Groupon is *Not* The Anti-CRM

I saw a blog post in CRMOutsiders written by Chris Buchholtz yesterday titled “Groupon: the Opposite of CRM” that essentially stated that “Groupon is the anti-CRM” and makes for undesirable customers.

I strongly disagree – Groupon is the anti-CRM only if companies do a poor job of managing the consumer and process.

For the uninitiated, Groupon is a locally-based group buying site that combines the power of crowds to deliver daily deals offering up to 50% off services and products.  According to the Groupon ‘tote board’, more than 46 million offers have been purchased saving consumers $1.9 billion.  Companies participating in Groupon offers typically split the offering price 50/50 with Groupon – which means that an offer that is used will generate about 25 cents on the dollar to the offering company.

While there are many consumers who use Groupon solely to get good deals, there are many things that a business can do to keep it from becoming an anti-CRM experience.   By using standard customer relationship best practices, introducing consumers to your brand and products can be a profitable and repeatable experience.  Essentially, the key is to turn Groupon into a very targeted lead generation tool that differs from online ads because you actually get to interact with a new consumer to demonstrate why they need your product or service.

  • Gather data – While Groupon will not share email addresses with you, that does not stop you from getting consumers to sign up for your email or newsletter list.  Tell them about your Facebook fan page or Twitter feed.  Use every effort to get the consumer to share information with you as part of the ‘deal’ that you are providing them.
  • Upsell – You are not limited to just selling the Groupon offer to the consumers who are using the service.  Show them other options and how other products or services will enhance their purchase.
  • Engage – As with any customer interaction, use the Groupon experience to learn more about your customer and start developing a relationship.  Ask them questions, have them share their experience with their friends and social networks, get them to share additional information and learn how you can serve them better in the future.
  • Train your staff – If you are going to use Groupon, you need to make sure that all of your frontline employees understand the process and the objectives of the offer.  Give them tips and tricks to gather data and upsell.
  • Leverage the buzz – Groupon can generate significant buzz for your brand so make sure that you can leverage that buzz on your website, Facebook page and on other social media outlets such as Twitter.  For some companies, the buzz by itself is worth the effort and expense.

Groupon may not be for all businesses, but it can be worthwhile if CRM best practices are followed.  In the same vein, I also found several other resources that have great tips for getting the most out of Groupon:

To learn more about Groupon for your business, visit the Groupon Works section on their website.

I “Heart” CRM (and Always Have)

I Heart CRM

I have been involved with customer relationship management in one form or anothe for more than 20 years.  My journey started when I was analyzing customer profitability (and building customer profitability systems) for large banks when I was at First Manhattan Consulting Group and continued into my days with software provider Treasury Services (TSC).  At a TSC customer event in 1997, I even met Martha Rogers when we hired her as a speaker while she was beginning to ride the wave of 1-to-1 Marketing with Don Peppers. When Treasury Services was acquired by Oracle, I moved into a product strategy role within Oracle’s CRM Development group and focused on marketing automation and analytical CRM.  Since then, I have spent significant time launching and managing communities, and getting immersed in social media.  For me, this completes the circle – which makes sense because true customer relationship management has to encompass both community and social media (or social networking).

While thinking about my early days in CRM, I began wondering about the terms that have been used to describe the phenomena of managing customer relationships.  For fun, I looked at the Google Search Timelines to get a rough idea of how various terms are growing (or fading) in popularity.  The terms I searched on included ‘traditional’ terms such as CRM, customer relationship management and 1-to-1 marketing, and the more ‘contemporary’ terms of customer experience management, social CRM, voice of the customer and CRM 2.0.

CRM and Customer Relationship Management returned the largest number of results but they along with 1 to 1 marketing are declining in volume and relevance.  On the contemporary side, both customer experience management and social CRM are on the rise (especially in the last year or two) while voice of the customer and CRM 2.0 seem to have peaked quickly and are in decline already.

Personally, I think customer experience management is the right term that should be used by the industry as companies need to ensure that their customers have the best experience wherever and however they choose to interact — but I can also see the merits of using social CRM as a complementary term too.

Below are screenshots of my Google Timeline Searches:

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While that was a fun exercise, the bottom line is that customers rule now more than ever and that it is now much easier for customers to ‘demand’ a better experience because they know that they will be heard (at least by smart companies who value providing a great customer experience).

In fact, there was an interesting survey that I “bumped” into while I was on Slideshare today.  A copy of the RightNow-commissioned survey insights are included in the Slideshare presentation below or you can find the entire report on the RightNow website.  The insights are not surprising – customers expect great service, they will share good and bad experiences with their friends and with people they don’t know, and they will pay more for great customer experiences.

What’s Different About Social CRM?

Nine years ago, I wrote an article titled “Where is the ROI in CRM”.  At the time, I was working at Oracle as a product strategist for their CRM (customer relationship management) solution and  was a big proponent of analytic CRM.  Analytic CRM is an approach for analyzing the profitability of customers (either current or lifetime value -LTV), and  then segmenting customers based on on their contributions.   At the time, Oracle was one of the few vendors who could actually deliver a complete customer profitability and analytic CRM solution.  Alas, I was a little ahead of my time as most companies didn’t really care about customer profitability before and during the booming dot-com era.

From the studies I did in the late 90’s for the financial services industry, customer profitability definitely followed the 80/20 rule (also known as the Pareto Principle) and in some cases, it was even worse than that ratio.

My article focused on the three simple things that companies could do once they were able to conduct a value-based customer segmentation:

  • Better customer management
  • Targeted selling
  • Focused retention efforts

My conclusions at the time were:

In a nutshell, companies need to build a strong foundation of customer intelligence which must include detailed customer profitability, data mining and predictive modeling; they need capable marketing tools to measure and manage interaction programs; they need people with strong marketing and analytical backgrounds to plan and execute their sales, up-sales and retention programs; they need to be able to manage and distribute customer intelligence to those who need to transform it into action; and, ultimately, they need to tie this customer knowledge into all customer-facing applications.

With the explosion of social media websites and tools (such as Facebook, Twitter, LinkedIn, Yelp and others) over the last year or two, people are starting to talk about a combination of social media and CRM called social CRM.

For example, the following graph from Google Trends shows the growth of the term “social CRM” over the last 12 months.  Before January, almost no one was talking about social CRM.

Worldwide Traffic Growth of term - Social CRM - from Google Trends

Worldwide Traffic Growth of term - Social CRM - from Google Trends

So what’s different about social CRM?

Basically, the customers are now in charge and expect to be part of the conversation.  Pete Blackshaw wrote an interesting book last year called “Satisfied Customers Tell 3 Friends – Angry Customers Tell 3,000” that sums up the dilemma.  While the title is catchy, I am not sure if the metrics are exactly accurate.  In any case, companies must listen to both satisfied and unsatisfied customers because they are being heard and can have a significant positive and negative impact on your brand.

Here is my updated social CRM advice:

Monitor conversations – If your company is not  monitoring the social media conversations, you are already a step or two behind.  It is imperative that all companies start to listen and plan to act on what their customers are saying over the Internet.

Selectively interact with customers – Companies need to let customers know that they are being heard which means that companies need to develop a plan for action and make someone responsible for making it happen.   For some companies, it may be difficult to respond to or participate in every conversation – but that should not stop you from at least responding to the most positive and negative comments.  In some cases, you may want to even ignore some negative comments as you do not want your conversations to devolve into a mudsling match which could cause more negative PR.  Ideally, you will want to prioritize customer interactions based on a combination of customer profitability and customer influence.

Develop new metrics – If your company already uses customer profitability or LTV, then you are a step ahead.  Then you just need to develop new metrics to merge customer profitability or LTV with some measure of customer influence, reputation or voice.  If your company does not have profitability, LTV or customer influence metrics, then you are really behind the eight-ball.

In case you want to explore this topic further, here are some links to resources and blog posts about social CRM:

Social CRM – Not Your Father’s Customer Relationship Management – a blog post by Brent Leary.

The Future of Twitter: Social CRM – a blog post by Jeremiah Owyang.

The Social C.R.M. Iceberg – a blog post by Ross Mayfield.

Enterprise Irregulars Join Social CRM Fray and Time to Put A Stake in the Ground for Social CRM – 2 blog posts by ZDNet’s Paul Greenberg.

Managing Customers for Profit: Strategies to Increase Profits and Build Loyalty is an academically focused book by V. Kumar that provides scientific insights to calculating profitability including referral value.