August 1, 2012
By Esteban Kolsky, Principal and Founder, ThinkJar

Klout for CRM? Ludicrous!

Klout is a start-up in the social media space that launched in 2009. At that time, its CEO, Joe Fernandez, was looking to create a model similar to the FICO scores, but for Twitter. Fernandez was not sure of the implications or uses this would have, but he knew that marketing managers had a tough time in the new world of Twitter recognizing who was who, and could use a reputation scoring system to figure that out.

Tracking people's reputation where "nobody knows you are a dog," as the popular New Yorker cartoon stated, is necessary in a world that is growing increasingly anonymous. Not knowing who a person is online is troublesome for individuals and corporations; a universal rating system that identifies a person as knowledgeable or influential about doughnuts versus quantum physics makes sense and provides the context to content and interactions. We need a universal rating system that you can port from one system to another, just like we can take our FICO scores from one creditor to another.

A lot has happened in the last three years, but what's most striking is how quickly Klout went from nothing to becoming a de facto score for influence. Unfortunately, the fact that it has become a standard means it is being used in many wrong ways—including as a customer score in CRM systems.

In conversations with vendors and practitioners for CRM, I have found that the Klout score has been added to many CRM functions to be used as a measurement of a customer's worth to the company. There are three reasons this is ridiculous:

1. Popularity is not influence. Influence is measured across channels, situations, and locations. Having 1 million followers on Twitter (or even 20 million, as Lady Gaga recently announced she has) does not guarantee the ability to make people act—the true measure of influence. A high Klout score is achieved by being popular (it involves number of followers, number of comments or retweets, and activity for the users and their first-level connections) and having high numbers in metrics that don't track what actions were sparked as a result of sharing the content.

2. Popularity tracking is selective. Klout tracks popularity on only a few social networks. For organizations, the most valuable actions and data in the social world do not happen in social networks, rather via blogs and communities. A mention on Twitter or a Facebook "like" doesn't have the same power and value as a blog post detailing the product, or a community-posted answer about a solution to a new problem. This activity, as well as offline and nonmonitored activity, is not considered when calculating a Klout score, limiting the value of the score to select channels and actions.

3. Lifetime value is not considered. A large number of organizations are adding Klout scores to the screens they use to display customer information. Worse, organizations are using these scores to drive decisions about whom to serve and when. This practice violates almost every rule of multichannel experience management, since not everybody has Klout scores and even those who do are simply more popular online—not better customers.

The argument can be made that targeting people with a high Klout score and treating them better or giving them "Klout perks" is a great public relations or marketing tool. Fair point, but using a score like Klout for publicity reasons does not mean that it should be used for customer relationship reasons.

My best customers may not tweet (or like me, choose not to have their Klout score tracked), but that does not diminish their value as customers. Making decisions that affect the relationship between an organization and a customer based on an arbitrary, secret popularity score is a bad idea for managing relationships with customers.

Esteban Kolsky is the principal and founder of ThinkJar, an advisory and research think tank focused on customer strategies. He has more than 25 years of experience in customer service and CRM consulting, research, and advisory services. He spent eight years at Gartner, and has assisted Fortune 500 and Global 2000 organizations in all aspects of their CRM deployments.