Social CRM: practice to theory to practice Paul Harrigan*. University of Western Australia.

au Musfiq Choudhury. University of Southampton. Keywords; customer relationship management (CRM), social media Abstract Customer relationship management (CRM) is a critical research domain and its importance is only increasing as more enabling technologies such as social media technologies are available to businesses (Boulding et al., 2005; Cooper et al., 2008; Verhoef et al., 2010). Now, social CRM is a phenomenon that is bringing together the power of CRM with the potential of social media technologies to create a higher level of marketing that actually has customer relationships at its core. The use of social media tools for marketing is rife in practice, but CRM theory is slow to catch up. It is important that it does, and quickly, because although social media use is rife in practice, in reality there are a lot of ad hoc approaches and a real confusion among practitioners about how social media actually adds value to marketing. Introduction Customer relationship management (CRM) is a concept that is as old as business (Sheth and Parvatiyar, 1995b; Drucker, 1954; Payne and Frow, 2006). CRM is often confused with relationship marketing, and in actual fact there appears to be no general consensus on the difference between these two phenomena in previous literature (Parvitiyar and Sheth, 2001). However, the best differentiation may be that, where relationship marketing is concerned with managing relationships with multiple stakeholders, CRM is concerned with managing the most important relationship; that with the customer (Ryals and Payne, 2001; Chen and Ching, 2007). CRM certainly is a critical research domain (Boulding et al., 2005; Cooper et al., 2008; Verhoef et al., 2010). Its importance is only increasing as more and more enabling technologies are available to businesses implementing or thinking of implementing CRM. This paper seeks to draw on a recent model of social CRM (see Figure 1), which was based on extensive quantitative empirical investigation of how social media technologies were being used for CRM in practice, and lay out clear implications for managers. Hence, the reasoning behind title of the paper, where we analysed what was happening in practice, modelled it against theory and now seek to disseminate that back to marketing managers as a prescriptive guide to using social media for CRM.
Figure 1 Model of Social CRM

0.595 n.s.  Customer  relationship  orientation  CRM technology  use  0.563

Customer  engagement  initiatives 0.427  Relational  information  processes

0.546  Customer  relationship  performance

0.404 0

1990: p. What it does require are technologies that facilitate the underlying marketing and customer-related strategies (Jayachandran et al. the dissemination of that intelligence across departments and the use of that intelligence across the organisation’ (Kohli and Jaworski. first on computers but now on smartphones (Ganesan et al. Two principal areas in which technology can enable CRM are customer communication and customer information management (Jayachandran et al. 6). A market orientation comprises ‘the organisation-wide generation of market intelligence on current and future customer needs. interactions and social exchanges (Chen and Ching.. 2007). 2007). 2004. media producer-directors on YouTube. this paper provides new insights for managers to consider when using social media technologies CRM Technology Technology as a term has always led to confusion as to what exactly it constitutes... 1990. Using such CRM technologies does impact on the two key processes of customer engagement initiatives and relational information processes. websites.Model shows the Standardised Estimates showing the latent constructs (in simplified forming and not showing the error item covariance matrix and measurement items) based on analysis using PLS/SEM Practice to Theory The model of social CRM includes several constructs that need explained. which in turn. which include social media. email. 2010:311). Cooper et al. email and databases or more complex CRM packages such as Onyx. the overall premise of the model is that a customer relationship orientation impacts on relational information processes.. the basic aim has been to build customer insight and use that to better tailor communications to customers. Whether it has been simple technologies such as websites. Relational information processes impacts on customer engagement initiatives. 2005). concepts. Boulding et al.g.. Effective CRM implementation does not necessarily require sophisticated analyses. 2009). which in turn will lead to a higher customer lifetime value (CLV) (Dwyer et al.. Technology has always been vital to CRM implementation. Coltman. 2008). Harrigan et al. Ahearne et al. social media and networks (e. . research linking market orientation and information technology always focuses on the customer related processes that are facilitated (Choudhury. 2011). among others. interactive channels are highly disruptive for the management of relationships with customers. The focus on relationships with customers is based on the understanding that competitive advantage is best achieved and maintained through satisfying customers’ needs through the development of close personal relationships.. Hence. 2005. Social media may be defined as the ‘group of Internet-based applications that build on the ideological and technological foundations of Web 2. discussion forums and blogs. and have led to the coining of the term ‘Social CRM’ (HennigThurau et al. This customer focus relates to customer relationship orientation and hence is considered a derivative of a market orientation (Kohli and Jaworski. 1987). authors on Wikipedia. has been the widespread availability of social-type technologies among customers. 2005. however. but problems have arisen when the technology focus has predominated over the marketing focus (Reinartz et al. 2008). The major development of the 21st century.. affects overall customer relationship performance Customer Relationship Orientation A customer relationship orientation is derived from the market orientation literature (Narver and Slater 2000). Such technologies include.. and critical reviewers on Amazon and Tripadvisor’ (Hennig-Thurau et al. These technologies have empowered customers to ‘serve as retailers themselves on eBay.0 and that allow the creation and exchange of user-generated content’ (Kaplan and Haenlein 2010).. All of these two-way. but does not directly impact on the use of CRM technologies. 2010). 2005. Facebook and Twitter). 2007). mostly due to the fact that social media is such a new and dynamic domain in practice. Few papers exist which examine how a customer relationship orientation may be facilitated through the use of social media technologies. If this is where the customers are. or technologies (Boulding et al. First. Thus.. then this is where CRM also ought to be? The fact that these technologies by their nature possess the characteristics and capabilities for relationship-building only increases their potential for successful CRM.

Relatively recent moves by Microsoft and Google to improve search functionality within social media should facilitate information capture for marketers (Kumar et al. 4). The growth in importance of customer engagement has been recognised by the Advertising Research Foundation. report on news events both big and small. sales. customers are participating in social networks. 2010. video or even novel with the world’. Kohli and Jaworski 1990. 2010). 2005). 2010). Integrating social media into CRM. 2005). and information use. Once the information is gathered by an organisation from the customer. information capture. and thus for CRM (Hennig-Thurau et al. this information can serve as basis for future interactions in the context of CRM (Jayachandran et al. However. through social CRM technologies. (Deighton and Kornfeld 2009. where user-generated content can be created jointly by marketers and customers (Kaplan and Haenlein 2010). This can range from customers writing reviews on websites like Amazon and TripAdvisor to testing new ‘beta’ products. Research in Motion (RIM) (developers of BlackBerry smartphones) and Apple have forums in which customer involvement in every stage of the co-creation process is actively encouraged.. or share a song. What is required is a shift in marketing thinking to recognise that customers have become highly active and highly engaged partners in the value creation process (Hennig-Thurau et al. or co-developing open source products such as Open Office or Mozilla Firefox (Hoyer et al. The notion of information capture is derived from market orientation literature (e.. have made it possible to facilitate such integration. 2010). the challenge for marketers is being able to filter usable information from such communities (Hennig-Thurau et al. Advances in CRM technology.. Moreover.. 2010). Engaging with customers through social media to create value through personal relationships can be seen as an extension of simply communicating with customers (Kumar et al. the exponential growth of social media has been highly disruptive for the management of customer relationships. communicating and building relationships with each other (Gordon 2010.. where information is not necessarily quantitative and rarely in a generalisable format (Bijmolt et al. (2010: p.. information reciprocity.Customer Engagement Initiatives ‘The digital innovations of the last decade made it effortless.. and IT departments (Bijmolt et al. Verhoef. 2008). and Neslin. for audiences to talk back and talk to each other’. the most important task is now information integration. 312) reflect. As Hennig-Thurau et al. Huber posited that advanced technologies could enable managers to communicate with and stay informed about customers. the American Association of Advertising Agencies. Since. Bijmolt et al. 2010). Instead of customer information being spread in several sectors of the organisation. 2010. ‘anybody with an internet connection can blog. write reviews. indeed second nature. ownership of the media and therefore the data is likely to span marketing. Integrating information from social media sources may be even more challenging than traditional sources of information.. Virtual communities collect a tremendous amount of data. These customers input into the product and service quality and also become ambassadors for the organisation (Hoyer et al. information integration. 2010). there is potential for significantly greater information reciprocity. van Doorn et al. Narver and Slater 1990). creating and sharing content. However. . Information reciprocity refers to the processes that enable customers to interact and share information with the firm and that enable the firm to respond to customers (Jayachandran et al. Krishnamurthy 2009). 2010. Libai et al. it needs to be now stored in one place. 2010).. Relational Information Processes There are five dimensions of relational information processes.g. information access. Konus. there are multiple modes by which customers can communicate with the firms. More generally. 2007). 2010) while also raising concerns over privacy and security. and the Association of National Advertisers who have called for metrics to try to measure it (Dwyer. 2010).. As far back as 1990. Information integration requires the assimilation of customer information from all interactions to develop a detailed history of customer relationships (Jayachandran et al. p. most of which is both real-time and indefinite (Hennig-Thurau et al. at least prior to the social media revolution. 2005). 2010.

Last is customer knowledge value (CKV). manage. Second is customer referral value (CRV). customers are engaging . In short. which has led to advantages such as speed and more complex analyses but disadvantages such as a loss of customer focus and a lack of access to the data (Bijmolt et al. In conclusion. Lastly and linked to information access. 2010). So. This is of course linked to information reciprocity. in actual fact. spread word-of-mouth (WOM) and assist other customers.This leads in to information access. Depending on who owns the data and who owns the modelling tools. which emphasises the value of customers who possess an expert knowledge of a brand or a product and/or service and who are able to both assist other customers. this may be a complex process. Looking at the two key processes of social CRM. use social media technologies is found to positively impact on both customer engagement initiatives and relational information processes. ….. Some metrics have been proposed by Kumar et al.e. either by their staff or customer use. the impact will be felt on relational information processes. rather than a CRM strategy per se. In particular. where customers want direct access to data on themselves and indeed wider customer interaction data (Bijmolt et al. (2010) that are relevant to social media data and its link with customer engagement.back to Practice Overall.. Third is customer influencer value (CIV). where truly using data to drive marketing is the ultimate goal. our model of social CRM is aimed at guiding managers through finding a home for their social media tools and approaches and thus having a framework or a ‘bigger purpose’ behind their everyday use. which is obviously an older measure of the present value of future profits generated from a customer over his or her life of business with the organisation. it tends to be IT departments who run analytics on customer data. The customer information should be used in a manner which is consistent with the philosophy of relationship management to understand the needs and behaviours of the customers and also to develop specific products and services (Jayachandran et al. al. rather than just the front-office customer engagement potential. are driving marketers to engage with customers. What we did find was that having a customer relationship orientation. it is proposed that an underpinning customer relationship orientation is necessary to fully understand the backoffice ‘information’ potential of social media. social media technologies are so suited to linking with customers that they. Today. regarding relational information processes) for CRM. which emphasises the value of customers who share information. Consequently. To complicate things further. even firms that are not historically customer oriented may be driven there by the power of social media technologies. it does impact on your ability to gather. although you don’t necessarily need an underlying customer focus throughout your organisation to just use social media to link up with customers. that is where marketing and therefore the customer has a voice at a senior level does help with using social media technologies for CRM. 2005). Thus. 2010). analyse and use information on customers.. First is customer lifetime value (CLV). and indeed advise the organisation itself (Joshi and Sharma 2004). This implies that there are marketers or businesses out there who are using social media technologies without initially realising their potential (i. 2005). which determines how much of each customer’s value stems from his or her referrals of new customers. which implies providing the customer information in a usable and timely manner to both customer-facing employees and strategic marketing decision makers (Jayachandran et. information use refers to the actual usage of customer information within the organisation by marketers. We propose that social media technologies have eradicated the power imbalances and distances between many brands and marketers and their customers. customer information should be used to direct and inform customer engagement. We find that. This tends to be the most difficult part of CRM. a third form of information access is becoming more and more important.

2005.. W. Eisenbeiss. Third. P. not Facebook or Twitter (which actually could be obsolete in their current form in 5 years). M. International Journal of Research in Marketing 24. H. This is a real shift in philosophy that marketers are coming to terms with. Block. the fact that social media customer data is being used to drive customer engagements on social media. E. A Customer Relationship Management Roadmap: What is known. F.. H. and Where to Go. We will finish will three general recommendations based on our research.with brand and marketers through various online forums and actually getting involved in product and service design in some instances. it is worth pointing out that some CRM software packages are now purporting social media integration measuring. it is cautioned against relying on such generic metrics that misunderstand the language used on social networks. M. P. we find that that customer engagement initiatives directly impact on customer relationship performance. . Why sales reps should welcome information technology: Measuring the impact of CRM-based IT on sales effectiveness.. it is important to note that the technologies alone will not change your organisation or your marketing performance. J. N. Second. Journal of Marketing 69(4). We find that relational information processes directly impact on customer engagement initiatives. T. 2010. Useful as this is. Analytics for Customer Engagement. 155-166. 336-349. References Aheane. and Schillewaert. W. but it must be a strategic understanding of the long-term importance of the customer that drives social CRM. and miss out on the real engagement potential. This is a valuable finding.. Conclusion This paper has sought to build a story around social CRM research that brings practical learning into theory to produce a clearer understanding to feed back into practice. viewing them from a CRM perspective should give a clearer strategic picture. Yes. much of the management of social media remains a resource and time-consuming activity that is difficult to scale. so customer satisfaction. and Johnston. D.. We conclude that an underlying focus on customer relationships coupled with an understanding of social media technologies is an ideal platform for social CRM and ultimate firm performance. Potential Pitfalls. rather than just one-way communication. S. retention and loyalty. Finally. R. Lemmens. Journal of Service Research 13(3). This is also a powerful finding that underlines the importance of the new notion of customer engagement and interaction. Boulding. Leeflang.. Hardie. A. a wider investment in customer relationships and empowerment of employees to engage with customers helps to spread the work load and also helps spread the marketing orientation throughout the organisation. Bijmolt. Hughes. B. ‘sentiment’ on networks like Facebook. First. where organisations are using information on customers and feeding it back into their communications. S. that is those marketing managers doing this on a daily basis. and Saffert. As software solutions become more advanced this should complement this process and make social CRM very much the norm. M. for example. 2007.. Ehret. 341-356. G. However. Staelin. At the moment. they are powerful tools and driving many organisations to get more interested in their relationships with customers. for those organisations who are experimenting with social media technologies but are uncertain of their purpose or value. customers are talking about you whether you’re on social media or not so it is better to be there. interactions and engagements with them.. A. This supports the notion of data-driven marketing..

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