The back end matters too: Social CRM and the customer-centric supply chain

Think Social CRM is purely a sales, service and marketing phenomenon? Think again. Columnist Paul Greenberg explains how it can impact the supply chain.

In the last several months, there has been this enormously heated discussion going on about what Social CRM is. Even though the pundits seem to have settled on the definition, the discussion has since been elevated to developing a Social CRM strategy. It centers on how to use the company's tools and services, the products and experiences to provide customers with what they need to interact with a company, whatever their personal ag...

enda.

There have been aspects of the discussion that are emerging that I'll be addressing more in my blog, PGreenblog. For example, is loyalty or feedback the "fourth pillar" of Social CRM (the other three being sales, marketing and customer service)? Or is the discussion about pillars even necessary at this stage?

But one thing getting lost in the customer-facing discussion around social media and Social CRM is of mission-critical importance. It has been of mission-critical importance in prior incarnations in traditional CRM as well – and that is the enterprise value chain and its evolutionary antecedent, the collaborative value chain.

Probably the simplest way to see the importance of the back office in the overall customer environment -- so you don't think this is mere speculation -- is to look at the supply chain's importance and the innovations that are already successful.

Supply chain and customer experience – a start

I don't think that anyone would argue that the supply chain functionality affects the overall experience (or as Denis Pombriant now calls it, a service-product) with a customer. When I tweeted my concerns about the back office being neglected in the discussion of Social CRM, here's what I got back from some of the members of the Twitter Social CRM group (#scrm):

  1. "Can we hire with (Social CRM)? Yes. Can we eval(uate) our employees via (Social CRM)? Yes. Much else too." – Bob Warfield, CEO, Helpstream
  2. "There is no back office anymore. Everything is visible and part of the experience." -- HaimToeg, COO, dbMaestro.

These were more typical than unique when it came to recognition of the effect of the supply chain, et al., on the customer experience.

For more from Paul Greenberg and social CRM
See what Paul has to say about social CRM and vertical communities

Learn what columnist Denis Pombriant thinks about social CRM and its future prospects

Procter & Gamble sets the table when it comes to taking the customer experience and the supply chain seriously. They use a KPI called pricing from the shelf back, which is focused on getting customers to tell them what they would pay for a particular product. P&G then re-engineers the supply chain and manufacturing processes to meet that price point (with margin built in, of course). This stemmed from a philosophy best expressed by Jake Barr, P&G's global director of supply network operations in a 2004 Baseline magazine article .

"If you can't drive sales and deliver product at the point of purchase, you lose," he wrote.

But while P&G set the table, Best Buy is eating at it.

Best Buy loves the social customer

Dan Currie, senior vice president of global supply chain at Best Buy, makes things as clear as possible in the Best Buy Customer Centric Supply Chain Strategy:

  1. Customer-experience driven
  2. Best Buy will "own the pipe" through end-to-end integration from the consumer's home back to the raw materials producers.

One of their more innovative efforts to realize this strategy revolves around inventory replenishment and distribution using RFID. Best Buy used its video game business to test a system that took advantage of RFID readers to confirm receipts and update story inventory automatically, based on purchases. Not only was Best Buy able to manage inventory but it could tag the products to specific "smart shelves" that had RFID-enabled shelves so that sales could correlate to store promotions and shelf position. The shelves could also predict stock levels based on sales patterns. Finally, the company has embedded some loyalty cards with RFID to identify customers when they come in the door.

This customer centered approach, ¬designed to provide valuable customer data to Best Buy, had a hard core ROI. Best Buy saw a revenue uptick (in video games) of 18.7%; and an increase of 14%+ in units sold. There were several more arcane positive returns, but you get the picture.

A customer centered supply chain works.

But is it enough for the social customer?

The answer is yes and no.

Supply chain visibility and the social customer

Without a long paean to collaboration and co-creation, well beyond the scope of this article, there is a further minimum requirement for the social customer when it comes to the supply chain. That would be transparency – the ability to look into the supply chain and get the kinds of information that you as a customer need to make an intelligent decision.

For example, if you decide that you want to buy something at Best Buy or Microcenter, you can go online, find the item you're looking for, and see store by store what inventory exists at the store. It's a small thing that you are used to by now, but it requires a complex supply chain effort to track inventory. However, the benefit to social customers is that they have enough information to decide whether or not a trip to the store is worthwhile – or whether they want to buy online and pick up the item at the store.

Think of it the way Dan Currie did when he closed his presentation at the Chain Store Age Supply Chain Summit this year by quoting the Cap Gemini Global Commerce Initiative:

"The potential value to be delivered by these trends will not occur on its own. Left to their own devices, companies may potentially act in isolation or in limited partnerships. The industry needs to work in a more collaborative fashion across the total value chain to deliver the cultural and infrastructure changes to meet … consumers' needs."

Got that? See you at the store.

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