CC BY
87Ph.A Lozovoy*
ENHANCEMENT OF CUSTOMER RELATIONSHIP MANAGEMENT THROUGH WEB SOCIAL NETWORK INTEGRATION
Лозовой Ф.А. Развитие системы управления взаимоотношениями с клиентами посредством интеграции с онлайн-сервисами социальных сетей. - Статья .
Проникновение онлайн-сервисов социальных сетей в деловые отношения увеличивается каждый год Традиционные корпоративные информационные системы как CRM приспосабливаются медленно и не помогают капитализировать новые, открывающиеся возможности Главной целью этой статьи является предложение комплексной концепции, которая позволяет оптимизировать внутренние и внешние деловые коммуникации, используя информацию доступную на сайтах социальных сетей Исследование было проведено в рамках анализа реальной деловой ситуации Предложенная разработка основывается на опыте автора в данной области и понимании данной темы Тем не менее, теоретическая база данного вопроса была основана на основательном обзоре литературы Разработанная концепция будет интересна для ученых и практиков в области CRM и установлению новых деловых контактов.
Ключевые слова: социальная CRM, B2B, установлению новых деловых контактов, процесс сбыта.
Lozovoy Ph.A. Enhancement of customer relationship management through web social network integration. -Article
The penetration of web social networking into business relationship increases every year. Traditional corporate information systems as CRM adapts slowly and don't generate business value from emerging opportunities . The main objective of this work is the proposal of a comprehensive framework that optimizes internal and external business communication using information from social networking sites . The study is conducted in the context of solving the real business case The proposed solution is based on author having experience in this area and understanding of the topic Nevertheless, the theoretical foundations of the issue are supported with solid literature research. The developed framework will be useful for scholars and practitioners in the area of CRM and business networking.
Keywords: social CRM, B2B, business networking, sales process .
Лозовий П.О. Розвиток системи управління взаємовідносинами із клієнтами за допомогою інтеграції з онлайн-сервісами соціальних мереж. - Стаття
Проникнення онлайн-сервісів соціальних мереж у ділові відносини збільшується щороку. Традиційні корпоративні інформаційні системи як CRM пристосовуються повільно та не допомагають капіталізувати нові можливості, що відкриваються . Головною метою цієї статті є пропозиція комплексної концепції, яка дозволяє оптимізувати внутрішні та зовнішні ділові комунікації, використовуючи інформацію доступну на сайтах соціальних мереж . Дослідження було проведено в рамках аналізу реальної ділової ситуації. Запропонована розробка ґрунтується на досвіді автора в даній області та розумінні даної теми . Проте, теоретична база даного питання була заснована на
* Lozovoy Philipp - Master at Business Informatics, Faculty of Business Informatics, National Research University Higher School of Economics, Munster, Germany
ретельному огляді літератури . Розроблена концепція буде цікавою для вчених і практиків в області CRM і встановленню нових ділових контактів.
Ключові слова: соціальна CRM, B2B, установленню нових ділових контактів, процес збуту.
Introduction.
Social media and similar developments that occurred through Web 2. 0, have evolved from a fad to an integral part of everyday communication. According to a recent study, 92.6 % of all German Internet users are registered in at least one social network [5]. Even though the attitude of the decisionmakers a few years ago was suspicious and sceptical, nowadays social media is perceived to be able to decrease company costs [3].
In line with the hype around social media, more terms such as «social business» or «social enterprise» were invented to describe the adoption of established social media forms of communication for business processes However, the potentially more efficient communication within a company, or even with their customers, is only a part of the full potential that social media usage can deliver in a company. Other business processes such as service or product development services are more and more supported by the use of social media Some business models even only have been made possible through social media [3]. A study of eMarketer. com (2012) confirms the potential with numbers and an estimated trend According to this study, global sales in social media will rise from five billion U . S . dollars in 2011 to 30 billion U . S . dollars in 2015. Although the absolute numbers are limited to electronics, toys and movie tickets and cannot be generalized light hearted, the relative change of 600% in five years can, however, suggest potential also for different sectors
The suitability of social media for companies is generally not disputed, although often still scepticism prevails [8]. In Public Relations, Social Media is regarded as an additional channel that can be used efficiently to address the defined target groups .Social network advertising can be used purposefully with enriched information from web social profiles Through the network effect and viral marketing the effective media
reach is increased to a level, which can hardly be achieved through traditional media
In this paper the B2B (business-to-business) market shall be investigated as it differs at critical points from C2C (consumer-to-consumer) interaction in social media and also the B2C (business-to-consumer) market. In the few scientific studies and practice-oriented publications, the suitability of social media in B2B markets is assumed [1]. However, since the basic properties of the products, the customers and the selection processes differ in the B2B marketplace an evaluation of the potential activities must be conducted In addition the various B2B markets have different requirements. The number of providers and the type of product are only two parameters that influence the differentiation of markets .
The goal of this paper is to reach an understanding of the topic, and then be able to create a model how real business problems can be solved Thus the research question «Which opportunities and challenges arise when using social networks to enhance customer relationship management in B2B markets?» is posed and shall be answered by means of a literature review. The insights from the literature review are then transformed into a framework that should be helpful for practitioners
Literature review.
In addition to the classification of social media in different categories a widely cited work by Kaplan and Haenlein (2010) also contains practical implications: (1) Choose Social Media wisely, (2) use the appropriate social media strategy or develop your own, (3) connect all activities together, (4) integrate Traditional Media and (5) grant access to anybody (including employees). Looking at these advices Kaplan and Haenlein (2010) remain very generic as the specific usage depends on the objectives .
The peculiarities of B2B communications including social media is examined by Fuchs (2012). He distinguishes between the medial-dominated (e g journal), the mixed-media-dominated (e g fairs) and the dialogue-dominated instruments According to his classification social media falls into the dialogicshaped instruments . Fuchs rates the B2B customers in scale from «relatively passive consumers» to „active communication proactive consumers» [4] This goes hand in hand with the replacement of the medial-dominated to increasingly dialogical-shaped instruments The goals that can be achieved through social media are according to Fuchs: (1) Information goals, such as providing information for current and potential customers, 2) the establishment of an alternative distribution channel, (3) the acquisition of new customer segments and (4) the increase in brand awareness and brand image A company should also be sensitive to the communication, and the other sales lead of the company, business agents that have the interest and authority to purchase a product or service
With a similar approach Chompis and Feldberg (2012) investigated the potential of virtual communities in the B2B financial services industry They researched it on the assumption that a financial provider, who is active in a B2B community, has a positive effect on customer satisfaction and thus lays the foundation for a long-term customer relationship . Starting from the consideration that only positively perceived communities lead to higher customer satisfaction, factors were evaluated that favour the satisfaction of the community users Main factors are thus the information and system quality, which consist of more detailed factors such as the ease of use and the speed of reaction to asked questions in the community The authors concluded that communities across industries are an effective way to build a customer base The high reach enables it to efficiently provide information on products and services [3]
A more brand-oriented research approach was conducted by Malaska and Nadeem (2012). The relevance of branding in online media was studied by means of a LinkedIn group of the network technology manufacturer CISCO They point to the displacement of traditional controllable communication that comes from the company into unplanned communication areas. Subject of this empirical study is the classification of communication that took place in the LinkedIn group As a result Malaska and Nadeem have identified four types of communication: (1) persuasive
communication of employees, (2) informational / neutral communication of employees, (3) persuasive communication of nonemployees, and (4) informational / neutral communication of non-employees In addition besides positive remarks from non-employees also critical ones were recognized, but were expressed rationally and technically [8].
Similarly, Andersen (2005) deals with the nature of communication in web-enhanced brand communities This type of communities allows the possibility of establishing linkages to professional users that have a strong and longstanding interest in exchanging product-related information The study involved a qualitative survey of members of a community of the medical products manufacturer Coloplast The company operates in a niche market and competes with only a few large suppliers It pursues the strategy that the loyalty of users, mostly nurses, constitutes a competitive advantage, which can be enhanced by advising communities As a result, the author comes to the conclusion that for all companies «unleashing the creative potential of their customers and developing adequate platform for knowledge-generation processes is a key competitive parameter» [1] and thus argues in the same direction as Chompis and Feldberg (2012).
Heller (2009) stated in his study that the Internet, especially in the first phase is a valuable source of information for decision makers. As a result Heller implies that it is
important for companies to be visible on the Internet A special feature of this study is to compare the responses to various information phase (inspiratory phase, research phase, detailed phase) . In the beginning Internet is still the most valuable source of information, but this decreases with more detailed investment specifications Although social media as part of the Internet resources play after a minor player, but Heller points out that a growth and an increasing willingness to gather information in social media is to recognize [6] Here should also be noted that the period of the survey is already back over four years
The work of Weinberg (2012) begins with the introduction of what social media marketing means and ranges of the target definition and monitoring to the various potential tools Finally, the question of the measurement of ROI is plucked, which seems to make an important factor for many decision makers However, Weinberg also points out that for the ROI of social media human interaction must be converted into numbers, which is problematic A comparable work for B2B companies was written by Bodnar and Cohen (2012). They questioned the lead generation through social media to the fore and therefore provide a basis for the area considered here As one of the most important effects of social media for B2B companies they refer to the better rating in search engines Also Bodnar and Cohen cater to the ROI of social media. They claim that the ROI of online marketing activities should be in principle even easier to measure than with offline activities, since the paths on the Web are traceable To determine merely the Total Lifetime Value (TLV) and the Cost of Customer Acquisition (COCA) one must calculate and set it in ratio
Developed solution.
The topic of enhancement of customer relationship management through web social network has been widely addressed in practitioner literature, in particular with regards to the consequences on organizations
(generally, in B2C segment) and their strategy. Challenges of converting this approach to B2B relationship are originated in nature of social network, where social actors as individual are easy noticeable, but organizations’ actions are blurred and vague If it is considered as one of certain business functions to assign a representative for a certain job such as purchasing, interaction with these persons is point of efforts to improve customer experience
Framework for planning social CRM. Using the business process approach, customer relationship management should be divided into three parts: pre-qualification, acquisition and customer care . Pre-qualification is an initial evaluation of the «profitability» of a potential customer that is used to distinguish «promising» sale leads from «cost increasing» sale leads . Acquisition is the set of technologies and systems to manage customer prospects and inquiries aimed to the conclusion of a sale contract Customer care is a service that is provided after products or services have been sold aimed building long term partnership and retain profitable customers
Pre-qualification is a process whereby a company takes information from a potential customer and makes a tentative assessment of how interesting this customer is . Usually in B2B relationship process of selling and negotiation requires appreciable time and efforts, before the final contract will be signed by both sides Because the burden of above mentioned cost is on the seller’s side, they prefer to target only profitable potential customer Profitable relationships are achieved through high size orders and long-term relationship There are also two segments of promising customers: either a long-term partnership is established or a huge order is submitted Nevertheless, sporadic or occasional customers are often misjudged as profitable ones and an efficient customer relationship management should able to handle these cases too
High
Promising customers Profitable customers
Cost increasing customers Promising customers
► Long term
Figure 1. Segmentation of potential customers (self-developed).
Integration of customer relationship management with web social networks provides two ways to cope with this challenge:
1) standardization of communication process or reducing cost of communication; 2) selection of most promising customers .
Standardization of communication process may be achieved by well-known solutions such as an internet shop, but it is out of scope for the current paper. This work focuses on improvements of existing sales channels . For internet selling gathering information about customer is an essential part of communication. Data is generally collected on a landing page that user complete to register for a site and/or on a page to finalize the purchase The problem with this application is poor data quality and a high probability of aborted orders as users decline to bear the burden of wasting time for the activity that has no value for him/her In this case using information that already is available in social networks is a promising solution . A «Sign in» function, for example LinkedIn solution*, with a social network account is a freely available function that does not require a lot of effort and time to implement in an existing web application. Actually a lot of integration code is open and available on the internet As information in social networks accounts, for instance on
* http://developer. linkedin. com/documents/ sign-linkedin
LinkedIn, represents the user publicly, the user is personally interested to keep the data up-to-date, which increases the actual value of the data and ensures high quality In addition, since this information already exists and there is no need for the user to spend additional time to type it in, this reduces the probability of aborted registrations, purchases . Moreover, the additional information that can be gathered through social network accounts is useful in implementing customer scoring algorithms To the extent to which professional social networks provide certain data, e g job title, numbers of employees, industry and branch, it can be used to estimate the customer segment and category through data mining techniques and tools For example, econometric models can evaluate the importance of certain profiles by an equation or a set of equations where the type of customer (profitable, promising, cost increasing) is an independent variable, whereas a branch and a company size (number of employees, turnover) are regressors .
Reducing cost of communication is possible with involvement of search engine optimization and links to corporate web site Integration of search engine optimization with social networks is aimed to identify most frequently used keywords in corresponding forums, discussions and chats and identify most popular topics in certain industries
These insights are usually used to increase client awareness of products and services Essentially it is important to support all company content with links to corporate web site, in particular to a concrete product and/ or service that were mentioned in the content Social networking sites provide new opportunity to manage company contacts to discover the most promising clients Client represents only one side of selling process, another one is a vendor or sale representative and the main difference of B2B from B2C relationships is the crucial role of both side For example, in B2C markets utilization of customer insights is more important than creating special sales channel, since there are a lot of sales channels and customers are free to choose any one That’s why the real value is only achieved through analysis of customer information (demographic, interests, hobbies, social activities, income, posts), that is available in social networks* Although, social
networks provide same information for all stakeholders, B2B-oriented solution should not lose sight of their sales representatives’ information . In this case two way optimization of external and internal communications should be implemented
External communications in B2B consist of three steps: 1) identifying companies or organizations, which potentially might be acquired to become potential customers;
2) identifying contact person who are in charge of the procurement; 3) updating the contact details of a given contact in their company based on given company name Internal communications in B2B include process of designating a performer and an issue (task) tracking system. Keeping in mind that internal and external communication are parts of customer relationship management and adding rich social data sets from social networks we developed a comprehensive framework for social CRM sales process
)
Retrieving profiles from web and professional SN
Web Filtering SNAPI crawler con panes CALL
Designating performers
Selection criteria
1) Network d tsta nc<
2) Social proximity
3) Skills
4) Others
Task details:
1) Performer
2) Company info
3) Contacts info
4) Others
Ranking profiles
Ranking criteria: ) 1) Job title m 2) Connections 13) Last update » 4) Others
I
%
List of ve'Ted contacts of potential client
Figure 2. Comprehensive framework for social CRM sales process (self-developed)
* http://developer. linkedin . com/documents/
profile-fields
Comprehensive framework for social CRM sales process consist of six basic blocks: 1) input data; 2) retrieving profiles from web and professional SNS; 3) profiles fusion; 4) ranking profiles; 5) designating performers; 6) output data First and sixth blocks represent general information about input data and results Second, third and fourth blocks are customer optimization of sales process and fifth one is optimization of seller internal communication . The detailed descriptions are in below
Input. Trigger for this process is an input request from CRM or company employees Regarding the input, three different ways exist to initiate the process of identifying contact persons First, a list of company names may be given, which is then processed in an iterative manner Second, a company name can be extracted from an already existing company profile in CRM . It is also necessary to determine company identification criteria, for example industry, size, region, and then run search in the prefetch of companies . There is a multitude of information sources on the web that could be used for retrieving details about an organization Company register sites, for example Yellow Pages, may provide lists containing almost every business from any branch Even though they provide only sparse information for each single company, the sheer number of entries makes them an appropriate starting point for retrieving a list of companies within a certain industry Consequently, this information should be combined with the profiles retrieved from different web sources in order to generate a holistic view on the respective organization Third, it is also possible to enter a company name manually.
Retrieving profiles from web and professional SNS. Having the defined company name, the next step is to retrieve profiles from SNS or web. Due to differences concerning the structure and content of different SNS and other websites as well as different terms and conditions, the sub-task of retrieving user profiles should be considered individually for each source For SNS, the sub-task starts by
executing an advanced Google search query with the company name as keyword, defined target SNS web address and required filters in order to identify the URL of the respective company profile in SNS Then, accessible employee profiles, which usually can be reached by adding the term «employees» to the URL, are crawled with respect to certain SNS terms and conditions limitations The extracted crawling results are temporarily stored in a database Next, the user names of the SNS profiles are extracted from the crawling results Finally, for each of the extracted user names, the API call is executed with the respective user name as parameter Since the API call may lead to problematic legal issues (Section 3 2), an alternative way is to crawl the user profiles instead of extracting information by using the API .
Profiles fusion. When accessible profile information from both SNS and web are extracted, profile fusion is the next step to perform This step is divided into two tasks First, matches need to be identified by comparing the profile information extracted from both sources Second, matching fields have to be merged so that for each possible contact person only one merged user profile is temporarily stored in a database This is necessary as it might be the case that one person has accounts with the same name and the same company name and therefore several SNS user profiles could be identified. In other words, it might not be clear which of the SNS user profiles belongs to the user profile in CRM
Ranking profiles. Ranking the extracted and merged profiles is necessary to create a prioritized list of contact persons that should contain the most promising contacts in terms of being responsible for procurement for the given company The most important criterion that has to be considered in the ranking is the job title of the potential contact Furthermore, the connection to certain company employees, the date of the last profile update, as well as several other criteria can be taken into account.
Designating performers. Apparently, people tend to be more helpful and responsive in
communication with familiar people than with strangers Thus, in order to facilitate communication between sales personnel and a potential lead via common contacts, this use case aims at identifying the best social connection path Then an API call is send in order to retrieve a list of shortest contact paths between the calling and the target user In a second step, further profile information for all contacts on all available connection paths is requested. In case the API call is best solution for CRM purposes Nevertheless, connection paths and respective profiles might also be extracted using a sophisticated web crawler Since there are usually several alternative paths to connect two people in a network, ranking of these alternatives is required Consequently, paths are evaluated according to the quality of common contacts, e g by assessing ones employment status For example, if a contact person is another employee from the sales team, this path might be preferable over a connection with the nearest contacts In addition, the user could create a blacklist, which specifies that some of his or her contacts should not be considered for finding an optimal path Finally, sales task is assigned to the selected sales representative
Output. The resulting list of assigned tasks and designating performers is the output of social CRM sale process The list should be automatically transformed into personal tasks to each involved employee If corporate CRM allows doing it, all tasks will assign within the system Otherwise social CRM sale process assumes to use features of social networks, first of all private messages, e g on Facebook, LinkedIn, and task managers, e g on Google email system Second option is more cost efficient, but requires changes in business processes and acceptance of data security risks .
Enhanced pre-qualification would generate more sale leads that create challenges for next steps of customer relationship management, acquisition and customer care Web social networking integration proposes several possible solutions for this issue: cross-selling
analytics; generating consumer content that target specific problems; creating an open «Wikipedia» for company's products or services; monitoring customer news and updates
The comprehensive framework provides solution for optimization of internal and external business communication aimed to enhancement of customer relationship management and raise sales
Limitations.
However, the social CRM strategy includes fundamental risks as well The CRM strategy is dependent on external websites data The dependency brings two crucial problems First, providing input data is not constant but is subject to change just following up with other social network websites . It means that social CRM should pay attention to any change of provider websites who transfer input data, responding to decisions of the providers to get the input information Second, collected social network data may represent only a part of whole data pool, so it can bring biased results .In fact, not all the social network websites allow using their internal users' data For example, LinkedIn expose its data only in limited boundary with a certain amount of payment Facebook is another websites which ban to extract their internal data for commercial using
To overcome those risks, two kinds of solutions are suggested First of all, strong business relationships with social network website partners are required to get input data continuously and steadily Second, purchasing other existing solutions may be another good way to escape the risks These days, as the importance of social CRM is emphasized, such a solution provider, using social network data is also increased For example, Salesforce com makes social CRM environment much easier, providing its own platform to gather social information from various sources Leadspace com is also useful outsourcing provider, who composes optimal customer list based on social network websites data. By using the sites, risks from the dependency of external data can be reduced.
However, using the outsourced providers also has risks First of all, the trustworthiness of the data from those outsourced providers should be considered Using outsourced data does not mean erasing all the responsibility to check data credibility. In the other words, using the websites can release the efforts and risks to gather and analyse social network data, but it is not reduce the information credibility itself. Second, provided information from the outsourced websites hardly matches perfectly to a single company CRM strategy Even though those outsourced information providers are professionals to do the jobs, but still they don't understand totally each CRM environment of their whole customers Actually it is inevitable to face those risks from outsourced data except the case in which a company only use its internal data.
Again, there are also possible solutions to overcome the risks above. Developing agile project frameworks and following up with it can be a way to reduce the risk that outsourced information does not fit into the business in a company The agile frameworks give a chance to compare what company does need currently and what information it gather now, so that the company can adjust the collected data to its business In addition, the credibility matters of the information also can be improved by checking the information of the company directly Constantly analysing IT structure can be another solution to reduce the risks By analysing the internal IT structure and external environment, the company may decide which information is required to them It may give the companies' own independent position to select outsourcing data providers and request more detailed requirements to the providers
The main assumption for practical implementation of proposed solution is high portion of enterprises that involve in web social networking Such assumption is valid for well-developed countries such as Germany, USA, UK, etc In case of low digitalization of among small and medium business and big enterprises implementation of corresponding strategy
should be consider with caution and additional research is necessary in order to ensure economic feasibility
Conclusion.
Communication becomes more important along with development online social network service . Especially for business in small and medium size enterprises, the communication with partners- usually representatives of other business- and internal employees is crucial The enhanced communications allow enterprises to have two main benefits; targeting promising clients, and building maintenance markets As a way to strengthen communication, social CRM strategy can helpful by providing social-oriented sales data that integrates communication with clients, and reinforces internal collaboration
In this study, six steps are suggested to integrate social CRM with the existing CRM process: first, social CRM gather
basic information about existing CRM and user request; second, social CRM retrieves companies' profile from web and professional social network sites; third, social CRM matches and merges the profiles gathered already; fourth, social CRM ranks the profile; fifth, social CRM selects the most appropriate performer; and sixth, social CRM assigns appropriate tasks to the performer
In addition to the benefits, social CRM also enhance the performance of existing CRM, in terms of making more outstanding customer experiences The improvements of customer relationship management include 3 top-level initiatives, and it may be supported by an innovative sales process, analysis of appropriate tools, benefit estimation and risk management
The list of references
1. Andersen, P. H . (2005). Relationship marketing and brand involvement of professionals through web-enhanced brand communities: the case of Coloplast Industrial Marketing Management, 34(1), 39-51.
2. Bodnar, K. , & Cohen, J. L (2011). The B2B Social Media Book: Become a Marketing Superstar by Generating Leads with Blogging, LinkedIn, Twitter, Facebook, Email, and More Wiley com
3 Chompis, E , Horn, H , Bons, R , & Feldberg, F. (2012). Social Media in B2B Financial Services: A Matter of Trust and Responsiveness?. BLED 2012 Proceedings, pp. 211-237.
4. Fuchs, W (2012) . Instrumente der B-to-B-Kommunikation in Business-to-Business-Kommunikation Neue Entwicklung im B-to-B-Marketing, T. Baaken, T. Kesting, T. Kliewe und R. Porner (Hrsg.), Berlin, Germany: Erich Schmidt Verlag, pp . 13-36 (in German) .
5. Hennig-Thurau, T. , & Vor dem Esche, J. (2013). German Social Media Consumer Report 2012/2013. Available online at http://www. socialmediathinklab. com/wp-
content/uploads/2013/02/WWU_Social-Media-Consumer-Report_0213_Ansicht . pdf.
6 Heller, R (2009) Webnutzung deutscher B2B Entscheider Hg v Virtual Identity AG Available online at http://www. virtual-identity. com/story/wissen/webnutzung-deutscher-entscheider, checked on 06/12/2013 (in German)
7. Kaplan, AM and Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media in Business Horizons (53:1), pp . 59-68.
8. Malaska, and M. Nadeem, W. (2012). Examining the Nature of an Online Brand Community as a B2B Brand Communication Platform: A Netnographic Analysis of the CISCO LinkedIn Group. BLED 2012 Proceedings , pp 30-42
9 Weinberg, T 2012 Social Media Marketing: Strategien fur Twitter, Facebook, Koln: OReilly (in German).
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