Big news today in the social analytics & CRM space as has acquired social media monitoring company Radian6 for approximately $276 million in cash and $50 million in stock. This will definitely blur the line between social and CRM. I wonder who will be next to be acquired.

As I was reading the acquisition news, and seeing this article about how companies don’t understand why consumers use social media, it reminded me of an article I published in July of 2001.

Have you been bombarded, like I have been, with the latest buzz suggesting we should spend our time, resources, and money on online customer relationship management (CRM) software {and Social Media monitoring and measuring tools}? Talk about putting the cart before the horse! Oh, the idea is pointed in the right direction, all right — but don’t you think first you need a satisfied customer base to manage?

Your goal, of course, is lots of satisfied customers — happy ones who become loyal, repeat buyers as well as active referrers. But just because they bought from you once doesn’t mean you have a relationship with them — yet. In fact, for all you know, they’re not coming back, and maybe for a very good reason.

First, you have to create an online shopping experience that plants the seeds of a real relationship. Then, you have to nurture those seeds with outstanding fulfillment and customer service. Building a relationship takes time. Shoving some tech-heavy CRM application at your customers is more likely to push them away than draw them in. If you want to get it right, you need to follow not CRM, but MRC: Manage your e-business correctly so that you can establish a relationship based on which you can develop a delighted and loyal customer. Only then can all the other stuff you do have the impact you want.

Lots of e-businesses have the software to facilitate CRM, and lots of software vendors would love to sell you some if you don’t have it yet. Nevertheless, most businesses don’t have the in-depth customer knowledge they need to use the technology effectively. They wind up getting carried away with trying to manage what they don’t actually have.

According to smart and commonsense customer relations guy David Sims: Everybody who profits from CRM has their own definition of what it is, but they’re agreed as to what it is not: CRM isn’t about technology any more than hospitality is about throwing a welcome mat on your front porch.

Properly understood, CRM is “a philosophy that puts the customer at the design point, it’s getting intimate with the customer,” [in the words of Liz Shahnam, CRM analyst with the META Group]. Mike Littell, president of the CRM division of EDS, agrees: “We view CRM more as a strategy than a process. It’s designed to understand and anticipate the needs of the current and potential customer base a company has.” Once you nail that, Littell says, there’s “a plethora of technology out there that helps capture customer data and external sources, and consolidate it in a central warehouse to add intelligence to the overall CRM strategy.”

In short, first get the happy customer base, and then you’ve got something to manage. To put it more bluntly, poor customer service can lose you a customer and leave you with nothing to manage.

And every one of us here has had the following problem: You go to a site, run into a snag making a purchase, and decide to call customer service. But the lines at customer service are all busy. Do they put you on hold? No! They tell you to go to the Web site! Didn’t you just come from there?

So, before you go spending your money on CRM, spend a little time — no, a LOT of time — considering how effective you are at MRC. That’s where it all starts, and if you get it wrong, that’s also where it all ends.

Do you know any companies that have put the cart before the horse? They invest in social media campaigns, tools, etc but not on their core service. Be remarkable first and your social media & CRM strategy will stem from their.