjoy and improves existing services based on their inputs. A large MNC employs blogs to educate its customers about the facilities it offers, making it easier for potential customers to reach out to it. These scenarios might soon become the norm.The proliferation of Web 2.0 has marked a paradigm shift in the way people communicate and collaborate.Harnessing individual participation, blogs, wikis, mashups and social networking sitesoffer vast and promising opportunitiesfor customer relationship management (CRM). From sales and marketing to customer service, Web 2.0 presents resounding implications for all business functions encompassed by CRM.
Image Courtesy: freedigitalphotos.net
Crowd-sourcing, a long known commercial model which utilises the general public to generate content, was earlier restricted to people who had sufficient technical knowledge. However, Web 2.0's easy to use architecture allows people with elementary computing knowledge to build applications. This has great potential for business houses as they can now extend crowd-sourcing to their own customers and implement proposals developed by them. Ideas generated by people from disparate geographical areas, cultures and perceptions can help firms gain a holistic picture of their offering. The asynchronous nature of communication over Web 2.0 would allow users to build on existing ideas and progressively refine content.
Sales Force Automation (SFA) software helps the enterprise in streamlining sales processes. At the heart of every SFA is a contact management system which records every phase of the sales process. With the capabilities of Web 2.0, it can be expanded to include insights into opportunities, territories and sales forecasts. On a similar note, CRM software in marketing can aid the enterprise by identifying and targeting specific clients. As firms move towards a multichannel distribution network, the software can track and measure the performance of each of these routes using metrics such as clicks, deals, responses and revenue. Organizations can also develop specific web activities such as free downloads, online presentations and assorted audio-visual content to further strengthen company-client relationship.
A significant portion of the working capital of the company is expended on customer based processes. A McKinsey Global Survey of 956 companies revealed that businesses using even a single aspect of Web 2.0 in their customer related activities saved a minimum of 20% in marketing, travel and auxiliary support costs.They also reported a 20% reduction in the time taken to market products and services. The interactivity embedded intoWeb 2.0 would increase inter-employee communication while decreasing costs. This can lead to substantial savings, especially for geographically diversified firms.
Many of the issues faced by firms are common across the industry. Instead of trying to solve the problem on their own, organisations can draw on the experience of another company that had faced and overcome a similar problem. Businesses such as CEO Connection have started using the power of cloud computing to build repositories of relevant topics from across industries and functions. Firms can access these online knowledge centres and contribute to them. This networked learning can save valuable resources and help firms react faster to changes in the business environment.
Consumers today demand customized, prompt and complete solutions. Gone are the days when shipping an instruction manual with a product would suffice. The web helps meet these expectations affordably. Firms can utilise live chat forums and 24/7 online support centres to reach out to clients on a global scale. These forums need not be restricted to only customer support. A New York Times study attributed poor conversion rates on e-commerce websites to the lack of human guidance in the customer buying process. With no one to advise them on the suitability of their current selection, customers are left undecided. Animated avatars controlled by company sales personnel which provide assistance to the customers as they browse the website can fill this gap.
When it comes to understanding consumer behaviour, analyzing databases is the predominantly employedtechnique. However, these records contain historical data which may have little bearing on the current customer sentiment. Websites such as Twitter allow users to broadcast their thoughts on virtually any topic. Software giantslike Oracle and SAP are designing tools which monitor such websites and provide companies with the latest and most relevant information. The data can also be collated to generate an overall picture of the general consumer mood. The analysis of these trends can help firms adjust their product and service offering to best suit the prevailing consumer disposition.
One of the key contributors to strong customer relations is a motivated workforce. A Towers WatsonGlobal Workforce Surveyof 32000 employees revealed that workers who felt disengaged at the work place had a 30%higher absenteeismand a 50% higher attrition rate vis-à-vis their engaged counterparts. Web 2.0 can augment CRM to enhance Human Resources by improving employee engagement. Referred to as Employee Resource Management (ERM), it a business process that creates strong professional bonds between an organization and its employees. Starting with basics such as profile management, payment information and training, the software can be expanded to include appointment scheduling, generation of online alerts and leave management.
With customers assuming greater command of their consumer experiences, Web 2.0 provides firms with an opportunity to better understand the requirements of their clients. By leveraging social media, businesses can move from merely reacting to customer feedback to actively involving the customer in the conversation and getting him to share his thoughts on the product. Instead of trying to design a need for the customer, the company can focus its resources on developing a product the customers actually want.
However, caution must be exercised by firms that want to leverage this new wave of technology. Companies must identify areas of Web 2.0 which best align with their strategy and not jump onto every Web 2.0 trend hoping it will work for them. Web 2.0 content places power in the hands of the consumer. Businesses which could earlier carefully craft their brand image through selective advertising would not be able to do so anymore. They cannot effectively control what is being said about them in blogs and wiki posts. Identifying such concerns and developing plans to deal with them is an integral part of any strategy which intends to use Web 2.0 as a commercial tool.
This article has been authored by Saket Joshi from IIM Ahmedabad