Voices of CRM

Jul 7 2011   10:26PM GMT

Social CRM, Versace-style

Rosemary Cafasso Profile: Rosecafasso

This week, Versace, a world-renowned fashion company, was dubbed “dumb’’ and “just plain stupid,’’ by social CRM analysts when it was reported that it scrubbed its Facebook page of negative customer comments concerning a production process and blocked any new comments from the page.

“They are inflaming a crisis, rather than containing a negative buzz’’ said Paul Greenberg, president of The 56 Group LLC in Manassas, Va. “I’m continually amazed by the lack of intelligence that is shown by some of these extraordinarily well established brands.’’

Versace was not available for comment.

According to reports, Versace customers were protesting because of its use of a particular sandblasting process on a line of jeans. The process can be dangerous to workers doing the sandblasting because they may inhale the tiny particles it releases into the air.

Instead of providing a direct response to customer concerns, Versace reportedly shut-down its critics, which analysts said was exactly the wrong thing to do.

Denis Pombriant, president of Beagle Research in Stoughton, Ma., said trying to exert that kind of control over customers will not work anymore because of the transparency social media creates. “Consequently the news of the cover up will be worse and have a more profound effect than the act itself,’’ Pombriant added.

To be fair, Versace isn’t the first company to create a preventable social media storm and it will not be the last. United Airline’s mishandling of disgruntled customer Dave Carroll led to what is now the legendary “United Breaks Guitars’’ song on You Tube. It continues to be watched and has had more than 10 million views. Or, take a look at Nestle. How does a chocolate maker get into trouble? When it is unexpectedly faced with environmentalists on Facebook urging boycotts because of a certain palm oil it used.

Analysts said this week’s Versace incident is yet another lesson in social CRM and how critical it is for companies to change how they interact with customers. As Greenberg pointed out, Versace may have blocked customers from posting nasty remarks on its site, but it can’t stop them – or others – from putting up even angrier comments on other channels. A quick glance at #versace on Twitter clearly illustrates that.

What the Versace incident underscores is the changing definition of a brand, analysts added. Many companies are still struggling to grasp that they don’t exclusively own their own brand anymore.

As Marcel LeBrun, chief executive of social media company Radian6, said at a Salesforce.com conference earlier this year: “Our customers have a much bigger voice and trust each other more than companies. Brand now means the sum of conversations about you.”

Analysts point out that smart companies are getting this shared-ownership concept of a brand.

“Social media gives consumers more power than ever before to connect with others and share their opinions, all in the public domain,’’ said Zach Hofer-Shall, an analyst with Forrester Research in Boston.

“Adaptive companies will embrace this shift and transparently connect with customers,” he added. “Other companies may resist this evolution and will struggle to maintain their image.’’

Perhaps Versace could take a tip from the Red Cross, which recently demonstrated how it is adapting. When an employee accidentally tweeted about getting drunk, the company owned up to it, responded and encouraged feedback. The incident turned out as a positive and actually caused a spike in donations for the organization.

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