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Has Social Media Killed This One Critical Sales Tool?

This post original appeared on Ryan Holmes’ LinkedIn Thought Leadership Blog.

We like to think we’ve turned marketing and sales into a fine-tuned science.

Generations of salespeople have been schooled in the concept of the sales funnel, the more-or-less linear journey customers take as they progress along the path to purchase. At the top of the funnel, marketing – from PR to paid ads – builds awareness and interest. Deeper down, things like opt-in email campaigns and white papers drive leads. At some point, the sales team kicks into high gear, courting hot leads and converting opportunities to sales. Finally, the customer is spit back out the bottom of the funnel to, theoretically, begin the journey anew.

The idea of the sales and marketing funnel is so entrenched that in recent decades a multi-billion-dollar software industry has sprouted to track and guide it. It’s called customer relationship management (or CRM): high-priced apps and programs that help companies acquire and identify leads and usher them neatly through distinct stages of the funnel.

The funnel fallacy

The problem is that nothing about the funnel is neat. It has always represented an idealized journey and, in the era of social media, it increasingly represents a fictional one. Customers are navigating their own paths to purchase. They’re learning about products in new ways and from new sources, not just from ads and marketing collateral. They’re entering the funnel then exiting, distracted by other offers. In short, now more than ever there is no pre-determined path to purchase, no series of predictable steps to a sale. Not to mention that these days a sale hardly represents the end of a customer’s journey. Ideally, it’s just the beginning.

The implications here are twofold. First, even getting customers into the funnel involves more guesswork and inefficiency than ever. Audiences are fragmented. Paid ads are lost in a cacophony of competing offers on a multiplying number of channels. At the same time, customers are bypassing ads and branded content altogether, instead seeking out objective information on review sites and social media. Companies are lavishing spending on ads and churning out ever more “content” yet getting fewer results

The other major consequence of changing customer habits is that software suites built around the linear concept of the funnel have grown out of date. CRM tools, for example, are great at keeping track of huge numbers of leads for salespeople, qualifying them and documenting any interactions – but they depend on customers playing by the old rules and reaching out to companies through classic channels like email. Tracking social media interactions – not to mention mapping the journeys of increasingly fickle consumers who scour online review sites and comparison shop instead of obediently plunging down the sales funnel – has thus far proved elusive.

All of this is borne out by the recent (and dramatic) spending sprees by big software players struggling to play catch up. Since 2011, Oracle, IBM, Salesforce, Adobe and Microsoft have spent billions in an effort to upgrade their marketing and CRM suites with social media capabilities. Nearly each month brings news of new acquisitions and product launches. But there’s one big problem: social media isn’t simply a new stage of the sales funnel that can be layered on top of the old model.

Sales in the social media era

Channels like Twitter and Facebook represent a different, decentralized and non-linear way for customers to learn about, interact with and compare companies and their products. In one respect, this represents a huge challenge. Simply tracking – not to mention influencing – the dialogue on fast-multiplying numbers of social channels can be a daunting proposition for brands.

But, at the same time, social media is remarkably effective at driving more prospects into the top of the funnel. And, used correctly, it can also compress and cut out entire stages (as when a salesperson reaches out to a hot lead directly on Twitter) and it can give consumers countless new entry and exit points (as when prospects turn to Facebook for feedback from friends before purchasing).

Consider the relatively simple example of a customer searching for a new car. Awareness is built not just through TV and print ads but through word of mouth on Facebook and Twitter. In many cases, online friends and followers help narrow down options, steering the buyer toward a particular model. Then comes the research phase – poring through online reviews, blogs and other resources. By the time the buyer makes contact with the car company itself – visiting its website or actually going to a dealership – she’s already deep into the funnel. But sales staff may be completely oblivious to her history. Furthermore, our theoretical buyer is by no means hooked at this stage. Strategic social ads on her Facebook account or new input on Twitter, for example, might send her careening in a new direction. Finally, if she does purchase, the cycle is far from over. Ideally, she shares photos on Instagram; she raves about her new car on Twitter. My point is that social media has twisted the familiar sales funnel into something almost unrecognizable.

In fact, for years now authorities like Forrester have gone so far as to declare that the traditional sales and marketing funnel is dead. In its place, Forrester has proposed a new “customer life cycle.” Four stages – discovery, exploration, buying and engagement – flow into one another. In this model, customers are continually redefining their relationships with a brand. Research, interaction and feedback occur at each stage, not merely at the beginning and end of the process. Consumers reach out and receive information from multiple sources at every point in the cycle. Social media is at the heart of it all.

The promise of social CRM

The result is a happy paradox. The rise of social media and new digital channels has hopelessly complicated the traditional marketing and sales process. At the same time, social media – used intelligently – offers a way to look past these complexities and introduce a new kind of efficiency and personalization to sales.

We’re starting to see this (finally) with the emergence of new-wave social CRM tools. The best of these new applications – like Nimble Nimble or SugarCRM – are finding ways to make use of the huge trove of public, social information out there (the so-called social graph or footprint that we all leave as we traverse the social web). Each additional interaction with Twitter or Facebook or YouTube or Yelp becomes, rather than an obstacle, a way to better understand the consumer, her needs and the particular phase of the sales funnel (or cycle, if you prefer) that she’s in. At their best, these tools are capable of building comprehensive profiles of customers and all of their social interactions.

The data collected is infinitely richer than what could be gleaned from a click on a website or an email campaign. And the benefits flow both ways. When social CRM works right, consumers end up with exactly the information they need in order to evaluate the product they’re looking for (sometimes before they even know exactly what product they’re looking for, a la Amazon). In turn, companies are able to dispense with archaic “spray-and-pray” marketing strategies – email blitzes, costly paid ads that reach the wrong audience, high-priced creative content that fails to hit its mark – and connect directly with people who actually want to learn about their products.

In other words, social CRM holds the promise of answering, at least in part, the riddle of how to turn the fickle art of advertising and marketing – so powerful but often so wasteful – into something resembling a science.

For more social media insight, follow Hootsuite on LinkedIn.