SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for August, 2009

Customer Service Segmentation in a Social World

Posted by Bob Warfield on August 25, 2009

Esteban Kolsky writes a great account of Paul Greenberg’s keynote for CRMe09.  By all means, give it a read to get a sense.  Paul has always done a fabulous job of boiling down what’s really important whenever he writes or talks about CRM.

The part that caught my attention was the discussion of segmentation.  It was only a short paragraph, so I’ll repeat it here:

First, Paul rightly mentioned how each of us want to personalize the experiences, and expect the organization to deliver that. The solution is not to personalize on a one-by-one basis but rather to use segmentation wisely.  And that segmentation should not be done on financial value, but rather on the concept of Referral Value.  I would have spent more time talking about segmentation as critical to the success (which I think it is).

This one got my attention because it goes to the heart of a very sensitive yin and yang Social CRM has to delve in to:

–  We must personalize the Social Experience so it is authentic and compelling.  An un-authentic experience is going to do more harm than good.

–  We can’t afford to personalize the experience for everyone when there are so many.  We have to pick and choose using some segmentation strategy.

These two are at odds with one another, at least they seem to be.  Yet, I am not easily comfortable with the notion of segmentation.  For want of a better word, segmentation just seems deflective.  Recall that deflection is the practice of trying to push customers away so they service themselves.  It cannotes the Bad Old Days of Customer Service.  Deflection is anti-Engagement, and Engagement is the watchword of Social CRM.

I recently went back over one of Paul G.’s posts on creating that personal connection, and I remember thinking, “This is perfect, but how many companies will be able to execute it?”  And then I realized it really doesn’t matter if the company can execute or not.  Companies have become peers of their customers.  If a peer can’t execute they’re soon forgotten about and new peers take their place.  Companies really don’t have a choice but to find a way to execute.  It isn’t that the market is unforgiving (though it certainly can be), it is that the market is indifferent.  It is so hard to get the market’s attention these days through any means but word of mouth that you simply can’t succeed otherwise.

Which brings me back to Esteban’s thoughts of segmentation.  Perhaps there is some sanity there, a way to succeed if only it were executed well and with care and respect for the customers.

Segmentation is all about rationing your available engagement to the places where it will do the most good.  Sorry, rationing is a strong word, but that’s what it is.  If you had unlimited resources relative to your customer’s needs, you would not need to ration. 

Now before we talk further about how to segment, let’s consider that Social CRM does tremendously extend our resources.  My customers at Helpstream tell me very commonly that their agents are able to handle 3 times as many customers as they could before Helpstream.  The beauty is that Social is a one-to-many or many-to-many interaction.  If I close a case for a customer, I have only helped that customer.  If I help someone in a Social forum, I have not only helped that person, but I have created visible public content that can help many others.  At Helpstream we routinely measure that Social Help can be worth as much as 16x more than writing another incremental Knowledge Base article. 

So before you consider segmentation, consider how much more powerful you Customer Service will be if you can convert as much of the effort spent today on cases as you can to Social Interaction in your Community.  Those 3x and 16x Social Force Multipliers leave you a lot of headroom before any rationing is necessary because you already have the resources in place to engage.

That’s a beautiful thing, but let’s continue under the assumption that at some point we still do not have enough resources to achieve the best possible Social Engagement without some sort of triage help from segmentation.

How might segmentation actually work in a Social World? 

In the Customer Serviec 1.0 world, segmentation was based on the value a customer brought to the organization.  Your best customers got better service.  The definition of “best” could be derived from your CRM system through a complex organization-centric equation that weighed factors such as:

–  How much business have they done with us in the past?

–  How much business will they do with us in the future?

–  Are they in a happy state of mind or have there been a series of crises such that we had better tread carefully?

–  Are they an important reference for us?

Interestingly, the last two points are very Social in nature.  Maybe there is hope after all!

Esteban talks about the new segmentation as being based on the concept of Referral Value.  That’s interesting to contemplate.  Perhaps it is a function of Social Reach.  Can our Social CRM system dynamically determine the Social Reach of an individual?  Is there some score based on how many channels they use (blogger, Facebook, Twitter, etc.) and how often they speak?

Here is a crude Straw Man attempt to create a set of Referall Value segmentation criteria.  The idea is to segment based on the avoidance of negative word of mouth and the maximization of positive word of mouth:

–  What is the Social Reach of the person?  (Measured by channels and followers of those channels)

–  What’s their Social history?  How much ink do they have out there?  (Never mess with the United Guitar Man again, people!)

–  Do they comment on products?  Have they commented on our products?  Recently?  How broadly?  Positive or negative?

–  What is their Org Credibility in Face Space?  e.g. Does their LinkedIn profile or our CRM record show they are powerful in the Real World?  They could be a 15 year old kid otherwise.

Of course we should also be grabbing some of the original segmentation metrics (such as how much business they’ve done with us) and blending those in as well.

This is all doable, and ultimately, perhaps essential, though we are some ways from needing it urgently today.  My problem is that while I can engage in the academic exercise, I am still deeply concerned about too little engagement moreso than I am about too much and any need to ration engagement.

Today companies are behind the eightball.  They need to prove good intentions.  They need to over-perform on the engagement front.  Many of the more famous brands from a Customer Service standpoint have made over-performance a powerful tool.  Zappo’s goes to insance levels of engagement.  Nordstrom once refunded a customer for a set of tires even though Nordstrom doesn’t sell tires.  There is that crazy notion again that being successfully Social pays back more than it costs, even in situations like these.  That same unfair advantage of being positively Social works negatively.  The cost of getting a segmentation strategy wrong is very high, and we have not yet clearly established the minimum norms needed for customers that segment low on the scale.  This latter is as important as the segmentation itself and leads to what ought to be the subject of another discussion: 

What are the minimum norms of engagement needed in a Social World?

Posted in business, customer service, Marketing | 1 Comment »

The Web Makes All Ice Cubes Icebergs

Posted by Bob Warfield on August 12, 2009

Ross Mayfield just launched a long but interesting blog post entitled, “The CRM Iceberg and Social Software.”  The gist of it is to talk about how little listening companies do to customers and contrast that with how much power there is to be gained by being social.  Ross is a member of the Enterprise Irregular group I belong to, so his post started some discussion flowing.  Another of our members pointed out that being too social can also be a bad thing.  He liked being able to rent a Hertz car without speaking to a single employee, or going through self-checkout lanes at Walmart.  Moreover, he emphasizes that making every customer interaction a one-off social event is not only not what the customer wants, but it is also outrageously expensive to deliver.

I’m absolutely on board about not wanting interaction lots of times.  I would go out of my way and pay more to use a gas pump with a credit card reader rather than go in and pay a cashier.  Same with an ATM.  BTW, I think the web is the best possible place to do that self-service and things like interactive voice menus are just too maddening.  Some kinds of self-service are too hard and they piss more off than they help.  I’m also on board with the idea that being too social can be expensive to service.  We’ve spent a lot of time at Helpstream working on that side of the equation until we have a system for customer service that leaves our customers way ahead on the ROI front.

However, I absolutely don’t want to throw out the Social Baby with the Efficiency Bathwater.  Vinnie Mirchandani commented on the thread that he would avoid social interaction, “Unless the customer wants interaction.”  Excellent refinement, Vinnie.  I would augment that with, “Unless the efficient minimal customer interaction is not working.”  If I have a problem with my self-service gas pump, I want some social interaction right now.  I’m impressed when the operator gets up out of his booth, walks over, and makes the pump work for me.
The problem is that so many companies have been intent on making customer interaction efficient, that they have forgotten to keep score via customer satisfaction.  They’re cutting expenses by analzing call center metrics without enough regard to what is happening as a result. There is a second problem as well.  Since Ross brought up icebergs, let’s talk icebergs.  The Old School thinks in terms of triage when it comes to customer interaction.  Give the high value customers lots of interaction.  Minimize the cost associated with low value customers.  Assume that we can actually view these customers as some being icebergs (that one will sink the ship if we hit it) and some being ice cubes.
Unfortunately, the web has changed that calculus quite a lot.  Communication between customers and prospects used to be a pretty high friction proposition.  Many markets went out of their way to make it even higher friction.  You have those companies where everything is a total one off, because they don’t want everyone to know what’s going on.  The web, unfortunately for that mindset, gives everyone a pretty darned big megaphone.  Every ice cube can get on Twitter or Facebook, reach out to their network, and start a viral bad mouthing meme that turns that little ice cube into a full blown iceberg.
Suddenly, a random airline passenger can be trouble.  The guy may not be in charge of corporate travel for a Fortune 500.  They may not run even a travel agency.  They may never even have flown first class or overseas.  They are not frequent fliers.  Yet, if you break their guitar, suddenly you have a viral PR disaster on your hands.  What is the cost of the damage that little ice cube of a customer did to your brand?
At the same time, you have a world where surveys indicate people don’t trust companies at all, they barely trust the pundits, and they are turning increasingly to their peers to understand what’s really going on.  They’ve just been taken advantage of too many times as companies preyed on the lack of good communication.  What is the value of being able to leverage the word of mouth of your happy customers to drive more sales?  The reduced friction of communication that the web brings has both the advantage of communicating value much faster, and the disadvantage of communicating negatives more quickly too.
So you can’t just motor along in your big ocean liner, secure that you have enough water tight compartments that even a small iceberg won’t sink you.  There are no water tight compartments.  Any leak fills the whole ship rapidly.  There are also no lifeboats.  Suddenly you need to take care to listen to any customer that might be a problem, if that customer wants to be heard.  You have another choice to make too.  You can force them to go somewhere else to get the word out, or you can welcome them into your own community to talk about it.
Either place is going to be pretty public.  That isn’t a choice you get to make.  But at least if you’re making every effort to welcome their opinion and show them you’re listening, you have a better shot at demonstrating to them (as well as to all the onlookers) that you’re trying to do a good job.  If you’ve been good to your customers, they’ll help you in this social setting to convince the unhappy customer to get happier.
Companies can really no longer afford to compartmentalize Customer Service and customer interaction.  They can’t count on keeping customers and prospects separate either.  That’s a pretty radical paradigm shift.  But it’s why I love Paul Greenberg’s short form definition of what Social CRM is“The company’s response to the customer’s control of the conversation.”  Paul is exactly right, which I guess is why I sometimes hear him referred to as the “Godfather of CRM.”

This loss of control is a scary dynamic that the vast majority of companies have not begun to internalize and deal with.  OTOH, it is a huge opportunity and competitive advantage for those that move ahead of the curve to embrace it while their competitors flounder.

Posted in business, Marketing, Web 2.0 | Tagged: | 1 Comment »