Written by a Master's Student of the Lund University School of Economics and Management
CRM, Customer Relationship Management, was around the turn of the millennium one of the brightest shining marketing concepts in the business world (Gummesson, 2004). Back then, the general perception and the use of CRM consisted of companies gathering extensive customer data, aiming to manage relationships with their customers. Furthermore, in this scenario the companies were viewed as the main actors and the customers as passive cast members (Malthouse, Haenlein, Skiera, Wege and Zhang, 2013). But the winds of change have blown strongly in recent years and the traditional view of CRM and its alleged success is constantly fading (Wind, 2008).
Scholars including Arman (2014) argue that CRM in its old form has become more and more irrelevant and obsolete, particularly due to the digital progress of society. Moreover, the rise of countless social media platforms provides the contemporary customers with the opportunity to interact with near and dear ones and corporations all over the world. This challenges the traditional function of CRM, since customers are taking an increasingly active role in their relationship with companies. The constant connectivity and the information democracy resulting from social media have empowered consumers and there is a strong likelihood that this phenomenon will continue to grow (Pires, Stanton and Rita, 2006). It can thereby be deduced that B2C relationships are becoming trickier to handle. In the era of social media, classic CRM-strategies are no longer sufficient in building relationships with both existing as well as potential customers. Therefore, CRM needs to adapt to the acceleration of social media in order to survive as a lucrative philosophy and strategy. The question is, how?
This paper aims to discover how CRM needs to evolve in order to remain significant in the era of social media. A case of Walt Disney Company will be analysed in order to understand and explain the ways in which CRM-strategies could be further developed to better suit contemporary society.
CRM is a multifaceted concept, however, the three main perspectives of CRM are; Information Technology, Customer Life Cycle and Business Strategy. Due to the fact that there are various definitions, it is not uncommon that CRM fails to deliver the anticipated results because of divergent views in a company on scope and objectives of the concept itself (Law, Lau and Wong, 2003). It is also prominent that the success stories of CRM are becoming increasingly vague on the ground of lacking innovativeness and proactiveness among companies. According to Arman (2014), social media is the future key to profitable CRM. This is because social media offers simple, immediate means of communication and may help to create closer relationships between corporations and customers.
Pires, Stanton and Rita (2006) argue that businesses have to engage in social media in order to bridge the gap of traditional CRM. Hence, move towards customization using social media platforms for personalized interaction and tailored products and experiences. This era of social media opens up possibilities for dialogue between the parties, and businesses can also detect specific individuals who act as influencers towards their social networks (Arman, 2014). In brief, social CRM parameters from online community activity such as emotional and behavioural data is added to the traditional transactional and demographic customer data. Thus, companies can gain a deeper understanding of customers' needs, lifecycle stage and what actually engages them (Paul, 2012).
Wind (2008) and Pires, Stanton and Rita (2006) claim that the focus should be set on CMR, Customer Managed Relationships, rather than CRM. The authors imply that it is about giving customers the necessary tools to make up their own minds and purchase decisions instead of focusing on actively selling a product or service to them. Thus, in creating relationships, companies need to treat the customers as individuals instead of segments and take a step back and let them engage with companies when they want to (Pires, Stanton and Rita, 2006). On the other hand, Malthouse et al. (2013) state that social media channels have their critical aspects. In the interaction with customers, companies have lost a lot of control over widespread content. Customers nowadays have access to detailed information concerning firms and their products or services. By just a few clicks, customers can express and share their views with the masses. This means that good as well as bad reviews and comments can go viral extremely fast. In this regard, corporate power and control has decreased. Anyhow, companies cannot afford to ignore the technological advancements if they want to stay competitive on the market (Malthouse et al., 2013).
Step into the world of (social) magic – A case of Walt Disney Company
If you ask me, the Walt Disney Company is a business that is in the forefront when talking about new and inspiring approaches to CRM. They are highly engaged in integrating social media platforms into their customer relationship strategies and is therefore an excellent case to analyze in order to find a possible answer to my question.
In recent years, Disney has taken CRM to a whole new level. By bringing together their CRM-system with self-developed online communities the company can generate multidimensional data about their target groups and their expectations and experiences on the Disney resorts. This fusion of data gathering and social media has so far been a successful story. The sales has gone up and above all, the number of returning customers has increased – which is what CRM is basically all about (Paul, 2012). It all comes together through My Disney Experience, which is a social platform customized for all the different electronic devices. The platform makes it possible for customers to plan their theme park experience to the smallest detail. You can do everything from making restaurant reservations, to finding the Disney character greeting locations and times, and sharing plans and pictures with friends and family and link to other social media channels (Disneyworld.disney.go.com, 2015). As Pires, Stanton and Rita (2006) and Wind (2008) advocate, Disney has therefore chosen to turn their CRM to CMR by allowing customers to be in charge of the experience. Disney has simply given its customers the proper tools to address the interaction between them and the company. Further, the My Disney Experience is a way of personalizing the relationship and putting the customer behind the wheel. The power shift caused by the social media rampage could according Malthouse et al. (2013) be harmful for business. But in this case, Disney has chosen to focus wholeheartedly on the customer as active participants, which seems to be the future way of looking at CRM.
According to the Law, Lau and Wong (2003), the main weakness of CRM is that companies often have difficulty finding a common view of what the concept means to them in terms of strategy. Therefore, it is important to set clear goals in the initialization process for how customer relationships should be handled (Paul, 2012). By visiting Disney's various customer-related social platforms, it can be deduced that the company has created a unified image and CRM strategy. This makes customers' ability and willingness to engage online much greater than if you had not been able to find traces of any type of digital relationship strategy (Lure Comments, 2014). It might sound simple, but oh so essential. Arman (2014) also confirms their belief in social media as the new road to profitable CRM. This is because of the communication possibilities and the fact that it can create deeper knowledge of customers as individuals. My Disney Experience gives Disney the ability to bring together transactional information regarding, for example, length of visit and purchases with emotional information concerning social media engagements and what they did once they were inside the Disney resorts (Disneyworld.disney.go.com, 2015). Disney's social CRM systems can thus give the company a close-up picture of their customers' preferences and habits so that they can customize marketing in a better way. Thereby, it can be said that the increased personalization springing from social media platforms will help customers create a stronger emotional connection to the company and feel more in charge of the relationship.
So, how should CRM be further developed and used in order to remain significant in the era of social media? From the analysis above I could conclude the following:
- Let the customer hold the power.
Social media platforms have proven that the idea of passive customers is a delusion. Therefore, companies need to switch perspective from CRM to CMR. The customer is always in charge of which market actors they want to engage in a relationship with, therefore the companies need to give the customers the necessary tools and allow them to be active. Instead of preaching, the companies need to listen and learn.
- Create a social-CRM-strategy across all channels.
To avoid confusion about CRM as a concept, it is important to clarify the objectives of the CRM-strategy in the corporate digital landscape. In order to build credibility and value in the eyes of the customer, having appealing, transparent and comprehensible social platforms with uniformity is key.
- Go emotional.
As a company, it is no longer enough being present on social media. Companies must strive to create likeability, engagement and a personalized approach towards customers. Customers are not just data in a computer system- they are humans with emotions. Take advantage of it.
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