How Social Networking Will Change CRM

Social networking is the newest online phenomenon, and it's going to change the way that companies use CRM. Sites like Facebook and MySpace are currently being used primarily for person-to-person social contact, but many of these sites also allow businesses and professionals to build pages to promote their wares and careers. This leads to a phenomenon that the market research firm Gartner calls the "connected enterprise," a new environment under which many B2B sales will inevitably take place.

Adding technology to the natural human desire to communicate enables individuals to participate in more, richer, faster, and denser social networks, according to Gartner's managing vice president, Scott Nelson. "In activities such as marketing it is valuable to find and spend effort on several key influencers that are trusted information sources used by other network participants. Enterprises should work the network and find out where their customers and potential employees are making decisions." This means that tomorrow's CRM systems will need to accommodate and understand the activity that's taking place in a wide variety of online environments.

This is no problem if social networking is taking place through the use of basic Internet infrastructure tools, such as email and instant messaging. Most CRM systems are already linked into email, and most plan to support IM tracking, if they do not already. The problem is when sales professionals start using somewhat more esoteric sites and tools, like FriendFeed, Twitter, Ryze, or Orkut. That's likely to be a trend, according to Nelson, because such networks form an increasing proportion of the trusted information sources that individuals use to make decisions.

CRM systems will need to integrate and accommodate these technologies in order to continue to monitor, track, and measure customer interactions. "As many of these networks are implemented using well understood technical standards, they can be probed and analyzed, opening up opportunities for a new generation of social network analysis and simulation tools," says Nelson.

The widespread use of social networking will force CRM to accommodate and measure the impact of broad issues that take place inside corporations and their cultures. Gartner believes that as IT-based devices and technologies become more personal in scope and application, social issues will become increasingly important to product success. In other words, sales professionals will need to actually participate in the customers' network – and build rapport with them on their own terms – in order to make sales in that environment.

Gartner predicts that by the end of 2010, 15 percent of U.S. and European businesses will have formalized societal trend watching as a corporate discipline, in order to identify and react to major societal shifts.

Nelson believes that companies using social networking to transact business will require anthropological and psychological input to help evaluate how changes in employees' and customers' lifestyles will affect business, according to Nelson. "A connected enterprise must understand the connected society in which it resides," he says. "Most firms wait until societal trends have overwhelmed them before they try to react [and] slowness to respond can cost firms incredibly large sums of money and may drive them out of business all together."