By Larry Augustin, CEO Of SugarCRM

While we were busy doing business, the world changed around us. The smarter and more alert among us have noticed and are forging a path based on the realities of today. The rest of us are plugging away as we always have been, still unaware that we’re becoming obsolete more rapidly every day.

That change has been created by the emergence of social networking technology. This technology has provided the sort of productivity gains to individual customers that used to be confined to businesses. Now, customers can compare notes on a business from across countries and continents. Instead of believing the marketing messages of companies, they can trust in the real-world experiences of other customers.

Starting in 2006, the Edelman Trust Barometer study found customers were more trusting of “a person like me” than they were of business or even of experts. Experts have regained their position of trust in recent years, but customers are still more likely to believe each other than they are to believe your marketing message.

This new dynamic has turned buyer-seller relationships on their heads — but it’s not an unmanageable situation. In fact, there are rules to follow that can help you find success in this new world.

Rule #1 — You Are Not in Control

The customer now controls the conversation, not you. What he or she says about you can have a dramatic impact. The good news is that social media allows you to participate in these conversations and to help steer them — but your influence is limited. This puts greater emphasis on your entire business to execute — not just to avoid providing fuel for negative comments but to give customers positive things to discuss in social media.

Rule #2 — Traditional Marketing Tactics Are Declining

The tactics of the past are losing their effectiveness as customers turn away from traditional channels. But realize that this is an opportunity, not a crisis. If you can adjust your orientation from broadcasting your message to listening for what the customer is broadcasting, the customer will tell you what he or she expects from your company. While listening first and acting second may feel alien to you, it’s what customers expect from their relationships today.

Rule #3 — Customer Service is the New Marketing

In the past, businesses could get away with providing barely adequate customer service, if only because customers were unlikely to be able to voice their dissatisfaction beyond their immediate circle of acquaintances. Today, bad customer service experiences can be reported to thousands or millions of other potential customers. Customer service used to be a key to customer retention; now, with the customer’s ability to learn about how good or bad service is before buying, service has become a component of new customer acquisition, too.

Rule #4 — Join the Conversation

Customers are already talking about your company in social media, leaving you with two options: continue to ignore those conversations, or join in and contribute to them. Research has already shown what your customers would prefer: Cone Inc. found that 85 percent of respondents believed that companies should not just present information via social media, but use it to interact and become more engaged with them.

In other words, customers now have the expectation that your business will behave as a peer and engage with them in social media. Engaging through social media sends the message that you’re willing to communicate with them via their preferred channels. By not engaging, you’re sending a message as well — that you don’t care enough to interact with them where they feel most comfortable.

Rule #5 — Integrate People with Technology

Just as communication channels are changing, the tools customers use to reach those channels are changing as well. Smart phones and tablet computers are changing how people interface with technology, and they make it vital that you consider mobility in your sales, marketing and service strategies. Your customers are unlikely to interact with you strictly from their desktop or laptop PCs; similarly, your employees are unlikely to work exclusively from computers.

But just being social is not enough to give your business an edge. Before you can apply these five rules, you need to have the tools in place to organize and distribute the data that results from these conversations. Customer relationship management (CRM) applications provide the foundation upon which to build your social engagement strategy.

CRM in the age of social is based on the simple premise that you are able to interact with your customers based on their needs, not your rules. If you combine that concept with a strong CRM foundation, you can evolve your business as your customers evolve.

Larry Augustin is CEO of SugarCRM, the world’s fastest-growing customer relationship management (CRM) company. A member of the group who coined the term “Open Source”, he has written and spoken extensively on Open Source worldwide. Prior to SugarCRM, he spent five years as an angel investor and advisor to early stage technology companies including JBoss, XenSource, DeviceVM, Fonality, Hyperic, Pentaho, and SpringSource. He currently serves on the Boards of Directors of Appcelerator and DotNetNuke. From 2002 to 2004 he was a Venture Partner at Azure Capital Partners. In 1993 he founded VA Linux (now GeekNet, NASDAQ:LNUX), where he served as CEO until August 2002. While CEO he launched SourceForge.net and lead the company through an IPO in December 1999.