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Integrating Social Media and Traditional CRM: Toward A Conceptual Framework for
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 103

Chapter 5
Integrating Social Media
and Traditional CRM:
Toward a Conceptual Framework
for Social CRM Practices

Kanghyun Yoon
University of Central Oklahoma, USA

Jeanetta D. Sims
University of Central Oklahoma, USA

ABSTRACT

In recent years, marketers have paid lots of attention to a new field called social CRM, created from the
combination of social media and traditional customer relationship management (CRM) practices. In the
past, traditional CRM practices have mainly focused on the task of valuing individual custom-ers’
profitability through relationship management over time as the proxy of creating the firm’s value. Shifting
away from this trend, firms have recently attempted to promote customer engagement into the value
creation process as the core of CRM strategy. This chapter proposes conceptual guidelines for the success
of social CRM practices, while considering the development of personalized customer engage-ment
programs with social media depending on customer status over the life cycle.

INTRODUCTION attention to customer relationship management

During the past two decades, the task of creating
and managing long-term profitable relationships
with target customers has been a top priority for
firms. To achieve this goal, the firms have paid
(CRM) strategy and its practices. Simply speaking,
CRM is a business strategy to acquire and manage
customers for the benefits of both customers and
firms in a co-profitable fashion through main-
taining relationships over time (Winer, 2001).

DOI: 10.4018/978-1-4666-5194-4.ch005

Copyright © 2014, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

To make this CRM strategy a reality, marketing
practitioners have developed various types of op-
erational tactics—for instance, collecting
customer information about purchasing patterns
with the aid of Information Technology (IT)—and
have attempted to transform the customer
relationships into greater profitability by
increasing the repeat purchase rates of target
customers and reducing customer acquisition
costs, among other tactics. To diagnose the
effectiveness of current CRM practices, firms in
recent years have used one popular metric called
customer lifetime value (CLV), which indicates
how much one customer is worth to the firm at a
specific point in time (Kumar and Rajan, 2009).
However, the true meaning of CRM has yet been
met since firms have used CRM as an operational
tool in order to maximize company profitability by
taking advantage of the collected information about
customers’ purchasing behav-iors. As current
literature in CRM indicates, most practitioners in the
CRM industry have focused on what firms should
do to attract and retain target customers in order to
maximize CLV as the proxy of the firm’s
profitability. However, firms do not have a clear
understanding of how customers react to the firms’
CRM efforts, how customers create their
engagement into the relationship-building process,
and how customer contributions can be transformed
into the entire value for the firm. In fact, what the
traditional CRM practitioners should consider is one
most important fact—i.e., CRM is about the well-
being of customers as human beings, even though
technology and process are required. Stated
differently, CRM practitioners need to create
strategies which are designed to align the process of
gathering information about the behavioral aspects
of target customers with the creation of self-
motivated engagement of target customers during
the process of attracting, keeping, and growing long-
term relationships with target customers.
104
Integrating Social Media and Traditional CRM
To resolve the issue of customer engagement in
the CRM process, CRM practitioners have changed
their attention to social media as a future promising
opportunity driven by recent impressive statistics.
As of March 2013, Facebook reached 655 million
daily active users on average with 79% of active
users residing outside the United States and Canada
(see up-to-date statistics at http://
newsroom.fb.com/Key-Facts). Twitter achieved a
milestone when the 10 billionth tweet was sent on
March 2010, and by July 2010, the number of
tweets doubled to an amazing 20 billion (Williams,
2010). Realizing the potential power of social
media, CRM practitioners have considered how to
incorporate the potential of social media into the
traditional CRM practices in order to meet the true
meanings of CRM. Consequently, this emerging
practice opens a new field called Social CRM,
which is simply speaking the integration of
traditional CRM practices with social media as the
new communication channels. Statisti-cally
speaking, the growth pace of social CRM practices
is very fast. According to Sarner et al. (2012), social
CRM will be approximately 8% of all worldwide
CRM spending in 2012—up from around 4% in
2010—which equates to $1 billion spent on Social
CRM compared to $12.9 billion being spent on
CRM in 2012. Also refer to the contents in the
following webpage (http://www.
forbes.com/sites/louiscolumbus/2012/10/02/
gartners-magic-quadrant-for-social-crm-and-the-
social-enterprise/).
Since current social CRM practice, as an
emerging trend, is at its early stage, CRM practi-
tioners face several critical issues (Bush, 2011). Of
course, the most important issue is how to meet the
true meanings of CRM practices by utilizing various
types of social media as alternative com-munication
channels. Specifically, the first issue is related to the
heterogeneous efforts of managing customer
relationships depending on the customer status over
customer life cycle. For instance, since
Integrating Social Media and Traditional CRM
customers change their status from potential buy-
ers to first-time buyers as they make a series of
multiple purchases, CRM practitioners need to
account for consumer heterogeneity in consumer
status over time (Yoon and Kang, 2011; also refer
to Reinartz, Thomas, and Kumar, 2005, for
ARPRO framework). When meeting the original
goal of CRM—i.e., building and managing the
long-term profitable relationships with custom-
ers, not the management of target customers at a
profit, CRM practitioners need to understand the
dynamic aspects of customer needs over time and
manage the customer relationships based on the
on-going process.
Second, social media are highly likely to provide
the opportunities for cultivating relation-ship
communications among potential custom-ers,
through word-of-mouth (WOM) activities, and
creating active engagements with target customers.
However, traditional IMC strategies for
communication goals have depended on the use of
traditional models of the communication process
(Belch and Belch, 2007), which miss the WOM
processes occurring between an opinion leader and
opinion seekers. Thus, it is necessary to revise the
traditional communication process model to
incorporate WOM processes based on the active
engagement of potential customers in an ongoing
relationship-building process. Given the revised
communication process model, CRM practitioners
may design their integrated marketing
communications (IMC) strategies at the company
perspective since social media provide the firms
with opportunities to create two-way communi-
cations between the firm and target customers as
opinion leaders and let opinion leaders engage into
the process of building customer relationships with
opinion seekers.
Finally, since social CRM is in the early stages
of development, CRM practitioners should be
equipped with various types of social CRM met-
rics for measuring the effectiveness of new social
CRM practices, which are called Social Analytics.
Stated differently, the increased attention paid to
social CRM indicates that it is necessary for CRM
practitioners to update either the traditional metrics
to measure the success of traditional marketing
activities for selling products or services or the
CRM metrics to evaluate the effectiveness of
traditional CRM practices. For instance, market-ers
may use popular financial and market-based
measures such as profitability, market share, and
sales units, among others. However, much more
emphasis should be placed on developing measures
which are customer- and/or value-oriented in the
perspective of value creation and delivery process of
marketing and provide CRM practitioners with
better insights into how the social CRM practices
are working for building long-term relationships
with customers.
Given each of traditional CRM and social CRM
concerns, this chapter is intended to pro-pose a
conceptual framework which provides general and
personalized guidelines required when
implementing social CRM practices. Social CRM
practice is defined as the business practice of
creating customer engagement through social media
in an attempt to build and manage long-term
profitable relationships with customers. To achieve
an overall goal of this study, we utilize two types of
new conceptual models—Model of Consumer
Dynamics in Status (MCDS) which accounts for
consumer heterogeneity in consumer dynamic status
over the customer life cycle (Yoon and Kang, 2011)
and Revised Communication Process Model which
includes mass media and word-of-mouth
communication channels between sellers, opinion
leaders, and opinion seekers especially for social
contagion process. Given these new frameworks, we
discuss general guidelines of social CRM to
enhance more customer engagement using social
media and consequently, to meet the true meanings
of traditional CRM practices which are centered on
managing long-term relationships with cus-
105

tomers over time. In addition, we suggest social
CRM metrics which allow CRM practitioners to
evaluate the effectiveness of social CRM practices.
This paper is organized as follows. First, we
provide a brief review of literature on traditional
CRM practices, the communication process, the new
emerging trend of social CRM, and Social Analytics.
In the next section, we discuss funda-mental issues
related to the implementation of social CRM
activities and provide some guidelines to resolve all
the issues mentioned. Then, we close our
discussions after tackling some research issues
related to future trends in social CRM.
CONCEPTUAL BACKGROUND
In this section, we provide a review of literature on
three areas: 1) traditional CRM practices and the
need for accounting for consumer heterogeneity in
customer status over the customer life cycle, 2) IMC
persuasive communication strategy and the
emerging trend of social CRM, and 3) guidelines to
measure the effectiveness of social CRM practices.
CRM Practices: Past,
Present, and Future
Since Levitt (1960) highlights the importance of
meeting customer needs as the essence of mar-
keting activities from the customer, not business,
perspective, the focus of marketing has shifted from
a transaction orientation driven by the ex-change
paradigm (Bagozzi, 1974; Kotler, 1972; Hunt, 1983)
to a relationship orientation based on the relational
paradigm (Berry, 1983; Bagozzi, 1994; Kotler, 1994;
Sheth and Parvatiyar, 1995; Gronroos, 1990). As a
result of this evolving trend, marketing scholars
have recently agreed to the definition of marketing
as the process of creating and managing long-term
profitable relationships with customers from the
relationship perspective
106
Integrating Social Media and Traditional CRM
(Kotler and Keller, 2009). At the same time, mar-
keting practitioners have shown their explosive
interests on customer relationship management
(CRM) as a strategic approach which capitalizes the
benefits of information technology—i.e., the use of
an internal customer database—in order to realize
the goals of relationship marketing (Bould-ing et al.
2005). Thus, over the past decade, the organized
CRM efforts of attracting, retaining, and growing
customers in a co-satisfying relationship have been
a top priority for any business.
To conceptually understand what the CRM is,
consider the following comprehensive definition
suggested by Payne and Frow (2005, p. 168):
CRM is a strategic approach concerned with
creating improved shareholder value through the
development of appropriate relationships with key
customers and customer segments. CRM unites the
potential of relationship marketing strategies and IT
[information technology] to create profit-able, long-
term relationships with customers and other key
stakeholders. CRM provides enhanced opportunities
to use data and information to both understand
customers and co-create value with them. This
requires a cross-functional integration of processes,
people, operations and marketing capabilities that
is enabled through information, technology and
applications.
As implied, all contemporary CRM practices
start with the perspective of dual creation of the
values for the customers and the firm (Boulding et
al., 1995; Payne and Frow, 2005; Tarasi, 1996). The
efforts of making dual creation of the values imply
that the firm creates the value for customers—i.e.,
by determining what value the firm can provide to
its target customers for satisfaction—and at the
same time, the value for shareholders—i.e., by
determining what value the firm can receive from
the customers. In order to make this value creation
process possible, specifically, the firms attempt
Integrating Social Media and Traditional CRM
1) to determine the strategic choices under their
mission and goal(s), 2) to gather customer-related
information about their purchasing patterns using
IT for both the design of valuable market offer-
ing and the task of valuing individual customers,
3) design relational processes across functional
departments keeping in mind optimal resource
allocation, and finally 4) implement the organized
CRM efforts in an attempt to attract, retain, and
grow customers in a co-satisfying relationship
building and management process (Tarasi 1996).
For the task of customer valuation, the firms in
recent years have utilized the popular concept of
customer lifetime value (CLV) (Gupta, Lehmann,
and Stuart, 2004; Kumar and Rajan, 2009).
Despite its attractive aspects, however, the fu-
ture of CRM is not promising since the outcomes
from the implementation are contradictory to the
expectations of CRM practitioners (Srinivasan and
Moorman 2005). For instance, most CRM projects
do not deliver the expected return on investment
(ROI). The trend analysis results in Google Trend
also support this skepticism: when considering that
the number 100 represented the peak search volume
in mid 2004, peoples’ interests have de-clined
significantly as the number was down to 49 in late
2012. Thus, CRM practitioners need to reconsider
the fundamental basics of CRM in order to achieve
its goals of building and managing long-term
profitable relationships with customers. One
solution is to equip firms with the customer
perspective so that marketers may understand how
individual consumers become adopters and later
loyal ones in the perspectives of consumer adop-tion
and loyalty processes. In addition, another solution
is to implement customer engagement programs
since the level of customer engagement with the
firm will arise as the market offerings fit their needs
and they have commitment and trust in the firm
(Morgan and Hunt, 1994; Tarasi, 1997). With
respect to the implementation of traditional CRM
projects, we tackle these issues in the next section.
Traditional Communication
Process Model for IMC Strategy
As mentioned above, a key challenge of traditional
CRM practices is the lack of customer engage-ment,
which is one of the Marketing Science Institute’s
research priorities suggested by the 2010-2012
Marketing Science Institute (MSI, 2010)—for
moving toward the process of creat-ing, building
and, enhancing long-term customer relationships.
Significance of this research topic lies on the
possibility of studying “consumers’ behavioral
manifestation toward a brand or firm beyond
purchase, which results from motivational drivers
including: word-of-mouth activity, recom-
mendations, customer-to-customer interactions,
blogging, writing reviews, and so forth” in the
perspective of relationship marketing toward the
goal of making customers loyal. To design better
customer engagement programs, however,
marketing practitioners need to rethink the use of
the popular communication process model as the
basis of all kinds of integrated marketing com-
munications (IMC) strategies (Belch and Belch,
2007; Kotler and Keller, 2009). In this section, we
provide a brief discussion on how marketers have
used one popular communication process model
mainly for IMC strategy and why it should be
updated in the era of social CRM by including the
flow of the interpersonal communication process
represented by word-of-mouth (WOM) activities.
Originally, Harold Lasswell (1948) introduced a
simple linear model of the communication process
to describe the transmission of messages from one
source to one receiver. As a variation of the
Shannon-Weaver mathematical transmission model
of communication, Wilbur Schramm (1954) later
developed a circular form of communication model
—called Schramm’s Model of Mass Com-
munication—to represent the reciprocal nature of
the communication process. As shown in Figure 1,
Schramm’s model has become the main form of
current communication process models which
107

Figure 1. Traditional communication process model
characterize all kinds of message transmissions
from one sender to another receiver and has been
popularly used in the design of all IMC strategies.
For the purposes of accounting for customer
engagement in CRM practice, a better communi-
cation model is needed. The two-step flow of
communication hypothesis, which was first intro-
duced by Lazarsfeld, Berelson, and Gaudet (1944)
in The People’s Choice, better captures the inter-
personal communication activities in the com-
munication process. Originally, this study focused
on the kinds of decisions people make during
presidential election campaigns, with the expec-
tation that a strong relationship between media
messages and voting intentions would exist. What
they found instead is that informal and personal
contacts have a stronger influence on voting be-
haviors than exposure to radio or newspaper as
sources of influence. Driven by this finding, Katz
and Lazarsfeld later developed the two-step flow
theory of mass communication (Katz and Lazars-
feld, 1955; Katz, 1957).
This theory asserts that information initiating
from mass media moves in two distinct stages.
108
Integrating Social Media and Traditional CRM
First, individuals—as opinion leaders—who pay
close attention to mass media and its messages
receive the information. Then, they pass on their
own interpretations, along with the actual media
content, to their friends expecting the creation of
personal influence. The term ‘personal influence’
refers to the process of intervening between the
media’s direct message and the audience’s ulti-mate
reaction to that message. Opinion leaders are quite
influential in getting people to change their attitudes
and behaviors and are quite similar to those they
influence. Thus, the two-step flow theory has
improved our understanding of how mass media
influence the decision-makings of opinion leaders as
well as opinion seekers. This theory refines the
ability to predict the influence of media messages
on audience behavior and helps explain why certain
media campaigns may have failed to alter audience
attitude and behavior.
Interestingly, the two-step flow theory is
distinctly related to the theory of diffusion of
innovation in marketing. A major assumption of the
diffusion of innovation, along with diffusion
models, is that two factors drive the entire diffusion
Integrating Social Media and Traditional CRM
process in the market such as advertising for mass
media communication process and word-of-mouth
(WOM) activities among potential adopters for
interpersonal communication process in the social
system (Rogers, 1962). Following this assumption,
Bass (1969) introduces a popular Bass diffusion
model which describes the diffusion process of new
durable goods—in terms of the timing of adoption—
depending on the mixed behaviors of first adopters,
called innovators, who are implic-itly governed by
mass communication activities and subsequent
adopters, called imitators, who are involved in word-
of-mouth (WOM) activities with innovators.
Recently, marketing scholars have studied the
effects of mass communication and WOM activities
on the diffusion process together, mainly driven by
the abundance of research data for empirical testing
(Godes and Mayzlin, 2004; Watts and Dodds, 2007;
Manchanda, Xie, and Youn, 2008; Iyengar, Van den
Bulte, and Valente, 2011).
In summary, it is recommended that current
popular conceptual frameworks of the commu-
nication process, represented by the traditional
model of communication process, be updated by
incorporating the interpersonal communication
activities occurring between opinion leaders and
opinion seekers as suggested by the two-step flow
theory and the diffusion process. Based on a new
updated model of the communication process (to
be discussed later) which incorporates
interactivity, CRM practitioners should develop
customer engagement programs to create, build,
and enhance customer relationships in a holistic
viewpoint, along with the new opportunities for
interpersonal communication that emerge through
social media for IMC strategies.
Role of Social Media in Social CRM
As social media become popular in recent years,
CRM practitioners see that social media are likely
to provide new opportunities in order to
improve the performances of traditional CRM
implementations. For instance, recognizing that
traditional CRM projects are not good enough to
achieve the firm’s goal, marketers have started
considering how to capitalize on emerging social
media opportunities—for instance, 1) to make use
of personal social network resources that opinion
leaders are likely to have and 2) to transform the
created customer engagement into the value
creation process and the profitable relationship-
building process via two- way communication
process—in a co-satisfying fashion. As the result,
to capitalize the power of social media for social
engagement, a mix of social media with tradi-
tional CRM practices, called social CRM, has
emerged into the surface of business practices as
one new direction of traditional CRM strategy. In
addition, CRM practitioners have considered the
development of social metrics—called social
analytics—to diagnose the effectiveness of social
CRM efforts. Now, we provide a brief review of
literature on social CRM and social analytics.
Simply speaking, social CRM is a new busi-ness
strategy and practical approach that combines the
power of online communities, broader social
networks around opinion leaders, and traditional
CRM practices (Lithium Technologies, 2009). As an
expert in the CRM field, Paul Greenberg provides a
nice definition of social CRM as “the business
strategy of engaging customers through social
media with the goal of building trust and brand
loyalty” (Greenberg, 2009). In this study, we define
it as a strategic business practice to build and
manage long-term profitable relation-ships with
customers by creating more customer engagement
into the value creation process with the firm using
social network systems.
Ideally, CRM practitioners expect that social
media provides better opportunity to create more
customer engagement—via word-of-mouth activi-
ties between opinion leaders and opinion seekers in
the two-step flow of communication process—into
the process of building and managing profitable
109

customer relationships. It is expected to go beyond
the traditional CRM practices which focus on
operational customer management using informa-
tion technology. However, there have been only a
handful of studies in the academic field with respect
to the guidelines for its implementation since this
discipline is at an early stage (Wood-cock, Green,
and Starkey, 2011; Mosadegh and Behboudi, 2011).
The growth of social media implies that the firm can
no longer control the relationship-building process
with customers as traditional IMC strategies suggest.
Thus, firms need to embrace this shift and develop
new guidelines for the implementation of social
CRM, which facilitates collaborative experiences
with customers, consequently translating the process
of customer relationship management into a profit-
able one. This is what the conceptual framework
offered in this chapter is intended to do.
With respect to social CRM, one important issue
that CRM practitioners should consider is the
development of social CRM metrics for mea-suring
the impact of both social media and social CRM on
business performance. Specifically, the increased
attention paid to social CRM means that CRM
practitioners need to embrace new metrics for
customer engagement into the use of traditional
metrics in order to meet the emerging social CRM
environment. The traditional metrics represent
financial- and market-based indicators such as sales
units sold, profit margins, among others and
customer-centric measures such as customer
acquisition costs, conversion rate from prospects to
buyers, retention or churn rates, among others
(Gupta and Zeithaml, 2006). In the domain of social
CRM, however, CRM practitioners need to measure
the effort of customer engagement and sentiment—
driven by social media during the interpersonal
communication processes be-tween opinion leaders
and opinion seekers—in the perspective of dual
creation of values for the
110
Integrating Social Media and Traditional CRM
firm and customers (Etlinger, 2011). Since social
analytics is a new discipline, a lack of guidelines
exist on how to measure the performance of social
CRM activities, and this study attempts to provide
new guidelines for social CRM implementation.
MAIN FOCUS OF THE ARTICLE
For the successful implementation of social CRM
projects, CRM practitioners first need to understand
the true meanings of social CRM practices and then
consider the guidelines for its implementations and
performance controls. Stated differently for the
success of relationship marketing, which can be
another name of CRM activities, practitioners
should focus more on process-oriented rather than
outcome-oriented processes and on value creation
practices work-ing with customers together rather
than value distribution activities driven by the firms
(Sheth and Parvatiyar, 1995). To accomplish this
task, we review how individual customers become
adopt-ers of a specific market offering and loyal
ones for the firm as they make a series of successive
purchases from the loyalty marketing perspective.
Combining all of these ideas, later, we propose our
general and personalized guidelines of how to
design, implement, and control social CRM efforts
toward building and managing long-term profitable
relationships with customers using social media as
new relationship communica-tion channels. When
discussing these issues, we consider how to
accommodate various types of theoretical
foundations—such as the adoption and loyalty
processes, the diffusion process with social
contagion or word-of-mouth (WOM) activities, the
two-way flow of communication process with
consumers’ response behaviors, the consumer
heterogeneity in life cycle status, social media, and
social analytics as mentioned previously—into
Integrating Social Media and Traditional CRM
the design of social CRM guidelines. Note that we
focus more on the value creation process as the core
of CRM practices (Payne and Frow, 2005).
Issue 1: Need for Customer-
Oriented Social CRM Practices
From the perspective of making both customers and
firms better off, traditional CRM practices have
mainly focused on the creation of the firm value,
along with relatively less emphasis on the side of
customer value (Boulding et al., 2005; Srinivasan
and Moorman, 2005). One typical example is the
firm’s efforts of valuing individual customers—
based on the calculation of customer lifetime value
(CLV)—to separate high-valued customers from the
group of low-valued customers (Reinartz and
Kumar, 2002; Gupta, Lehmann, and Stuart, 2004;
Kumar and Rajan, 2009).
Considering the fact that at the core of any CRM
approach is “the concept of dual creation of value”
for the firm and target customers (Payne and Frow,
2005; Tarasi, 2007), CRM practitio-ners need to
consider ways of maximizing the customer value
during the value creation process for the success of
CRM. Stated differently, it is essential to remember
that from a viewpoint where the customer is
regarded as a co-creator and co-producer
(Bendapudi and Leone, 2003; Prahalad and
Ramaswamy, 2004; Vargo and Lusch, 2004), the
success of CRM depends on the firm’s efforts of
encouraging the participation of target custom-ers
into the value creation process for a win-win
situation. Thus, there remain important questions
regarding how to make CRM practices successful:
1) how to create a better value creation process
driven by the promoted engagement of target
customers and 2) consequently, how to redesign
existing information gathering/analysis
systems, which allow marketers to design better
customized or personalized CRM approaches.
Customer Engagement
In recent years, marketers have paid lots of at-
tention to the role of customer engagement in an
interactive process of co-creating customer value
and experience with customers. The rea-son for
this movement is that customers in an
engagement process play a key role in generating
transactional outcomes—for instance, creating
customer referrals (Rye and Feick, 2007; Kumar,
Petersen, and Leone, 2010)—as well as non-
transactional outcomes—such as word-of-mouth
(WOM) or recommendation behaviors to others
(Godes and Mayzlin, 2004, 2009; de Matos and
Rossi, 2008; Chen and Xie, 2008). As the result,
some marketers argue that the popular customer
lifetime value (CLV) as the proxy of company
profitability should be replaced with the measure
of customer engagement (CE) for the purpose of
valuing individual customers (Kumar et al., 2010;
Brodie et al., 2011).
As a hot research priority for the period of 2010-
2012 (Marketing Science Institute [MSI] 2010), CE
can be a major driving force to maximize the
effectiveness of social CRM practices. To under-
stand why, take a look at the definition of CE as
suggested by Brodie et al. (2011) shown below:
Customer engagement (CE) is a psychological state
that occurs by virtue of interactive, cocreative
customer experiences with a focal agent/object
(e.g., a brand) in focal service relationships. It
occurs under a specific set of context-dependent
conditions generating differing CE levels; and
exists as a dynamic, iterative process within service
relationships that cocreate value. CE plays a
central role in a nomological network governing
service relationships in which other relational
concepts (e.g., involvement, loyalty) are antecedents
and/or consequences in iterative CE processes. It is
multidimensional concept
111

subject to a context- and/or stakeholder-
specific expression of relevant cognitive,
emotional and/ or behavioral dimensions.
The above definition indicates that as a
psychological state, it happens when customers
have ongoing experiences in a dynamic,
interac-tive, and co-creative process of value
with the firm. In addition, it plays a key role in
a social network with friends, for instance, by
exercis-ing the responsibility of opinion
leadership to others. Thus, it can be suggested
that customer engagement represents a strategic
imperative for building long-term relationships
with custom-ers, resulting in the enhancement
of company performance such as sales growth,
profitability, and return-on-investment (ROI),
among others (Brodie et al., 2011).
Consumer Heterogeneity
in Customer Life Cycle
To promote customers’ engagement into the value
creation process, one possible approach that CRM
practitioners may consider is to prepare the guide-
line for social CRM after addressing “potential
heterogeneity in customer behavior”—specifi-cally,
accounting for consumer heterogeneity in customer
life cycle (Boulding et al., 2005; Kumar, 2008). It is
well-known that customers typically change their
status by taking a series of succes-sive purchases in
their life cycle as the extant models of adoption and
loyalty building process indicate (Dodson and
Muller, 1978; Hahn, Park, Krishnamurthi, and
Zoltners, 1994). For instance, marketers are likely to
design acquisition, reten-tion, and attrition strategies
depending on the status of individual customers over
the customer life cycle (Kumar, 2008). Due to this
reason, CRM practitioners need to understand when
and how individual customers become adopters and
loyal to a specific market offering within the context
of adoption and loyalty-building process (Reichheld,
1993). Reinartz, Thomas, and Kumar (2005) high-
112
Integrating Social Media and Traditional CRM
light the importance of allocating resources into
acquisition and retention strategies to maximize
customer profitability.
To understand how target customers behave
over their life cycle and utilize the gathered cus-
tomer knowledge for the design of CRM strategy,
we borrow one conceptual framework—called
Model of Consumer Dynamics in Status
suggested by Yoon and Kang (2011)—which
enables mar-keters to account for consumer
heterogeneity in the adoption and loyalty-building
process in the perspective of loyalty marketing.
To the best of our knowledge, this study is the
first attempt to account for consumer
heterogeneity in the CRM context. This
conceptual framework is shown in Figure 2.
One major advantage of this conceptual frame-
work is to allow CRM practitioners to consider
important customer-oriented insights and relevant
metrics—as a set of challenging tasks. For in-stance,
marketers can understand when and how potential
buyers (PBs) make a purchase decision to become
first-time buyers (FTBs) or adopters given the
presence of marketing stimuli offered by the
competing firms. Then, marketers are likely to
consider when and why the FTBs stop making
additional purchases, make a first-repeat purchase
with the same brand, or switch to one of the
competing brands before becoming one of my
repeat customers (MRCs). Finally, marketers may
review when and why the MRCs make a series of
repeat purchases with my brand and ultimately
become emotionally committed and loyal customers
given the presence of marketing efforts such as
loyalty programs toward the goals of relationship
marketing. Of course, marketers are also able to
consider how to attract competi-tors’ repeat
customers (CRCs) as the main part of attraction
strategy.
Given this framework, it is necessary for mar-
keters to identify major marketing goals, along with
possible performance metrics, when targeting each
type of consumer groups within the adoption and
loyalty-building process. Note that the list of
Integrating Social Media and Traditional CRM
Figure 2. Model of consumer dynamics in status
marketing goals identified should be based on the
response process of target consumers to market-ing
or other incoming stimuli occurring under the two-
way communication process between a sender and
receivers. One popular framework for this
understanding is the framework related to the
response process the receiver may go through in
moving toward a specific behavior and how the
promotional efforts of the marketer influence con-
sumer responses. One key aspect of this framework
is that consumers are assumed to follow a series of
three stages such as cognitive, affective, and
behavioral (or conative) stages depending on how
consumers respond to incoming stimuli (refer to
Belch and Belch, 2007, p. 146). Following this
notion, Oliver posits that consumers become loyal
after going through four phases such as cognitive
loyalty, affective loyalty, conative loyalty, and action
loyalty (Oliver, 1997, pp. 392-394). Using this
proposed framework, we are able to identify major
marketing goals—as the guidelines—when targeting
four types of consumer groups toward the goal of
making them loyal, as shown in Table 1.
Key ideas of our proposed framework are dif-
ferent from those suggested by Kumar (2008).
For the details of his framework, refer to Figure
1-5 (Kumar, 2008, p. 9). In his book, Kumar
discusses various types of topics such as acquir-
ing profitable customers, retaining current
custom-ers for profitability, allocating resources,
and managing customer referral behaviors,
among other topics, depending on the customer
life cycle framework. In contrast, our framework
enables CRM practitioners to attract, retain, and
grow customers—with personalized CRM
practices— after accounting for consumer
heterogeneity in consumer dynamics, given the
presence of a firm’s internal database. Also, our
framework is able to accommodate the possible
effects from the com-petition.
Issue 2: Role of Social
Media in Relationship
Communication Process
The next issue is related to the tasks of creating two-
way relationship communication channels with
target customers and promoting their engage-ment
into the value creation process for the ulti-mate goal
of social CRM practices—i.e., building
113
 Integrating Social Media and Traditional CRM

Table 1. Marketing goals and metrics for each type of consumer groups

Transition Patterns Marketing Goals Examples of Marketing Relevant Metrics

Activities
Potential Buyers (PBs) • Developing purchase intention after A series of welcome Awareness level; Knowledge level;
→ First Time Buyers Increasing their awareness, knowledge, email, Conversion OTM, Intention level; Conversion rate;
(FTBs) preference levels. and E-newsletters; A Churn rate.
• Maximizing the number of trials from series of Conversion DMs
potential customers to be the paying and emails.
customers.
Competitors’ Repeat • Increasing positive attitude toward the A series of emails for Frequency of switching behaviors;
Customers (CRCs) → company brand. awareness, DMs, and Conversion rate.
My Repeat Customers • Increasing share of wallet after ADs.
(MRCs) generating switches to the company brand.
• Increasing the likelihood to stay with my
brand as the repeat purchase customer.
First Time Buyers • Maximizing satisfaction with the Surveys for measuring Satisfaction level, Conversion
(FTBs) → My Repeat company brand. satisfaction; Coupons for rate; Churn rate; Effectiveness of
Customers (MRCs) • Reinforce the positive attitude. Repeat Purchase; frequent promotional campaigns.
• Increasing likelihood to make a first calls for managing
repeat purchase. ongoing relationship.
My Repeat Customers • Increasing the likelihood to stay as Loyalty programs; Repeat purchase rate;
(MRCs) → Loyal repeat customer. programs for increasing Loyalty level; Commitment level,
Customers (LCs) • Prevent them from switching to other emotional attachment. level of emotional attachment.
competing brand.
• Making them loyal by increasing their
emotional attachment level.

and managing long-term profitable
relationships with target customers in a co-
beneficial fashion. As mentioned previously,
the true meaning of social CRM can be secured
when target custom-ers voluntarily exercise
their engagement into the value creation and
loyalty-building process by taking advantage of
two-way relationship communication channels
including social media as a new hybrid element
of the promotion mix (Mangold and Faulds,
2009). To achieve these goals, thus, marketers
may consider the following two specific issues.
New Communication Process
Model for IMC Strategy
Traditional IMC efforts can be characterized as a
marketer-oriented communication process in the
sense that the two-way interaction activities
between senders and receivers are not emphasized
well and the traditional communication process
model has not included the channels for WOM ac-
tivities—as one part of social contagion—among
prospective customers. In fact, one explicit goal of
all IMC activities is the acceleration of the diffusion
process for a specific brand/product in a target
market, as the function of both mass communication
processes typically driven by a mix of promotional
elements such as mass media and interpersonal
communication processes us-ing new social media
or word-of-mouth (WOM) marketing tools (Rogers,
1962; Bass, 1969). Note that most of the extant
IMC-related studies have relied on the traditional
communication model as shown in Figure 1 and as
previously discussed in “Traditional
Communication Process Model for IMC Strategy”
section of this manuscript.
Following the principles of the two-step flow
of communication (Lazarsfeld, Berelson, and
Gaudet, 1944; Katz, 1957), however, we propose
a new revised communication process model—as
shown in Figure 3—which describes how the core

114
Integrating Social Media and Traditional CRM
Figure 3. Revised communication process model
messages of any IMC strategy can be transmitted
from a sender (e.g., firm) to opinion leaders and
finally to opinion seekers, along with the feedback
channels. The model in Figure 3 draws from the
work of Lazarsfeld, Berelson, and Gaudet (1944)
who first crafted the two-step flow of communica-
tion within the context of political communication in
evaluating presidential elections. Katz (1957)
offered an updated report of research related to the
original work of Lazarsfeld et al. Figure 3
incorporates this body of work as well as the
diffusion process in rendering how interpersonal
interactions in the communication process are as-
sociated with the marketing context. The contexts of
political communication and marketing are different,
but the research of the two-step flow hypothesis
(and the diffusion process) is supported by
numerous empirical studies and can fill the void of
accounting for customer engagement which has
been noted to be lacking from traditional CRM
practice. Introduction of our revised communica-
tion process model is a necessity since it enables
marketers to clearly understand the roles of mass
media and interpersonal communication activi-ties
among the firm as a sender, opinion leaders,
and opinion seekers in the relationship-building
process for social CRM and as a result, to design
effective IMC persuasive communication strate-
gies and social CRM practices.
Next, social CRM practitioners need to con-sider
how to build and manage relationships with
customers using two-way communication chan-nels
and how to promote social engagement of customers
into the value creation process by showing non-
transactional behaviors such as WOM, influencing
behaviors and inputting knowl-edge for customer
engagement, particularly utiliz-ing various types of
social media. In addition to initiating social
engagement of customers, social CRM practitioners
should consider a plan to routinely engage in social
media monitoring of relevant customer interactions
that may or may not be initiated by the firm.
Relationship Communication Strategy
Duncan and Moriarty (1988) propose a commu-
nication-based model for relationship marketing
efforts and discuss how communication can be
the foundation of any marketing effort associated
115

with attracting new customers by asserting that
“communication is the human activity that links
people together and creates relationships” (p. 2).
Later, scholars have reconsidered the role of IMC
strategies from the relationship perspective
(Andersen 2001; Lindberg-Repo and Gronroos,
2004; Finne and Gronroos, 2009). A key aspect of
relationship communication strategy is one of
interactivity, based on the feedback channel,
between senders and receivers. Given this frame-
work, CRM practitioners need to design IMC
persuasive communication strategies to build new
relationships with potential buyers, manage
interactive relationships with existing customers,
and finally promote engagement efforts of all
kinds with committed customers into the value
creation process toward the goal of social CRM—
i.e., making customers truly loyal. However, one
thing that CRM practitioners should remember is
the fact that any kind of customer engagement
and relationships occur uniquely and differently at
each stage in the customer life cycle as indicated
by the Model of Consumer Dynamics in Status.
Thus, the need exists again to account for
consumer heterogeneity.
For this purpose, we introduce Miller’s (1980)
framework which assumes consumers go through
the stages of shaping, reinforcing, and chang-ing,
depending on consumers’ response process of
cognitive, affective, and behavioral stages (Belch
and Belch, 2007, p. 46). By combining this
framework with the Model of Consumer Dynam-ics
in Status, we are able to understand the roles of
social media and customer engagement in the value
creation process toward the success of social CRM
practices, while accounting for consumer
heterogeneity from a holistic perspective. For
example, CRM practitioners may focus on how to
build new relationships with potential buyers (PBs),
while promoting their engagement at the same time
by using customized IMC persuasive
116
Integrating Social Media and Traditional CRM
communication strategies with a well-designed
value proposition that follows the shaping-rein-
forcing-changing process.
A final challenge that marketers may face is the
issue of what kinds of metrics should be prepared
for measuring the effectiveness of social CRM
efforts, depending on the type of consumers over the
stages of the customer life cycle. The most popular
measures for traditional CRM efforts are outcome
measures such as the number of acquired customers,
the “churn” rate as a percentage of the customer
base, the customer retention rate, the dollar value of
cross-selling and up-selling, the percentage increase
in customer migration to higher margin products,
and the changes in individual customer lifetime
value (CLV), among others (Winer, 2001; Lerman
and Winer, 2005). However, new measures are
required to effectively manage the value creation
process driven by the customers’ engagement efforts
as customers exhibit a series of purchases over their
life cycle.
One way of enhancing metrics with new
measures is to borrow traditional popular metrics
and classify them into each category depending on
the stage of the shaping-reinforcing-changing
process. One typical example is the effort by Strauss
and Frost (2006). In addition, marketers have been
interested in measuring the value of customer
engagement (CEV) from two different perspectives.
For instance, van Doorn et al. (2010) argue that
customer engagement (CE) involves transactional
behaviors and therefore, marketers measure the
transactional outcomes as the proxy of CE. In
contrast, Kumar et al. (2010) assume that as an
overarching new customer value, the CEV metric
should capture both transactional value— such as
customer lifetime value (CLV)—and non-
transactional value—for instance, customer referral
value (CRV), customer influence value (CIV), and
customer knowledge value (CKV). Following the
principles of Kumar et al. (2010),
Integrating Social Media and Traditional CRM
we attempt to develop relevant metrics for
CKV, CIV, CRV, and CLV, depending on
customer types in their life cycle. We also
identify marketing cost related metrics in the
perspective of return-on–investment (ROI).
SOLUTIONS AND
RECOMMENDATIONS
Our guidelines for social CRM practices are built
on the conceptual framework for CRM strategy
which is suggested by Payne and Frow (2005, p.
171) given the assumption that social CRM is
one branch of traditional CRM practices. The
strategic framework that Payne and Frow
propose for the CRM strategy consists of five
major processes such as strategy development,
value creation, multichannel integration,
performance assess-ment, and information
management process. We propose our social
CRM guidelines by focusing on how to
increase the likelihood of customer engagement
into the value creation process with the firm.
From the holistic perspective, our guidelines are
the outcome of integrating the concepts of value
creation process (Boulding et al., 2005; Payne and
Frow, 2005), two-step flow of communication
(Lazarsfeld et al., 1944; Katz, 1957), relationship
communication (Duncan and Moriarty, 1998;
Lindberg-Repo and Gronroos, 2004; Finne and
Gronroos, 2009), relationship marketing (Sheth and
Parvatiyar, 1995; Parvatiyar and Sheth, 1999),
customer engagement using social media (Verhoef,
Renartz, and Krafft, 2010; Bijmolt et al., 2010;
Brodie, Hollebeek, Juric, and Ilic, 2010), word-of-
mouth activities for social contagion (Dodson and
Muller 1978; Godes and Mayzlin, 2004; Iyengar,
Van den Bulte, and Valente, 2011), and social CRM
metrics along with customer lifetime value (Gupta
and Lehmann, 2006; Gupta et al., 2006; Kumar,
2008) into the Model of Consumer Dynamics
of Status (Yoon and Kang, 2011) which makes
it possible to account for consumer
heterogeneity in customer life cycle.
Through integrating each of the above concepts
and processes into a single conceptual framework,
we recommend practical and relevant guidelines
that provide unique insights for implementing social
CRM practices. A key benefit of this in-tegrative
framework is its utility despite shifts in existing
(e.g., Facebook, Twitter, LinkedIn, Pinter-est, etc.),
obsolete (e.g., MySpace), or emerging social media
platforms. Rather than focusing on chronicling the
numerous social media platforms that may come
and go, the aim of this conceptual framework is to
assist marketers in retaining a focus on the value
creation process for each type of consumer group
while using their desired social media platform—all
in an effort to manage rela-tionships over time.
Also, it should be noted that numerous measurement
approaches and metrics exist, which are not fully
discussed in this frame-work, including social media
analytics (Etlinger, 2011), predictive analytics
(Halper, 2011; Shmueli and Koppius, 2011),
automated sentiment analysis (Pang and Lee, 2008),
and social network analysis (Wasserman and Faust,
1994; Burt, Kilduff, and Tasselli, 2013). Rather than
offering an exhaus-tive account of every metric and
measure, this framework offers examples of certain
metrics and measures in an effort to demonstrate
utility for CRM practitioners. We summarize the
guidelines of social CRM practices in the process of
making individual customers loyal when targeting
each type of customer group based on their
respective status in the life cycle over time such as
potential buyers, first-time buyers, competitors’
repeat cus-tomers, and my repeat customers. The
summary is shown in Table 2. Now, we discuss the
details of our guidelines for social CRM practices
for each type of consumer group over time.
117

Table 2. Guidelines for social CRM practices and metrics by customer types
Evaluation Criterion Targeting
Potential Buyers
Major Goal for Making them first-time
Targeting buyers (FTBs).
Underlying Marketing Acquiring potential buyers
Concepts and (PBs) based on adoption/
Strategies diffusion and IMC
processes.
Key Challenges in Creating and
the Value Creation communicating the value
Process proposition for building
new relationships.
Major Focus of Creating new relationships
IMC Persuasive with PBs using the new
Communication value proposition by:
Strategies • Shaping: Sharing new
for Relationship features in the value
Building proposition.
• Reinforcing: Highlighting
positive aspects of
prevailing attributes.
• Changing: Increasing
the likelihood of first-time
product purchase.
Role of Social Listening to customer
Media in Customer opinions for identifying
Engagement target customers’ unmet
needs.
Suggested Metrics for Measuring the effectiveness
Social CRM Practices of building new
relationships with PBs
using:
• Metrics for customer
engagement: Customer
knowledge value (CKV),
customer influence value
(CIV), customer sentiment,
etc.
• Metrics for IMC
persuasive comm.:
Awareness, liking,
preference, intention, trial,
etc.
• Metrics for marketing
cost: New customer
acquisition cost, etc.
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Integrating Social Media and Traditional CRM
Targeting Targeting Targeting
Competitors’ Repeat First-Time Buyers My Repeat Customers
Customers
Generating frequent Making them my repeat Making them loyal to
switching behaviors. customers (MRCs). the company.
Attracting competitors’ Retaining first-time Growing my repeat
repeat customers (CRCs) buyers based on repeat, customers based on
based on switching renewal or replacement the loyalty formation
and share-of-wallet processes. process.
maximization processes.
Redesigning the existing Assessing the value Emphasizing emotional
value proposition for proposition with gap attachment in the value
stronger competitive analysis for maximizing proposition for creating
advantages. overall satisfaction. loyalty.
Creating new Creating continued Sustaining continued
relationships with CRCs relationships with my relationships with
using the redesigned FTBs using the assessed MRCs using an
value proposition by: satisfaction results by: emotional-oriented value
• Shaping: Sharing key • Shaping: Sharing key proposition by:
features in the new value features that address • Shaping: Sharing key
proposition. dissatisfaction in the features that address
• Reinforcing: value proposition. rebuy commitment in
Reminding about the • Reinforcing: the value proposition.
original customer needs. Reminding about the • Reinforcing:
• Changing: Increasing satisfied features in the Reminding competitive
the likelihood of their value proposition. aspects of key features in
switches. • Changing: Increasing the value proposition.
the likelihood of their • Changing: Increasing
repeat purchases. the likelihood of
transitioning from
habitual behaviors to
emotional attachment.
Listening to Listening to customers’ Interacting with
customer opinions complaints and customers in a loyalty-
for understanding interacting with building relationship
competitive advantages customers for improving process to create brand
of competing brands. company brand and ambassadors.
customer satisfaction.
Measuring the Measuring the Measuring the
effectiveness of effectiveness of effectiveness of loyalty-
switching-induced satisfaction enhancement building programs using:
programs using: programs using: • Metrics for customer
• Metrics for customer • Metrics for customer engagement: CKV, CIV,
engagement: CKV, CIV, engagement: CKV, CIV, CRV, CLV, customer
customer sentiment, etc. customer referral value commitment rate, etc.
• Metrics for IMC (CRV), CLV, consumer • Metrics for IMC
persuasive comm.: sentiment with number persuasive comm.:
Awareness, liking, of complaints, etc. Customer retention rate,
preference, intention, • Metrics for IMC customer attrition rate,
trial, etc. persuasive comm.: lead to sales, etc.
• Metrics for marketing Customer satisfaction • Metrics for marketing
cost: Customer using gap analysis, cost: Customer churn
conversion cost, cost for response time to rate, customer matching
switching, etc. customer demands, etc. cost, etc.
• Metrics for marketing
cost: Customer churn
rate, etc.
Integrating Social Media and Traditional CRM
Targeting Potential Buyers (PBs)
In an attempt to build and manage long-term
profitable relationships throughout time with
customers, social CRM practices start with the
task of identifying potential buyers (PBs) for a
specific company brand. Given the identification
of the PBs, a major goal of this targeting strategy
is to make the PBs first-time buyers (FTBs) by
implementing an acquisition strategy based on the
diffusion/adoption and IMC processes.
When incorporating the customer engagement
into the value creation process, a key challenge is
how to create and communicate the value proposi-
tion of a specific brand with the PBs in order to
build new relationships with them. Using social
media and social media monitoring, marketers may
listen to customer opinions for identifying unmet
needs of target customers and for identifying major
trends with respect to their needs in an at-tempt to
promote customer engagement. Through social
media monitoring, marketers can listen to customer
opinions, nWOM (negative word-of-mouth),
fraudulent or planted reviews, and other types of
secretive or detrimental activities that can occur
across multiple social media platforms.
Given this challenge, CRM practitioners
usually design IMC persuasive communication
strategies by following the stages in the shaping-
reinforcing-changing process in order to change
the status of the PBs into the FTB status. For
instance, marketers shape PBs’ new beliefs about
the target brand based on the value proposition,
reinforce their existing beliefs by highlighting
positive aspects of prevailing attributes in the
value proposition, and change their behaviors
toward the trial of the target brand by increasing
the likelihood of a first-time product purchase.
The effectiveness of building new relation-
ships with the PBs can be measured using various
types of metrics related to customer engagement,
IMC, and marketing cost. Examples of customer
engagement metrics can be the likelihood of
giving feedback for customer knowledge value
(CKV, Kumar et al., 2010), the number of re-
views and product expertise customer sentiment
for customer influence value (CIV, Kumar et al.,
2010), the frequency of posting opinions on
websites or blogs, and the frequency of pressing
‘like’ or posting comments in Facebook, among
others. IMC-related metrics can be ones related to
awareness, knowledge, liking, preference, inten-
tion, and trial or purchase following the stages in
the hierarchy-of-effects model (Belch and Belch,
2007). Finally, metrics for marketing cost are new
customer acquisition cost (CAC), messaging cost,
and advertising cost per customer, among others.
Targeting Competitors’
Repeat Customers (CRCs)
The goal of targeting competitors’ repeat cus-
tomers (CRCs) is to generate frequent switching
behaviors from a competing brand to the
company brand and become my repeat customers
eventually via the process of maximizing share-
of-wallet (SOW, Magi, 2003; Cooil, Keiningham,
Aksoy and Hsu, 2007). For this task, marketers
usually design an attraction strategy, even though
it is a very costly effort (Kotler and Keller, 2009).
When incorporating the customer engagement
into the value creation process, a key challenge is
how to communicate the redesigned value
proposition of the company brand with the CRCs in
order to rebuild new relationships with them. Using
social media and social media monitoring,
marketers may listen to customer opinions for
identifying new sources of competitive advantages
in an attempt to promote customer engagement.
Through social media monitoring, marketers can
listen to CRC opinions, and nWOM, among other
forms of social media content that can occur across
multiple social media platforms.
Given this challenge, CRM practitioners need
to implement IMC persuasive communication
strategies with a redesigned value proposition.
For instance, marketers shape CRCs’ new beliefs
about the target brand based on the redesigned
119

value proposition, reinforce their existing beliefs
by highlighting positive aspects of prevailing at-
tributes in the new value proposition, and change
their prior behaviors toward the trial of the target
brand by increasing the likelihood of making their
switches.
The effectiveness of rebuilding new relation-
ships with the CRCs can be measured using various
types of metrics related to customer engagement,
IMC, and marketing cost. Similar to the case of the
PBs, examples of customer engagement metrics can
be the likelihood of giving feedback for CKV, the
number of reviews and product ex-pertise customer
sentiment for CIV, the frequency of posting opinions
on websites or blogs, and the frequency of pressing
‘like’ or posting comments in Facebook, among
others. IMC-related metrics can be ones related to
awareness, knowledge, lik-ing, preference, intention,
and trial or purchase following the stages in the
hierarchy-of-effects model. Finally, metrics for
marketing cost are new customer attraction cost
(CAC), messaging cost, and advertising cost per
customer, among others.
Targeting First-Time Buyers (FTBs)
Once the PBs become first-time buyers (FTBs), the
next step is to make the FTBs my repeat customers
(MRCs) by generating their first repeat, renewal, or
replacement purchases with the company brand.
When targeting the FTBs, a major challenge is
how to maximize their overall satisfaction with the
chosen brand since customers will not be involved
into the next repeat purchase without satisfaction. To
measure overall satisfaction of target customers,
marketers are usually using gap analysis (Parasura-
man, Zeithaml, and Berry, 1985; Zeithaml, Berry,
and Parasuraman, 1988) or a survey questionnaire.
Using social media and social media monitoring,
marketers can also listen to customer complaints for
understanding the sources of dissatisfaction and
improving the quality of the company brand.
Through social media monitoring, marketers can
learn key themes of nWOM and other types of
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Integrating Social Media and Traditional CRM
secretive or detrimental activities which may be
initiated by competing brands that can become
a barrier to creating MRCs.
Given this challenge, CRM practitioners de-
sign IMC persuasive communication strategies in
order to create continued relationships with the
FTBs based on the assessed satisfaction results.
Specifically, marketers are likely to share key
features which address dissatisfaction in the value
proposition to make them corrected.
The effectiveness of building continued
relationships with the FTBs can be measured
using various types of metrics similar to those for
the PBs. However, more measures should be
developed for customer referral value (CRV) and
customer lifetime value (CLV), in addition to
CKV and CIV. For instance, CRM practitioners
may consider number of referrals, likelihood to
recommend, tendency to use social media and
blogs for CRV (Kumar et al., 2010) and satisfac-
tion, purchase intent, acquisition rate, retention
rate for CLV (Kumar et al. 2010). IMC-related
metrics can be satisfaction-oriented measures,
and response time to customer demands, among
others. Finally, metrics for marketing cost are
customer churn rate and cost of initiating loyalty
programs, among others.
Targeting My Repeat
Customers (MRCs)
From the perspective of loyalty and relationship
marketing, a major goal of targeting my repeat
customers (MRCs) is to make them truly loyal after
generating a series of successive repeat purchases.
For this task, CRM practitioners may consider the
loyalty formation process. For instance, Oliver
(1997) argues that individual customers tend to form
cognitive loyalty first, followed by affective loyalty
and conative loyalty, before forming action loyalty
as assumed in the four-stage loyalty model.
In recent years, marketers have used various
types of loyalty or reward programs to induce a
series of repeat purchases and ultimately loyalty
Integrating Social Media and Traditional CRM
behaviors. However, some scholars and practitio-
ners have questioned the effectiveness of these
programs since attractive rewards are likely to
induce the repeat purchases of retained customers,
not true loyalty behaviors (Dowling and Uncles,
1997; Whyte, 2004). Due to this reason, a key
challenge is how to develop customer emotional
attachment to the target brand in order to promote
customer engagement into the value creation pro-
cess. Note that emotional attachment is likely to
be one of the driving forces toward true customer
loyalty (Hallberg, 2004 and Papdatos, 2006 for
storytelling; Funk and James, 2006; Patwardhan
and Balasubramanian, 2011). Another challenge is
how to interact with current retained customers
using social media in a loyalty-building process to
eventually transform them into brand ambas-
sadors. Through social media and social media
monitoring, marketers can routinely interact with
MRCs and listen for opportunities to cultivate
loyalty formation processes and brand ambassa-
dors. Through social media monitoring, marketers
can listen for evidence of interactions initiated by
brand loyalists as well as listen for nWOM or
other forms of secretive or detrimental activities
which may be initiated by competing brands in an
effort to remove the stronghold developed with
truly loyal customers.
Considering this challenge, marketers may
design IMC persuasive communication strategies
for promoting customers’ rebuy commitment at
the shaping stage, reminding competitive aspects
of key features in the value proposition at the re-
inforcing stage, and increasing the likelihood of
transitioning from habitual behaviors to emotional
attachment at the changing stage.
The effectiveness of the loyalty-building re-
lationship process with MRCs can be measured
using various types of metrics related to customer
engagement, IMC, and marketing cost. Similar to
metrics with FTBs, examples of customer engage-
ment metrics may include a variety of measures for
CKV, CIV, CRV, and CLV. IMC-related metrics
are customer retention rate, customer attrition
rate, and lead to sales, among others. Finally,
metrics for marketing cost are customer churn
rate and customer matching cost, among others.
FUTURE RESEARCH DIRECTIONS
A number of proven and useful concepts exist
that individually account for relevant and very
important marketing and CRM processes. How-
ever, an integrative approach that unites each of
these concepts into a single framework for social
CRM practice is rare, if not non-existent. The
primary aim of this chapter has been to share the
relative merits of each of these concepts and
combine them in an integrative conceptual
framework that provides much-needed guidelines
for social CRM practice in a way that accounts
for consumer heterogeneity over time. In order to
use our guidelines in social CRM practices, CRM
practitioners need to consider the following issues
as discussed below.
Viability of Our Guidelines
for Social CRM
The first condition for the viability of our guide-
lines depends on the company-level process of
gathering customer information using an IT sys-
tem that can equip the firm with better customer
knowledge over the customer life cycle. This
condition is related to a current hot issue of Big
Data (McKinsey Global Institute 2011). In recent
years, we have witnessed explosive growth in the
amount of data around us. As a typical example,
Facebook users create tons of information every-
day by posting their own shopping opinions or
comments to other friends’ opinions. Facing the
new era of big data, CRM practitioners should be
ready to change their entire information process
for improving competitive advantages of the firm
and creating the value for target customers. This
121

is the reason that the Marketing Science
Institute (MSI) marked this issue as one of top
research priority – Leveraging Research Tools
and New Sources of Data (MSI 2010).
Along with this new perspective on the data
gathering process, social CRM practitioners also
need to develop a mix of two-way relationship
communication channels including social media in
order to achieve the goals of social CRM—i.e.,
promoting high levels of customer engagement into
the value creation process and ultimately, building
and managing long-term profitable relationships
with target customers. As mentioned previously,
marketers have started coordinating traditional
communication channels and social media as the
fifth element in the promotional mix together with a
perspective on relationship- and loyalty-building
processes. As one activity, Hennig-Thurau et al.
(2010) consider the impact of new social media such
as Facebook, YouTube, and Twitter, among others
on building and managing customer rela-tionships.
In addition, more in-depth discussion is needed on
how to promote engaged efforts of customers into
the firm’s value creation process in a win-win
situation.
Finally, another important condition for mak-
ing social CRM practices successful is to con-
ceptualize the concept of customer engagement
(CE) or social engagement (SE) in the context of
value creation, along with the identification of
relevant metrics. As mentioned before, it is not
possible to maximize the effectiveness of social
CRM approaches without this effort since
custom-ers’ voluntary participation into the co-
creating efforts is a critical requirement for the
success of the program. In addition, inappropriate
and incomplete use of relevant social CRM
metrics can put the firm at the risk of generating
long-term failure (Boulding et al., 2005). Thus,
the tasks of conceptualizing, operationalizing, and
measuring the customer engagement construct are
topics for future research.
122
Integrating Social Media and Traditional CRM
New Perspective of
Creating Shared Value
For several decades, at the bottom of any market-
ing activities has been an exchange process of the
value—in the form of a product, service, or
market offering—between sellers and customers.
Driven by the efforts of the American Marketing
Association (AMA) in recent years, however,
marketing scholars have attempted to shift their
major paradigm from the exchange process to the
value creation process (Sheth and Uslay, 2007;
Yoon and Tran, 2011). As one of these efforts,
marketers often regard marketing activities as the
value creation and delivery process (Kotler and
Keller, 2009). Beyond this paradigm change,
another group of scholars have started
considering the role of corporate social
responsibility (CSR, Porter 2006) on firm’s
performance and further-more, have found ways
to maximize the social value from the perspective
of creating shared value (CSV, Porter, 2011).
Findings of the extant research indicate that
there is a positive relationship between corporate
social responsibility and financial performance
(Piercy and Lane, 2009; Surroca, Tribo, and
Waddock, 2010; Lacey and Kennett- Hensel,
2010). As stated previously, the main idea of the
value creation process is based on the con-cept of
dual creation of the firm and customer value, not
the society value or social value from the society
perspective. Given this emerging trend, CRM
practitioners may ponder the task of
reinterpreting the value creation process as the
core part of social CRM practices with the
process of creating shared value. Stated differ-
ently, marketers may consider a new perspective
on the value creation process—i.e., considering
the tri-creation of the customer, the firm, and the
society value as the core of social CRM. This is
an important issue for future research in the social
CRM field.
Integrating Social Media and Traditional CRM
CONCLUSION
CRM is a business strategy to create, retain,
and grow profitable relationships with
customers over time in a two-way interactive
communication process, using gathered
customer knowledge via an IT system.
Thus, it can be said that CRM is about a mix
of customers, process, and strategy
implemented over time.
In this regard, this book chapter attempts to
provide the guidelines for personalized social CRM
practices, depending on the heterogeneous status of
individual customers over the life cycle. For the
preparation of the guidelines, we specifi-cally
discuss how individual customers become adopters
after trying the company brand and later loyal
customers in a loyalty-building process. We also
discuss how to reconceptualize the traditional
communication process from the relationship
perspective in Figure 3. And, we prepare our
guidelines by discussing how to promote customer
engagement into the value creation process using
social medial as well as traditional mass media.
A major contribution of this study is to provide
an integrated framework—from a holistic perspec-
tive—which allows CRM practitioners to design,
implement, and manage the efforts of social CRM in
order to make consumers loyal in the end, using
IMC persuasive communication strategies asso-
ciated with both traditional mass and new social
media. This framework is characterized with two
key features. First, the social CRM strategy is based
on consumer heterogeneity in purchasing experience
as consumers change their status in the Model of
Consumer Dynamics in Status as shown in Figure 1.
Using this conceptual frame-work, marketers are
able to provide customized or personalized
marketing and IMC programs, along with proper
metrics for measurement, de-pending on the needs
as well as characteristics of the target group of
consumers. Second, this study
allows marketers to capitalize on various types
of traditional mass media and new social media
in an attempt to promote their engagement into
the value creation process.
This chapter is not without limitations. Since
the manuscript provides a conceptual framework
and offers guidelines for social CRM practices by
integrating various existing concepts and
processes, there is a lack of empirical evidence to
support our argument. Thus, more empirical
studies can be designed to test the feasibility of
our conceptual framework in the future.
Welcome to the new world of Social CRM! In
the era of new social CRM, it is necessary for you
as a CRM practitioner to have a more expansive
way of thinking about traditional CRM practices in
order to induce a full level of customer engage-ment
into the value creation process, to make customers
emotionally attached to the company brand, and
ultimately, to develop and manage long-term
profitable relationships with customers. The
conceptual framework we offer should assist CRM
practitioners as they usher in this new era and as
they engage in efforts to re-conceptualize traditional
IMC modes of thought with the unique role and
metrics of social media. By moving toward a more
relationship-building perspective that incorporates
the status of individual customers over the life
cycle, we believe CRM practitioners will be more
poised for the new social CRM.
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Integrating Social Media and Traditional CRM
KEY TERMS AND DEFINITIONS
Customer Engagement: As a psychological
state, it happens when individual customers have
ongoing experiences with a firm in a dynamic,
interactive, and co-creative process of value.
Customer Heterogeneity: It describes the
degree to which individual customers are
unique and different from each other in a
defined target market.
Customer Relationship Management
(CRM): It is a firm’s strategic approach to
build and manage long-term relationships with
customers—based on the co-creation process of
dual values—from the perspective of
relationship marketing.
Model of Consumer Dynamics in Status:
As a new conceptual framework, it describes
how each potential buyer becomes first-time
buyer, my or competitor repeat customer before
becoming a loyal one, depending on the stages
of customer life cycle. This model is introduced
to account for consumer heterogeneity in the
adoption and loyalty-building process.
New Communication Process: Unlike the
traditional communication process which fo-
cuses on the communication efforts of firms with
customers using mass media, it emphasizes the
perspective of two-step communication process
which includes mass media—i.e., between a firm
and an opinion leader—and interpersonal com-
munication functions—i.e., between an opinion
leader and opinion seekers.
Relationship Communication Strategy: It
focuses on the building and managing interactive
relationships with customers in the context of
 Integrating Social Media and Traditional CRM
persuasive integrative marketing communications
(IMC) efforts. Specifically, it focuses on building
new relationships with potential buyers, manage
interactive relationships with existing customers,
and finally, promoting engagement efforts of
com-mitted customers into the value creation
process toward the goal of social CRM—i.e.,
making customers truly loyal.
Social Analytics: The firms need various
types of social CRM metrics or measures—
called social analytics—to measure the
effectiveness of new social CRM practices.
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Social CRM Practice: It is a strategic business
practice of creating more customer engagement
through social media in an attempt to build and
manage long-term profitable relationships with
customers. In fact, it happens after combining
traditional CRM with social media.
Social Media: It refers to the collection of
media which allows people to interact by
creating, sharing, and exchanging user-generated
content in virtual communities and networks.
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