Social Network Analysis: a missing piece of sCRM strategy?

There’s a whole lot of talk right now in the social business blogosphere about a little thing called sCRM, or “Social Customer Relationship Management.”. It’s also been called names like “CRM 2.0” and “Social Relationship Management,” but it seems like the general consensus rests on sCRM. Although the term that’s still being defined by pioneers from many fields of expertise, generally speaking it can be loosely understood as an expansion of “classic” CRM into the world of Web 2.0, a world in which the customer – especially the “social” customer –lives at the center of every good business strategy. Naturally, part of this repositioning entails the adoption of social media communication and analytics to drive the customer-centric conversation, but there’s a lot of confusion about which elements, channels, tools, and methods are the right ones for both the customer and the company.

The guys over at Altimeter put together this excellent report earlier this year in which they outline 18 use cases for sCRM. This is a great starting point to help businesses understand how they can use “social” means to reach their existing CRM ends. The use cases are broken up into six categories: marketing, sales, service and support, innovation, collaboration, and customer experience. (Wim Rampen suggests in this post that many of these use cases could — and should — already be in place within a traditional CRM framework. While this is true in part, I think even the “existing” cases certainly have much to gain by adding a social dimension, so it was helpful for Altimeter to include them in this list for the sake of thoroughness.)

As the Altimeter report points out in a quote from CRM “Godfather” Paul Greenberg, at its core sCRM is about moving from the transactional model (traditional CRM) to a new interactional model in which the “relationship” aspect of CRM is based on a conversation between company and customer. Businesses now have the opportunity not just to reach out to their customers, but to actually engage with them in their venue of choice, a process that offers huge potential benefits for both sides. For the company, implementing sCRM strategies can lead (at the most basic level) to better ROI and longer customer lifetime and loyalty statistics. The customer benefits from better, faster, and deeper customer service, support, product development, use experience, and maybe even more entertaining marketing . I think Jacob Morgan did a great job of summing this up on his blog:

The real value from SCRM comes from being able to change how your company does business and improving the user experience while building advocacy. Simply responding to as many comments or tweets as possible is senseless and not scalable.  A much better solution is to actually fix the problems the customers are identifying and collaborating with your customers to help give them what they want.  This is part of what being a social business is all about.

How It’s Done: Social Media Analytics VS. Social Network Analysis

There’s plenty of reading material about where and how companies can “begin the conversation,” and there is a healthy selection of social media monitoring/marketing tools. But, like Morgan, one of the key questions I’ve noticed with the social business sphere is the issue of scalability. Though these tools provide powerful social media analytics to discover information about the conversations (where they are happening, how often, by whom, etc.), as more customers adopt social means of communication, companies run the risk of missing some of the value in the midst of all the noise.  Social media analytics charts are a powerful and necessary element of a sound sCRM strategy, but they don’t tell the whole story. In a business world where 1:1 communication is growing simultaneously simpler and more challenging, how can companies discover whom to talk to, when, where, and how often – all while keeping the experience and product tailored to the customer’s needs?

One possible answer to this question can be found in social network analysis – or, in the case of companies, customer network analysis. Unlike social media analytics, which usually collects and analyzes the conversations defined by brand name or keywords, customer network analysis is an effort to make sense the of the chaotic web of relationships within an existing network of people – be they customers, prospects, or both. Though the concept of social network analysis has been around in sociology since the 1950s, only in recent decades have we garnered the computing technology needed to efficiently analyze networks with millions of nodes and edges with the swiftness needed to impact business results.

Customer network analysis (CNA) is therefore quite a different concept and practice than social media analytics. It’s a topic which, by my observation, has not yet made it into much of the sCRM conversation, and it seems that still some confusion about the differences. SocialCRMWorld has had some great posts highlighting a few of the implications of CNA for sCRM, but I’d like to sum them up here to highlight the differences between CNA and social media analytics.

CNA: Same game, different player

Social media analytics platforms tend to start with the brand name (or keyword) and work down through the layers of web conversation to discover the customers as they speak. This methodology can be used to answer questions about where web traffic is coming from, the effectiveness of brand messaging, campaign tracking, sentiment analysis, and online loyalty.

While these are all very important questions that definitely need to be answered, they leave something to be desired from the sCRM perspective. If sCRM is really about running a customer-centric business, isn’t it important to start with the customer instead of the brand? Customer network analysis starts from the other direction – we go from the names of your existing customers (or prospects) and work outward to discover a different set of answers about the customers and their network. These are a few of the sorts of questions CNA can answer:

• To whom are my customers connected (both within and beyond of my existing customer base)?
• Which persons are highly connected within that network?
• Which persons are highly influential within that network?
• Where are my customers on the web? (aggregated social profiles, preferred websites, etc.)
• What are the topical interests of my customers, on both an individual level and within clusters or groups of customers?
• How does information flow within and beyond my customer base?

When combined with existing CRM data (after all, sCRM is an expansion upon – not a replacement of—“classic” CRM), the answers to these questions can lead down many paths. Understanding precisely where your customers “hang out” on the web and how they use their preferred channels can increase media planning efficiency. Discovering your influencers and reaching out to engage with them can lead to faster product diffusion, collaborative product development, and increased word of mouth marketing. Incentivizing your “answer people” can help your best customers help each other. Strengthening inter-customer relationships can lead to higher loyalty and customer lifetime values. Understanding interest clusters and the opinion leaders within those clusters can teach you about new avenues in which to engage your customers.

Whether used for support, innovation & collaboration, marketing, knowledge management, or community development, it’s clear that there is an important role for customer network analysis in every mature sCRM strategy.

Not sure how to integrate CNA into your sCRM strategy? We’ve got a closed beta of our CNA solution coming this fall. Sound intriguing? Get in touch!