1805 4AA3-8914ENW Social Intelligence Approaches_VP

8/3/2019 1805 4AA3-8914ENW Social Intelligence Approaches_VP

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In a recent paper, we identified four core scenarios(called strategies in that document) and sixteen sub-strategies that drive profitable customer management.

The focus in that paper was on classic customermanagement approaches, but Social Intelligence andMedia approaches are beginning to have a marked effect

on how businesses can manage their customersin both business to consumer and business to business.

This paper suggests some of the best ways to deploy socialintelligence and marketing thinking and tactics to support

core customer strategies.

Social IntelligenceApproaches to Support FourCore Customer Scenarios

Viewpoint paper

DRIVEsocial intelligence to engage with customersin ways that were previously impossible.


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Table of contents

How social is an interruption tothe traditional consumer decision-making journey .........1Social intelligence ....................................................1Customer engagement and business performance ........2The four customer management strategies(scenarios) that deliver profit ......................................2

Winning customers ..................................................3Keeping customers ..................................................3Developing customers...............................................3Efficiency in customer management(reduce cost and increase yield) .................................4Social Intelligence Use Cases ....................................4A service-oriented business architecture tosupport the scenarios and use cases ...........................5Social must be integrated with the foundationsof the way a company does business ......................6

The socially enabled businessmaturity model ............8Conclusion .............................................................9About the authors ....................................................9


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Evangelists see the social revolution as

putting customers at the heart of businesscustomer centricity on steroids if you like.They argue, convincingly, that we can listento, understand, and engage with customers in

ways that were previously impossible.

How social is an interruption tothe traditional consumer decision-making journeySocial media channels enable the brand to extendits personality to engage with consumers on theirterms, when they want, at work and play, throughtheir chosen channels. From a brand engagementperspective, applications or content for entertaining,informing, educating, or providing insight can bedesigned to connect with consumers wherever theyare, whenever they want (fish where the fish are).They can be used throughout the customer cycletomake people aware of the brand, to encourage themto buy, to help them buy easily and conveniently, tohelp them use the brand, or to help manage serviceissues and dissatisfaction. They can be used overthe product cycle, to help design new products, toincrease their speed to market, to build early salesquicker so as to maintain their price premium, or to

understand the functions and features that customersmost like. They can also be used to optimize thecosts of sales, marketing, and service incurred byengaging customers and managing transactions, byproviding new communication channels to replacetraditional media or to make them more effective, ornew distribution channels offering lower transactioncosts, or by enabling peer-to-peer self-help and servicechannels and by listening to issues to reduce the costof failure.

Evangelists see the social revolution as puttingcustomers at the heart of businesscustomer centricityon steroids if you like. They argue, convincingly,that we can listen to, understand, and engage withcustomers in ways that were previously impossible.

Social intelligenceSocial intelligence, the knowledge of customers tharises from combining insights into customers socmedia behavior with the classic customer intelligenarising from conventional marketing and customerrelationship management, allows us to manage retime, or near real-time conversations with custome

listen to their points of view, and deliver contextuarelevant, and engaging communicationsnot justinterruptions to a customers day. And thesecommunications can be delivered increasingly thromobile devices that provide content exactly whenpeople need it. However, to do this, companies hato deal with new data sources and combinations, technologies, new ways of working, new talent, nways to measure, and a new way of thinkinganthis comes at a cost.


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The four customer managementstrategies (scenarios) that deliverprofit

We define Social Intelligence Customer ExperiencOptimization (SI-CEO) as using social marketingapproaches to support the customer managementobjectives, strategies, and tactics that drivecommercial value. The main scenarios (which we acall strategies) are:

Winning customers: customer acquisition andactivation

Keeping customers: customer retention andmaintenance

Developing customers: customer penetration/sof wallet, improving the gross value produced bcustomers

Efficiency in customer management: reducingand increasing yield

Customer engagement and businessperformance

We know from many long-term, well-documentedstudies that improvement in customer engagementhas a commercial value. However, customerengagement arguments may not convince revenue-oriented senior executives to invest. An example of thisis the discussion about the value of a fan. Much hasbeen written on this. Below, we reference one leadingreport from Syncapse that shows that fans are worthbetween US$0$360, averaging about $136. Thesestudies are fraught with technical and methodologicalproblems and also unconvincing to the seniorexecutives. What is needed is a clear descriptionof the commercial benefit of an approach thatintegrates social and classic marketing approaches.This involves building a business case on the likelycosts and impact on revenue and margin. Below, wedescribe how we do this.

There have been a few studies on the impact ofsocial media on customer engagement and business

performance. The study from Wetpaint and the AltimeterGroup confirms that deep engagement with consumersthrough social media channels correlates with betterfinancial performance. The ENGAGEMENTdb study(www.engagementdb.com) showed significantpositive financial results for companies with thegreatest breadth and depth of social mediaengagement. The most socially engaged companiesgrew revenues on average by 18% over the previous12 months, while the least engaged companies sawrevenues sink 6% on average over the same timeperiod. To understand the return on investment foryour specific situation, we must go back to basics.The end goal is not to recruit fans (although this maybe an intermediate goal), but to increase total salesand/or margin.

Recruit more (quantity) Recruit better (quality) Improve activation Manage win-back

Focus on high value prospects/customers Retain marzipan Retain rest Retain value/avoid value decay

Improve cross sales/up sales

Manage UP the valuable tail Increase frequency of spend Increase basket size

Manage cost of sales Reduce cost to serve Reduce cost of failure Improve overall yield

MANAGE

COST

TO SERVE

& YIELD

DEVELOP

KEEP

WIN

1.

2.

3.

4.

$

Figure 1Social Intelligence Customer Experience Optimization


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Winning customersThis strategy focuses on building the customer base,activating customers, and winning back valuablecustomers who have left. The four main sub-strategiesfor achieving this are:

Increase customer numbers (that is, quantity)

Improve the quality of new customers you win

Improve the activation rate (or second order orproduct use)

Increase win-back of lost customers

How social intelligence is changing the game

Few organizations are managing to connect themany pieces of the data that could lead them to moreeffective and efficient marketing investment:

Nielsen has awareness and advertising data, butdoesnt know what you buy

Lifestyle databases know what youve told them butlittle else

Financial databases know what youve bought andwhere youve shopped

Foursquare know where you are, now, and whereyou have been

Retailer loyalty databases know what you buy withthem but not with others

Google knows what youve been searching for

Social sites know who you influence, your friends,what you like and what you are talking about

Cable databases know what ads you see, but notwhat you buy

Mobile telco databases know who youve calledand where youve been

Your own databases store data on interactionsand sales

With this data, we can identify and create like-mindedprospect groupsniche segments or much largercommunitiesand target relevant propositions to themthrough the right media. With the right permissions,we can develop 1:1 communications to valuableinfluencers or high-value prospects. We can learnmore about indirect consumers by transacting directlywith them, through social or owned technologies.

We can use social intelligence to improve media or

connection planning to target marketing investmentmost effectively at prospects throughout their purchasejourney, from prospect from customer (the path topurchase). HP Enterprise Information Solutions SocialIntelligence teams can help you make sense of thisdata to inform your acquisition strategies.

Keeping customersThis strategy focuses on reducing customer attritioand retaining customer value. The four main sub-strategies for achieving this are:

Acquisition, retention, and development of high-value customers (the icing on the cake)

Retention of the marzipan layer (the layer just unthe icing, the high-value customers)

Reduce attrition across the mass of profitable

customersReduce value decay (groups of customers who

decrease their buying amount from the companydo not stop completely)

How social intelligence helps keep customers

Social intelligence analysis can help companies reget to know all or their best customers. Companiecan more fully understand their customers interestand passions, their likes and dislikes, where theyshop, where they congregate offline and online,what they are intending to buy, and what they havbought. If companies have the right permission frothe customer, social media channels enable the brto extend its personality to engage with consumeron their terms, when they want, at work and play,through their chosen channels.

From a brand engagement perspective, applicator content for entertaining, informing, educatingor providing insight can be designed to connectwith consumers wherever they are, whenever thewant. Social techniques can even be used to brinthe physical and virtual worlds together to bringproducts alive.

Social intelligence approaches can be used in verpractical ways: to help manage loyalty programs,instance, or to improve customer service by being just reactive but proactive, anticipating problems, communicating with communities to let them knowpossible issues.

Developing customersThis strategy focuses on getting increased valuefrom all customers. The four main sub-strategies foachieving this are:

Manage up the tail (increase the value of thoslow value customers with higher potential)

Improve cross-selling rates

Increase purchase frequency (number of visits,orders) of existing products bought

Increase basket size (purchase amount) each timsomeone shops


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How social intelligence helps develop customers

Social intelligence can be used to encouragecustomers to buy more and different products, moreoften, and to identify the products and services theymight want in the future, to ensure even greatercustomer development. It achieves this through use ofa much richer and more personal and immediate dataset, including data on what interests customers andwhat they are searching for.

Additional sales can be gained by prompting loyal

customers to buy additional products or services, soavoiding the margin destruction often caused by apoints means prizes approach. Cross-selling oninbound, well established in classic CRM, can beextended to social media.

Social approaches can be used to get offers andsamples to customers more effectively, to thosecustomers who are ready to buy and consideringyour brands.

Promotional activity can be accelerated by combiningreal-time analysis of social data and next-best-action

marketing. Content encouraging customers to buyacross the portfolio can be distributed via socialmedia, increasing the effectiveness of cross-selling.Communities can be created around product ideas orcontent, and retail and other partners can be involvedin developing joint social campaigns to encouragewider range or more frequent buying.

Efficiency in customer management(reduce cost and increase yield)This strategy focuses on reducing the costs of customermanagement relative to revenue. The four main sub-

strategies for this are:

Reduce cost of sale (or cost per acquisition)

Reduce cost to serve (cost of managing customers)

Reduce cost of failure (identifying the key customercomplaint areas and fixing them at source)

Improve yield

How social intelligence helps optimize costs

Social intelligence can help companies optimize oreduce the costs of marketing, sales, service, andfailure incurred throughout the win, keep, develolife cycle. As other use cases have shown, customeuse social channels to find out about, inquire, buy,and advocate brands (impact on cost of sales);communicate and engage with brands they love asolve queries/service issues (impact on cost to servand provide feedback on their experiences (impacon cost of failure). It follows then that integratingsocial and traditional channels will have an impacbudgeting throughout the organization.

In addition, there will be improvements in theprofitability (yield) from new products, for instancefrom reduced new product failures, quicker speedto market and faster sales growth (making the mosof the new product advantage). Fans and advocatlike to evangelize brands they love, amplifying eaadoption messages about innovative channels or products they use. HP Enterprise Information SolutSocial Intelligence will help bring the required dat

together and use it to optimize returns throughout customer and product life cycle.

Social Intelligence Use CasesTCF and HP Enterprise Information Systems aredeveloping an industrial-strength methodology anddeployment mechanism, which any company thatwants to manage its customers better and/or moreeffectively can use. This involves identifying thedetailed use cases that are the main opportunitiesuse social media (and the resulting social intelligeto engage with and sell to customers. Each use ca

directly impacts one or more of the businessscenarios. This list will grow as new ideas andtechnologies emerge and as client engagements rnew possibilities. We use these scenarios to modethe link between customer management activities abusiness performance to show ROIs. The foundatioof most of the uses cases is identifying your customand/or advocates, channels, and partners; listeninthem; understanding them; and engaging them mofrequently and effectively. This is the fundamentalmarketing application of social media channel.


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A more granular level of the Business Services

Oriented Architecture is represented above.

At the top of the pyramid we have the businessuse cases, which is a technology-free definitionof a business process that provides value tobusiness actors, describing whya business processis performed (objective), whatthe process does(workflow), and howit is measured (KPI).

A business use case is formed by a number ofbusiness services. A business service representsan individual step in a business workflow defining abusiness use case. It is supported by a set of functional

services that interoperate in a coordinated andintegrated way.

A business service in turn is executed by one ormany functional services that are defined asreusable self-contained functional software blocks,with mechanisms and control policies governing theirusage. Each functional service exposes a numberof methods, representing the elementary functionscomposing the service.

At the bottom of the architectural stack, there is anenterprise information system, that is, the software

platform enabling the definition, building, execution,and maintenance of each functional service.

Social must be integrated with thefoundations of the way a companydoes businessMany marketers believe that social media andbuilding a fan base (or, worse, earned databareplace conventional CRM and building a databaof high-value and/or influential customers. Some ssocial and CRM as separate, with different teamsdriving two separate strategies. Despite all the talkabout social marketing, social CRM, and the focusengagement programs and participation platfomany businesses still fail to integrate their social a

CRM efforts into one customer management strateA primary reason for this is obsession with technoand the assumption, so common when marketinginnovations are enabled by systems innovation, thplugging in one of the many latest software-as-a-service (SaaS) or cloud-based solutions will transfothe DNA of their company and enable the suddenswitching on of customer centricity and participamarketing program implementation.

Figure 4Business Services Oriented Architecture

Business use case

Business service

Functional service

Enterpriseinformation system

Businessprocess layer

Applicationlayer

Softwareplatform layer


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Figure 5SCHEMA model of customer management TCF Ltd.

Figure 6Social business maturity model

SUSTAINED

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Execution Enablers Foundations

Changing to the new marketing model demands morethan changing technology, although technology thatcan replace legacy, uni-directional, batch-focused,and inflexible operating models is vital. However,in our view, technology is only a small part of theanswer. The main change required is in people andculture, processes, and ways of working. There ismuch talk now about the consumerization of IT(CoIT), which is a step forward, but without the focuson HOW technology will deliver change, they are

likely to have little impact. To make the requiredchange, businesses must become socially enabled.Social enabled businesses (SEB) recognize that thefocus of control of the relationship has shifted tocustomers and that to succeed they must listen to andunderstand customers before responding and conversein an open, two-way, relevant dialogue, ensuringfocus on delivering the best customer experienceacross multiple channels. Companies who do not takethis approach are taking the risk of their customersleading a revolt against poor service and delivery.It clearly makes sense for businesses to listen to theircustomers properly, open up communication channels,build richer profiles through the smart use of sociallysourced data, deliver personalized experiences,and get better at internal collaboration to deliver acustomer-centered business strategy.

One way to view how social is integratedinto profitable customer management customermanagement is via TCFs SCHEMA model. TCF usesquestions about organizational capabilities (coveringour core strategies) to assess just how customer-centrica business really is and, in addition, how close it isto being a socially enabled business that integrates

traditional and well-proven methods of customermanagement with social marketing approaches. At thecore of SCHEMA are a set of key capabilities basedon tried and tested CRM principles that are equallyrelevant in todays socially driven world.

CPGaverage

CPGaverage

Top bank(Australi

Top phar

(US)

Toptelco (UKLevel 1

Basic state

Level 2Emerging but disparate

Time/Scale of change

TCFs maturity model

Level 3Embedded

withgrowingfocus

Level 4Socially enabled

businessc

a b

e

d


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The socially enabled businessmaturity modelOur use of SCHEMA has shown various levels ofmaturity in different sectors. It is early days for manycompanies in this socially enabled world. Figure 4shows a maturity curve with time and perception ofbusiness benefit as the two axis. This is based onour similar study from traditional CRM research.

HP and TCF consultants are working with clients to

understand this curve and identify the challenges andbenefits of maturity.

Early TCF and HP research shows that among reabusinesses, consumer packaged goods (CPG)companies are leading in becoming socially enab(although it is early days in terms of progress)with heavily regulated industries such as financialservices and pharmaceutical slower to adopt sociaapproaches. Many pure web-play businesses in msectors are generally up with the leaders.

Maturity Level Description of maturity state

0 The leadership team is resisting the impact of social media although their customers and employees are using social medin their daily lives. The organization prefers to rely solely on conventional marketing and CRM techniques to manage branproducts, and channels.

1 The organization is dabbling in socialmostly listening . Responsibility firmly sits within a silo in marketing. No corporasenior management commitment exists, and any activity is down to some enthusiasts in the business.

2 There is clear but isolated usage of social, with disparate and tactical objectives focusing on the obvious external uses inreactive service, interaction, and community.

3 The organization is beginning to:

a) introduce internally focused elements and supporting workflow methods to make Level 2 elements more robust (forexample, escalation and closed-loop resolution of support/service, campaign creation aspects, and lead managem

b) use social for internal purposes, for example, project management, ideation cycles, human resources (HR), and builknowledge bases

Use of data is beginning, with serious investigation taking places.

4 There is clear and visible broad and integrated use of social marketing across all areas of the organization, including extcustomer engagement, internal processes, collaboration and analytics/measurement, and working in a coordinated businsystem. Social has a clear, accepted role in driving direct sales, sales through delivery chain, partner selling, and integratcross-channel commerce. The company balances nicely the use of structured and unstructured data.


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ConclusionThis paper has explained the use cases that canbe used to deploy social intelligence and mediaapproaches across the four strategic customermanagement scenarios of win, keep, develop, andcosts. In combination with our previous article, itprovides a planning framework that companies canuse to determine both the scale of benefit that maybe achieved from social approaches and priority usecases, which should be deployed first.

It shows that the deployment of the use cases demandthe provision of four common technology services:listening, analytical, engagement, and digital platformand describes what these services look like. The paperhas explained that a socially enabled approach tomarketing, sales, and service also relies not just ontechnology but on the foundations of the business. TheSCHEMA model shows the areas affected.

About the authorsMassimo Pellegrino

Vice President of HP Enterprise Information SolutioMassimo has deep business and strategy consultinexperience, in particular in financial services,telecommunications, and manufacturing where hemanaged several CRM, data warehousing, andinformation management initiatives. He is also weknown internationally for conference speaking andthought leadership research.

Massimo Iengo

Social Intelligence Solution Lead at HP EnterpriseInformation SolutionsMassimo is a well-known data warehousing andinformation management guru. He worked for maconsulting firms like Accenture and The TechnologPartner, as well as for some large financial serviceinstitutions. Massimo has broad internationalexperience working with customers in financialservices, telecommunications, and consumer good

Neil Woodcock

CEO & Chairman at The Customer FrameworkNeil is one of Europes leading experts and authoin customer management. His background withMobil, Unilever, Accenture, and McKinsey hasprovided him with the knowledge and experienceadvise companies, practically, about how to improbottom-line profit through more effective and efficicustomer management. Neil has co-authored fivebooks, various reports, and numerous articles oncustomer management. He is on the editorial boaleading journals and is an honorary fellow of the He is a regular speaker at conferences, at home a

[email protected]

Professor Merlin Stone

Head of Research at The Customer FrameworkHe is a leading expert in customer management,including strategies and tactics for customerrecruitment, retention, and development and hasbeen a leading contributor to the development of customer management assessment methodologiesfor which The Customer Framework is best knownHis work focuses on improving customer experiencsatisfaction, loyalty and trust, and also the custom

research, data analysis, systems decisions, andsupplier selection and management needed tosupport improved management of customers. He ialso well known for conference speaking and thouleadership [email protected]


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