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Customer Engagement for a New Generation A Benchmark Study of the Impact of Social Media on Customer Service November 2011 September 2011
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© DMG Consulting LLC

© 2011 DMG Consulting LLC. All rights reserved. This Report is protected by United States copyright law. The reproduction, transmission or distribution of this Report in whole or in part in any form or medium without express written permission of DMG Consulting LLC is strictly prohibited. You may not alter or remove any copyright, trademark or other notice from this Report. This Report contains data, materials, information and analysis that is proprietary to and the confidential information of DMG Consulting LLC and is provided for solely to purchasers of this Report for their internal use. THIS REPORT AND ANY DATA, MATERIALS, INFORMATION AND ANALYSIS CONTAINED HEREIN MAY NOT BE DISCLOSED TO OR USED BY ANY OTHER PERSON OR ENTITY WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF DMG CONSULTING LLC. Substantial effort went into verifying and validating the accuracy of the information contained within this Report, however, DMG Consulting LLC disclaims all warranties as to the accuracy or completeness of this information. DMG Consulting LLC shall not be liable for any errors or omissions in the information contained herein or for any losses or damages arising from use hereof.

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Table of Contents
I. Executive Summary .......................................................................................................... 1 II. Survey Demographics ...................................................................................................... 2 III. Benchmarking Results and Leadership Profiles.............................................................. 4 i. Social Media Usage ..................................................................................................... 4 DMG’s Leader Profile:............................................................................................... 16 Social Media Usage................................................................................................... 16 Transitioning to a Leading-User Status For Social Media ......................................... 19 ii. Planning for Social Media ........................................................................................ 19 DMG’s Leader Profile: Planning to Engage in Social Media ..................................... 23 Transitioning to a Leader in Planning to Engage in Social Media ............................ 23 iii. Impact of Social Media on Customer Service and the Contact Center ................. 25 DMG’s Leader Profile: Social Media’s Impact on Customer Service and the Contact Center.......................................................................................................... 32 Transitioning to a Being a Leader in Having the Customer Service or Contact Center Group Handle Social Media Interactions ........................................ 34 iv. Social Media Forecasting, Scheduling and Service Level Goals .............................. 34 DMG’s Leader Profile: Social Media Forecasting, Scheduling and Service Level Goals ................................................................................................................ 44 Transitioning to a Being a Leader in Social Media Forecasting, Scheduling and Utilization of Service Levels ............................................................................... 46 V. To Host or Not to Host?................................................................................................. 47 DMG’s Leader Profile: To Host or Not to Host? .......................................................... 52 Transitioning to Being a Leader in Using Hosted/Cloud-Based Solutions................... 52 VI. Final Thoughts .............................................................................................................. 54 About Verint Systems ........................................................................................................ 56 About DMG Consulting LLC ............................................................................................... 56

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I. Executive Summary
DMG’s worldwide survey of 132 operations, contact center, marketing, line-of-business, sales and IT managers, as well as enterprise executives, found that a majority, 67.4%, are already using social media for a variety of activities. While no one doubts the power of social media, few organizations have figured out how to use it effectively to achieve their enterprise goals. This study is intended to help enterprise leaders understand how to utilize this powerful communications channel to benefit their customers and organization. This Report reviews four social media-related topics: 1. Social media usage 2. Planning for social media 3. Impact of social media on customer service and contact centers 4. Social media forecasting, staff scheduling and service level goals The Report also visits the topic of whether organizations should host their customer service and contact center solutions. This subject has been explored in prior DMG benchmark studies, and is being reviewed again to see how enterprise attitudes have changed over time. This Report presents DMG’s survey results and discusses the significance of the findings for enterprises, marketing, customer service, contact centers and customers. It presents recommendations for leading companies to effectively handle social media interactions, and provides tactics and proposed best practices for transitioning to leading performance in the categories listed above. The Report enables readers to benchmark their company’s performance with regard to social media against that of their peers, so they can see where they stand and what they need to change to improve their handling of this emerging but important business communications channel.

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II. Survey Demographics
During Q3 2011, enterprise, marketing, customer service, contact center and IT leaders and managers from all over the world were invited to participate in this benchmark study of social media. The study found a great deal of confusion or simply a lack of clarity regarding the best way to use and apply social media in the enterprise, despite the fact that 67.4% of respondents indicated that their company was using social media to communicate with and/or respond to customers, prospects and the general public. Of the 177 participants who started the survey, 132, or 74.6%, completed it. 56.8% of respondents had at least one contact center in the United States; the other 43.2% did not have contact centers in the US or at all. Keeping in mind that a participant could have had contact centers in multiple regions, the study participants represented 51 countries. 18.2% had a presence in India; 15.9% in Canada; 15.2% in the United Kingdom; 6.8% in the Philippines; 5.3% in Australia and Germany; 4.5% in Brazil, Mexico and South Africa; 3.8% in China; 3.0% in Belgium and France; 2.3% in Argentina, Costa Rica and Spain; and 1.5% in the following 11 countries: Columbia, Hong Kong, Hungary, Ireland, Italy, Japan, Malaysia, Poland, Romania, Russia and Singapore. 24 other countries were also represented in the study, each accounting for 0.8%. 42 US states were represented in the study. Of those companies with contact centers in the US, 12.7% had at least one contact center in California; 11.4% had a presence in Florida; 10.6% were in Texas; 8.3% in Illinois, North Carolina and Virginia; 6.1% in Colorado, New Jersey and Pennsylvania; 5.3% in Arizona, Georgia and New York; 4.5% in Massachusetts; 3.8% in Indiana and Tennessee; 3.0% in Kansas, Missouri, Nevada, Ohio and Washington; 2.3% in Kentucky, Maryland, Michigan and Utah; and 1.5% in the following 11 states: Arkansas, Connecticut, Louisiana, Minnesota, Mississippi, Nebraska, Oklahoma, Oregon, South Carolina, Vermont and Wisconsin. Another 7 states were also represented in the study, each with 0.8%. It is significant that that so many countries and states were represented in this study, indicating that the issues raised are relevant all over the world. 17 different job titles were represented in this study, which reflects the broad interest in this topic. 14.4% were operations managers; 12.1% were contact center vice presidents, directors or managers; 10.6% were enterprise senior executives; 9.1% were marketing vice presidents or managers; 9.1% were line-of-business executives or managers; 7.6% were consultants; 6.8% were business analysts; 6.1% were contact center senior executives and IT managers; 4.5% were sales vice presidents or managers; 3% were CIOs; 2.3% were social media analysts/moderators, training managers or workforce management specialists; 1.5% were chief marketing officers or project managers; and the remaining 0.8% did not fall into any of the other categories. The survey asked participants:
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Figure 1: What is your Industry?

Source: DMG Consulting LLC, November 2011

Individuals from 25 different verticals responded to this study. The telecommunications industry had the largest number of participants, 18.2%. Financial services accounted for the second largest group of respondents, 15.9%. 14.4% of the participants were in the hightech/software industry. Consulting and outsourcing each represented 7.6% of respondents. Government, healthcare and retail each accounted for 4.5% of the study responses, and 3.8% of the study answers came from the insurance industry. Manufacturing, transportation and utilities/energy each contributed 2.3% of the responses, while participants from education, electronics and travel and hospitality industries each accounted for 1.5%. Another 10 industries each accounted for 0.8% of the answers to this benchmark study.

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III. Benchmarking Results and Leadership Profiles
Benchmarking is traditionally used as an effective way to determine if an enterprise is a leader, follower or laggard in a particular business function or activity. As social media is still very new, it’s challenging to assess companies in this way. Instead the results of this study should be used to give corporate, governmental and not-for-profit organizations ideas about the most effective methods for using social media and applying its findings and insights.

i. Social Media Usage
Organizations of all sizes are trying to figure out the best way to use social media. Most organizations believe in the importance of social media for their business, as reflected by the 67.4% of respondents who said that they were currently active in social media. However, it is also notable that a very statistically relevant 32.6% of participants indicated that their company was not yet using any of the social channels. DMG did not ask these respondents why they had elected to participate in this study if they were not interested in social media, although we believe that many invested their time in order to learn what other organizations were doing. We expect that they are hoping to apply the findings of this study to their own company in the future. This study answers a few of the top questions being asked in the industry about social media: 1. What is the adoption rate for social media? 2. What functions and activities should social media be used for? 3. Who should be responsible for building a social media strategy? 4. Who should be accountable for responding to social media interactions?

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The survey asked participants: Figure 2: Does your company use social media to communicate with or respond to customers, prospects, investors, influencers, and/or the general public?
In what country or countries are your contact centers located? United States United Kingdom India Canada Australia Philippines Germany China Brazil Belgium Mexico South Africa Costa Rica France Argentina Spain Hong Kong Ireland Japan Singapore Colombia Hungary Italy Malaysia Poland Romania Russia Bahamas Barbados Egypt El Salvador Guatemala Indonesia Iraq Israel Jamaica Kenya

Yes 54 17 15 13 7 7 6 5 5 4 4 4 3 3 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

No 21 3 9 8 0 2 1 0 1 0 2 2 0 1 1 1 0 0 0 0 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0

Response Percent 56.8% 15.2% 18.2% 15.9% 5.3% 6.8% 5.3% 3.8% 4.5% 3.0% 4.5% 4.5% 2.3% 3.0% 2.3% 2.3% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

Response Count 75 20 24 21 7 9 7 5 6 4 6 6 3 4 3 3 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1

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In what country or countries are your contact centers located? Korea, South Kuwait Luxembourg Saudi Arabia Sweden Uruguay Afghanistan Bulgaria Chile Gibraltar Netherlands Serbia Thailand United Arab Emirates Other Respondent Totals

Yes 1 1 1 1 1 1 0 0 0 0 0 0 0 0 2 89 Answered question

No 0 0 0 0 0 0 1 1 1 1 1 1 1 1 0 43

Response Percent 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 1.5%

Response Count 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 132

Source: DMG Consulting LLC, November 2011

DMG analyzed the results to determine if adoption of social media varied by country. While the percentages varied, a clear trend emerged, as seen in Figure 2. A clear majority of companies in all of the countries most heavily invested in contact centers are using social media. These countries include the US, UK, India, Canada, Australia, the Philippines, Germany, China, Brazil, and many others, all of which indicated that they use social media to communicate with or respond to customers, prospects and the general public. DMG further analyzed the results to determine if adoption of social media varied by industry. Figure 3 shows that among the top 4 industries addressed by this study, all but financial services have chosen to use social media to communicate with or respond to their customers and the general public. Some financial services organizations are lagging behind the industry overall in their adoption of social media; this is due to security and regulatory concerns. A surprising number of financial services organizations still limit email to secure sites and are struggling to determine how to incorporate social media into their support infrastructure. Many of these companies appreciate that adoption of social media is necessary to satisfy their customers, prospects and the public, but have not yet found a way to balance their need for secure transactions with the needs of their customers. As the public has decided in favor of social media, as have most other industries, DMG encourages the lagging financial services organizations to determine a “secure” method for interacting via social media, or risk having their future prospects look elsewhere to do business.

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Figure 3: Does your company use social media to communicate with or respond to customers, prospects, investors, influencers, and/or the general public?
Response Percent 18.2% 14.4% 15.9% 7.6% 7.6% 4.5% 4.5% 3.8% 4.5% 2.3% 2.3% 2.3% 1.5% 1.5% 1.5% 0.8% 0.8% 6.1% Answered question “Other” includes entertainment, consumer publishing, music, beauty products, furnishings, advertising, and membership associations. Response Count 24 19 21 10 10 6 6 5 6 3 3 3 2 2 2 1 1 8 132

What is your industry? Telecommunications High-tech/software Financial services (banking, brokerage and investment management) Consulting Outsourcing Retail Government Insurance (P&C, life, health) Healthcare Manufacturing Transportation Utilities/energy Electronics Travel and hospitality Education Airlines Collections Other Respondent Totals Note: 1.

Yes 17 15 11 7 5 5 4 4 2 2 2 2 2 2 1 1 0 7 89

No 7 4 10 3 5 1 2 1 4 1 1 1 0 0 1 0 1 1 43

Source: DMG Consulting LLC, November 2011

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Figure 4: What business activities does your company use social media for?

Source: DMG Consulting LLC, November 2011

As was expected, marketing was the primary use of social media, as reflected by 76.4% of respondents, but customer service came in a surprising second with a total of 62.9%. Corporate communications/public relations, which was expected to be one of the top uses, came in third place with 52.8%. Another surprise was that contact center came in fourth place, as reflected by 37.1% of the responses. Sales was in fifth place with 33.7%, executive communications in sixth place with 18.0%, investor relations in seventh with 16.9%, and crisis management in eighth place with only 12.4% of responses.

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Figure 5: What type of information is gleaned from social media interactions?

Source: DMG Consulting LLC, November 2011

The top answer to this question, as reflected by 77.4% of respondents, is the positive and negative sentiment shared about an organization. Discussions about issues with product and services was the second highest ranked category, with 69.8% of respondents. Requests for more information regarding the company, products, services or procedures was close behind at 66.0%. Complaints or follow-ups regarding previous customer service interactions was reflected as a top use by 60.4% of respondents. Issues with procedures was a function indicated by 45.3% of respondents. Crisis identification was prioritized by 43.4%; and, sales leads represented 41.5% of the responses. Other information identified via social media included: number of fans/followers/likes, complaints or questions regarding marketing campaigns, competitive information, new product ideas, size and scope of various issues, and volume trends regarding types and channels of comments and inquiries. Figure 5 makes it very clear that identifying and addressing customer service issues is a primary use of feedback received via social media interactions. Marketing is important, but secondary to customer issues.

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Figure 6: What department is responsible for setting the social media strategy for your company?

Source: DMG Consulting LLC, November 2011

Marketing is the winner for this question, chosen by 33.7% of respondents. Corporate communications/PR is in second place, with 24.7% of the responses. 12.4% of respondents indicated that each department within their company set their own social media strategy. Another 12.4% of respondents indicated that the contact center set the social media strategy; and, 4.5% selected customer service or executive communications. It is interesting that marketing most often set social media strategy, even though it was primarily used for customer service.

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Figure 7: What business units are responsible for responding to social media comments and feedback on a day-to-day basis?

Source: DMG Consulting LLC, November 2011

Figure 7 reviews the results for all industries, and Figure 8 assesses it for the major verticals, the top four of which are telecommunications, financial services, high-tech/software, and outsourcing. Figure 7 shows that 62.3% indicated the contact center and 54.7% selected customer service as the department responsible for responding to social media messages. 41.5% of respondents specified that marketing was responsible for ensuring that social media interactions were handled. 37.7% of respondents assigned this task to corporate communications/PR. 28.3% indicated that a dedicated social media support team was charged with the daily task of handling social media interactions. 13.2% delegated this responsibility to an executive communications team. 11.3% stated that sales was responsible for handling social media interactions; and, only 3.8% assigned this task to a third-party consulting/advertising/marketing company. Since the survey results indicate that marketing is most often responsible for setting the strategy, this means that they are often responsible for assigning the task of responding to the inquiries to either the contact center or customer

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service group. As lack of inter-group cooperation is a major concern in most large enterprises, as well as many smaller ones, the findings are somewhat troubling.

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Figure 8: What business units are responsible for responding to social media comments and feedback on a day-to-day basis?
Third-party consulting/ advertising/ marketing company 1

What is your industry? Telecommunications Financial services (banking, brokerage and investment management) High-tech/software Outsourcing Consultancy Government Insurance (P&C, life, health) Retail Transportation Airlines Healthcare Manufacturing Utilities/energy Collections Travel and hospitality Other Note: 1.

Contact Center 11

Corporate Communications/PR 4

Customer Service 5

Dedicated social media support team 2

Executive Communica tions 2

Marketing 5

Sales 2

Other 0

Response Percent 26.4%

Response Count 14

4 5 4 1 3 1 0 1 0 0 1 1 0 0 1

1 3 1 1 3 1 0 2 0 1 1 0 0 0 2

2 5 3 2 3 1 2 1 1 0 0 1 0 0 3

3 1 2 2 1 1 0 1 0 0 0 0 0 0

0 2 0 1 1 1 0 0 0 0 0 0 0

1 5 0 0 2 2 1 0 0 1 0 1 0 1 2

1 1 1 0 0 0 0 0 0 0 0 1 0 0 0

0 0 0 0 0 0 0 0 0 0 0 1 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

13.2% 11.3% 7.5% 5.7% 5.7% 5.7% 3.8% 3.8% 1.9% 1.9% 1.9% 1.9% 0.0% 0.0% 9.4%

7 6 4 3 3 3 2 2 1 1 1 1 0 0 5 53

2 0 Answered question

“Other” includes entertainment, consumer publishing, music, beauty products, furnishings, advertising and membership associations.

Source: DMG Consulting LLC, November 2011

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Figure 9: Please indicate the social media channels in which you are the most active.
1 (Highly Active) 30 28 18 16 13 13 6 5 2 1 132 5 (Least Active) 5 10 10 6 Response Count 92 92 92 92 92 92 92 92 92 92 92

Answer Options Facebook Twitter LinkedIn Community Forums YouTube Blogs Message Boards Google+ MySpace Tumblr Respondent Totals

2 20 18 14 11 11 15 8 5 1 1 104

3 24 18 12 16 18 14 13 6 2 1 124

4 5 6 11 6 12 4 8 6 2 1 61

Not Used 8 12 27 37

13 25 11 35 13 44 12 58 8 77 5 83 93 406 Answered question

Source: DMG Consulting LLC, November 2011

92 respondents responded to this question and 43 elected to skip it. This indicates that approximately 1/3 of survey respondents do not know the answer. As 32.6% of survey participants do not yet have a social media program, the fact that 1/3 of the respondents skipped this question aligns with the overall survey findings. For the 92 survey participants who answered this question, Facebook, Twitter and LinkedIn were the most commonly used channels.

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Figure 10: How do you measure the success of your social media program?

Source: DMG Consulting LLC, November 2011

53 of the 132 respondents, 40.2%, answered this question. The low response rate is indicative of the immaturity of the market. It is likely that many organizations have not yet introduced formal success metrics for their social media initiatives. 60.4% of respondents indicated that they measured positive and negative sentiment found in their incoming social media communications. 41.5% of respondents depended on increases (or decreases) in customer satisfaction scores. 34.0% of respondents to this question measured success based on the length of time it took to respond to feedback or the number of fans/followers/likes. 30.2% of respondents measured success based on the number of increases in leads or sales or a decrease in the volume of complaints to the contact center. 28.3% measured the number of posts/comments/direct messages, while 24.5% measured the amount of free publicity they received. 9.4% of respondents were forthright in indicating that they did not yet have a way to measure the success of their social media program.

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DMG’s Leader Profile: Social Media Usage
Currently, there are not many proven best practices for handling customer-service-oriented social media interactions. However, there is historical business “precedent” and experience with related channels and activities that can and should be applied to the handling of social media. When the use of email as a business communications channel first became “hot” in 1997, marketing decided that it owned the new channel. Once marketing organizations realized that ownership implied that they needed to respond to all of the inquiries and complaints, they literally “dumped” the responsibility for handing emails on the contact center or customer service department. Customer service had little or no say or input into the email communications strategy, or the lack of one, but was left to handle the day-to-day tactics, often without even being given incremental resources to staff the new channel or time to train their staff. Unfortunately, DMG is already seeing a similar pattern emerging in companies. and we are aware of a couple of situations where this cycle has already been repeated. Since, like email correspondence, social media, is used to interact with customers, marketing believes that it’s their organizational right to “own” the channel, as they believe that they “own” the customer and should therefore define the customer interaction strategy. In fact, no one in any organization “owns” customers, and the sooner this is understood, the more positive the customer experience will be. In fact, all groups involved in enhancing the customer experience – and this minimally involves marketing, sales and customer service (or, the contact center) – should work together to create a social media strategy. DMG encourages organizations to include all business units that will be involved in delivering on this strategy in its conception and implementation. The broader the participation and cooperation, the more effective the strategy and its benefits for the enterprise and its customers. Here are proposed best practices for social media usage: 1. Build an enterprise-wide social media strategy. From the outset, involve all constituents who will be involved in delivering on or participating in the strategy. As part of the strategy, determine how you plan to use the feedback received via social media and create both real-time and historical reports and alerts that effectively communicate what is learned with all relevant internal groups.

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2. Decide which social media channels you need to support by asking your customers and members of your target audience what they want to use. It should be their decision, not yours. 3. The contact center or customer service group should be responsible for responding to social media interactions. Use workforce management to determine the number of resources required to support each channel at a predetermined service level. 4. Identify quantifiable metrics, and possibly qualitative ones, for determining if your social media program is successful. 5. If the social media volume is low enough, start by handling these interactions manually, but invest in the right technology once an investment in text analytics and/or multi-channel contact center solutions can be cost-justified. 6. Integrate the social media channel with existing customer service/contact center servicing or customer relationship management solutions, so that everyone involved in handling inquiries has a complete multi-channel view of what is happening with each and every customer. The goal is to resolve all issues on a timely basis in order to keep anything negative from going viral. 7. Set a different service level for each social media channel. The service levels should be set to meet the expectations of your customers, prospects and the public who will be using that social media channel. Here are some guidelines: Twitter – should be addressed within 1 to 5 minutes; Facebook/LinkedIn/community forums – response should be within 2 – 4 hours. (Keep in mind that in social media there is no such concept as “business hours”.) 8. Put in place service level agreements between customer service/contact center and all departments involved in providing the information required to respond to social media interactions on a timely basis. 9. Create standardized procedures for handling common types of social media interactions. Make sure these procedures are aligned with those of your other customer service or contact center channels to avoid having customers “play” your organization. 10. Create a time-sensitive escalation process for social media interactions that are “hot” and at risk of going viral. 11. Use social media proactively to build your brand and support your marketing initiatives, not just on a defensive basis. 12. Fully train all resources on the use of the social media and your business etiquette.

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13. Start small, pilot various aspects of the strategy and program, and then build it out as critical success milestones are met. As the world of social media is evolving rapidly, the strategy should be flexible and take into account the need to quickly respond to changes in the popularity of the various channels. There are many more best practices, but these will help you avoid some of the pitfalls that many organizations are already experiencing as they struggle to build an effective social media program.

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Transitioning to a Leading-User Status for Social Media
In case there was any doubt, the survey results make it clear that social media has attracted the attention of the market, and adoption is picking up rapidly. However, there is a long way to go before it is a common business practice to manage social media interactions well . This means that companies that are willing to invest in creating an enterprise-wide social media strategy and making the necessary investments in technology, tactics and training, can become leading users of this powerful communication and interaction tool. As DMG expects that within five years social media will be the second largest communications channel (after phone calls), it’s advisable for companies to commit to this channel and make the necessary investments as soon as possible.

ii. Planning for Social Media
It is challenging to get started with social media because of the lack of industry expertise and best practices. While experience with social media has only recently started to develop, there is a great deal of knowledge in the market about how to introduce and incorporate the handling of new channels into organizations and contact centers. Although social media is different from other channels due to its public nature – social media interactions often are directed to a community instead of to one individual or company – there are still enough similarities to enable a company to effectively plan and build a social media program that enables their customers to engage via their channel of choice There are many decisions that organizations need to make just to begin the process. These decisions/issues include: 1. When is the right time to introduce a social media program? 2. Which social media channels should be supported? 3. What does you organization hope to accomplish by using social media? (It should be more than self-defense and crisis management.) 4. What information does your organization want to capture and glean from social media interactions?

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5. What public persona does your organization want to establish? (Marketing should play a primary role in defining the persona, as it needs to be an extension of your brand.) 6. Which functional groups – marketing, sales, customer service, IT, executive suite – should be involved in setting up the social media strategy and process? 7. Who within the organization has “ultimate” responsibility for the social media strategy and program? 8. How do you get the necessary funding to build an effective social media program that is properly staffed? 9. How many resources should be assigned to handle social media, and should they be dedicated on a full-time or part-time basis? 10. How should your social media specialists be trained? 11. What should your social media specialists be empowered to do? 12. How can you ensure that your social media specialists receive the support (and information) they need on a timely basis from the rest of the corporation? 13. What types of escalation policies should be put in place to ensure that social media does not get stuck in “traditional” service/marketing streams? 14. What should you do if social media surfaces a highly visible issue much beyond the scope of the social media specialists? 15. How should you modify your hiring and training practices to address the needs of your new social media specialists? Too many companies are still at a standstill. They are not sure how to move forward or what to do to commit to this “emerging” channel, but they appreciate that building a social media program is a strategic imperative and no longer merely an option. The survey findings show that if this is how you are thinking, you are not alone. The survey asked participants who indicated that they were not currently using social media:

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Figure 11: When does your company plan to start using social media?
Within 7 to 12 months 4 5 1 0 1 1 1 0 0 0 0 0 0 0 0 13 Within 13 to 24 months 2 0 0 1 0 0 0 0

Industry Financial services (banking, brokerage and investment management) Telecommunications Outsourcing Healthcare High-tech/software Consulting Government Insurance (P&C, life, health) Collections Manufacturing Retail Utilities/energy Airlines Travel and hospitality 1 Other Respondent Totals Note: 1.

No current plans 3 0 1 3 3 2 1 1 1 1 1 1 0 0 2 20

Within 6 months 1 2 3 0 0 0 0 1 0 0 0 0 0 0 1 8

Response Percent 22.7% 15.9% 11.4% 9.1% 9.1% 6.8% 4.5% 4.5%

Response Count 10 7 5 4 4 3 2 2 1 1 1 1 0 0 3 44

0 2.3% 0 2.3% 0 2.3% 0 2.3% 0 0.0% 0 0.0% 0 6.8% 3 Answered question

“Other” includes entertainment, consumer publishing, music, beauty products, furnishings, advertising, and membership associations.

Source: DMG Consulting LLC, November2011

45.5% of all respondents who were not yet using social media did not have any plans to use it. 29.5% of organizations who had not yet built a social media program planned to do so within 7 to 12 months. 18.2% planned to make this move within 6 months, and 6.8% planned to enter the world of social media within 13 to 24 months. It is interesting to view this data by vertical, as seen in Figure 11. Financial services is lagging behind other verticals in its adoption and use of social media; however, Figure 11 makes it clear that many of these firms plan to catch up within the next 12 months.

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Figure 12: What type of information do you plan to capture from social media interactions, in the future?

Source: DMG Consulting LLC, November 2011

70.5% of respondents planned to capture information about products and services. 59.1% of organizations expected to use social media to identify positive and negative feedback/sentiment and to enable their customers, prospects or the general public to request information regarding the company’s products, services or procedures. 56.8% of survey participants who were not yet using social media expected to use it in the future to capture complaints or follow-ups regarding previous customer service interactions. 50.0% of organizations hoped to use social media to capture sales leads and complaints or questions regarding marketing campaigns. 45.5% of organizations intended to use social media to identify new product ideas. 43.2% of companies not yet using social media intended to use it for crisis identification and to find issues with existing procedures. 36.4% of organizations hoped to use social media to capture the number of fans/followers/likes. 27.3% of respondents planned to use it to track the size and scope of various issues and concerns. 25.0% were going to use it to identify volume trends regarding the types and channels of comments and inquiries; and, 22.7% planned to use social media to capture competitive information.
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DMG’s Leader Profile: Planning to Engage in Social Media
Most organizations that are not currently using social media appreciate that they should. Their challenge is determining the most risk-free and cost-effective method of engaging in this important business activity while still achieving the desired goals. Given the direction of the market and the growing importance of social media as a communication and interactions channel, within two years the danger of not engaging is going to be far greater than the risk of making mistakes in the process of building and implementing a social media strategy and program. There are no known leaders in this category, and therefore social media planning best practices are in short supply. Most of the companies that are considered leaders in handling social media interactions jumped in blindly and after some false starts and mistakes, and have found processes that work for them. As social media matures, established planning and development practices will emerge, as they do for all important business activities. For the time being, DMG encourages all organizations to move forward. Put together a strategy and then build an implementation roadmap and plan for executing the strategy. As part of this plan, we recommend starting small, if possible, and then formally expanding into new channels. However, if customers and interested members of the public are already engaging with you in their channels of choice, do not hesitate to join them.

Transitioning to a Leader in Planning to Engage in Social Media
In all industries, there are already companies and organizations that are actively engaged in social media. While they may not be handling everything perfectly and are likely making insignificant as well as costly mistakes, it’s a great time to experiment, as the public does not have high expectations yet and is likely to be more forgiving now than later. Since using social media to address customers, prospects and the general public is still a novelty, you have an opportunity to truly thrill your customers by engaging them in this channel. The more effective early leaders in social media also tend to generate positive notice in the relevant communities, and sometimes even get free publicity in traditional media. Here are best practices for companies that are still considering how to enter the world of social media: 1. Before engaging in social media, locate a friendly organization that is willing to share their best practices, and find out what worked and didn’t work for them in order to avoid making the same mistakes. If your company is a division of a larger organization, this may be easy. If you operate on a stand-alone basis, identify and attend

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conferences that cover this topic. Alternatively, hire a consultant with hands-on experience to help you navigate the social media landscape. 2. Since you have the benefit of hindsight, take advantage of it. Select the social channels and best practices that are best suited for your kind of organization, and identify your operational and technical gaps. 3. Determine how to cost-effectively fill the gaps before making any investments. 4. Draft an operational and technical implementation plan and put it into action. 5. Start small and scale up as social media proves its value to your organization. Companies that have delayed in entering the market will be able to acquire the resources and expertise to assist them in doing it correctly the first time. While late to the game, with proper planning and investments they can catch up.

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iii. Impact of Social Media on Customer Service and the Contact Center
This benchmark study established that the top uses for social media are customer satisfaction and customer service. This includes identifying positive and negative sentiment about a company, issues with product and services, requests for more information, complaints and follow-ups regarding previous customer service interactions, and issues with internal processes and procedures, just to mention a few. While marketing needs to provide input for some of these issues, such as how to best handle positive or negative sentiments in order to yield optimal outcomes for the organization, customer contact should largely be handled by a customer-service-oriented group. This is a very broad concept that can be acted upon in many different ways, depending upon the politics within each organization. Currently, various departments are still fighting for the right to “own” the social media channel, however IT is no longer in the running, as their only interest is in setting it up and have never planned on being involved in supporting customer interactions on an ongoing basis. Based on the results of this study, marketing (33.7%) and corporate communications/PR (24.7%) are most often leading social media strategy initiatives, while contact centers (62.3%), customer service organizations (54.7%), marketing (41.5%) and corporate communications/PR (37.7%) are responsible for handling inquiries. This seems appropriate, although it begs many questions, such as: Are the inquiries/interactions being handled by the traditional groups or by social media specialists who are dedicated to the new channel? Are social media feedback and comments being integrated into the customer relationship management (CRM) or servicing applications to give the staff a holistic view of each customer? And when will marketing pass off the handling of social media interactions to either their customer service or contact center groups? The results of this study show significantly more social media activity than was thought to be happening in the market. The explanation is that there are a significant number of informal social media efforts underway along with the relatively few formal and funded initiatives. While the informal approach is a good way to get started, it’s not advisable for building a lasting and effectual program. The survey asked participants:

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Figure 13: Do you use social media for customer service?

Source: DMG Consulting LLC, November2011

Of the 132 survey participants, 92 (69.7%) responded to this question. 59.6% of those who answered this question indicated that they were using social media for customer service, while the remaining 40.4% said that they did not. It is not known if the other participants did not know how their organization was handling social media interactions or if they had not yet begun to engage in social media. It is clear, however, that a majority of organizations agree that social media should be used to address customer service issues, which is consistent with earlier findings that identified the top social media interactions as customerservice-oriented. The breakdown by industry supports the overall market trends, with the exception of hightech/software where close to half of the responding organizations do not use social media for customer service. This could be, in fact, what is happening, or it could be an issue regarding the definition of customer service. The high-tech world is ahead of many other industries in their use of social media. They have been using it informally for years to identify systems issues, introduce bug fixes, and to share information. If high-tech organizations

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consider these activities technical support and not customer service, it would explain why their industry numbers are different from other major verticals. Figure 14: Do you use social media for customer service?
Response Percent 19.6% 17.4% 12.0% 7.6% 5.4% 5.4% 5.4% 4.3% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 1.1% 0.0% 8.7% Answered question Response Count 18 16 11 7 5 5 5 4 2 2 2 2 2 2 1 0 8 92

What is your industry? Telecommunications High-tech/software Financial services (banking, brokerage and investment management) Consulting Insurance (P&C, life, health) Outsourcing Retail Government Electronics Healthcare Manufacturing Travel and hospitality Transportation Utilities/energy Airlines Collections Other (please specify)

Yes 14 7 7 3 4 4 2 3 1 1 1 0 2 1 1 0 4

No 4 9 4 4 1 1 3 1 1 1 1 2 0 1 0 0 4

Notes: 1. “Other” includes consumer publishing, music, beauty products, education, furnishings, advertising, and membership associations.

Source: DMG Consulting LLC, November 2011

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Figure 15: When do you plan to start using social media for customer service?

Source: DMG Consulting LLC, November 2011

Organizations that indicated that they were not yet using social media for customer service were asked to indicate when they planned to move in this direction. A surprising 61.1% of the respondents who answered this question said that they did not yet have plans to use social media for customer service, leaving only 38.9% moving in this direction. 11.1% reflected that they were going to use social media for customer service in the next 6 months; 22.2% indicated that they planned to begin using social media for customer service within the next 7 to 12 months; and 5.6% said they were going to do so in the next 13 to 24 months.

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Figure 16: How is your customer service department or contact center involved in handling social media interactions?

Source: DMG Consulting LLC, November 2011

50.9% of the 53 people who responded to this question indicated that their customer service group or contact center had day-to-day responsibility for handling their company’s social media interactions. Another 34.0% of respondents said that customer service/contact center did not have primary responsibility, but was asked to provide answers to the social media team. It is likely that in these organizations, marketing or a separate social media group handled the inquiries. 9.4% of respondents said that the contact center/customer service group had no direct involvement. Instead, customer service issues raised via social media were handled by other departments. 5.7% indicated that the contact center/customer service group was not formally involved, but got engaged only after another group made a mistake. This figure does an excellent job of helping the industry identify a best practice: Either the contact center or customer service group should be responsible for, or at least actively

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engaged in, providing the necessary information to accurately respond to social media interactions. Since a majority of issues raised via social media are service-oriented, DMG recommends that the contact center or customer service group be involved in setting the social media strategy in cooperation with marketing and corporate communications/PR, and that they be the primary group(s) responsible for ensuring that all social media interactions are handled in a timely and professional manner. Figure 17: What impact have social media tools had on your contact center?

Source: DMG Consulting LLC, November 2011

Figure 17 assesses the impact of social media on contact centers and customer service groups and, in doing so, speaks to the power of social media. 60.4% of respondents indicated that social media had increased the visibility of customer complaints; 47.2% reflected that it increased their company’s responsiveness to customers; 30.2% said that social media had decreased call volume. 20.8% answered that social media had decreased email volume as well as the number of complaint calls. 18.9% of survey participants believed that social media had decreased their agents’ stress levels. 15.1% indicated that social media had increased email volume, and 7.5% indicated that social media had increased call volume.

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The results are interesting in that they clearly reflect a belief that social media is impacting the contact center and changing the mix of interactions. However, this figure also makes it clear that the impact is not yet clearly understood. As DMG believes that social media interactions will reach parity with incoming call volume within five years, it will bring about significant changes in contact centers and customer service groups.

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DMG’s Leader Profile: Social Media’s Impact on Customer Service and the Contact Center
This section of the benchmark study identifies a few clear trends that are expected to become industry best practices. While there is still a great deal of market confusion (and politicking) regarding who should own the organization’s social media channels, it’s clear that the contact center or customer service group should take lead in handling the interactions and feedback. There are many reasons for this, including: 1. The inquiries are predominantly customer service or customer satisfaction issues. 2. The contact center/customer service group is already trained to respond to these types of inquiries or comments, albeit in different channels. 3. The contact center/customer service group is designed to effectively handle high volumes of customer interactions. 4. The contact center/customer service group knows how to respond to customer inquiries and address issues within time frames established in service level agreements (SLAs). 5. The contact center/customer service group has the broadest knowledge about the organization, as its mission has always been to handle customer issues. 6. The contact center/customer service group has established communications channels and SLAs with other departments within the organization that are involved in handling social media inquiries; while these SLAs may have to be modified to address social media time frames, at least the information bridges already exist. 7. The contact center/customer service group already has escalation procedures in place and can extend them to incorporate the new social media channel. 8. The contact center/customer service group has reporting mechanisms in place and can accurately capture and report on social media findings. 9. Contact center/customer service staff is already experienced in dealing with the public, which is a challenging task. 10. Social media interactions are expected to replace phone calls and emails once organizations put in place the proper policies, procedures and service level agreements to ensure that they are handled on a timely basis.

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While there are many other compelling and practical reasons why the contact center or customer service group needs to be primarily responsible for handling social media interactions, the bottom line is that no other group is going to be willing to take on this responsibility on a long-term basis. Even if a different group, such as marketing, initially wants to manage the channel, they will ultimately “dump” the responsibility on the service group once the volumes become overwhelming. Enterprises also need to realize that they cannot compel customers to use social media in specific ways, but can only build out and promote the relevant channels and be prepared to respond to the ensuing volume of interactions. However, organizations should proactively use social media for their benefit, and not just react to whatever comes. This is where strategy really comes in. The power of social media is its ability to communicate with the masses. If a customer communication can (and does) go viral, why not use social media to respond in the same manner? Organizations have begun to do this and are putting out a large volume of YouTube videos, for example. The problem is that too many of these clips are very amateur and/or are not compelling – organizations continue to release content that addresses their interests instead of giving the public what they want. This points out the importance of working with marketing, advertising, PR or customer service in order to determine how to frame outbound communications in an appealing manner, using the customer’s frame of reference. Enterprises have so much to learn about how to use social media effectively. Here are a few recommendations that DMG believes will become best practices in the next two years: 1. As no department owns the social media channel or customers, all customer-facing and policy-setting groups should work together to build both an inbound and outbound social media strategy. 2. Make the contact center or customer service group responsible for handling all social media interactions; new SLAs should be established for this new medium. 3. Establish a formal program for handling social media interactions and staff it appropriately. 4. Identify and measure your organization’s responsiveness to social media interactions to ensure that you are satisfying your customers, prospects and the public. 5. Train the team that is involved in handling social media interactions, as this is neither an innate skill nor one that comes from handling phone calls and emails. 6. Evaluate the impact of social media on your contact center or customer service group so that you can be prepared to make the necessary changes over the next few years to accommodate increasing utilization of this channel.

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Transitioning to a Being a Leader in Having the Customer Service or Contact Center Group Handle Social Media Interactions
Despite market consensus that customer service and satisfaction issues are the top reasons why customers, prospects and the public use social media, there is a surprising amount of confusion, doubt and/or disagreement about the role of customer service or the contact center in handling social media interactions. What this means is that marketing, corporate communications, PR, executive management and others are not confident in their customer service or contact center’s ability to handle the social media channel. Since organizations – public and private – have no choice but to use their service organizations to handle these inquiries, they need to address these concerns. The first step in the process of becoming a leader in handling social media inquiries is to stop the infighting about who owns the channel or the customers – as previously indicated, no department does – and work together to build an effective strategy that will benefit customers and prospects and, in doing so, deliver significant and quantifiable returns for the company. However, as many organizations learned during the CRM movement and the customer experience management era, this is much easier said than done. If enterprises want to achieve their goals, senior management will have to get involved and motivate their staff with goals and rewards.

iv. Social Media Forecasting, Scheduling and Service Level Goals
In the context of a benchmark study, a great deal can be learned about a subject simply by noting the number of people who elect to skip a question. This section addresses five questions related to the topic of forecasting, scheduling and service level goals for social media. 53 of the 132 respondents answered four of the questions. However, when we asked study participants to share their enterprise’s response time goals for social media comments or inquiries, only 29, 22.0%, provided an answer. This means that either a majority of study participants’ organizations have not yet established formal social media service level goals, or that these study participants were not aware of their organization’s goals. Given the attention that social media is receiving in the press and the obvious potential of this communications channel, we expected to find that a vast majority of organizations were using it for their primary business functions. This study has proven this assumption wrong, even though it’s clear that there is growing interest in using social media for these activities, as well as many others. Moreover, the companies that use social media are dedicating only a small amount of time and resources to addressing inquiries arriving in this channel. When asked to specify the amount of time spend handling social media interactions on a weekly

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basis, the most common answer was 21 to 40 hours. This means that it takes approximately ½ to 1 person to manage and oversee a typical social media program, putting an end to the perception that social media is highly disruptive and expensive to support. The quantifiable enterprise-wide benefits that can be realized from a well-planned social media initiative should far exceed the costs, given that most companies enter the social media world without making any investments in infrastructure, technology, management, or even policies and procedures. This study also makes it clear that companies are experimenting and trying to find the right technologies to facilitate their social media programs. Although vendors are promoting text analytics and sentiment analysis for social media, organizations are currently using primarily CRM/servicing/tracking systems to help manage their social media programs. It is not known if organizations are using targeted, licensed applications or have custom-built capabilities to integrate social media interactions with the rest of their servicing interactions. However, it’s a positive trend that organizations are realizing the importance of incorporating social media into their standard servicing systems and applications.

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The survey asked participants: Figure 18: How much time is spent by your organization handling social media comments and feedback on a weekly basis?

Source: DMG Consulting LLC, November 2011

32.1% of respondents dedicated only 21 to 40 hours per week to handling social media comments and feedback on a weekly basis. 24.5% of respondents devoted less than 20 hours weekly to addressing social media interactions. 17.0% of participants have started to gear up and dedicate more than 160 staff hours per week to overseeing their social media program. 15.1% allocated between 41 to 80 hours per week to handling social media interactions. 7.5% of the people who responded to this question reflected that they were investing 81 to 160 staff hours to social media activities each week; and 3.8% of respondents knew that their company had resources dedicated to handling social media feedback, but did not know how much time was being dedicated to the activity. The top two answers to this question, reflected by a combined 56.6% of survey participants, indicate that more than half of organizations are dedicating 1 or fewer staff members to

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handling their social media initiatives on a weekly basis. This very likely means that companies are simply replying to inquiries and comments that arrive, instead of using this emerging channel proactively to build and enhance their brand. While it’s essential to respond to customers, prospects and the general public, it’s as important to take the initiative to establish a strong social media presence. This does not mean that companies need to “tweet” about their every move and strategy, but they should communicate via a variety of media about their products, services, offerings, customer stories, and anything else that marketing and PR organizations believe is important for building their brand. Companies need a multi-tiered inbound/outbound outreach strategy to communicate with all of their constituents – current customers, prospects, investors and the general public – in order to influence buying decisions. Figure 19: Do you have internal response time goals for addressing inquiries or issues raised via social media?

Source: DMG Consulting LLC, November 2011

Disappointingly, but not surprisingly, only 54.7% of the respondents who indicated that they had a social media program also had internal response time goals to ensure timely responses to comments and feedback. The remaining 45.3% had formal service level goals. Having a

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goal does not ensure that it’s the right one, or that objectives are being met, but it is significantly better than having no standard at all. Social media is quirky; some channels, such as Twitter, are intended for near-real-time communications, and the people who use them expect an almost immediate reply. In some cases, late responses are actually worse than not responding at all. Organizations need to create service level agreements with response times specific to every social media channel, and then build some mechanism or infrastructure that enables them to measure adherence to their objectives. This is necessary to determine if they are consistently meeting their objectives or if they are maintaining the right staffing levels. And, if you’re not sure what response times your customers and prospects expect, use social media to reach out and ask them via the channels you plan to support in the future. Keep in mind that as you attract more fans, service expectations may change, so it’s recommended that you ask this question periodically to ensure that you stay in tune with the needs of your audience. Figure 20: What are your response time goals for responding to a comment or inquiry via social media?

Source: DMG Consulting LLC, November 2011

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DMG asked the study participants to share their response time goals. It is not surprising that only 22.0% of survey respondents answered this question. Having response time goals is a sign of maturity, and social media is a very immature channel. Of those who responded to this question, the vast majority, 65.5%, indicated that their response time goal was between 1 hour and 1 day. The second most common answer to this question, reflected in 10.3% of responses, was that they did not currently have time frame goals. 6.9% of the respondents reflected a goal of either 16 to 60 minutes or more than 1 day; and 3.4% of survey respondents said their goals were less than 2 minutes, 3 to 5 minutes or 6 to 15 minutes. Figure 21: How does your organization forecast social media volumes and schedule staff resources to handle the forecasted volumes?

Source: DMG Consulting LLC, November 2011

The answers to this question also reflect how unstructured most organizations are in planning for social media interactions. The number-one answer to this question was that they did not forecast (41.5%). The second most common answer to this question was that they did manual forecasting using spreadsheets (26.4%). 17.0% of respondents indicated that they were using third-party workforce management software to determine the correct number of resources required to ensure that social media interactions were handled within

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a set service level. 7.5% of survey participants indicated that staffing of social media channels was addressed based on their manager’s “gut feel”; and 3.8% of respondents indicated that forecasting was being done with third-party social media listening/mangement tools. The answers to this question support the idea that a majority of organizations is taking a “seat of the pants” approach to managing social media interactions. While we didn’t ask this question, it is believed that social media still falls under the “skunk works” category, meaning that it is being done “under the radar” and may not even be formally endorsed by management in a large number of organizations. It may also indicate that social media staffing has yet to reach the level where most organizations feel that formal forecasting is necessary. DMG believes that this informal approach will continue until companies are embarrassed by their lack of responsiveness or find it too costly not to address these channels with a structured program. Once an organization decides to build a formal social media strategy and program and gets beyond the pilot phase, they will need a variety of technologies and applications to support the channels. The required applications include workforce management software to forecast incoming volume by medium and then determine the staffing level needed to ensure responses to traffic from each channel within specified service levels on a half-hourly basis. The timeliness requirements for social media are different from other channels currently supported by organizations, and require a solution that has been optimized to handle these types of transactions.

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Figure 22: What technologies do you use to help manage your social media interactions?

Source: DMG Consulting LLC, November 2011

The answers to this question are broad and address many different technology categories. The dominant technology for handling social media interactions, reflected by 45.3% of survey participants, was CRM/servicing/customer tracking applications. The second most common answer was text analytics, as indicated by 43.4% of respondents. Data mining technology was being used by 35.8% of study participants. Sentiment analysis was the application of choice for 30.2% of respondents. 24.5% of survey participants selected workforce management solutions to forecast volume and staff resource requirements. Campaign management and workflow solutions were selected by 18.9% of the respondents. 9.4% of the survey participants indicated that they were not using any technology in this area. Third-party social media listening/management tools were being used by 7.5% of the respondents. Enterprise resource planning (ERP) applications were utilized by 5.7% of the study participants. 3.8% indicated that they were using their supply chain solution, and the remaining 1.9% were not sure what was being used to handle social media interactions.

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Participants were invited to select all relevant responses to this question, as a number of different technologies may be required to do the job right. While it’s fine to start without any specialized technology when the social media transaction volume is low and can be handled by a few people, even then opportunities may be lost by not having a solution that identifies and tracks trends. Figure 23 shows the technology and applications of choice for managing social media interactions for the top verticals in this study. It’s interesting to see which verticals are investing the most in technology and applications to facilitate their social media programs, and which are not. In this case, the companies that are using technology most heavily appear to be more advanced in their use of social media than those that taking a more informal approach to addressing their social media interactions.

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Figure 23: What technologies do you use to help manage your social media interactions?
Workforce management (to forecast volume and staff resources to respond) 2 3 0 1 1 1 2 1 1 0 1 0 0 0 0 0 1

What is your industry? Telecommunications Financial services (banking, brokerage and investment management) High-tech/software Outsourcing Government Insurance (P&C, life, health) Consulting Transportation Airlines Electronics Healthcare Manufacturing Retail Utilities/energy Collections Travel and hospitality Other (please specify) Note: 1.

Text analytics 7 2 3 2 1 1 2 1 1 0 0 0 0 0 0 0 3

Data mining 6 1 2 4 2 0 1 1 0 0 0 0 0 0 0 0 2

Sentiment analysis 3 1 2 3 0 1 1 0 1 1 0 0 0 0 0 2

CRM/ servicing/ customer tracking application 7 3 1 2 1 2 1 1 1 1 0 1 1 0 0 1

Enterprise resource planning (ERP) 1 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0

Supply chain 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1

Campaign manageme nt 3 1 2 0 0 0 0 0 0 1 0 0 1 0 0 2

Workflow 2 2 3 1 0 1 1 0 0 0 0 0 0 0 0 0 1

Other (please specify) 2 3 2 1 0 0 0 0 0 0 1 1 0 0 0 0

Response Percent 26.4% 13.2% 11.3% 7.5% 6.8% 5.7% 5.7% 3.8% 2.3% 1.9% 2.3% 1.9% 3.8% 2.3% 0.0% 0.0% 7.5%

Response Count 14 7 6 4 3 3 3 2 1 1 1 1 2 1 0 0 4 53

Answered question “Other” includes consumer publishing, music, beauty products, education, furnishings, advertising, and membership associations.

Source: DMG Consulting LLC, November 2011

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DMG’s Leader Profile: Social Media Forecasting, Scheduling and Service Level Goals
It’s curious that businesses have been so slow to formally adopt the essential and increasingly influential social media channel, given how much is known about the popularity of social media and the proven best practices for building out other new channels. As previously discussed, DMG believes that it’s only a matter of time before social media becomes as influential a channel as phone calls. Companies of all sizes are aware of the power and potential impact of social media, both positive and negative. What the market needs to appreciate is that companies have been slow to adopt and integrate new channels into their servicing infrastructure, as new media represent major and often costly changes to standard ways of doing business. In the near future, all organizations will have to address social media. It will become the second most important servicing channel, whether companies are ready for it or not, because it is a very comfortable way for a growing percentage of the population to communicate. For whatever reason, many people prefer to share their gripes with the public rather than going directly to a company to deal with an issue. If this is because they realize that a company is more likely to resolve their problem once it’s in the public domain, it’s an unfortunate reflection of how poorly companies are handling their customers’ concerns. Social media should not be viewed as an independent channel. It is the ultimate voice of the customer (VOC) channel around the world. It’s time for organizations to become serious about incorporating social media into their servicing fabric so that it becomes a standard component of all VOC, customer relationship management and customer experience management (CEM) initiatives. To properly incorporate social media into the servicing infrastructure, enterprises need to re-engineer their best practices and customer service or contact center technology and applications. This does not mean that it’s time to change the entire environment; instead, it’s an opportunity to rethink how customer service is delivered. Here are some approaches that DMG believes will become best practices as social media is formally integrated into all strategic corporate initiatives: 1. As previously discussed, the first step is to create a cross-functional steering committee to build an enterprise-wide social media strategy. This strategy should not be stand-alone; it should be conceived as an element of each company’s CRM,

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CEM or VOC initiatives. It should also be incorporated into the enterprise’s marketing and corporate communications strategies. 2. The steering committee should conduct research to identify all of the groups within the company that are engaged in social media interactions in order to come up with an all-encompassing strategy that can provide a single, consistent voice and message to all customers, regardless of where and how they come into contact with the company. 3. Once the internal groups involved with social media are found, determine the volume of interactions and your customers’ channels of choice. 4. Reach out to your customers in their channel of choice and ask them to specify their informational and response time desires. You do not have to do what they suggest, but it’s important to understand their expectations. If you decide to meet their needs, you’ve got a great program to communicate to them via social media. If you are not positioned to be as responsive as your customers would like, use social media to justify the delay. The point is to leverage the channel in the same way that your customers do, for the benefit of your organization. 5. If the volume and number of channels warrant the investment, acquire a workforce management solution to assist in forecasting the interaction volumes and determining how many people are required to address the volume within the desired service level. The solution can be purchased or acquired on a hosted/cloud basis. 6. Determine which technologies and applications are required to enable you to meet your customers’ service level requirements. a. Determine how to enhance your CRM or servicing solution to be able to integrate and track social media interactions and their resolution. This data should be made available to service and support staff throughout the organization so that your organization has a holistic view of the customer, regardless of the channel in which they interact. This will also facilitate standardized handling of all inquiry categories, independent of the channel in which they arrive. b. Determine how to best receive social media interactions into your environment. DMG recommends using text analytics to aggregate, analyze, tag and route the interactions into the automatic call distributor (ACD) for distribution to appropriate agents. Of course, computer telephony integration (CTI) is required to understand the value of each individual who reaches out to your organization. If the interactions are being handled by a customer service group that does not use

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an ACD, text analytics should still be used to vet and route the interactions as they arrive. (Keep in mind that many text analytics solutions also include sentiment analysis.) 7. Enterprise policies and procedures should be established for handling all social media interactions, and should be aligned with guidelines that already exist for each type of issue. It is important for the public to realize that they cannot “play” the system by coming into your organization through a social media channel. However, companies must also appreciate that when customers try to avoid customer service or contact centers or other more traditional departments, it could very well be because there are aspects of your traditional service that they find very disappointing. These best practices provide a foundation upon which to build an effective social media program.

Transitioning to a Being a Leader in Social Media Forecasting, Scheduling and Utilization of Service Levels
Since all of the activities described above are considered new, companies that adopt these best practice recommendations will be considered leaders if they experience any degree of success. The good news is that there are vendors who are eager to work with organizations that are willing to attempt to address these challenges. The vendors are well aware of the potential risks and rewards. They are interested in finding customers who appreciate that their solutions are not yet proven, but are willing to help them vet and enhance them. Early adopters of any social-mediaoriented solution will have the opportunity to influence its product direction. Enterprises can greatly mitigate their risks by working with hosted providers. The degree of social media experience among the vendors varies greatly. For example, text analytics has long been used to capture unstructured written communications and then structure it to find customer needs and intents. It’s only in the last few years that it has been applied to social media interactions; however, the source of written communications is irrelevant to text analytics vendors. This is therefore one of the more mature social media solutions and a great place to start. It will give an organization a great handle on the types and intent of interactions being received so that appropriate resources can be assigned to address them.

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V. To Host or Not to Host?
Adoption of hosted, software-as-a-service (SaaS) or cloud-based solutions continues to pick up momentum. While customer service and contact center groups were not early adopters, this has changed dramatically in the last 18 months. DMG expects this trend to continue for the foreseeable future. This does not mean that enterprises will swap out their entire premise-based customer service or contact center for hosted/cloud-based solutions, but they will seriously consider this acquisition model every time they need to bring in a new or replacement solution. There is no doubt that hosting is a very cost-effective and low-risk approach for entering the world of social media. Vendors often provide resources to assist with the initial implementations, something that most end-user organizations need, as few have the experience to do it on their own. Hosting can be an attractive method for acquiring all types of technology and applications. The survey asked participants:

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Figure 24: Are you using any hosted/cloud-based systems or applications in your customer service department or contact center?

Source: DMG Consulting LLC, November 2011

All 132 survey participants responded to this question. 59.1% said no, and the remaining 40.9% said yes. A “yes” response to this question means that an organization is using one or more cloud-based solutions; it does not mean that their entire environment is built upon hosted solutions.

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Figure 25: Are you using any hosted/cloud-based systems or applications in your customer service department or contact center?
In what country or countries are your contact centers located? United States India Canada United Kingdom Philippines Germany Brazil Mexico South Africa China Belgium France Costa Rica Spain Colombia Hong Kong Hungary Ireland Italy Japan Malaysia Poland Romania Russia Singapore Bahamas Barbados Bulgaria Chile Egypt El Salvador Gibraltar Guatemala Indonesia Israel Iraq Jamaica Kenya Response Percent 56.8% 18.2% 15.9% 15.2% 6.8% 5.3% 4.5% 4.5% 4.5% 3.8% 3.0% 3.0% 2.3% 2.3% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% Response Count 75 24 21 20 9 7 6 6 6 5 4 4 3 3 2 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1

Yes 30 9 10 10 3 3 3 3 4 2 2 4 2 3 2 1 1 1 1 1 0 2 1 1 1 1 1 0 1 0 0 0 0 0 0 0 1 0

No 45 15 11 10 6 4 3 3 2 3 2 0 1 0 0 1 1 1 1 1 2 0 1 1 1 0 0 1 0 1 1 1 1 1 1 1 0 1

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In what country or countries are your contact centers located? Korea, South Kuwait Luxembourg Netherlands Saudi Arabia Serbia Sweden Thailand United Arab Emirates Uruguay Other (please specify)

Yes 0 0 0 0 0 0 1 0 1 1 0

No 1 1 1 1 1 1 0 1 0 0 2

Response Percent 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 1.5% Answered question

Response Count 1 1 1 1 1 1 1 1 1 1 2 132

Source: DMG Consulting LLC, November 2011

Figure 25 breaks down the results by country. In most countries, the percentage that answered “no” to this question was greater than or equal to the “yes” reponses. However, in France and South Africa, more organizations reflected that they are hosting than not. Within the next two years, DMG expects more than 70% of contact centers and customer service groups to host at least some of their technology and applications. This is a trend that is continuing to pick up momentum around the world.

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Figure 26: If not currently using any hosted solutions or applications in your contact center of customer service department, when are you planning to implement any hosted/cloud-based systems or applications?

Source: DMG Consulting LLC, November 2011

Respondents who indicated that they were not currently using a hosted or cloudbased solution were asked when they were planning to host a solution. 66.2% said that they did not have any plans to use hosted/cloud-based solutions. 13% indicated that they were going to begin using a hosted application within the next 6 months, and another 13.0% of respondents said it would take 1 to 2 years before they would invest in a hosted application. 7.8% of respondents said that they were going to host some technology within 7 to 12 months. While there are still organizations where premise-based solutions are preferred, a majority of the market is adopting some hosted solutions.

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DMG’s Leader Profile: To Host or Not to Host?
DMG asked a similar question about hosting contact center and customer service technology and applications in a 2010 benchmark study. A lot has changed in a year. In 2010 only 33.0% were using a hosted solution; today, 40.9% are already hosting. Hosting is a flexible acquisition model that enables users to acquire the technology and applications they need without making a major capital investment. It also gives users access to technology and often business experts who can provide assistance that is usually not available in their own company. It also gives users a constant flow of updates and new releases without requiring them to make any additional investments. Despite the classic benefits of hosted offerings, it is still not the right choice for all companies. DMG recommends that any organization considering the acquisition/replacement of any contact center application add cloud-based solution providers to their mix, and then conduct a lease (hosting) vs. buy analysis as well as a total cost of ownership analysis. (Keep in mind that this approach should also give premise-based providers an incentive to be more price-competitive.) There are situations where it absolutely makes more sense to purchase than use a hosted contact center solution. Organizations that have the resources to maintain a solution and plan to keep it in place without making significant upgrades for 5 or more years will probably save money by purchasing their solution, and are ideal candidates for the traditional approach. Despite the claims being made by the hosted providers, companies that require a significant amount of customization are also better off with a premise-based solution. In general, it’s a toss-up, and both solution sets – premisebased and hosted – should be considered.

Transitioning to Being a Leader in Using Hosted/Cloud-Based Solutions
The entrance of hosted/cloud-based providers into the contact center and customer service arena has greatly increased the number of competitors and introduced new offerings to the market. End users have more choices than ever before. This gives them great maneuverability, and has altered the status quo of the market. Premisebased leaders in many technology categories are still struggling to figure out how best to enter this market – the classic way is through partners. (These vendors are overly concerned with cannibalizing their existing customer base and, in the process, are

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losing customers to hosted providers.) However, the contact center and customer service technology markets have challenged this traditional model, too. End users expect their preferred vendor to offer and support their solutions on both a premisebased and hosted basis. Leading users of technology have started to use hosted/cloud-based solutions, but only when these solutions have the functionality they need and it makes financial sense. Users need to make this assessment every time they consider an acquisition. However, it is important to point out that if it’s not clear that a solution will add value and benefits to the organization, a hosted solution offers a safe way to “try before you buy” on a month-to-month basis. This is certainly valuable in the world of social media. Before making major investments or commitments, try a hosted or cloud-based solution. This will mitigate the risks while presenting a chance to try out applications and see if they can help in achieving the company’s social media goals, without requiring a major up-front investment or a commitment to a long-term technology direction.

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VI. Final Thoughts
Social media is not a passing fad. It is a highly valuable grouping of channels that are going to play an increasingly important role in business communications. Companies and organizations of all sizes should embrace it as quickly as possible, despite the significant impact that this may have for the organization. The dynamics of social media are different from those of any other corporate communication channels. Customers, prospects and the general public use social media to share thoughts about an issue or organization. But in the spirit of a generation that believes that few thoughts should be private, these comments are very often shared publicly. The question is not whether people are going to write about a company or organization. This is inevitable. The question is what to do once these opinions are in the public domain. This benchmark study found that 67.4% of organizations are using social media. Not surprisingly, marketing is the primary use of social media (76.4%). Customer service is the second most common use (62.9%), and corporate communications/PR was the third most common use of social media (52.8%). Most people believe that social media is primarily useful for crisis identification or management. This study proved this assumption wrong. The top use of social media in organizations today is to identify the positive or negative sentiment of the person who sent the communication/comment/post/”tweet” (77.4%). The second most cited use of social media is to identify issues with products and services (69.8%), and the third is to send requests for information regarding a company, its products or services (66.0%). Crisis identification/management was number 6 in the list of top uses, as reported by 43.4% of the study respondents. The good news is that most organizations have realized that they need to be involved with social media. Unfortunately, few have figured out how to effectively incorporate social media into their servicing fabric and infrastructure. In most organizations, marketing believes that it “owns” the social media channel, even though they are either poorly positioned to respond to all of the expressed customer needs or do not appreciate that they have to respond within a specific service level/time frame. Most companies learn this lesson when there are complaints – in public, as this is the nature of social media – due to slow or off-topic responses. At this point, marketing is ready to “dump” the responsibility for social media onto customer service or the contact

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center. While the service organization should be charged with handling social media interactions, as they already are proficient at responding to most inquiries and understand the importance of service levels, it would be better for everyone if they were involved early in the process, before the organization risks an embarrassing lapse. The right way to build a social media program is to set up an enterprise-wide steering committee to build a strategy for this important channel. The committee should consist of members from all departments that are going to be involved in setting policy and handling or providing the information necessary to respond to social media feedback and comments. This steering committee needs to understand that the dynamics of social media interactions necessitate appropriate responses within very short time frames. The point is that social media is changing the service requirements of enterprises. However, to avoid providing inconsistent responses in different channels, the service organization needs to align their current communications policies and procedures with those being used in the social media channel in order to ensure that all customers receive the same treatment, regardless of the channels in which they interact. Social media will change how an organization interacts and delivers service to customers and the public. It’s time to put internal politics aside and build an enterprise-wide inbound and outbound social media strategy that is designed to always present a company in the best possible light. Achieving this goal requires appropriate resources, investments in new technology, and changes to policies and procedures, as what has worked in the past is not sufficient to succeed in the world of social media.

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About Verint Systems
Verint® Systems Inc. (NASDAQ: VRNT) is a global leader in Actionable Intelligence® solutions that include enterprise workforce optimization (WFO) and voice of the customer (VoC) software and services. The company’s solutions enable organizations of all sizes to capture, analyze and act on customer, business and market intelligence. Today 10,000+ organizations in more than 150 countries – including over 85 percent of the Fortune 100 – use Verint solutions to improve enterprise performance and make the world a safer place. Learn more by visiting www.verint.com, or by contacting 1-800-4VERINT or info@verint.com.

About DMG Consulting LLC

DMG Consulting is the leading provider of contact center, back office and analytics research, market analysis and consulting services. DMG’s mission is to help end users build world-class, differentiated contact centers and back office operating environments, and to assist vendors in developing high-value solutions for the market. DMG devotes more than 10,000 hours annually to researching various segments of the contact center and back office markets, including vendors, solutions, technologies, best practices, and the benefits and ROI for end users. DMG is an independent firm that provides information to executives, contact center managers, the financial and investment community, and vendors in the market. For more information, visit www.dmgconsult.com.

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DMG Consulting LLC 6 Crestwood Drive West Orange, NJ 07052 973.325.2954 www.dmgconsult.com
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