Social Media and Customer Relationship Management - Case Study Example

Case Study Contents Case Study Contents 2 References 11 Bibliography 12 Executive Summary Internet has become an important medium of communication for marketers. The easy access and wide reach makes internet one of the powerful media for communication. The advent of social networking sites has made the internet even more powerful as a tool for communication. Social media is one such medium which uses the internet as a communication media. Social media uses various internet and web based technologies to convert the information from media into their sociable forms. The study below tries to analyse the concept of social media and their implications. The study takes into account the implications of social media from the context of customer as well as employees. It also analyzes social media as a tool for Customer Relationship Management. The study also highlights ways to implement social media in organizations. It suggests certain guidelines that must be followed by organizations while implementing social media in organizations. Finally an effort is also taken to include the measurement of success of social media with the balanced scorecard approach. Introduction The term “Social Media” generally refers to media dedicated for social interactions. Social media makes use of various online and web technologies to transform the media monologues into their sociable forms. In the contemporary context social media can be appropriately defined as a collection of web based applications which build the foundations of the internet. Social media has come a long way from being an exclusive element of IT domain to everyday social networking sites like Twitter, Facebook, and blogs etc which command a huge reach and can drastically affect a firm’s business prospects. Social media has been effectively used by organizations as a tool for reaching out to their prospective customers. The growth of social media has been largely used by many organizations as a promotional tool. Moreover, with the advent of social networking and blogging sites, social media has become an important means of getting customer feedbacks about their products and services. These days many organizations have a dedicated department that handles social media related issues. Organizations need to frame their social media policies so that it provides them with the ways and means to deal with possible opportunities and threats. The spread and easy accessibility of the internet has taken away the luxury that used to exist when non web based sources were used as a social media tool (Kane, et al., n.d.). The use of social media enables organizations to get valuable feedbacks from the market as well as their employees which are very important considering the fact that most of the business organizations are highly flexible in nature. A recent study conducted by Avande reveals that around 59% of the organizations are yet to implement social media. The study also states that social media has penetrated into grass root levels in most of the organizations (Avande, 2008). This has led the organizations to formulate and implement strategies to handle social media more effectively. Organizations that neglect social media often face problems of functional redundancy, poor service quality arising from operational inefficiencies and loss of internal focus. Social media also gives organizations a platform for addressing customer grievances (Mennecke, n.d.). Social media brings customers and business firms on a common platform thus making it an effective tool for customer relationship management. In addition to framing and implementing policies, organizations must employ suitable techniques so as to measure the success or failure of using social media techniques. Techniques like balanced scorecard provide a fair measure of the success or failure of a social media policy. Social Media and Customer Relationship Management Modern day organizations lay more stress on building customer relationships across all the organization levels which extends beyond geographical boundaries and industries. Social media has the power and potential to change the ways firms build customer relationships. A recent market study conducted by the market research firm Avande reveals that uncertainty, fear and apathy are emerging as the key factors that tend to prevent organizations from formally implementing social media as a part of their business strategy (Avande Inc. 2008). Social media has three aspects of customer relationship management which include use of social media by the employees of the firm towards business communications, use of social media towards integrating firms with their prospective customers and finally using social media to promote Customer Relationship Management. Implementation of social media as a Customer Relationship Management tool enables organizations to provide value addition to the product or service offering as well as to present a useful platform for enhancing customer relationships. Apart from involving customers, firms also need to involve its employees for implementing social media in their organization. Social media is becoming an important platform for prospective employees seeking employment in a particular organization. Social networking sites provide an efficient platform for both current and prospective employees to share their views about a particular organization. (Avande, 2008) Implementing Social Media in organizations In order to frame a policy towards social media, a firm needs to take up the following steps, 1. Formulating a social media policy 2. Monitoring various internal and external online communities 3. Engaging various online communities towards effective adoption and implementation of social media policies. Formulating a Social Media Policy The basic requirement of any organization is to frame a formal policy dedicated towards implementing social media in organizations. The policy should be designed in such a manner which would guide an employee as to how he/she has to interact in various communities (Society for New Communication Research, 2007). The policy should also contain suitable examples which would clearly mention the effects of a bad conduct. There are three important aspects in this regard namely, 1. Transparency and accuracy- This would ensure that all the posts put forward by the employees must necessarily indicate their identities and should not be left anonymous. 2. Accountability- The policy dictates individual responsibility of actions, wherein it would indicate that the beliefs of a particular person are purely personal in nature and does not necessarily reflect the views of the organization. 3. Lawfulness- The policy should also mention the various rules and government legislatures within which the organization operates. Monitoring various internal and external online communities There are various allies and threats that are associated with social media. Tools like Twitter Lexicon etc pose both as threats and opportunity in social media. Firms should also emphasise towards mobilizing internal disputes. Firms should have a dedicated department which would concentrate on the internal policies which includes web conversations on sites like facebook, twitter etc. Engaging various online communities towards effective adoption and implementation of social media policies Organizations must also ensure that social media leads to the creation of a compelling voice that reflects the organizations core mission and goals. Social media should act as a compelling voice for the organization that aims towards addressing customer grievances. Firms like Dell (Dell’s Idea storm) have successfully employed such techniques towards creating a brand value for their organization (Gerald et al., n.d.). Measurement of success An efficient social media policy also requires a tool that measures the success or failure of a policy framework. A balanced scorecard approach serves as an effective strategic management tool for measuring the success or failure of a strategic tool. The balanced scorecard approach supplements the traditional measures which used financial data as the sole source to measure the effectiveness of a policy. The balanced scorecard has led to the inclusion of three more perspectives namely internal business process, growth and learning and finally customers. This has led the firms to use a combination of financial and non-financial tools to measure the success or failure of a particular organization policy (Kaplan & Norton, 2007). The Balanced Scorecard Approach The balanced scorecard approach was first conceived by Dr. Robert Kaplan and David Norton as a tool which was aimed at including non financial factors in addition to the traditional financial factors to measure the success of an organization policy. The use of balanced scorecard as a measurement tool has led to an enhanced focus on results and strategy along with aligning it with the needs of the people. This approach also stresses on improving the strategy and vision of an organization while prioritizing the various initiatives and projects (Balanced Scorecard Institute, n.d.). The balanced scorecard approach takes into account the following perspectives to measure the success or failure of an organizational process. These are namely- 1. Financial 2. Internal Business Process 3. Learning and growth 4. Customer Financial Perspective- This perspective includes all the financial facts and figures which are used to judge the financial health of an organization. The main aim of taking up financial perspective is to ensure that the organization is providing more value to its stakeholders. The balanced scorecard does not tend to undermine the importance of financial data but it encourages organizations to consider certain non financial factors the absence of which might lead to an unbalanced situation. Financial analysis tools like cost benefit analysis, risk analysis provide a clear picture of the financial health of an organization or a business process. (IFMA Foundation, 2009) Internal Business Perspective This perspective refers to the business process of a firm. It helps firms to know whether their product or service offering has met the specified standards. The metrics for this perspective is designed by people having high knowledge of the product or service offering (Balanced scorecard Institute, n.d.) In case of social media, this perspective can be used to find out possible feedback about a product or service offering. Firms would then be in a suitable position as to fix errors if any that may have cropped up in the product or service offering. Learning and growth The learning and growth perspective takes into account the corporate culture and training which are aimed at promoting growth and self improvement. The approach lays more stress on learning over training (Balanced scorecard Institute, n.d.). In case of social media, this perspective assumes high importance considering the fact that a lot of valuable feedback about a product or service offering would be available to firms given the wide reach of social media. Web based sources like Twitter, Facebook provide an easy option where information can be accessed or put forward by any individual. The same applies to information shared by employees with regards to their work culture in an organization. Social networking groups on sites like Orkut, which have wide reach, can have considerable effect on the image of an organization. Organizations should ensure that proper accountability as well as responsibility is maintained by the employees while exercising their opinions in the social media. Customer Perspective Customer perspective is one of the most important aspects of the balanced scorecard approach. The growing competition amongst the market players has led to a situation where organizations can no longer afford to undermine the needs of the customers. The advent of social networking sites has enabled sharing of thoughts and ideas over diverse areas which goes beyond geographical boundaries. Firms like Dell have efficiently used social media as a customer relationship management tool which has led to the creation of greater customer values. Conclusion Firms have traditionally paid less importance to social media but with the advent of web based sources, social media has assumed greater importance. Most of the firms have started framing well defined policies for social media so as to use it for enhancing the value of the product or service offering as well as amplifying the firm’s brand value. References Avande Incorporation. (2008), CRM and Social Media: Maximizing Deeper Customer Relationships, Retrieved August 03, 2010 from http://www.avanadeadvisor.com/CRMsocialmedia/docs/Coleman%20Parkes%20Research%20Findings%20Summary_final.pdf IFMA Foundation. (2009). 2009-2010 Balanced Scorecard. Retrieved August 03, 2010 from http://www.ifmafoundation.org/bsc.pdf Mennecke, B. (No Date), New Collaboration Tools and Social Media Strategies for the Organization of Tomorrow. Retrieved August 03, 2010 from http://www.eng.iastate.edu/aciee/MenneckeNewCollaborationTools.pdf. Professional and continuing education: University of Washington. (2010), Certificate in Social Media Technologies and Implementation, Retrieved August 03, 2010 from http://www.eng.iastate.edu/aciee/MenneckeNewCollaborationTools.pdf. The Balanced Scorecard Institute. (No Date). Balanced Scorecard Basics. Retrieved August 03, 2010 from http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx. The Society of New Communications Research (2007). Best Practices for developing & implementing Social Media Policy. Retrieved August 03, 2010 from http://sncr.org/wp-content/uploads/2008/09/sncr-social-media-policy-best-practices.pdf. Bibliography Niven. (2006). Balanced Scorecard step by step: maximising performance and maintaining results John Wiley and Sons. Postman. (2009). SocialCorp: social media goes corporate. 2nd ed. Peachpit Press. Zarella, (2009). The Social Media Marketing Book. OReilly Media, Inc. Read More