social intelligence to support four core customer scenarios

8/13/2019 Social Intelligence to Support Four Core Customer Scenarios

1/12


2/12

Table of contents

3 An interruption to the traditional consumer decision-making journey

3 Social intelligence

3 Customer engagement and business performance4 Four strategies that deliver prot

4 Winning customers

5 How social intelligence is changing the game

5 Keeping customers

5 How social intelligence helps keep customers

6 Developing customers

6 How social intelligence helps develop customers

6 Reduce costs and increase yield

6 How social intelligence helps optimize costs

7 Social intelligence use cases

7 A service-oriented business architecture to support the scenarios

and use cases

8 Social must be integrated with the foundations of the way a companydoes business

10 The socially enabled businessmaturity model

11 Conclusion

12 About the authors

Viewpoint paper | Social intelligence approaches to

support four core customer scenarios


3/12

3

An interruption to the traditional consumerdecision-making journey

Social media channels enable the brand to extend its personality to engage with consumers on

their termswhen they want, at work and play through their chosen channels. From a brand

engagement perspective, applications or content for entertaining, informing, educating, or

providing insight can be designed to connect with consumers wherever they are, whenever

they want.

They can be used throughout the customer cycleto make people aware of the brand, to

encourage them to buy, to help them buy easily and conveniently, to help them use the brand,

or to help manage service issues and dissatisfaction. They can be used over the product cycle

to help design new products, to increase their speed to market, to build early sales quicker so

as to maintain their price premium, or to understand the functions and features that customers

like most.

They can also be used to optimize the costs of sales, marketing, and service incurred by

engaging customers and managing transactions, by providing new communication channels

to replace traditional media or to make them more eective or new distribution channels

oering lower transaction costs, or by enabling peer-to-peer self-help and service channels

and by listening to issues to reduce the cost of failure.

Evangelists see the social revolution as putting customers at the heart of businesscustomer centricity on steroids if you like. They argue, convincingly, that we can listen to,

understand, and engage with customers in ways that were previously impossible.

Social intelligence

Social intelligence is the k nowledge of customers that comes from combining insights

into customers social media behavior with the classic customer intelligence arising from

conventional marketing and customer relationship management. It enables us to manage

real-time or near-real-time conversations with customers; listen to their points of view;

and deliver contextual, relevant, and engaging communicationsnot just interruptions

to a customers day.

These communications can be delivered increasingly through mobile devices that providecontent exactly when people need it; however, to do this, companies have to deal with new

data sources and combinations, new technologies, new ways of working, new talent,

new ways to measure, and a new way of thinkingand this comes at a cost.

Customer engagement and business performance

We know from many long-term, well-documented studies that improvement in customer

engagement has a commercial value. But customer engagement arguments may not convince

revenue-oriented senior executives to invest.

An example of this is the discussion about the value of a fan. Much has been written on this.

One leading report from Syncapse shows that fans are worth between $0 $360 USD, averaging

about $136. These studies are fraught with technical and methodological problems and also are

unconvincing to the senior executives. What is needed is a clear description of the commercialbenet of an approach that integrates social and classic marketing approaches. This involves

building a business case on the likely costs and impact on revenue and margin.

There have been a few studies on the impact of social media on customer engagement and

business performance. A study from Wetpaint and the Altimeter Group conrms that deep

engagement with consumers through social media channels correlates with better nancial

performance. An ENG AGEMENTdb study (www.engagementdb. com) showed signicant positive

nancial results for companies with the greatest breadth and depth of social media engagement.




4/12

Recruit more (quantity)

Recruit better (quality)

Improve activation

Manage win-back

Focus on high-value prospects/customers

Retain marzipan

Retain rest Retain value/avoid value decay

Improve cross-sales/up-sales

Manage UP the valuable tail

Increase frequency of spend

Increase basket size

Manage the cost of sales

Reduce the cost to serve

Reduce the cost of failure

Improve overall yield

MANAGE

COSTS

TO SERVE

& YIELD

DEVELOP

KEEP

WIN

1.

2.

3.

4.

$

4

The most socially engaged companies grew revenues on average by 18 percent over the

previous 12 months; the least engaged companies saw revenues sink 6 percent on average

over the same time period. To understand the return on investment for your specic situation,

we must go back to basics. The end goal is not to recruit fans (although this may be an

intermediate goal) but to increase total sales and/or margin.

Four strategies that deliver proft

We dene social intelligence customer experience optimization as using social marketing

approaches to support the customer management objectives, strategies, and tactics that

drive commercial value. The main scenarios or strategies are:

Winning customerscustomer acquisition and activation

Keeping customerscustomer retention and maintenance

Developing customerscustomer penetration/share of wallet, improving the gross value

produced by customers

Managing customers ecientlyreducing costs and increasing yield

Winning customers

This strategy focuses on building the customer base, activating customers, and winning back

valuable customers who have left. The four main sub-strategies for achieving this are:

Increase customer numbers (quantity)

Improve the quality of new customers you win

Improve the activation rate (or second order or product use)

Increase win-back of lost customers

Figure 1.Social intelligence customer exp erience optimization




5/12

5

How social intelligence is changing the game

Few organizations are managing to connect the many pieces of the data that could lead them

to more eective and ecient marketing investment:

Nielsen has awareness and advertising data but doesnt know what you buy.

Lifestyle databases know what youve told them but little else.

Financial databases know what youve bought and where youve shopped.

Foursquare knows where you are now and where you have been.

Retailer loyalty databases know what you buy with them but not with others.

Google knows what youve been searching for.

Social sites know who you inuence, who your friends are, what you like, and what you are

talking about.

Cable databases know what ads you see, but not what you buy.

Mobile telco databases know who youve called and where youve been.

Your own databases store data on interactions and sales.

With this data, we can identify and create like-minded prospect groupsniche segments or

much larger communitiesand target relevant propositions to them through the right media.

With the right permissions, we can develop one-to-one communications to valuable inuencers

or high-value prospects. We can learn more about indirect consumers by transac ting directly

with them through social or owned technologies.

We can use social intelligence to improve media or connection planning to target marketing

investment most eectively at prospects throughout their purchase journeyfrom prospect

to customer.

Keeping customers

This strategy focuses on reducing customer attrit ion and retaining customer value. The four

main sub-strategies for achieving this are:

Acquiring, retaining, and developing high-value customers (the icing on the cake)

Retaining the marzipan layer (the layer just under the icing, the high-value customers)

Reducing attrition across the mass of protable customers

Reducing value decay (groups of customers who decrease their buying amount f rom the

company but do not stop purchasing from them completely)

How social intelligence helps keep customers

Social intelligence analysis can help companies really get to know all of their best customers.

Companies can more fully understand their customers interests and passions, their likes and

dislikes, where they shop, where they congregate oine and online, what they are intending

to buy, and what they have bought.

If companies have the right permission from the customer, social media channels enable

the brand to extend its personality to engage with consumers on their terms, when they

want, at work and play, through their chosen channels. From a brand engagement

perspective, applications or content for entertaining, informing, educating, or providinginsight can be designed to connect with consumers wherever they are, whenever they

want. Social techniques can even be used to bring the physical and virtual worlds together

to bring products alive.

Social intelligence approaches can be used in very practical waysto help manage loyalty

programs, for instance, or to improve customer service by being not just reactive but proactive,

anticipating problems, and communicating with communities to let them know of possible issues.




6/12

6

Developing customers

This strategy focuses on getting increased value from all customers. The four main

sub-strategies for achieving this are:

Manage up the ta il (increase the value of those low-value customers with higher potential)

Improve cross-selling rates

Increase purchase frequency (number of visits, orders) of existing products bought

Increase basket size (purchase amount) each time someone shops

How social intelligence helps develop customers

Social intelligence can be used to encourage customers to buy more and dierent products,

more often, and to identify the products and serv ices they might want in the future to ensure

even greater customer development. It achieves this through use of a much richer, more

personal and immediate data set, including data on what interests customers and what

they are searching for.

Additional sales can be gained by prompting loyal customers to buy additional products or

services, so avoiding the margin destruction often caused by a points-means-prizes approach.

Cross-selling on inbound, well established in classic CRM, can be extended to social media.

Social approaches can be used to get oers and samples more eectively to customers who are

ready to buy and considering your brands. You can accelerate promotional activity by combining

real-time analysis of social data and next-best-action marketing. Content encouraging customers

to buy across the portfolio can be distributed via social media, increasing the eectiveness of

cross-selling. Communities can be created around product ideas or content, and retail and othe

partners can be involved in developing joint social campaigns to encourage wider-range or

more frequent buying.

Reduce costs and increase yield

This strategy focuses on reducing the cost of customer management relative to revenue.

The four main sub-strategies for this are:

Reduce the cost of sale (or cost per acquisition)

Reduce the cost to serve (cost of managing customers) Reduce the cost of failure (identifying the key customer complaint areas and xing them

at source)

Improve yield

How social intelligence helps optimize costs

Social intelligence can help companies optimize or reduce the cost of marketing, sales, service,

and failure incurred throughout the win, keep, and develop lifecycle. As other use cases have

shown, customers use social channels to nd out about, inquire, buy, and advocate brands

(impact on the cost of sales); communicate and engage with brands they love and solve

queries/service issues (impact on the cost to serve); and provide feedback on their experiences

(impact on the cost of failure).

Then it follows that integrating social and traditional channels will have an impact on budgetingthroughout the organization. In addition, there will be improvements in the protability from

new products, for instance, from reduced new product failures, quicker speed to market, and

faster sales growth (making the most of the new product advantage). Fans and advocates like

to evangelize brands they love, amplifying early adoption messages about innovative channels

or the products they use.




7/12

7

Social intelligence use cases

The Customer Framework (TCF) and HP are developing an industrial-strength methodology

and deployment mechanism that any company can use to manage its customers better and/or

more eectively. This involves identifying the detailed use cases that are the main opportunities

to use social media (and the resulting social intelligence) to engage with and sell to customers.

Each use case directly aects one or more of the business scenarios. This list will grow

as new ideas and technologies emerge and as client engagements raise new possibilities.

We use these scenarios to model the link between customer management activities and

business performance to show returns on investment. The foundation of most of the use

cases is identifying your customers and/or advocates, channels, and partners; listening to

them; understanding them; and engaging them more frequently and eectively. This is the

fundamental marketing application of social media channel.

Figure 2 is an overview of the use cases. We believe they are the most important opportunities,

but they will vary by company and market.

A service-oriented business architecture to support the scenarios and use cases

To support the customer scenarios and use cases, we use a service-oriented business

architecture. The services are shown in gure 3 and are described as follows:

Listening services: Various listening techniques can be applied to structured and unstructured

datasets from transac tion, owned channel systems (for example, website, contact center, help

desk), or from social sites and forums. In essence, they are specialized agents that crawl the

external Web and connect to internal information sources to collect the voice of consumers

according to specic privacy rules, internal communication policies, and industry regulations,

as well as IT security standards.

Analytical services: Various analytical services can be applied to the data to identify individuals

and segments, plan how to connect, monitor activities, and analyze results. To analyze text,

video, and calls, semantic algorithms are applied to extract an actionable meaning.

Engagement services: These services are used to manage a dialogue with customers and

prospects through mobile applications, social CRM applications, social network applications,

and games.

Digital dashboard: This is a set of services designed to monitor the key performance indicators

(KPIs) associated with driving customer engagement, revenue, and prot from social CRM activity.

A more granular level of the business service-oriented architecture is represented in gure 4.

At the top of the pyramid we have the business use cases, which is a technology-free denition

of a business process that provides value to business actors, describing why a business process

is performed (objective), what the process does (workow), and how it is measured (KPI).

Activate

inuencers

1.011.00

2.00

3.00

4.00

1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09

WIN

KEEP

Enable

advocacy

Improve

connection

planning

Acquire

high-value

customers

Optimize

owned

assets

Socially

enable F/M/T

commerce

Recruit

through

communities

Promote

social member

get member

Social refresh

of transaction

data

Increase

engagement

DEVELOP

COSTS &

MARGIN

Implement

loyalty

program

Improve

customer

service

Partner

with

intermediaries

Resolve

crises

Merge

physical

products/social

Facilitate

owned

communities

Socially enable

customer

save program

Reward

advocates

Provide

utility

applications

Improve

strategic

account mgmt.

Collaborate

with

colleagues

Manage

event

engagement

2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.1 2.11 2.12 2.13

Provide

contextual real

time prompts

Lower time

between

desire/buy

Increase

category

(portfolio) sales

Increase sales

through

sampling trial

Socially drive

e-commerce

Bundle

products

Social gifting

& member

get member

Integrate

intermediary

approaches

Shop within

shop

3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09

Optimize

communication

costs

Improve

service &

reduce costs

Improve sales

territory

analysis

Increase

efficiency

Sell via

alternative

channels

Reduce the

cost of

failure

Win earned

media

Develop

center

of excellence

Reduce new

product costs

Increase

customer

yield

Improve new

product

yield

Lower the

cost of

risk

Improve

matching of

price to need

4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.1 4.11 4.12 4.13

Resource

empowermentDigital brand

management

Customer

experience

optimization

Product

lifestyle

innovation

Business

areas

Listeningservices

Governance

Digitaldashboard

Engagemen

tser

vic

es

Anal

yti

calservic

es

Cult

ure

Leadership

Or

ganization

Figure 2.Social intelligence Use Cases TCF Ltd. and HP 2011

Figure 3.The service-oriented business architecture

to support the social business strategy




8/12

8

A business use case is formed by a number of business services. A business service represents

an individual step in a business workow dening a business use case. It is supported by a set offunctional services that interoperate in a coordinated and integrated way.

A business service, in turn, is executed by one or many functional services that are dened

as reusable, self-contained functional software blocks with mechanisms and control policies

governing their use. Each functional service exposes a number of methods, representing the

elementary functions composing the service.

At the bottom of the architectural stack, there is an enterprise information systemthat is,

the software platform enabling the denition, building, execution, and maintenance of each

functional service.

Social must be integrated with the foundations of the way

a company does businessMany marketers believe that social media and building a fan base (or worse, earned database)

replace CRM and building a database of high-value and/or inuential customers. Some see

social and CRM as separate, with dierent teams driving two separate strategies.

Despite all the talk about social marketing, social CRM, and the focus on engagement programs

and participation platforms, many businesses still fail to integrate their social and CRM eorts

into one customer-management strategy. A primary reason for this is obsession with

technology and the assumptionso common when marketing innovations are enabled by

systems innovationthat plugging in one of the many latest software-as-a-service (SaaS)

or cloud-based solutions will transform the DNA of their company and enable the sudden

switching on of customer centricity and participative marketing program implementation.

Changing to the new marketing model demands more than changing technology, althoughtechnology that can replace legacy, unidirectional, batch-focused, and inexible operating

models is vital. But in our view, technology is only a small part of the answer. The main change

required is in people and culture, processes, and ways of working.

There is much talk now about the consumerization of IT, which is a step forward. But without

the focus on how technology will deliver change, they are likely to have little impact. To make

the required change, businesses must become socially enabled. Social-enabled businesses

recognize that the focus of control of the relationship has shifted to customers. To succeed,

businesses must listen to and understand customers before responding and converse in an

open, two-way, relevant dialogue, ensuring focus on delivering the best customer experience

across multiple channels.

Business use case

Business service

Functional service

Enterprise

information system

Business

process layer

Application

layer

Software

platform layer

Figure 4.A more granular view of the service-oriented business architecture




9/12

9

Companies that do not take this approach are risking their customers leading a revolt against

poor service and delivery. It clearly makes sense for businesses to listen to their customers

properly, open communication channels, build richer proles through the use of socially

sourced data, deliver personalized experiences, and improve internal collaboration to deliver

a customer-centered business strategy.

One way to view how social is integrated into protable customer management is via TCFsSCHEMA model (see gure 5). TCF uses questions about organizational capabilities to assess

just how customer-centric a business real ly is and how close it is to being a socially enabled

business that integrates traditional and well-proven methods of customer management with

social marketing approaches. At the core of SCHEMA are a set of key capabilities based on

tried-and-tested CRM principles that are equally relevant in todays socially driven world.

SUSTAINED

INCREMENTAL

PROFITABILITY

WIN

KEEP

COSTS

DEVE

LOP

Experience

management

Technolog

y&

system

s

Data

mana

gem

ent

Chann

els

&

media

Ag

ili

ty

&

wor

k

ow

Dire

ctio

n&

leader

ship

People

&

cultu

re

Insight&

planning

Brands&

prop

osition

Mea

sure

ment

Execution Enablers Foundations

Figure 5.SCHEMA model of c ustomer management TCF Ltd.




10/12

10

The socially enabled businessmaturity model

Our use of SCHEMA has shown various levels of maturity in dierent sectors. These are the

early days for many companies in this socially enabled world. Figure 6 shows a maturity curve

with time and perception of business benet as the two axes. This is based on our similar

study from traditional CRM research.1

HP and TCF consultants are working with clients to understand this curve and identify the

challenges and benets of maturity.

Early TCF and HP research shows that among real businesses, consumer packaged goods

(CPG) companies are leading in becoming socially enabled, with heavily regulated industries

such as nancial services and pharmaceutical slower to adopt social approaches. Many pure

Web-play businesses in many sectors are generally up with the leaders.

M at ur it y l ev el D es cr ip ti on of ma tu ri ty st at e

0 The leadership team is resisting the impact of social media, although their customers

and employees are using social media in their daily lives. The organization prefers

to rely solely on conventional marketing and CRM techniqu es to manage brands,

products, and channels.

1 The organization is dabbling in socialmostly listening. Responsibility rmly sits

within a silo in marketing. No corporate or senior management commitment exists,

and any activity is down to some enthusiasts in the business.

2 There is clear but isolated usage of social, with disparate and tactical objectives

focusing on the obvious external uses in reactive service, interaction, and community.

3 The organization is beginning to:

a) Introduce internally focused elements and suppor ting workow methods to

make Level 2 elements more robust (for example, escalation and closed-loop

resolution of support/service, campaign creation aspects, and lead management)b) Use social for internal purposes, for ex ample, project management, ideation

cycles, human resources (HR), and building knowledge bases

Use of data is beginning, with serious investigation taking place.

4 There is clear and visible broad and integrated use of social marketing across

all areas of the organization, including e xternal customer engagement, internal

processes, collaboration and analytics/measurement, and working in a coordinated

business system. Social has a clear, accepted role in driving direct sales, sales

through delivery chain, par tner selling, and integrated cross-channel commerce.

The company balances nicely the use of structured and un structured data.1 Woodcock, Starkey et al. QCIs State of the

Nation IV, Ch. 6. 2006. Contact neil.woodcock@

thecustomerframework.com

CPG

average

CPG

average

Top bank

(Australian)

Top pharma

(US)

Top

telco (UK) c

ab

e

d

Level 1Basic state

Level 2Emerging but disparate

Time/Scale of change

Businessbenefit

TCFs maturity model

Level 3Embedded

withgrowing

focus

Level 4

Socially enabledbusinessc

ab

e

d

Figure 6.Social business maturity model


mailto:neil.woodcock%40thecustomerframework.com?subject=mailto:neil.woodcock%40thecustomerframework.com?subject=mailto:neil.woodcock%40thecustomerframework.com?subject=mailto:neil.woodcock%40thecustomerframework.com?subject=


11/12

1

Conclusion

This paper has expla ined the use cases that can be used to deploy social intelligence and media

approaches across the four strategic customer management scenarios of win, keep, develop,

and manage. It provides a planning framework that companies can use to determine both the

scale of benet that may be achieved from social approaches and priority use cases, which

should be deployed rst. It shows that deploying the use cases demands the provision of four

common technology serviceslistening, analytical, engagement, and digital platformand

describes what these services look like.

A socially enabled approach to marketing, sales, and service also relies not just on technology

but on the foundations of the business. The SCHEMA model shows the areas aected.

Learn more athp.com/services/actionable-analytics


http://www.hp.com/services/actionable-analyticshttp://www.hp.com/services/actionable-analytics


12/12

Rate this documentShare with colleagues

Sign up for updateshp.com/go/getupdated

About the authors

Massimo Pellegrino

Massimo Pellegrino is vice president of HP Information Management and Analytics.

He has deep business and strategy consulting experience, particularly in nancial

services, telecommunications, and manufacturing, where he managed several CRM,

data warehousing, and information management initiatives. He is also well known

internationally for speaking at conferences and thought leadership research.

Massimo Iengo

Massimo Iengo is a social intelligence solution lead at HP Enterprise Information

Solutions. He is a well-known data warehousing and information management guru

who worked for many consulting rms, including Accenture and The Technology Partner,

as well as for some large nancial services institutions. Iengo has broad international

experience working with customers in nancial services, telecommunications, and

consumer goods.

Neil Woodcock

Neil Woodcock is chief executive ocer and chairman at The Customer Framework and is

one of Europes leading experts and authors in customer management. His background

with Mobil, Unilever, Accenture, and McKinsey has provided him with the knowledge and

experience to advise companies about how to improve bottom-line prot through more

eective and ecient customer management. Woodcock has coauthored ve books,various reports, and numerous articles on customer management. He is on the editorial

board of leading journals and is an honorary fellow of the IDM. He is a regular speaker at

conferences, at home and overseas.

Professor Merlin Stone

Merlin Stone is the head of research at The Customer Framework. He is a leading expert

in customer management, including strategies and tactics for customer recruitment,

retention, and development. He has been a leading contributor to developing the

customer-management assessment methodologies for which The Customer Framework

is best known. His work focuses on improving customer experience, satisfaction, loyalty,

and trust, and also the customer research, data analysis, systems decisions, and supplier

selection and management needed to support improved management of customers.

Stone is also well known for speaking at conferences and thought leadership research.

Copyright 20122013 Hewlett-Packard Development Company, L.P. The information containe d herein is subje ct to change without notice. The only

warranties for HP products and servi ces are set forth in the express warranty statements accompanying such products and services. Nothing herein

should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial er rors or omissions contained herein.

Copyright 2013 The Customer Framework

Google is a trademark of Google, Inc.

4AA3-9484ENW, October 2013, Rev. 2


http://www.hp.com/go/getupdatedhttp://www.hp.com/go/getupdatedhttp://www.linkedin.com/shareArticle?mini=true&ro=true&url=http%3A%2F%2Fh20195%2Ewww2%2Ehp%2Ecom%2FV2%2FGetDocument%2Easpx%3Fdocname%3D4AA3-9484ENW&title=Social+intelligence+approaches+to+support+four+core+customer+scenarios+Viewpoint+paper+&armin=arminhttp://twitter.com/home/?status=Social%20intelligence%20approaches%20to%20support%20four%20core%20customer%20scenarios%20Viewpoint%20paper+%40+http%3A%2F%2Fh20195.www2.hp.com%2FV2%2FGetDocument.aspx?docname=4AA3-9484ENWhttp://www.facebook.com/sharer.php?u=http://h20195.www2.hp.com/V2/GetDocument.aspx?docname=4AA3-9484ENWhttp://deploy.ztelligence.com/start/index.jsp?PIN=168M59L2W4H8Z&filename=4AA3-9484ENW

social intelligence to support four core customer scenarios

Documents