Governance & Organizational Design for World-Class Social Media & Customer Management Programs

Governance & Organizational Design for World-Class Social Media & Customer Management Programs

By Steven M. Jeffes
1) Background – Lack of Effective Governance can Wreak Havoc on Social Media & Customer Management Programs
In my previous blog entry titled “Social Media Pitfalls and Mistakes – the Seven Deadly Sins of Social Media Programs”, I covered the major mistakes companies make when developing and managing enterprise level Social Media programs.  One of the points that I focused on was not developing an effective governance model and organization in order to oversee and manage the strategic direction and overall success of a social media program.
The lack of an effective social media governing organization is the most widely encountered issues by companies and can, by far, be the most damaging to the activities of social media & customer management program. An effective governance model is absolutely critical and will directly influence the overall quality of a social media and customer management program.  The following lists the potential impact of not having an effective governance model for your social media and customer management programs:
1) Inconsistent and overlapping customer communications
2) Infighting amongst departments and functions leading to highly inefficient operations
3) Inefficiencies and cost escalation due to inter-departmental duplication of effort
4) Programs that are consider unfair, confusing, inconsistent and ineffective by stakeholder and customer groups
5) Inability to improve or scale the program due the lack of focus on cross-organizational continuous improvement
The bottom line, if you can’t develop an effective governance model, you are not likely to have a very good social media & customer management program. The remainder of this blog post will highlight the critical considerations in developing a highly effective social media and customer management (CRM)
governance model.
       The following chart (Chart 1) from my firm’s SMARTE methodology depicts two different governance models for social media and customer management. On the left, governance of social media and customer management is performed with brand silos, each having their own unique version of dealing with their stakeholders and customers. While each program is effective in each silo and meeting the needs of the specific brand, there are many issues created from a company and stakeholder management perspective. There also many missed opportunities in terms of revenue optimization and cost containment.

Chart 1

In addition, the left side governance model in silos is prone to the following:
1) Duplication of effort between brands – higher costs
2) Lost customer management opportunities (i.e. cross/up-sell) – lost revenue
3) Lack of focus on cross-company efficiency and continuous improvement – higher costs
4) Perception by customers that the social media and customer management programs are not very effective – lost revenue, wasted capital
5) Frustration by employees of continually having to reinvent the wheel in terms of programs and customer interactions – higher costs

As seen below in Chart 2, the left side governance model in silos is much more likely to generate frustration and contempt from the customer’s perspective vs. the holistic governance model on the right. Refer to the following chart for a sample of the different types of customer comments each of these governance models is likely to generate. Obviously, the left side of the chart generates many more positive stakeholder and customer comments and it much more likely to result in higher customer loyalty, share of wallet, customer cross/up-sell opportunities and will generally result in lower costs and higher revenue.

Chart 2

Based on the above outcomes on both sides of the chart, the following rules apply to social media and customer management (CRM) governance:
Programs In Silos Stifle Effective Delivery (PISSED) – 
      These silo’s programs tend to create PISSED   
      stakeholders & customers
due to perceived inconsistent,
      inefficient and ineffective program delivery
Programs Leveraged Enterprise-Wide Aid Synergistic & Effective Delivery (PLEASED)
      Remember,  these non-silo’d programs tend to create 
      PLEASED stakeholders & customers due to perceived
      consistent, efficient and effective program delivery.

2) Impacts from Ineffective Social Media & Customer Management Program Governance

Based on my firm’s SMARTE methodology (SMARTE stands for “Social Media Adaptive/Responsive/Transcendent Enterprise”) and direct client experience, I have found that in order for Social Media and CRM programs to be highly effective, a company must develop and maintain an organization design and corresponding governance structure that maximizes the ability of the company to build and leverage enterprise-wide synergy. This governing structure must be built to avoid developing programs that exist in brand or channel specific silos such whereby everyone is developing their own flavor of social media and customer management that appears to the outside world to be inconsistent, unfair, non-relevant, unappealing or just another one-off initiative.
The following are the top 5 Impacts of poor organizational design and governance for social media and customer management programs from both an internal and external perspective:

Internal Impacts of Poor Organizational Design & Governance:
1. Many individual departments are attempting to develop their own flavor of Social media without any regard to consistency
2. Infighting exists between functions & departments on which direction the SM program should take
3. The department(s) that led the introduction of the social media program thinks they own the social media program and is attempting to control the program by dictating program rules, standards, policies, etc.
4. Lessons learned and cross-brand insights are not being cultivated and leveraged for the benefit of the entire company vs. individual brands
5. Social Media & customer initiatives seem ad-hoc and are really not driven by solid metrics, business cases, enterprise-wide strategic business plans, etc.

External Impacts of Poor Organizational Design & Governance:

 1. Stakeholders & customers receive contradictory messages from organizational silos (i.e. different brands, different messages – brand A special vs. brand B special discount vs. valuable customer total discount – all brands)
2. Stakeholders & customers are treated inconsistently based on the department they are interacting with or channel they are interacting with (Facebook vs. Twitter, on-line vs. traditional off-line channels)
3. Stakeholders & customers find your company’s content and messages ad-hoc (vs. themed) in terms of relevancy, timing, venues by which messages are communicated, etc.
4. Stakeholders and customers are not recognized cross-functionally, but rather just in brand silos which tends to create frustration (i.e. “I just told ‘brand A’ my preferences, why do I have to repeat this all over again for brand B!?”)
5. Stakeholders and customers are not treated differently based on their specifics needs and enterprise-wide profile (e.g. valuable customers that buy both brands A and B do not receive differentiated ‘valuable customer’ treatment across the company)


3) Best Practice Social Media & Customer Management Governance Design Principles:

In order to avoid a sub-optimized governance model and one that is in silos, some best practice design principles must be followed when developing and/or optimizing a social media or customer management program. The following chart (Chart 3) depicts a very small sample of the governance design principles put forth in my firm’s SMARTE social media methodology:

Chart 3

These governing principles are accompanied by an entire set of practices and methods for developing a governance model and corresponding governing organization. These were developed following over 50 successful consulting engagements on Fortune 500 clients involving the development and/or improvement of social media and customer management programs.
4) Sample Governance Organizational Structure:
A very typical governing organization for social media and customer management is shown in the following chart (Chart 4):

Chart 4

The key message in this chart is as follows:
1)  Policy and strategy for social media and customer management program must be holistic, based on cross-functional leadership direction that is applied and leveraged enterprise-wide
2) Program planning and tactics must be developed by mid-managers who have direct expertise and responsibility for stakeholder and customer communications & touch-points.
3) Operations and Interactions must be carried out by professionals who are well versed in customer management, social media interactions (i.e. social media conversation managers – topic to be covered in a future blog post), and who are incentivized to optimize the customer experience to the point of best in class stakeholder and customer excellence.

5) Conclusion & Share Your Stories:

The bottom line here is that, without a strong and well thought-out governance model for customer management and social media, you will likely end up with a chaotic and ineffective program.  Trust me I know as I am hired by many companies to help re-engineer the situation after they have gone awry. Anybody wanting to hear more about social media governance, please feel free to give me a call. 

Anybody else run into governance issues that they’d like to share?

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