How Social Media Is Changing CRM

It’s big news these days for tech watchers: CRM software stalwarts are rapidly acquiring startups that enable businesses to manage the increasing number and variety of social media platforms better. In May, Oracle (ORCL) bought Vitrue to help it publish and manage social media campaigns, and the company just announced the acquisition of Collective Intellect to help it monitor social chatter. (CRM) purchased social media performance and sentiment tracking company Radian6 last year and now is acquiring Buddy Media, a Vitrue competitor.

What’s prompting the shopping spree? According to Laura McLellan, a research vice president at Gartner (IT), technology spending in the next five years will be directed more by chief marketing officers than chief information officers—a remarkable prediction. I predict those CMOs will be spending much of that money on CRM systems that integrate social media.

That’s good news for businesses that don’t have seven- or eight-figure technology budgets. Big, deep-pocketed early adopters of what is being called Social CRM are paving the way for smaller companies with limited resources to adopt the best new methods quickly, affordably, and with fewer of the missteps that have plagued CRM programs over the years.

It’s not that traditional CRM (telephone, mail, and e-mail communications from company to customer) hasn’t helped businesses that have used it. They’ve employed it to lower their costs and increase profitability, and their customers have benefited by receiving custom offers, product recommendations, timely resolutions to their complaints, and other rewards of data sharing. But there have also been notable downsides to CRM that have made it, according to my colleague Emily Griebel, “like an acronym for a disease.”

Haven’t we all experienced times when poorly executed CRM programs have made us a bit nauseous? Sometimes you could swear CRM means customer relationship manipulation, such as when clever marketers print customers’ names on a postcard, as if to fool them into thinking it was personally addressed. I smirk when I receive a mailer that says, “Just for you, Stephen” or something similarly pithy. Nobody calls me Stephen, other than my mother (and then only when she’s angry). It’s even funnier when it’s addressed to Stphn Mrkey or some other butchered version of the name with which Mom blessed me.

Other times you’d think CRM means customer relationship minimization. That’s never so much in evidence than with automated telephone answering systems. Tone-deaf corporations love them, but I’ve never met a human who doesn’t view them with contempt. Sure, they lower a company’s costs, but they do so on the backs of customers who are forced to navigate their way through a frustrating forest of options, only to end up at a dead end or repeatedly entering their account number because the customer service system isn’t compatible with the customer complaint system, which itself isn’t compatible with the customer service person speaking broken English who finally comes on the line after the customer screams “AGENT!” into the receiver 17 times.

Sometimes CRM seems to refer to customer relationship mechanization. I appreciate Amazon (AMZN) making suggestions based on my reading interests, but the fact that I bought a baby book for a friend doesn’t mean I’m pregnant.

Perhaps most stomach-turning is when CRM refers to cold, hard customer relationship monetization. A few years ago I was struck by the number of mailers I was receiving from the various divisions of a large credit-card company, so started to collect them. I found I was receiving an average of three to five per week—an annoyance to me and an immense waste of money for them. And in the past year alone, one of my favorite brands has e-mailed me 38 times (yes, I’ve been counting). I’m sure the content and frequency of e-mails is somehow based on my purchase activity (or lack thereof), but it comes across as insensitive and somewhat desperate. Good customers want to be courted, not cashed in, and courtship requires careful pacing and rhythm.

That’s the thing traditional CRM systems don’t account for well. Customer relationships aren’t built on information, they’re built on trust. And relationships are reciprocal; I’ll share with you my deep thoughts if you’ll share yours with me. When one party focuses too much on acquiring and leveraging information, trust can’t help but be compromised, if not breached. The problem with traditional CRM is that it turns people into data and relationships into rules of engagement. But technology has no empathy, and a database will never be as responsive as a living, breathing person.