Impact Of Social Networking On Customer Relationship Management Marketing Essay

2909 words (12 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Abstract-Dealing over the Internet is becoming extremely important. Now the organisations have a tremendous opportunity through using the internet by specifies how to increase revenue and how it can reduce the cost of sales through using the Internet power. Internet at the present time is not just an additional business channel, but even more, it is a strategic business channel through which organisations can showcase their products and services.

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E-Business Relationship Management, Customer Relationship Management is managing of all customers and business partners through the Internet and social networking. It is not anything else but the management of customer relationships, which contains two of the scenarios, Business to consumer scenario and Business to Business scenario.

Customer Relationship Management is the strategic process to put the customers in the middle of the business world. CRM is the solution that will give the organisation all the necessary information for successful managing the customers.

Index Terms-Customer relationship management, E-business, Social networking.


THE Social community sites have now become available to the mainstream and individuals as from over the world have adopted this new phenomenon in the making and sharing of content. When this phenomenon started, the small online communities were the leaders of social community sites and are partly responsible for their extraordinary growth. Nowadays, social community has become one of the most popular applications on the Internet since the burst of the dot-com bubble (Chan, 2007). Also many social community sites surpass even the great Google in page hits in 2006. In addition some social community sites are targeting the business community. This tendency makes viable new business models that are semi-private and by subscription only. New e-commerce benefits to the side, the popularity of these sites have seriously heightened the threats of criminal elements, such as predators, hackers and copyright violators lurking in them.

Introduction to CRM in the context of e-business

Organisations are facing rapid paced changes in their business environment and this change relates to evolving customer needs, evolving technologies for meeting customer needs. Change is the only constant in an organization’s life (Drucker, 1992).

using technology able the companies to applied the automation in trading area this new technique leads the markets to create new policy to customer relationship management in old day’s markets used face to face trading that’s mean you should be in the store and the body language and speaking with the worker will motivate you to buy or not, put in the now trading approach no need for being in hand, it’s the on-line business method.

Now by changing the over all paying method from physical to virtual that’s mean you should change your CRM policy and create now aides to managing customer relationships by using technology in e-business.

Customer relationship management has many definitions and that’s referred to the researchers or organisations view; Customer relationship management is neither a concept nor a project. Instead, it’s a business strategy that aims to understand, anticipate and manage the needs of an organisation’s current and potential customers. It is a journey of strategic, process, organisational and technical change whereby a company seeks to better manage its own enterprise around customer behaviours (Brown, 2000).

In general from the definitions, CRM created to managing the customer files which contain basic information about the clients to understand and predict the customer needs and the customer behaviours.

In accordance to Gefen and Ridings (2002), Can be divided the CRM into three functional categories and that is operational, analytical and collaborative CRM. Operational CRM category, as well-known as front-office CRM, Enables and simplifies communication and areas which involve direct contact with customers occur, such as e-mail promotion (Romano, 2003). Operational CRM efforts to provide smooth integration of back-office processes with customer interfaces and described CRM products on the market.

Analytical CRM category, as well-known as back-office CRM, regards understanding the activities of customer that happened in front office and enable an organisation to analyse customer relationships using data mining to increase loyalty and profitability (Gefen and Ridings, 2002).

Collaborative CRM category, a centre of communication and coordination network that provides the tracks for customer and supplier (Schubert & Koch, 2002); It can also mean the channels of communication such as the Internet or e-mail or voice applications.

Customer Relationship Management, which contains two scenarios, Business to Consumer scenario (B2C) and Business to Business scenario (B2B). From compared B2B scenario and B2C scenario will be noted that B2B closing with a supplier-vendor relationships based on history, performance and trust as well as after-sales service is of great importance; B2C market may a small but fast growing and require different kinds of relationships, information and communication approaches (Zeng and Wen & Yen, 2003), B2C relationships are usually of shorter duration with shorter sales cycles and more transactions driven. B2C consumer may be seeking a combination of comfort, price and capabilities of product. The information collected around the consumer usually include demographics, past and present purchase behaviour, psychographics and preferences.

A new expression for taking care of customers over the Internet, eCRM, is applied lately by some organisational and academic societies (Ragins and Greco, 2003).

Social networking revolution and implications for business

Humans in all cultures form complex social networks; the expression social network at this point means ongoing relations between people who are engaged in the group, either for particular reasons (such as fantasy basketball, diabetes support groups) or for more general expressions (like families, friends, social clubs). Membership of these networks may be relatively permanent (like extended families) which couldn’t be changed. Or flexible (like club support groups) which may be changed.

Studying social networks, makes interaction between individuals, has been considered as a main research topic in sociology (Wasserman, 1994). Many theoretical models were built to study such models and later on and Based on computerized data capability of managing large data, it is possible now to analyze real social networks that were purely theoretical researches.

Boyd Introduced the following description for Social Networking Sites as, “Social network sites as web-based services that allow individuals to (1) construct a public or semi-public profile within a bounded system, (2) articulate a list of other users with whom they share a connection, and (3) view and traverse their list of connections and those made by others within the system” (Boyd, 2007).

Building online communities of people who wish to share interests, knowledge and/or activities, or who are concerned in exploring the interests, knowledge and activities of others.

Social networking websites not only allow the ability for persons to communicate with each other but too enable persons to find individuals with the same of interest. Once they find out each other, members can form specific societies On the basis of their mutual interests.

Social networking websites continues to growing up in popularity, companies can no longer only rely on traditional methods (print, radio, television, etc.) to impose the public perception of their products.

On the contrary, these new channels of communication too provide organisations means to discover and maintain a persistent contact with their constituents of the most vocal. This information can be harnessed by organisations to use social networks to help consumers identify the most influential and participate in the campaign of product development, and improve the feeling of the brand.

Finally the organisation marketing and services efforts can be enhanced by social networking. But to take advantage of social networks in a manner consistent, sustainable and open for analysis, the organisations need to customer relationship management solutions that present the right capabilities.

The organisation that will enable individuals to build relationships and societies at the most easily way with other they trust, that organisation will win.

The powerful idea in social networks is the concentration on making geographic place irrelevant. Social Community recognizes that people love to connect with people similar to them. But it may be more powerful if people use these communities and making them.

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Relation between Social network and E-commerce

Sinha and Swearingen (2001) found that customers are more likely to accept recommendations and suggestions from other people they know and trust, for example family members or friends, rather than from automated systems in E-commerce websites.

In reality, people decision when buying a product is strongly affected by his or her friend and business partner more than strangers. Also communities on the Web allow the users to express their personal choices and to share their recommendations. Social network sites become an opening point for Web users who are interested in E-commerce. Therefore, E-commerce corporations may take this advantage to increase their sales and support consumer relationship management.

Many social network sites have been so attractive recently for a huge number of people. For example Facebook site has gathered around 47 million very active customers in the last three years, according to Shuen (2008), who argues that Facebook is the social network advertising platform. The importance value of these installed base over 47 million free users is immediately monetized via target advertising revenues. The writer maintains that the transition from Web 1.0 to Web 2.0 has been marked with the dynamism and interaction of participants. She rightly notes that Techniques, architectures, and technologies that combined to trigger a phase transition, from a Web 1.0 technology collection of static websites to a Web 2.0 technology platform for anew generation of social dynamic web applications and services. The author further argues that Billions of clicks per day contribute to the collectivist Web and a rethinking of ourselves via sharing, collaborating and trading.

THE Impact of social networking on e-CRM

A main topic of debate between customer management and business, attention process leaders right now is making sure the business value of social CRM. The techniques and technologies of social are proliferating rapidly. Recent survey of 286 companies displays that while only 21% have established, for instance, customer community interaction sites, an amazing additional 42% are piloting or interested in executing customer communities (Forrester, 20009). Another Forrester research also spotlights that the ROI for social media applied to specific use cases, like customer service, can be attractive. (Forrester, 2009)

Cutting through all the hype, companies are challenged to make difficult decisions around the level of investment they should work in Social Computing technologies such as wikis, blogs, forums, tools for customer feedback, social networking websites and customer community platforms. And they need to know how these advanced capabilities should be and how it can be integrated and structured with their transactional CRM systems.

To understand this, Forrester defines e-CRM to the key of technologies that support the business processes and procedures for targeting, acquiring, retaining, understanding, and – very importantly – collaborating “socially” with customers (Forrester, 2008).

The phenomenon of the social networking which is forcing business process to expand the thinking beyond the target of optimizing a two-way relationship between the companies and customer to also include the synchronise interactions that customers have between themselves. CRM is improving from its traditional concentrate on optimizing customer-facing transactional operations to include the strategies and technologies to evolve collaborative and social relations with customers, suppliers, and even competitors See the below figure (Forrester, 2008)

Fig. 1. Old world and new world (social relations with customers, suppliers, and even competitors).

In this new world (simultaneous and collaborative relationships), traditional CRM solutions will continue to gathering data for customer, analysis that data, and automate workflows to improve business processes. But business process must search for new and innovative solutions to engage with emerging social consumers, enhance the customer experience and knowledge through architect solutions and fundamental community-based interactions that are flexible, support and foster strong intra-organization and client collaboration.

So in order to innovate the e-CRM and make the benefits of the social community, the following points may be used: Initiate e-CRM experiments immediately, specify a near-term opportunity to apply e-CRM viewpoints to a customer-facing challenge at company; Building some practical experience that will get out of old mindsets. Refine the strategies later as new insights emerge. Define social customer objectives, of the most important decision is not what the technique or technology to use; the most important is specifying what are trying to achieve and how the plan to modify and change relationships with customers. Map out e-CRM capabilities-building plan, the social CRM plan should be tightly related to business objectives, focused on customer benefits, clearly determine the processes and procedures that will be affected, and identify the associated information and capabilities required.

Social networking application with exploring opportunities, benefits and risks

The future of the advertising is personal. This not only means “personalised” in the sense that companies can prepare of custom messages to individual customers, but also “personalised” in the sense that product recommendations, tips and notes come directly from friends, for friends.

The early examples of this new type of advertisement are called virtual marketing campaigns on the World Wide Web: the company may leak some apparently unauthorized pictures, videos, or specifications of a soon-to-be released product such as blog, that is mean the information will spreads quickly by word of mouth on all over the world.

Companies such as Amazon, Netflix, ebay and Tripadvisor have popular and powerful marketing tools in the case of the Amazon website it concerns books and videos, in the case of Tripadvisor concerns hotels and restaurants, where customers write the shows of the products they liked or disliked. In that way, additional to advertisement and the mission of marketing department the company can rely on first-hand experiences through previous customers. Social networking websites take this approach additional one point: instead of receiving reviews and other information about the products from third parties is not known, consumers receive related information about the product such as experience reports or buying decisions from people they know like a friends.

Facebook’s “Beacon” program was attempt at implementing such a “word-of-mouth” or “what’s on your mind?” campaign tool in a social networking website: As soon as a user of Facebook would buy an item from online shop such as buy a book at Amazon all of her friends on Facebook would be told her friends about that in the form of a status message. This allowed to easily staying up to date about friends shopping behaviors. The Facebook developer launched the “Like” button, Visitors may now declares their sympathy with a company or product simply by pressing the (conspicuously placed) “like” button. This predilection is then communicated not exclusive to the visitor’s entire social network website, but also to all the companies participating in the Facebook advertising platform.

So the Companies may take advantage of this property by create application on the Facebook website and that will publish on all over the world and the users can see that and press on Like buttons or participate in the group and be a member and this allows the visitors to feed information into Facebook.

According to Nicole, et al. (2007), in these days social networking websites have become powerful tools for customer through acquisition and retention, employee recruiting. And these form one of opportunities and benefit for social networking.

Virtual Marketing also enter new dimensions through the use of social networks, With social networks, a virtual marketing campaign can rapidly and easily establish interest groups for recently launched products or upcoming events. So far, few commercial heavyweights can bear not to have appearance in these social networks (Livingstone, 2008).

The customer relationship management based mainly on information and data customers, providing social networking sites a huge database can be managed through CRM. Through the social network website may the companies advertising that is product and that will reduces the cost and reach to all customer in easy way.

According to Fogel and Nehmad (2008), of the most important things that constitute a risk to social networks is the information privacy and perceptions about the security of personal data, lack of interest in the field of technology from some of the people and belief that it is only for young people, perceptions about its value, truth of the information or lack of it, lack of understanding how to use these websites and lack of interest in contacting and sharing knowledge.


The most important for CRM in e-Business objectives is reduce the cost and time-saving and that happen through using the technology revolution such as social networking website and knowledge sharing and understand customer buying behavior by collect and analysis the information of customer.

eCRM is not created to change the marketing however instead to enhance it, eCRM tools available to marketing manager to help them to achieve their goals and objectives. eCRM and marketing manager together can successfully carry out new products and launch new marketing campaigns to satisfy customer needs and wants.

With many of the features intrinsic of embracing social networking websites and other social media channels of communication, companies need to carefully assess not solely the opportunities of such a move, but must also face the risks.

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