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CRM has traditionally referred to a company managing relationships with customers. The rise of social media, which has connected and empowered customers, challenges this fundamental raison d'etre. This paper examines how CRM needs to adapt to the rise of social media. The convergence of social media and CRM creates pitfalls and opportunities, which are explored. We organize this discussion around the new “social CRM house,” and discuss how social media engagement affects the house's core areas (i.e., acquisition, retention, and termination) and supporting business areas (i.e., people, IT, performance evaluation, metrics and overall marketing strategy). Pitfalls discussed include the organization's lack of control over message diffusion, big and unstructured data sets, privacy, data security, the shortage of qualified manpower, measuring the ROI of social media marketing initiatives, strategies for managing employees, integrating customer touch points, and content marketing
The premise of CRM is that the firm could, and should, manage relationships with its customers to maximize lifetime value, an objective that benefits only the firm. Social media and other new technologies have empowered consumers. Technologies have also enabled consumers to filter out advertising and CRM messages, compare prices with competitors from anywhere with mobile devices, and distribute positive or negative brand messages to a global audience. CRM must evolve if it is to survive in this marketplace, by producing contact points that engage the consumer and provide value to both the company and consumer. Despite our focus on the various challenges associated with social CRM, we are by no means naysayers with regard to the use of social media in CRM strategies. Rather, we believe that by fully recognizing these challenges, companies and researchers will be better able to address them.