Social media upends old rules of customer relationship management

The traditional world of customer relationships is in danger of falling into anarchy due to the internet and impact of social media, according to a new report by IT and management consultancy firm, BearingPoint Ireland. Extracts from the report, Next Generation Customer Management can be downloaded from www.bearingpoint.ie.

'Irish and global organisations need radically different customer relationship management (CRM) models in this new environment,' commented Martin McKenna, Partner, BearingPoint Ireland.

The report says that 'businesses must rebuild their customer relationships from the bottom up. Over time the functions of each contact channel have become confused. This is both costly for the business and lacks transparency for the customer'.

Mr McKenna said 'most organisations are struggling with providing a seamless service because of the abundance of customer contact points from call centre to retail outlets to online forums and social media channels. The IT infrastructure is finding it difficult to keep pace as traditional CRM systems were developed long before the impact of social media.'

The report points out that a large proportion of customer relations has shifted to social media. 'One negative service or product issue can have a whole community discussing it in an instant,' added Mr McKenna.

He added, 'no one is wondering any longer whether the relational web is only a passing fad. Businesses now know that they will have to make room for online communities in their customer relationship strategies.'

He said that while online communities now have a real influence on customer relationships, they also have their limits. 'The fans of a brand may not be satisfied for much longer with chats and forums. They will be looking for a richer experience of the brand. The point of sale is the ideal place for that, provided it is given the means to transcend its transactional role.'

The report predicts that some traditional stores will become more like showrooms. Companies like Apple and Nokia as well as some UK banks are creating a retail environment where consumers can engage with the products in a fuller and more sensory way. The concept is known as 'retail-tainment'. For example, Orange recently opened its first multimedia concept store in the UK featuring a 70-inch cinema style screen.