Author: Anand Divekar
Principal, Eco-Bridge LLC.
Author’s Note: For a description of opportunities and risks related to business adoption of social networking, see my earlier paper: “Social Networks – Can Businesses Adapt?”.
Reputation management for businesses is becoming increasingly important…
As I publish this article, a news story just out today concerns another case of corporate damage control based on backlash over mismanagement of a customer’s questions. The customer emailed Randall Stephenson, CEO of AT&T twice in a couple of weeks with service related questions and received a phone call from a company representative in which he was threatened with a cease and desist order. After the customer’s blog about the event was widely publicized, a Sr. VP at AT&T called to apologize. The customer ended up dropping AT&T’s service anyway and switching to Sprint.
…As growing access to technology empowers customers…
As adoption of social networking accelerates in the consumer and business communities, traditional models of interaction between companies and customers are beginning to change, driven by customer dissatisfaction with the level of service available through conventional channels such as operations staff and call centers. This dissatisfaction is increasingly being expressed on social networks where customers are learning to amplify their voices by broadcasting opinions about less than perfect service to friends and followers who re-broadcast these messages to even larger audiences, resulting in embarrassing media coverage and public backlash for the company. As the technology and platforms available for instant communications proliferate, customers are expressing a demand for an improved, more individualized level of service. As a result, conventional customer service is under a spotlight which is exposing weaknesses and risks in business operations and the ability to resolve customer issues.
The irony is that consumer technology, after trailing business technology development for many years, is now accelerating faster than businesses can keep up. Innovative technology startups are leveraging widely available PC-based and mobile devices to build and perpetuate social networking platforms which include a combination of free services (to attract new users), premium (paid) services, marketing services for advertisers, revenues from sale of aggregated business intelligence reports, donations from users, etc. to build healthy businesses. The resulting access to technology has put control in the hands of customers who can now communicate in real time on the internet with anyone who is listening, at any time of day or night – a fact which is causing trepidation for many businesses and forcing them to participate in social networks.
…Causing businesses to rethink operations and adapt…
Many businesses are scrambling to keep up and adapt to this growing clamor of voices (which show up on the internet as blogs, tweets, comments, bulletin board posts, etc.) to ‘listen’ to relevant conversations, gauge sentiment and take action when necessary to reduce risks. There are several challenges associated with this activity, not the least of which is the demand for flexibility in how they listen for and respond to customer issues. Business processes in general were not designed with this level of flexibility in mind. As a matter of fact, the impact goes well beyond business processes. Impact resolution affects aspects of business policy, organizational structure, roles and responsibilities, business systems, operational guidelines, employee training etc. and has the potential to impact supply chain and vendor relationships in future. In short, optimizing a business in the age of the enlightened customer can result in an expensive redesign.
The good news is that new toolsets are emerging which allow businesses to listen in on customer conversations to plan adequate responses and handle customer issues before they become public relations nightmares. The right toolsets accompanied by the appropriate methodologies can provide a robust approach to reputation management and future damage control. Tools are the subject of a future blog/article.
…Creating dual operating standards…
Customer service is an area in which many companies already have investment fatigue based on past customer relationship management (CRM) systems implementations. However, the adoption of social media is dividing consumers into ‘haves’ and ‘have-nots’ of power as the customer service function evolves into two very different flavors represented by the legacy-CRM and the social-CRM versions. These constitute significantly different levels of responsiveness to customer concerns, a fact which has not gone unnoticed by consumers or by rights advocates desiring to apply public pressure to companies to change their practices (an example is Greenpeace’s anti-Nestle campaign to protect Indonesia’s rain forests and save the orang-utan habitat).
Legacy-CRM handles a single customer at a time with private conversations ‘pushed’ (initiated) by the customer, through call centers supported by interactive voice response (IVR) systems, CRM software and associated technology, processes and staff. A customer typically navigates through numerous computerized voice prompts requesting information which may eventually result in a conversation with a live customer service representative (CSR). If the CSR is knowledgeable and friendly it is possible to have a pleasant experience while resolving the issue. But not everyone gets a knowledgeable CSR.
The social-CRM version is an entirely different level of service offered to customers who are technologically savvy and use public and/or corporate social media sites. In this case, customers ‘pull’ (attract) attention and assistance from designated company representatives who are listening in on designated sites. It is not uncommon to have a concerned company representative clucking over such customers like a mother hen, either on the phone or through social messaging techniques (tweets, posts, etc.). Resolution is often very generous (compared to the legacy-CRM approach) based on business reputation management fears, exacerbated in the case of customers who have large numbers of readers, followers or friends in the blogosphere or other platforms such as Twitter and Facebook. The specter of accelerating backlash in a public forum often drives businesses to bend over backwards to achieve resolution.
…Which are driving new social, business and technology trends…
Trend#1: Consumers will gravitate to social networks to get improved customer service, forcing businesses to evaluate existing infrastructure and integrate new supporting technologies
Consider the Comcast Cares program which has fulltime staff listening for consumer issues on public social networks like Twitter. These resources have a mandate to defuse potentially damaging public complaints by consumers converting them into Comcast supporters. ‘Listening platform’ software deployed by companies like Jet Blue makes it easier for staff to aggregate and monitor posts and assess sentiment associated with their brand, allowing them to react quickly to issues.
The benefits for customers are significant enough to attract growing numbers to social media channels and to expect quicker, more personalized service while avoiding navigation through the much criticized legacy-CRM systems. Mass consumer adoption of social media as a channel for customer service could result in periodic tsunamis of requests for support, stretching budgets and staff to the breaking point. The challenge for businesses is being able to scale this service, eventually integrating processes across social-CRM and legacy-CRM domains. This evolution will require new leadership thinking about policies, processes, systems and training for employees (see this blog by The Altimeter Group and Charlene Li’s book on Open Leadership).
For example, businesses will need to map customers’ socialgraphics profiles before they can make educated decisions about the level of customer service to provide. Socialgraphics provides guidance on assessing how customers use social technologies, where they are online, and how it influences them in the context of the customer life cycle (see Richard Pentin’s blog post). Customers with large numbers of followers will be treated as preferred customers (similar to airline handling of customers with substantial frequent flier miles) and get superior personal service which will be followed by incentives to convert them into implicit evangelists for the business.
Trend #2: Businesses will leverage online customer conversations to ‘deflect’ calls to call centers
Call deflection occurs when a customer is able to self-service their support question on a website. The numbers of call deflections can be multiplied by the cost per support call, e.g., $15 -$40 per call loaded cost. A world-class call deflection rate would be 70% – 80%, with 30% – 50% being the norm.
(Extracted from this article by Randy Ross).
By setting up their own social networks for customers, often as add-ons to existing websites, businesses are finding it possible to deflect customer calls and reduce call center costs by encouraging customers to directly answer each other’s questions, instead of contacting customer service. The result is a growing database of documented interactions between customers which serves to provide answers to the next customer researching a question which has been answered in the past. A moderator is necessary to provide support by monitoring conversations, answering questions which other users cannot answer and addressing issues such as site abuse through spamming, solicitations, etc. However, I cannot think of a more effective judo move to handle a massive problem – by using the momentum of customer conversations (which would occur anyway) to solve the larger customer service problem.
These conversations also automatically identify gaps in the knowledge base, which are filled over time, raising the quality of the information available and gradually increasing the call deflection rate to optimal levels. Attractive ROIs can be achieved on technology deployed to deflect calls. For example, refer to this Best Buy case study from Lithium Technologies.
Trend#3: Potential for misuse by customers (and employees)
Power and new capabilities often drive misuse. Here is an example of a risk scenario which businesses dabbling in social media will need to be wary of. This scenario should especially resonate with companies who are Sarbanes Oxley (SOX) certified or headed in that direction.
A customer complaint on a social media site is dealt with by an empowered employee who grants the customer significant benefits to resolve the complaint, ostensibly to prevent additional backlash and convert him/her into an evangelist for the business. The customer follows up and proceeds to praise the company in the social media convincing the company they have a new evangelist in their ranks.
In fact, the customer is a friend or relative of the employee. Subsequently, the truth leaks out and now the company looks naïve in the press, possibly attracting additional schemers, along with unwanted attention from regulators and shareholders demanding transparency and disclosures.
Checks and balances will be needed to address such issues, if companies want to steer clear of the hazards of such situations.
Driven by technology advances, power is shifting to customers who leverage cheap devices and free access to social media to communicate with their networks. Reputation management concerns are increasing business sensitivity to customer issues reported on social media sites and causing them to escalate resolution to a higher level of priority compared to legacy-CRM channels, creating a dual operating standard for customer ‘haves’ (technology adopters) and ‘have-nots’ (little or no access to technology). However, scalability of these service levels is an issue, which will require new leadership thinking and infrastructure solutions.
These changes will drive new trends in the marketplace as businesses, customers, vendors all react to the new forces in play. I have identified a few of them above (future updates will identify more trends as they become clearer).