Friday, September 24, 2010

Role of Social CRM & Its Impact on Lead Generation in B2B Sales

Thanks to Carolina Business Connecton and Michael Rodriguez, Ph.D. Assistant Professor of Marketing Elon University For access to printer friendly version CLICK HERE

Introduction – Overview of Social Media
The phenomenon of social media use has exploded in the last few years. According to the Cone Business Study 60% of Americans use social media, with 59% of social media users interacting with companies on social media sites (2008). The study also found that 93% of social media users feel companies should have a social media presence. According to Forrester Research, social media spending will grow from $716 million this year to more than $3.1 billion in 2014 (Bunzel 2010).

Social media technology, such as Linked-In, Facebook, and Twitter, has enabled customers to express their feelings of a product or service they have purchased. With this feedback, businesses can improve decisions on how to serve clients and create more informed solutions, thus increasing customer loyalty (Myron 2010). Social media, also known as Social CRM, is still working its way into business to business (B2B) sales (Lager 2009).

Results by ES Research Group (2009) show that only a small percentage of sales professionals use social media tools in their sales process.

The purpose of this article is to present some leading thoughts on utilization of Social CRM and its potential role in B2B sales. We then highlight some of the challenges sales professionals face in the current environment and discuss best practices in integrating Social CRM in a B2B sales process.

Challenges of B2B sales
Business-to-business (B2B) sales face a number of challenges in today’s environment: a slow economy, increased competition, complex sales cycles, and qualified, lead generation. The B2B sales process can be viewed as networks of relationships of both internal and external contacts (Gummesson 2004).

One of the challenges in B2B sales is not only discovering the decision makers within the network of external stakeholders, but also finding the right type of clients through prospecting efforts. In Heinonen and Michelsson’s (2010) study on creating customer relationships, their findings indicate prospect initiation is more challenging and is significantly different between Business-to Customer (B2C) and B2B relationships.

Prospecting, the first of the seven-step classical approach to sales (Moncrief and Marshall 2005), is the most important first-step of the sales cycle. Sales organizations lose customers every year for a variety of reasons and there is a constant need to expand the customer base by building the sales pipeline (Jolson and Wotruba 1992). Sales professionals need to capture detailed information on prospective clients in order to gain a better understanding of their needs, discover key buying influences, and understand their buying process.

Once all the information is obtained, the next and equally challenging step is to qualify the prospect. By qualifying prospects, sales firms can focus on ideal clients that fit their business model and, as a result, may minimize time wasted on less than ideal customers and decreasing the sales cycle time.

Sales-intensive organizations have invested in state-of-the-art customer relationship management (CRM) solutions, to help manage prospect information and improve customer relationships in order to increase sales force productivity. Though past research has supported the impact of CRM on managing client information and managing relationships, CRM technology does not assist with the first most important step of the sales process –prospecting.

Social CRM may benefit the B2B sales process because this new approach of social media seeks to route communication, influence dialogue, and connect sales professionals to firms and individual who are already interested in a firm’s product or service. In other words, using content to pull in interested parties qualifies organizations as prospects.

This new era of sharing content and creating conversations results in greater engagement with the customer and, in turn, means creating deeper, meaningful relationships with people and the community

Utilizing Social CRM in B2B Sales
Business-to-Consumer (B2C) sales is defined has being more transactional and also as having a shorter, more straightforward sales cycle (Shih 2009) as compared to B2B sales. For commoditized products many companies may focus more on marketing efforts than on a sales strategy. One thing both B2C and B2B sales share is that customer engagement first starts with mutual trust. Trust is especially important for higher-priced, more complex items. A salesperson’s relationships and expertise play a much bigger role in the B2B sales cycle. It’s important to remember that though sales people are dealing with entire organizations in B2B, these organizations are made up of individuals who are key decision makers, from the gate keeper to the end user to the person who signs the check.

With every step of the sale cycle, the sales professional must first build credibility with each of these individuals. Clara Shih, author of The Facebook Era, explains sales professionals can utilize Social CRM tools to “accelerate the process of building trust” (2009, p. 65). Similar to customers sharing reviews on books or restaurants on sites such as Amazon.com or Zagats, social networking sites are becoming a common place for business professionals to share product information as well. More professional use of Social CRM tools, such as LinkedIn to provide online testimonials and recommendations for other business professionals to review and share. Organizations can also raise brand and product awareness through Social CRM. Founders Insurance Group, a Connecticut-based insurance organization, for example launched a multipronged, social media campaign to build its company profile.

Cindy Donaldson, director of marketing and sales, started a blog, launched an e-newsletter, and created both a Facebook page and Twitter account to share information with targeted organizations. By raising brand recognition and product awareness, Founders' social media campaign resulted in a 20% increase in sales within one year (Baldwin 2010).

Wang (2008) noted that when peers and experts make recommendations it builds attitudes in consumers’ mind. Once a positive attitude is formed it will directly support behavior intent on the part of the individual. Thus, Social CRM can also be utilized in the first step of the sales process -- prospecting. Social CRM can be used to qualify leads early in the sales cycle by researching the profile of the ideal target prospect (Shih 2009). Facebook and LinkedIn provide detailed information on a prospect and enable sales to share information of their products that would greatly increase the chance of being a better fit for the prospective client. Knowing more about the prospect makes the first call less invasive since the interaction and pitch are more targeted to the prospect’s profile.

Aster Data Systems, a technology solutions firm based in Silicon Valley, for example, used LinkedIn to dramatically grow its business. Senior management asked all employees to tap their social networks for prospects by searching for the words “data warehousing” in their contacts’ title or functional expertise. Within months, Aster Data Systems was able to identify and qualify those who may be interested in their database solution and successfully signed more than a dozen B2B clients (Shih 2009).

Best Practices of Implementing Social CRM
Adding a Social CRM strategy is critical to doing business in today’s conversation-based economy, especially when prospecting for the ideal B2B customer. With the growing use and popularity of social media technology, a Social CRM strategy will become a “must-have” for many B2B organizations. Social media, as an extension of traditional CRM, requires planning in order to make it an effective part of a firm’s sales strategy.

The following are some of the best practices on how to implement Social CRM in B2B sales.

First, pinpoint where it can help improve interaction with clients. Many firms, for example, have created white papers on important topics to use as an enticement to get a prospect interested in their product or potential solution. The target here is primarily attracting new customers, therefore organizations should write about what other organizations want to know and publish information to pull in people, not intercept them as they go about their business.

Second, businesses need to think differently of how they communicate with prospects and customers. Lager (2009) suggests creating a two-way conversation on the white paper vs. mass emailing documents to a prospect database, a "pull" strategy versus a "push" strategy. For many firms, this fundamental shift away from a “resource allocation” perspective towards a “resource attraction” outlook will prove difficult, or require investments they are unwilling to make, notably time. However, organizations can accomplish this by coordinating webinars between the firm and prospects in order to share ideas on a specific topic and create a conversation. Webinars provide a means whereby customers can interact via social technology, enabling “them to feel like they have immediate and direct access to the company” (Lager 2009, pg. 32). Webinars are also a powerful tool in distributing important content and attracting prospects that are seeking specific products or services.

Third, companies can engage clients in conversations via their own websites and blogs. Firms need to be able to get out of the typical approaches and “feel comfortable with being a participant in conversations with social customers, and be ready to let them decide where the conversation goes” (Leary 2008, pg. 7). Social CRM prospecting will require posting in order to engage others and create a more in-depth opportunity for both parties. This is engagement well beyond having an email address or contact number to call. Today’s customers need to interact and engage businesses via other means of communication.

One more recommendation might include discovering what your current customers are doing in social media. What Twitter accounts or blogs are they following, personally or collectively? A firm can develop direct relationships with influential bloggers who can help share information with prospective clients. “It’s important to tap into the valuable information your best customers can provide you. Not only can they help you understand how they are currently using social tools but what they are using those tools for” (Leary 2008, p. 7).

Fourth, as with the CRM phenomenon, it is important to be patient when implementing a Social CRM initiative. When firms started spending hundreds of thousands of dollars on CRM technology, they expected increased sales, revenue growth, and market share overnight. Businesses must learn from the past and know Social CRM will take time. Firms need to understand the tools available to engage and interact with customers. Often people start out being voyeurs, looking for a non-interactive or non-personal experience because they are engaged in search inquiries. However, if satisfied, these individuals will often move towards personal and interactive communications that will facilitate education on the part of the consumer. Through interaction, organizations can provide vital information to prospective buyers and build credibility within a community. As a result, not only will the social community grow but the opportunities to generate more sales will as well.

Fifth, it is very easy to get excited about the possibilities of Social CRM and the Web 2.0 phenomenon but it is important to keep in mind that Facebook and Twitter are not replacements of traditional CRM but an extension of it (Leary 2008). Traditional CRM activities such as accessing customer information, tracking sales activities and managing sales processes are the foundation for building and managing the relationship with the customer. Social CRM adds a new dimension by recording the interaction, and conversation, with the client. Organizations need to capture the most relevant and valuable information from social media and integrate with the firm’s current CRM workflow. Companies should look to add new fields or modules within their existing CRM to track and store social media interactions such as tweets, Facebook, or LinkedIn updates. Capturing this type of information will enable sales departments to track new leads, opportunities, competitors, or key influencers, and potentially leverage these connections in creating new business.

By making Social CRM an intricate part of the marketing and sales strategy, companies will develop deeper relationships with customers, increase collaboration via the two-way conversation, gain incredible customer insight, and as a result achieve a true 360-degree view of their customer. In the end, social media isn’t about you, it’s all about them.

About Michael Rodriguez
Michael Rodriguez is Assistant Professor of Marketing and teaches Professional Selling, Principles of Marketing and Customer Relationship Management courses. He earned his Ph.D. in Technology Management from Stevens Institute of Technology, where he won Most Outstanding Dissertation Award in 2009. His research interests include Customer Relationship Management, Sales Leadership and Sales Management. Dr. Rodriguez has been published in the Journal of Selling and Major Account Management and International Journal of Innovation and Business Research. He has also developed and facilitated sales training programs for corporate clients. Prior to joining Elon, Dr. Rodriguez worked on Wall Street for 14 years selling market data and trading platforms to investment banks, asset managers, and hedge funds.

Koury Business Center 249
(336) 278-5942
mrodriguez4@elon.edu

Michael Rodriguez, Ph.D.
Assistant Professor of Marketing
Chandler Family Professional Sales Center
Love School of Business, KOBC 249
Elon University
Elon, NC 27244
Office: 336-278-5942
mrodriguez4@elon.edu

What is your best tip for Social Media CRM?





Article References
Baldwin, Heather (2010), “The ROI of Social Media," Selling Today. http://www.sellingpower.com/content/newsletter/article.php?ia=9078, June 14th.
Bunzel, Tom (2010), “The Best of Both Worlds: How to Effectively Leverage Social Media Relationships with Real Time Collaboration Tools," Webinar, April 14th, 2010.
ES Research Group (2009), “Survey Results: Do The New Social Media Enable B2B Selling?”, ESR/Insight, ESR Research Library, pp. 1-25.
Gartner Group (2010), The Gartner CRM Vendor Guide, Webinar, August 13th.
Gummesson, Ever (2002), Total Relationship Marketing, Butterworth-Heinemann/Chartered Institute of Marketing, Oxford.
Heinonen, Kristina and Thomas Michelsson (2010), “The Use of Digital Channels to Create Customer Relationships," International Journal of Internet Marketing and Advertising, Vol. 6, No. 1, pp. 1-21.
Jolson, Marvin A. and Thomas R. Wotruba (1992), “Prospecting: A New Look at this Old Challenge,” Journal of Personal Selling & Sales Management, Vol. 12 (4), 59-66.
Lager, Marshall (2009), “No One’s Social (Yet)," Customer Relationship Management, June, p. 29 – 33.
Leary, Brent (2008), “Social CRM: Customer Relationship Management in the Age of the Socially-Empowered Customer," A CRM Essentials, LLC White Paper, October, p. 1 – 9.
Moncrief, William C. and Greg W. Marshall (2005), “The Evolution of the Seven Steps of Selling,” Industrial Marketing Management, 34, 13-22.
Myron, David (2010), “Embracing Social CRM, Engage Your Customers, Don’t Manage Them," CRM Magazine, Webinar.
Sellingpower.com, April 2009, http://www.sellingpower.com/content/newsletter/article.php?ia=3057.
Shih, Clara, (2009) “The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff”, Boston, MA: Prentice Hall.
Wang, Alex (2008), “Consensus and Disagreement between Online Peer and Expert
Recommendations," International Journal of Internet Marketing and Advertising, v4(4), 328- 349.
Warfield, Bob (2009), “A Social CRM Manifesto: How to Succeed with the CRM Virtuous Cycle”, Webinar conducted by Bob Warfield, CEO of Helpstream, November, 2009.