Knowing your birthday is not enough...

What do companies need to do to become market leaders today?

The difference between regular CRM and social CRM is the ease of accessibility and the ability to reach out and touch your customers in a way that makes them feel special and unique. While traditional CRM requires active efforts on the side of companies and active participation on the side of the customers, social CRM is just a mouse click away. Social CRM, using web 2.0 is reaching out to us as consumers from every social network we use and from every blog post we read. This enables companies to access our opinion about their products much faster than ever. Social CRM is so fast it can even be used by companies in the design phase of new products and not just as feedback on existing products; basically giving companies a perfect sounding board in the form of the same people it will sell the products when they hit the markets.

The ubiquitousness of the internet has made social CRM a strategic tool which is no longer a luxury, but a necessity, in fact missing out on social CRM will lead to destruction of value and loss of market leadership for the companies who choose not to use it.

The perfect example is the company “Zalando” which in 2008 revolutionized the online clothes retail market by changing the industry business model. It chose to focus heavily on social CRM and reach out to its end users without any intermediaries, thus creating a strong sense of belonging in its customers. Within 3 years they became the market leaders in Germany, overtaking traditional competitors, using a superior business model which empowered the consumers. Zalando took the market leadership because its competitors were not fast enough to react to the changes in the market. In a mass consumption market, with current technology leading to very low costs, the best way to differentiate is to make customers think of you when they think of the product – the easiest way to do this is with social CRM. If the existing market leaders in other industries do not learn this lesson quickly, they might lose their leadership as well to young and energetic companies who will put the customer in the center.

With the ease of access to information, consumers want to feel special, and not just as a line of code in the company’s database. Increasing computational power and speed led companies to segment more and more data about customers, trying to get into their heads by quantifying everything about them, when in fact customers crave a human touch from the companies they love. They do not want the customer relations representative to wish them a happy birthday when the time comes because the representative has the information; they want actual human touch when interacting with the company. 

The companies that will act on this insight fastest will be the market leaders in this brave new world.