CRM 2.0 or Social CRM for Financial Industry.

Consulting July 2011

CRM 2.0 or Social CRM is a new business approach that extends the current capabilities of the traditional CRM, enabling an institution to have real time conversations with its customers and the market

CRM 2.0 or Social CRM

CRM 2.0 or Social CRM CRM 2.0 or Social CRM is a new business approach that extends the current capabilities of the traditional CRM, enabling an institution to have real time conversations with its customers and the market. Though most an institutions are not fully aware of this fact, the Internet and its evolution towards 2.0 platforms has changed for good the way people relate to one another. Even when the most natural is to watch how our life as customers has been transformed with online services Electronic Banking, Mobile Services, etc., some entities still believe that the relationships with their customers are based on the same usual traditional standards.

Though most institutions are not fully aware of this fact, the Internet and its evolution towards 2.0 platforms has changed for good the way people relate to one another

CRM 2.0 or Social CRM for Financial Industry

Lasting experiences through innovative experiences

Web 2.0 According to Wikipedia, the Web 2.0 is dened as a second generation of web developments that facilitate communications, secure information sharing and interoperability. Web 2.0 enables: Collaboration Community creation Conversation Creativity
CRM 2.0 generated for customer Market- centered social internations
(Outside-to-Outside)

Market reactions on brand or industry Questions & Complaints Market information

Social Services Social Sales

Social Marketing

Market

Customer preferences

Own social contents

Existing Social Media

(Facebook, MySpace, Twitter, LinkedIn, etc.)

ButWhy should the Traditional CRM evolve into a much more Social one? We live in a social world We are inserted in and surrounded by social communities We establish relationships based on more and more virtual conversations We strive to be accepted by other social groups We share our insights with peers and friends We make decisions based on suggestions by those peers and friends We need that our opinions are considered by the community ...and because we are, above all else, social beings

Businesscentered social interactions

(Inside-to-Outside, Inside-to-Inside)

(Corporate blogs, Forums, Social Networks, etc.)

Customer Services Employees Internal social tools

(Internal blogs, wikis, share platforms, social networks, innovation portal, etc.) Monitoring/ Data Mining (Hootsuite, Tweetdeck, Social Metrix, etc.)

Socially empowered staff

According to Wikipedia, the Web 2.0 is defined as a second generation of web developments that facilitate communications, secure information sharing and interoperability

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2.0 Scenario

2.0 Scenario The traditional CRM paradigm is based on the knowledge we have of our customers from specic facts used to generate a unidirectional communication of structured messages for a passive audience. The key components there are institutions, processes, technologies and the analysis of information. But the CRM 2.0 paradigm adds to the traditional approach the building of the relationship and the knowledge of the customer by analyzing the bidirectional interactions (downwards and upwards) and horizontal, collaborative, communityoriented ones, where the essential components are the experiences and emotions of users and communities. The communities or connected groups of peer customers increase the complexity of the customer experience and eventually create a new type of customer -that we could call the Social Customersince the Web 2.0 connects them, encouraging deep changes in their behavior. They currently interact with the entities through their traditional channels and on an online basis by means of making transactions, requiring products and information from channels, such as Home Banking and other mobile applications. However, social networks create a new and completely different environment to connect people. Their experiences both positive and negative- are shared regarding nancial institutions, expectations on the creation of new products and services, among many other aspects; all this results in a new source of valuable information for the Institutions decision-taking regarding client relation management issues. This environment is strengthened while the members of the Y Generation (born 1982 to 1995) not only become part of the workforce, but also represent the new generation of Clients, and their preferences regarding ways of communication and the selection of information sources lead to a wider embracement of these social means. It is estimated that

in the next 10 years, the whole of the Y Generation will be integrated into the global workforce. Their members respond better to entities that are more interconnected and less hierarchical, and which grant a great sense of importance to both work and community. Therefore, it becomes essential for a CRM 2.0 approach to articulate the interaction of communities within the entity (inside-toinside), between entity and customer (insideto-outside), between entity and other entities and among those customer communities happening outside the entity (outside-to-outside).

Under CRMs new social approach, relationships between customers and brand start prematurely and do not end but are under constant feedback. Which features dene the new social customer in Financial Institutions? Uses new online channels and new communications tools Demands more and more secured environments for interaction. Relies on advice given by online friends, acquaintances and even strangers Trusts in online shopping methods Wants to provide feedback on products and customer services and creates virtual communities Expects better online and offline customer experience Reads and writes product reviews and rankings, as well as blog posts Seeks support to connect with like-minded peers Tries to reflect his identity and to be granted some special or differential treatment when he becomes the follower of a brand or institution Uses social networks as search tool (Ex. Twitter, Youtube)

CRM 2.0 or Social CRM for Financial Industry

Traditional CRM approach versus CRM 2.0 approach

Social relationships with customers are much more than just addressing their needs on products and customized services, or than making available customer service channels. The following table summarizes the fundamental changes between the traditional CRM approach and the CRM 2.0 approach: Traditional CRM CRM 2.0

Context

Focus on individual relationships. Messages are the value generators.

Focus on collaborative relationships. Conversations are the value generators.

Channels

Single Customer View, based on the history of operations, stored in the internal information systems.

This single view is harder to achieve, since it includes the need to complement the information residing in internal systems with prole information and behavior in social networks.

Processes

Customer service processes developed from the institutions standpoint. Process-focused: To adapt and optimize processes to support interactions and transactions with the customers.

Customer service processes developed from the customers standpoint. Conversation-focused: To include the conversation factor in order to establish an institution community, capture the new ideas and improve segmentation. It requires the generation of dynamic processes that provide the institution with capability of reaction towards what has been identied in social networks.

Innovation comes from one specialized source within the entity (innovation team). Frontline employees communicate the targeted messages for transactional operations. Organization

Innovation is gathered from all the employees that are closely connected with the end customer and among them via Web 2.0 tools. New skills and roles are required oriented at behavioral and Sentiment Analysis. These roles require the analysis of information and feedback to the sectors involved or immersed in the conversations in social networks. Customers are in the center of the innovation cycle.

 CRM Solutions focused on automating and supporting internal business processes.

Technology

Capture of network information in order to know the customer in his social milieu. Need to include Social Networks tools, both created and managed by third parties, which interact with CRM solutions and meet with existing security standards and regulations in each country. Use of fast and specific monitoring tools that can support internal business processes.

Communication, Image and Brand Reputation

Massive face-to-face client communications depending on Business needs. Segmented direct communications from the analysis of structured information. Image and reputation analysis from traditional market research.

Communication designed and supervised on the basis of the analysis of structured information involving the social traits of the Client. Image and Reputation analysis from metrics accounting for number of followers, type of comment or impressions and influence on the Networks. Need to establish communication in times of crisis or unexpected circumstances requiring timely and wise reactions.

CRM 2.0 or Social CRM for Financial Industry

The new customer behavior patterns demand new strategies, better segmentation, new channels, targeted messages and that organization; technology and business processes are adapted accordingly: CRM 2.0 requires a social transformation of business. Some examples of how an organization may use social channels to support CRM 2.0 processes are provided below.

CRM and entity Processes Social channels Marketing Blog focused on building reputation, written by a senior executive. Focus on leadership. Sales Deals with members of a community, for the acquisition of products and services. Service Capture of comments in the executive blog regarding claims or requests by customers, and to act accordingly.

Blog

Internal Wiki

Platform to share market knowledge that has been collected from conversations with customers.

Shared presentations on sales and common knowledge about new sales leads.

Creation of a knowledge base of customer service procedures.

Video Sites / YouTube

Viral advertising propagated only online, encouraging word-ofmouth reference.

Point of contact to create sales opportunity in another channel.

Publication of educational videos on how to use certain product, extending the user manual online.

MicroBlogging/ Twitter

Messages to announce special offers and discounts. Spreading of viral marketing campaigns, integration with channels like YouTube.

Launching of exclusive product offers for Twitter followers, as a way of looking for new sales opportunities. Focus on the current follower base.

Response to support inquiries and product complaints, monitored by an exclusive team. Focus on all digital customers.

Personal Social Networks / (Facebook)

Spreading of advertising campaigns within the communities of Clients.

Launch of new product and benet campaigns for community members only. Focus on the current follower base.

Resolution of enquiries among community members. Opinion gathering regarding services and products.

New technology, new era

This new scenario where social networks burst into peoples lives and modify the manner they interact as customers with their peers and also with the supplying institutions -, is fostered by the technological explosion in the development of 2.0 platforms. However, platforms alone are not enough to account for the quick adoption of the Web 2.0 and all its applications. The rise of portable technologies, such as intelligent cell phones and other mobile devices with Internet access, enable connectivity from almost any place, under any circumstances, 24 hours a day. Specically, for people or customers of an institution, it means the possibility of interacting whenever or wherever they choose.

Likewise, for the organizations, it presents the challenge of making available a 2.0 CRM channel in order to satisfy the purposes of their current of new customers. By using language and tools specic to these types of media, entities can reach customers that they would rarely nd through traditional channels and listen to and interact with them. Finally, it is unlikely that 2.0 platforms or mobile devices on their own would have led to such fervent development of these types of interactions. But jointly they produce a synergy that enables customers to carry in their pocket or purse an institutions Sales Department or Customer Service, as well as a panel of customers sharing opinions about it.

CRM 2.0 or Social CRM for Financial Industry

Security and privacy

Even though the CRM 2.0 approach is a fact, there are concerns regarding how it works. In this sense, one specic concern has to do with security and privacy, mainly with the difculty of controlling the appropriate and reliable of the information shared and the generated content. Likewise, there are legal and reputational risks with respect to the negative consequences that may result from information leakage or misuse. . Internally, security policies must be adapted to respond to the needs of the changing world and the 21st Century risk factors. In addition, it is necessary to generate a participation policy in platforms 2.0 to train employees and avoid compromising the Clients condentiality and Institutions reputation in these spaces. The employees must be instructed so as to know how to use adequately the new technologies and how to gain more value from them. Externally, in this kind of 2.0 platforms government regulations regarding user privacy must be observed, and the institutions reputation, including its brand, products or services, must be taken care of.

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Multidisciplinary approach

CRM 2.0 framework is immersed within the context of social media and entails a combined effort of key aspects such as:

Strategy

Comunicaciones Communications

Project Management

CRM 2.0

Change Management

Government

Technology

The rise of portable technologies, such as intelligent cell phones and other mobile devices with Internet access, enable connectivity from almost any place, under any circumstances, 24 hours a day

CRM 2.0 or Social CRM for Financial Industry

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Generally, we can identify the following business questions raised in relation to CRM 2.0 framework:

Strategy

Which is the view, strategy and business case of CRM 2.0? Is current social media efforts part of a wider social CRM strategy? Do we know the digital customers and understand their main concerns? Which are the existing opportunities for the creation of value and how are they incorporated into the business imperatives?

Communications

How can customers be engaged to play an active role in the conversation? How should key actors be engaged?

Change Management

How is the adequate adoption and use of social tools promoted? Do we know how sociable the employees are? Does corporate culture encourage fruitful conversations with the customers? What types of training programs should be applied?

Technology

Which social platforms should be used? How is the solution drafted and integrated? Have all security concerns been addressed? Which is the appropriate mitigation measure?

Government

Which are CRM 2.0 risks and how shall these risks be mitigated? Are business processes and rules suited for a social behavior? Who should be involved? What kind of support structure is needed?

Project Management

How is the Social Networks strategy executed? Which is the project roadmap? How is the progress of initiatives measured? How are benefits and return on investment effectively monitored? Is there any Social Network effort integrated into the CRM system?

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In order to answer these questions, its recommended that the problem is addressed with and integrating approach based, at least, on the following disciplines: Strategy and Processes Definition of CRM global strategy and goals Quantitative and qualitative value assessment Cost estimates and financial projections Project planning and roadmap design Organization Assessment of organizational culture and structure Commitment of key actors Change impact assessment End user training and education Communications management Project plan development and execution Technical assessment Selection of the most appropriate platforms Design of functional and technical architecture Implementation management Pilot and system testing Risks Assessment of government, regulations and controls Assessment of implementation risks and security testing Business continuity plan Alignment of government and controls of new systems Alignment of new systems to audit goals

CRM 2.0 or Social CRM for Financial Industry

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Conclusions

Apart from the difculties expressed during the development of the different subjects addressed, it can be concluded that so far the organizations have found it hard to manage the emerging social media mainly due to: (1) disorientation in the face of the revolution generated around these new media, (2) lack of knowledge regarding their scope and technology, and/or (3) distrust regarding its potential value and/or associated risks. Although all these issues must be consider when a new integral CRM 2.0 strategy is set out, it will be hard for the entities to remain on the fringes of social media, since they constitute a reality that came to stay and ignoring their existence will only lead to the advantage of their competitors. Social media are like a Formula 1 car: a valuable tool in the right hands but potentially dangerous in inadequate hands. Social media are useful to guide the experience of consumers. It is the experience that each organization creates and which arouses passions among its clients. Todays language is digital and instant, which offers the possibility of establishing deeper relationships with consumers.

Social networks contribute to the building of relationships and this is why the main motivation of consumers when they connect with the brand is personal and relational rather than transactional. Reasons for which they connect the organization or the brand are the same reasons that make them connect to other people, they are interested in building or strengthening relationships in a funny and amusing way. This is why organizations too should launch an education campaign for their customers, showing that this channel is useful to connect them and emphasizing that the aim is to provide them with an open institution/ customer conversation, real time access to information, the possibility of hearing the experiences of other customers and of learning about special offers, should that be the case. Finally, social media provide consumers with a platform to share experiences, either good or bad, with their virtual communities or social networks. Internet has changed how relationships work by going from the one way era (entity/customer) to a two ways era (entity/ customer and customer/entity), where corporations are expected to respond. Social networks force changes in marketing strategies. Those organizations that earlier rather than later understand this and adapt to this new paradigm will gain an important competitive advantage in the next years.

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Contacts

For more information, please contact: Claudio Fiorillo Consulting Partner S&O Leader Deloitte Argentina and FSI Industry Leader LATCO corillo@deloitte.com Pablo Selvino Consulting Director - S&O pselvino@deloitte.com Sebastin Erlich Senior Consultant S&O serlich@deloitte.com Luisa Erazo Senior Consultant S&O lerazo@deloitte.com

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