Social Intelligence Approaches to Support Four Core Customer Scenarios

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social intelligence to engage with customers in ways that were previously impossible.
In a recent paper, we identified four core scenarios (called strategies in that document) and sixteen substrategies that drive profitable customer management. The focus in that paper was on classic customer management approaches, but Social Intelligence and Media approaches are beginning to have a marked effect on how businesses can manage their customers— in both business to consumer and business to business. This paper suggests some of the best ways to deploy social intelligence and marketing thinking and tactics to support core customer strategies.


.................................8 Conclusion .....................2 Winning customers ......................1 Social intelligence .......................................5 Social must be integrated with the foundations of the way a company “does business“ ...................................................................6 The socially enabled business—maturity model ..................................4 A service-oriented business architecture to support the scenarios and use cases ...................4 Social Intelligence Use Cases ........................1 Customer engagement and business performance .................................9 About the authors ...........3 Developing customers..................................................9 ............................................3 Keeping customers ...................Table of contents How social is an interruption to the traditional consumer decision-making journey ................................2 The four customer management strategies (scenarios) that deliver profit .....................3 Efficiency in customer management (reduce cost and increase yield) .............................

through their chosen channels. and a new way of thinking—and this comes at a cost. or providing insight can be designed to connect with consumers wherever they are. and engaging communications—not just “interruptions“ to a customer’s day. listen to their points of view. when they want. or to help manage service issues and dissatisfaction. to encourage them to buy. or new distribution channels offering lower transaction costs. and engage with customers in ways that were previously impossible. relevant. They can also be used to optimize the costs of sales. Social intelligence Social intelligence. convincingly. that we can listen to. How social is an interruption to the traditional consumer decisionmaking journey Social media channels enable the brand to extend its personality to engage with consumers on their terms. They can be used throughout the customer cycle—to make people aware of the brand. understand. to increase their speed to market. new ways of working. From a brand engagement perspective. educating. And these communications can be delivered increasingly through mobile devices that provide content exactly when people need it. to help them use the brand. companies have to deal with new data sources and combinations. or by enabling peer-to-peer self-help and service channels and by listening to issues to reduce the “cost of failure. informing. and service incurred by engaging customers and managing transactions. to build early sales quicker so as to maintain their price premium. marketing. 1 . at work and play.Evangelists see the “social revolution“ as putting customers at the heart of business— customer centricity on steroids if you like. or to understand the functions and features that customers most like. applications or content for entertaining. They can be used over the product cycle. whenever they want (fish where the fish are). convincingly. or near real-time conversations with customers. allows us to manage real time. understand.” Evangelists see the “social revolution“ as putting customers at the heart of business—customer centricity on steroids if you like. the knowledge of customers that arises from combining insights into customers’ social media behavior with the classic customer intelligence arising from conventional marketing and customer relationship management. They argue. and engage with customers in ways that were previously impossible. new talent. new technologies. new ways to measure. and deliver contextual. However. They argue. by providing new communication channels to replace traditional media or to make them more effective. to help them buy easily and conveniently. that we can listen to. to do this. to help design new products.

averaging about $136.Customer engagement and business performance We know from many long-term. strategies. we must go back to basics. showed significant positive financial results for companies with the greatest breadth and depth of social media engagement.engagementdb. MANAGE COST TO SERVE & YIELD • • • • Manage cost of sales Reduce cost to serve Reduce cost of failure Improve overall yield $ 2 . 1. improving the gross value produced by customers • Efficiency in customer management: reducing cost and increasing yield Figure 1 Social Intelligence Customer Experience Optimization performance. Below. The ENGAGEMENTdb study (www. There have been a few studies on the impact of social media on customer engagement and business The four customer management strategies (scenarios) that deliver profit We define Social Intelligence Customer Experience Optimization (SI-CEO) as using social marketing approaches to support the customer management objectives. However. but to increase total sales and/or margin. What is needed is a clear description of the commercial benefit of an approach that integrates social and classic marketing approaches. while the least engaged companies saw revenues sink 6% on average over the same time period. we reference one leading report from Syncapse that shows that “fans“ are worth between US$0–$360. The end goal is not to recruit fans (although this may be an intermediate goal). To understand the return on investment for your specific situation. KEEP • • • • Focus on high value prospects/customers Retain marzipan Retain rest Retain value/avoid value decay 3. “customer engagement“ arguments may not convince revenueoriented senior executives to invest. and tactics that drive commercial value. These studies are fraught with technical and methodological problems and also unconvincing to the senior executives. DEVELOP • • • • Improve cross sales/up sales Manage UP the valuable ‘tail’ Increase frequency of spend Increase basket size 4. The most socially engaged companies grew revenues on average by 18% over the previous 12 months. we describe how we do this. This involves building a business case on the likely costs and impact on revenue and margin. An example of this is the discussion about the “value of a fan. The main scenarios (which we also call strategies) are: • Winning customers: customer acquisition and activation • Keeping customers: customer retention and maintenance • Developing customers: customer penetration/share of wallet.” Much has been written on this. WIN • • • • Recruit more (quantity) Recruit better (quality) Improve activation Manage win-back 2. The study from Wetpaint and the Altimeter Group confirms that deep engagement with consumers through social media channels correlates with better financial performance. well-documented studies that improvement in customer engagement has a commercial value.

or to improve customer service by being not just reactive but proactive. The four main sub-strategies for achieving this are: • Increase customer numbers (that is. Companies can more fully understand their customers’ interests and passions. but doesn’t know what you buy • Lifestyle databases know what you’ve told them but little else • Financial databases know what you’ve bought and where you’ve shopped • Foursquare know where you are. at work and play. activating customers.” Social intelligence approaches can be used in very practical ways: to help manage loyalty programs. Social intelligence analysis can help companies really get to know all or their best customers. and winning back valuable customers who have left. through their chosen channels. social media channels enable the brand to extend its personality to engage with consumers on their terms. what they are intending to buy. and where you have been • Retailer loyalty databases know what you buy with them but not with others • Google knows what you’ve been searching for • Social sites know who you influence. when they want. and what they have bought. and development of highvalue customers (the icing on the cake) • Retention of the marzipan layer (the layer just under the “icing. We can learn more about indirect consumers by transacting directly with them. The four main sub-strategies for achieving this are: • Manage up the “tail“ (increase the value of those low value customers with higher potential) • Improve cross-selling rates • Increase purchase frequency (number of visits. what you like and what you are talking about • Cable databases know what ads you see.Winning customers This strategy focuses on building the customer base. We can use social intelligence to improve media or “connection“ planning to target marketing investment most effectively at prospects throughout their purchase journey. for instance. educating. quantity) • Improve the quality of new customers you win • Improve the “activation“ rate (or second order or product use) • Increase win-back of lost customers How social intelligence is changing the game Keeping customers This strategy focuses on reducing customer attrition and retaining customer value. Developing customers This strategy focuses on getting increased value from all customers. where they shop. we can develop 1:1 communications to valuable influencers or high-value prospects. or providing insight can be designed to connect with consumers wherever they are. applications or content for entertaining. now. we can identify and create like-minded prospect groups—niche segments or much larger communities—and target relevant propositions to them through the right media. where they congregate offline and online. HP Enterprise Information Solutions Social Intelligence teams can help you make sense of this data to inform your acquisition strategies. but do not stop completely) How social intelligence helps keep customers Few organizations are managing to connect the many pieces of the data that could lead them to more effective and efficient marketing investment: • Nielsen has awareness and advertising data. Social techniques can even be used to bring the physical and virtual worlds together to bring products “alive. From a brand engagement perspective. orders) of existing products bought • Increase basket size (purchase amount) each time someone shops 3 . anticipating problems. and communicating with communities to let them know of possible issues. retention. whenever they want. through social or owned technologies. their likes and dislikes. informing. your friends. With the right permissions. The four main substrategies for achieving this are: • Acquisition. from prospect from customer (the “path to purchase“). but not what you buy • Mobile telco databases know who you’ve called and where you’ve been • Your own databases store data on interactions and sales With this data.” the high-value customers) • Reduce attrition across the mass of profitable customers • Reduce value decay (groups of customers who decrease their buying amount from the company. If companies have the right permission from the customer.

increasing the effectiveness of cross-selling. and “failure“ incurred throughout the win. and partners. We use these scenarios to model the link between customer management activities and business performance to show ROIs. Each use case directly impacts one or more of the business scenarios. customers use social channels to find out about. including data on what interests customers and what they are searching for. for instance. develop life cycle. 4 . This is the fundamental marketing application of social media channel. Additional sales can be gained by prompting loyal customers to buy additional products or services. Social Intelligence Use Cases TCF and HP Enterprise Information Systems are developing an industrial-strength methodology and deployment mechanism. buy. to ensure even greater customer development. The four main substrategies for this are: • Reduce cost of sale (or cost per acquisition) • Reduce cost to serve (cost of managing customers) • Reduce cost of failure (identifying the key customer “complaint“ areas and fixing them at source) • Improve yield technologies emerge and as client engagements raise new possibilities. keep. and retail and other partners can be involved in developing joint social campaigns to encourage wider range or more frequent buying. “Cross-selling on inbound. Fans and advocates like to evangelize brands they love. It achieves this through use of a much richer and more personal and immediate data set. service. HP Enterprise Information Solutions Social Intelligence will help bring the required data together and use it to optimize returns throughout the customer and product life cycle.How social intelligence helps develop customers How social intelligence helps optimize costs Social intelligence can be used to encourage customers to buy more and different products. Content encouraging customers to buy across the portfolio can be distributed via social media. and to identify the products and services they might want in the future. This list will grow as new ideas and Efficiency in customer management (reduce cost and increase yield) This strategy focuses on reducing the costs of customer management relative to revenue. more often. amplifying early adoption messages about innovative channels or the products they use. The foundation of most of the uses cases is identifying your customers and/or advocates. Promotional activity can be accelerated by combining real-time analysis of social data and next-best-action marketing. As other use cases have shown. communicate and engage with brands they love and solve queries/service issues (impact on cost to serve). Communities can be created around product ideas or content. can be extended to social media. It follows then that integrating social and traditional channels will have an impact on budgeting throughout the organization. sales. there will be improvements in the profitability (yield) from new products. and engaging them more frequently and effectively. which any company that wants to manage its customers better and/or more effectively can use. inquire. from reduced new product failures. and provide feedback on their experiences (impact on cost of failure). so avoiding the margin destruction often caused by a “points means prizes” approach.” well established in classic CRM. Social approaches can be used to get offers and samples to customers more effectively. This involves identifying the detailed use cases that are the main opportunities to use social media (and the resulting social intelligence) to engage with and sell to customers. quicker speed to market and faster sales growth (making the most of the new product advantage). Social intelligence can help companies optimize or reduce the costs of marketing. channels. understanding them. to those customers who are ready to buy and considering your brands. and advocate brands (impact on cost of sales). In addition. listening to them.

In essence.01 1. website.00 3. social network apps.09 4.07 3. they are specialized agents that crawl the external web as well as connect to the internal information sources to collect the “voice of consumers” according to specific privacy rules.01 3. colleagues Manage event engagement 3. social CRM applications.02 Improve customer service 3. use of content.05 Socially Recruit Promote Social refresh enable F/M/T through social member of transaction Commerce communities get member data 2.01 Enable advocacy 2. and games. monitor activities.1 2.06 Social gifting & member get member 4.12 2. internal communication policies. Analytical services: Various analytical services can be applied to the data to identify individuals and segments. but they will vary by company and market.06 2.1 4.08 2.00 1.03 Acquire high value customers 2. revenue.02 Improve connection planning 2.03 1. help desk) or from social sites and forums.04 4.09 2. for example.04 Resolve crises Merge Facilitate Socially enable physical owned customer products/ social communities save program 3. video.13 2.12 4.07 2.08 Shop within shop 4.04 Optimize owned assets 2.05 Bundle products 4.05 3.02 4. plan how to connect.07 Integrate intermediary approaches 4.00 KEEP Increase engagement Implement loyalty program 3. A service-oriented business architecture to support the scenarios and use cases To support the customer scenarios and use cases.01 Lower time Increase Increase sales Socially drive between category through e-commerce desire/buy (portfolio) sales sampling trial 4.04 1.05 1. lylitical services Ana Organization s Liste nin g servic e G ove rnance 5 . To analyze text.09 DEVELOP Provide contextual real time prompts 4. and calls.02 1. and analyze results. and industry regulations. owned channel systems (for example.08 Reward advocates Provide Improve Collaborate utility strategic with applications account mgmt.08 1. contact center.06 3. Digital dashboard: This is a set of services designed Leadership tal dashboard Digi agement services Eng Resource empowerment Digital brand management Culture Product lifestyle innovation Business areas Customer experience optimization to monitor the key performance indicators associated with driving customer engagement. Engagement services: These services are used to manage a dialogue with customers and prospects through mobile apps.03 4. We believe they are the most important opportunities.09 WIN Activate influencers 2.03 Partner with intermediaries 3.Figure 2 Social Intelligence Use Cases © TCF Lrd and HP Enterprise Information Systems 2011 1.06 1.1 1 4.00 COSTS & MARGIN Optimize Improve Improve sales communication service & territory costs reduce costs analysis Increase efficiency Sell via alternative channels Reduce the cost of failure Win earned media Develop center of excellence Reduce new product cost Increase customer yield Improve new product yield Lower the cost of risk Improve matching of price to need Above is an overview of the use cases. as well as IT security standards. and profit from social CRM activity. We shall be publishing more about these use cases in a later paper.1 1 2. The services are shown in the diagram and described as follows: Figure 3 Service-oriented business architecture Listening services: Various listening techniques can be applied to structured and unstructured datasets from transaction. services-oriented business architecture is used.13 4. semantic algorithms are applied to extract an actionable meaning.07 1.

integrated way. which is a technology-free definition of a business process that provides value to business actors. representing the elementary functions marketing program implementation. composing the service. with different teams A business use case is formed by a number of driving two separate strategies. the software platform enabling the definition. Each functional service exposes a number “switching on“ of customer centricity and participative of methods. Some see social and CRM as separate. Social must be integrated with the foundations of the way a company “does business“ Many marketers believe that social media and building a “fan base“ (or. what the process does (workflow). worse. so common when marketing A business service in turn is executed by one or innovations are enabled by systems innovation. “earned database“) replace conventional CRM and building a database of high-value and/or influential customers.” business use case. At the bottom of the architectural stack. execution. building. and maintenance of each functional service. A business service represents about social marketing. that many functional services that are defined as plugging in one of the many latest software-as-areusable self-contained functional software blocks. and the focus on an individual step in a business workflow defining a “engagement programs“ and “participation platforms. At the top of the pyramid we have the business use cases. It is supported by a set of functional many businesses still fail to integrate their social and services that interoperate in a coordinated and CRM efforts into one customer management strategy. describing why a business process is performed (objective).Figure 4 Business Services Oriented Architecture Business use case Business process layer Business service Application layer Functional service Enterprise information system Software platform layer A more granular level of the Business Services Oriented Architecture is represented above. 6 . A primary reason for this is obsession with technology and the assumption. Despite all the talk business services. social CRM. there is an enterprise information system. and how it is measured (KPI). that is. service (SaaS) or cloud-based solutions will transform with mechanisms and control policies governing their the DNA of their company and enable the sudden usage.

which is a step forward. W I N ea M re su m en t Di Lea r e c t de n& i o hip rs Insi g Plan h t nin g Pe Cu K EE P B ra nd s & os Prop ition & & le o p ture l Agility & Workflow TS x a n p e ri ag ence em e nt s el nn C h a e dia M DE Execution Enablers Figure 6 Social business maturity model EL V Foundations OP CPG average & lo em gy s & Ma ta em en D aa g n t SUSTAINED INCREMENTAL PROFITABILITY o hn t Te c Sy s E TCFs maturity model CO Level 1 Basic state M S d e e Level 3 Embedded with growing focus Level 4 Socially enabled business CPG average Top bank (Australian) Business benefit a Level 2 Emerging but disparate b c d b Top pharma a (US) Top telco (UK) c Time/Scale of change 7 . in our view. how close it is to being a socially enabled business that integrates traditional and well-proven methods of customer management with social marketing approaches. build richer profiles through the smart use of socially sourced data. two-way. and inflexible operating models is vital. Figure 5 SCHEMA model of customer management © TCF Ltd. and get better at internal collaboration to deliver a customer-centered business strategy. processes. To make the required change. TCF uses questions about organizational capabilities (covering our core strategies) to assess just how customer-centric a business really is and. The main change required is in people and culture. Companies who do not take this approach are taking the risk of their customers leading a revolt against poor service and delivery. although technology that can replace legacy. At the core of SCHEMA are a set of key capabilities based on tried and tested CRM principles that are equally relevant in today’s socially driven world. businesses must become “socially enabled. uni-directional. but without the focus on HOW technology will deliver change. open up communication channels. ensuring focus on delivering the best customer experience across multiple channels. they are likely to have little impact. One way to view how “social” is integrated into profitable customer management customer management is via TCF’s SCHEMA model. It clearly makes sense for businesses to listen to their customers properly. technology is only a small part of the answer. in addition. batch-focused. and ways of working.Changing to the new marketing model demands more than changing technology. However. relevant dialogue. There is much talk now about the consumerization of IT (CoIT). deliver personalized experiences.” Social enabled businesses (SEB) recognize that the focus of control of the relationship has shifted to customers and that to succeed they must listen to and understand customers before responding and converse in an open.

human resources (HR). campaign creation aspects. There is clear but isolated usage of social. sales through delivery chain. Figure 4 shows a maturity curve with “time“ and perception of “business benefit“ as the two axis. It is early days for many companies in this socially enabled world. Responsibility firmly sits within a silo in marketing.The socially enabled business— maturity model Our use of SCHEMA has shown various levels of maturity in different sectors. internal processes. and lead management) b) use social for internal purposes. escalation and closed-loop resolution of support/service. collaboration and analytics/measurement. The organization prefers to rely solely on conventional marketing and CRM techniques to manage brands. for example. project management. and channels. HP and TCF consultants are working with clients to understand this curve and identify the challenges and benefits of maturity. The organization is beginning to: a) introduce internally focused elements and supporting workflow methods to make Level 2 elements more robust (for example. 1 2 3 4 There is clear and visible broad and integrated use of social marketing across all areas of the organization. The organization is dabbling in social—mostly “listening “. and any activity is down to some enthusiasts in the business. products. accepted role in driving direct sales. interaction. and community. partner selling. and integrated cross-channel commerce. 8 . and building knowledge bases Use of data is beginning. with serious investigation taking places. Many pure web-play businesses in many sectors are generally up with the leaders. consumer packaged goods (CPG) companies are leading in becoming socially enabled (although it is early days in terms of progress) with heavily regulated industries such as financial services and pharmaceutical slower to adopt social approaches. This is based on our similar study from traditional CRM research. No corporate or senior management commitment exists. Early TCF and HP research shows that among “real” businesses. and working in a coordinated business system. including external customer engagement. The company balances nicely the use of structured and unstructured data. Social has a clear. with disparate and tactical objectives focusing on the obvious external uses in reactive service. Maturity Level 0 Description of maturity state The leadership team is resisting the impact of social media although their customers and employees are using social media in their daily lives. ideation cycles.

develop. Massimo has broad international experience working with customers in financial services. data warehousing. keep.stone@thecustomerframework. and service also relies not just on technology but on the foundations of the business. About the authors Massimo Pellegrino Vice President of HP Enterprise Information Solutions Massimo has deep business and strategy consulting experience. as well as for some large financial services institutions. and also the customer research. telecommunications. He is a regular speaker at conferences. loyalty and trust. retention. Accenture. and numerous articles on customer management. Neil has co-authored five 9 . It shows that the deployment of the use cases demand the provision of four common technology services: listening. various reports. The paper has explained that a socially enabled approach to marketing. He is also well known for conference speaking and thought leadership research. sales. Unilever. in particular in financial services. and consumer goods. engagement. He worked for many consulting firms like Accenture and The Technology Partner. it provides a planning framework that companies can use to determine both the scale of benefit that may be achieved from social approaches and priority use cases. which should be deployed first. and supplier selection and management needed to support improved management of customers. and manufacturing where he managed several CRM. analytical. Neil Woodcock CEO & Chairman at The Customer Framework Neil is one of Europe’s leading experts and authors in customer management. He is on the editorial board of leading journals and is an honorary fellow of the IDM. and development and has been a leading contributor to the development of the customer management assessment methodologies for which The Customer Framework is best known. and digital platform and describes what these services look like. He is also well known internationally for conference speaking and thought leadership research. about how to improve bottom-line profit through more effective and efficient customer management. satisfaction. Massimo Iengo Social Intelligence Solution Lead at HP Enterprise Information Solutions Massimo is a well-known data warehousing and information management guru. at home and overseas. including strategies and tactics for customer Professor Merlin Stone Head of Research at The Customer Framework He is a leading expert in customer management. and information management initiatives. data analysis. His background with Mobil. In combination with our previous article. practically.Conclusion This paper has explained the use cases that can be used to deploy social intelligence and media approaches across the four strategic customer management scenarios of win. merlin. and McKinsey has provided him with the knowledge and experience to advise companies. telecommunications. systems decisions. and costs. The SCHEMA model shows the areas affected. neil. His work focuses on improving customer experience.

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