The Impact of Social Media on the Change of

Interrelationship between the Organisations and the Customer

Channa Wallheimer - 10410910

Abstract. The introduction of social media has a large influence

on the change of interrelationship between the organisation and
the customer. Because of this, a new technology around social
media namely social customer relationship management (SCRM)
developed. Organisations use SCRM technologies to provide a
better customer service and maintain a better customer
relationship. Through SCRM, organisations are able to increase
their customer performance. By making use of big data derived
from social media, organisations are able to perform a more
personal marketing which results in a better customer experience
and a more personal relationship. The use of social media by
organisations also has a positive effect on the customer
satisfaction. Another consequence of the introduction of social
media is that the power shifted from seller to buyer.

Keywords. customer relations, social customer relationship

management (SCRM), customer satisfaction, social media, social
big data

Introduction
For over the last 50 years, organizations rely more and more on technology to
support their communication and information processing in all areas of their
operations. Although there is widespread consensus that social media has
affected almost every aspect of everyday life, it is from a marketing perspective
particularly useful to understand ‘how social media has changed the
interrelationship between organisations and customers’. This essay reflects a
literature research into the impact of social media on said change. Over the last
years, many different new marketing techniques have been developed. This is
partly due to the involvement of ICT in the marketing. Some of the new
techniques that have been developed with the help of ICT are: customer
relationship management (CRM), database marketing and big data but maybe
the biggest change is social media. In this essay the impact of social media on
the change of interrelationship between organisation and the customer is being
discussed.

Organisation
Since the upcoming of social media the relation between the organisation and
the customer went through some major changes. Jussila (2014) writes that
social media already has demonstrated that it opens many new opportunities for
customer relations in the business-to-business (B2B) sector. According to a
Mckinsey (2009) study, 69% percent of the respondents report that their

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business has gained measurable business benefits as a result of using Web 2.0.
Another study of McKinsey (2013) shows that in 2013, 64% of the
organisations use social networking as a method to improve customer relations
(figure 1). For example in the year 2009 only 30% of the organisations used
social media to improve their customer relations. This shows us that over the
last years organisations used more and more to improve their customer
relations.

Figure 1 (McKinsey, 2013)

This new way of developing and maintaining customer relationships is defined

as social customer relationship management (SCRM) (Trainor, 2014). Trainor
(2014) tests in his article the hypothesis “SCRM capabilities have a positive
association with customer relationship performance”. His study provides
evidence that the investment in social media technology provides firms with
substantial relationship benefits.

The development of social media gives organisations the opportunity to listen

to the wishes of the customer and encourage them to become advocates of their
products (Malthouse, 2013). Another change in the relationship has to do with
the introduction of social media marketing. Kim (2012) writes in her article
“Do social media marketing activities enhance customer equity”, that social
media indeed enhances customer equity. This is not the only change in
marketing. Organisations used to perform a one-to-many marketing
communication. With the introduction of social media this changed to a more
individual one-to-one relationship (Gensler, 2013)

Also, with the introduction of social media a new and important source of big
data became available. During the last couple of years social media has become
one of the most representative and relevant sources for big data. The big data

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that is coming from social media is referred to as social big data (Bello-Orgaz,
2016). A study done by Oracle (2015) predicts that in the next two years 27%
percent of the organisations external data will come from social media (figure
2).

figure 2 (Oracle, 2015)

Data analysis from social media ensures that organisations are able to gain
more personal information on the customer. Organisations are able to predict
the customers buying behaviour and therefore organisations can better
understand the customer and their behaviour. Using big data derived from
social media has its consequences on the organisation’s marketing strategy. The
marketing strategies of the organizations become more and more personal since
they know a lot more about the personal behaviour. Organisations can use this
personal marketing to improve the customer experience and satisfaction. The
immense growth of data that organisations experience with the introduction of
social media affects the way organisations think and decide. The use of big data
by organisations makes the relationship between organisations and the
customer more personal.

Customer
The customer-organisation relationship changed during the development of
social media. Siamagka (2015) writes that customers perceive social media as
more trustworthy than any other information sponsored by organisations.
Customers are consequently turning back to social media to get more
information about products and services. Another development is that
nowadays organisations frequently ask customers to like their organisation on
Facebook or follow them on Twitter. This has as result that customers are
better connected to the organisation, more knowledgeable about its products
and more of a force in buyer-seller relationships (Agnihotri, 2016). With
increasing interactions between organisations and customer the power is
shifting from seller to buyer.
Customer complaints on social media is another big change in the relationship
between organisation and customer which has effect on the customer
satisfaction. For example 58% of the customers want a response when they

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posted a complaint on social media, yet only 22% got a response1. The model
of Agnihotri (2016) shown in figure 3, shows a set of hypothesized
relationships between organisations and customers through social media use.
The model proposes (which proposition was confirmed later on) that a
salesperson’s use of social media has a positive effect on the customer
satisfaction.

Figure 3 (Agnihotri, 2016)

As previously mentioned, the power of the customer is shifting and customers

no longer have a passive relationship with the organisation. Customers of today
have more information about competitive products and can easily express and
distribute their opinions to large audiences (Malthouse, 2013). Because of
social media, the customers are able to go viral with their negative story which
might seriously damage the reputation of an organisation and/or its product.
This makes the customer powerful for organisations.

Conclusion
For organisations a lot has changed since the upcoming of social media
especially in the field of customer relations. A whole new customer
relationship technique called SCRM had been developed. SCRM makes it

1
Customer Experience Report: North America (2010).
RightNowTechnologies

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possible to provide a better customer service and also maintain a better
customer relationship. Also, there is evidence that the use of social media has a
positive effect on the customer satisfaction. Social media generates a lot of big
data which brings new opportunities to organisations. By performing data
analytics, organisations are able to predict the customers buying behaviour and
improve the customer experience. All of this results in a more personal
relationship between the organisations and the customer.

The position of the customer on the other hand also went through material
changes. Firstly, the customers are better connected to the organisation and are
more knowledgeable about products which makes them more powerful in the
buyer-seller relationship. The relationship between the organisation and the
customer shifted from seller to buyer as a result of which the customer has
more influence and power towards the organisations.

The overall conclusion is that social media made the interrelationship between
organisations and customers more individual and personal. This has advantages
for both parties. A potential downside for organisations is that not taking regard
of customer originated social media, can have a negative impact.

Discussion
Social media has a large impact on the interrelationship between organisations
and the customer. Buss (2015) states that the appropriate use of social media
channels results in a mutually beneficial relationship between organisations and
the customer. The reality however is that not all organisations know how to
make use of SCRM. Some organisations either lack the capabilities or do not
acknowledge the value of utilizing social media. Marketing managers are
struggling to find the best way to introduce information and communication
technology in their marketing domain (Brady, 2008). It would be useful to
research if certain objective denominators can be developed to assist such
organisations in their marketing decision to include social media in their
interrelationship with the customer.

Literature:

Agnihotri, R. et al. (2016). Social Media: Influencing the customer

satisfaction in B2B sales. Industrial Marketing Management, Vol. 53, 172 - 180

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 Bello-Orgaz, G., Jung, J. J., Camacho, D. (2016). Social big data:
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Brady, M., Fellenz, M.R., Brooks, R. (2008). Research the role of

information and communication technology (ICT) in contemporary marketing
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Bughin, J., Manyika, J., Miller, A. (2009). How companies are

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Buss, O., Begorgis, G. (2015). The impact of Social Media as a

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Gensler, S. et al. (2013). Managing Brands in the Social Media

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Jussila, J.J., Kärkkäinen, H., Aramon-Immonen, H. (2014). Social

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Kim, A., Ko, E. (2012). Do social media marketing activities enhance

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