Article by Dave Ury

Reposted from original July 1, 2013 article on Loyalty360.com

As marketing professionals responsible for increasing customer loyalty and LTV, there are many levers to consider when planning how to meet our objectives. One of our biggest challenges is that customer loyalty can be affected by the entire customer experience, and so we have to consider the way many different tactics will impact customer attitudes and behavior.

Social media has emerged as a powerful way to engage customers, but it is also a relatively new marketing discipline where the potential isn’t always clear. With that in mind, I decided to explore how social media can be used most effectively as part of a comprehensive loyalty strategy, and also identify any shortcomings. In my experience, social media’s most effective loyalty applications are around nurturing a community and facilitating advocacy among a brand’s most engaged customers.

Letting the Experts Weigh In

Given my perspective on what works, I decided to focus my social media exploration around marketing challenges where the effective use of Social Media isn’t as obvious. To get the best insight on these questions, I asked for help from a range of social media experts and let them provide their own unique guidance. Our panel included:

They were all very gracious to share their time and insight, providing these very interesting and actionable responses to each question.

Q1. Is social media an effective way to increase engagement among customers who aren’t big fans?

Changing the attitude and behavior of disengaged customers might be the greatest challenge of loyalty marketing and CRM. Since the disengaged segment is often a very large share of a customer base, it can also be one of the greatest opportunities. Let’s see how our panel assessed this challenge:

Adam Naide – By nature of the cable TV business, Cox doesn’t expect to have huge fans of the brand, but Cox customers are often huge fans of the shows they love. Thus, we will focus on where the potential for engagement does exist. For example, Cox will team with our network partners to create exclusive content, prizes, etc. and tap into customer’s passions, engage them at that juncture, and then try to reinforce the value of the Cox brand. It’s important to recognize that social media doesn’t replace your CRM efforts that are based on customer data, it augments them. Many brands have been successful growing their fan base, but the challenge and best opportunity is in engaging the key influencers and amplifying the relationship to spread the word to other fans.

Dave Hanley – Social media can be used to reach customers at every point in the sales funnel or lifecycle. One solution is to do landscape studies to examine conversations across the web and see where in the funnel the conversation is happening.  Awareness can happen at a blog level, consideration/research could happen in a forum or on twitter, purchase decision might occur where they ask friends in Facebook. The key is that you need to listen to understand where they are in their lifecycle and react accordingly. Ultimately, to engage someone you have to have a value proposition the customer cares about – e.g., a specific, relevant reason (offer or special content) for someone to like you on FB. Of course your reach is limited to those who are part of the communities you participate in.

Eric Weaver – It’s hard to answer this question because social media provides the tool for engagement that many brands simply don’t have on, for example, their dot-com presences. I think I’d say that the tool enables engagement for all, fans or not, depending on the context. If the brand is being relevant to its audiences, non-fans will be just as engaged as fans.

Our perspective is that community size is completely irrelevant to marketing success. Many brands will benefit more greatly from the online touch-points created by 1,000 passionate fans than they would by 100,000 mostly silent fans who merely saw an ad, clicked Like, and then moved on to other interests. A focus on community size is applying an old-school lens (reach and frequency) to a new medium where eyeballs don’t really matter.

In 2009, McKinsey did a study (their famous “Consumer Decision Journey” paper) that showed that 66% of all brand touch-points were generated by consumers, largely via social media. I’m sure that number is much higher 4 years later. That means that as marketers, we can no longer drive the conversation around the brand, but merely steer it. So if I as a marketer cannot possibly compete in generating touch-points, I’d better leverage the sentiment and efforts of others to promote my brand or product. That’s where the vocality of 1,000 passionate fans will trump 100,000 passive ones – they are more likely to generate touch-points, particularly passionate ones that are more likely to help with conversion.

Harvey Hughes – It depends, customers have to be somehow engaged with the brand or category, AND someone has to be listening. Where customers do voice an issue it creates a good opportunity for Customer Support to engage, potentially at a deep and change-inspiring level.

Q2. How can we show the effect social media has on increased loyalty and LTV?

There are many reasons why loyalty marketing can be hard to measure, not the least of which is that the impact of programs often occurs in the form of buying decisions made weeks or months after a campaign or treatment. To really understand if a loyalty effort is working we frequently use control groups as a reference point, something that is inherently difficult if not impossible with social. Here’s how our panel thinks about it:

Adam Naide – This remains a challenge because it’s hard to connect a customer ID to social interactions. But if customers interacting via social media become advocates then we consider that a measurable win.

Dave Hanley – Causality is still a challenge, at least in terms of showing a sustained impact, but you can certainly show transactional impact.

Eric Weaver – Social media contributes because it gives the brand a sense of humanity and because it provides a venue to connect with brands via community. For example, a study showed that during the month of June 2011, Coca-Cola got 227,000 monthly unique visitors to its dot-com site – but 22.5 million uniques to its Facebook page. That same month, Starbucks got 1.8MM visitors to starbucks.com, and 19.4MM to its Facebook fan page. It implies that consumers would rather connect in a place already associated with community (friends and family and those with similar interests) vs. a lonely dot-com page where you feel disconnected from others.

A 2010 study by Chadwick Martin Bailey showed that 51% of Facebook fans were more likely to buy vs. non-fans, and 60% more likely to recommend. Based on that, I recommend to many brands that they start their conversion process via social rather than display ads or dot-com sites.

Q3. Can social media resolve customer support issues at a great enough scale to matter?

Clearly most brands use social media as an interaction point for customer support, and effective support can be a tremendous driver of satisfaction and advocacy. But how does it scale?

Eric Weaver – Depending on the size of the customer base, sure. One large client discovered that by offloading some customer care issues to social, they experienced a 72% reduction in per-incident resolution cost. This is one area where social can actually reduce cost.

Harvey Hughes – It’s huge. First, social media can be used to announce things like outages, and often the reach is much greater via social channels than it is through your website or email. Second, while social media might have significantly less interactions each day, the incident in social media is a ticking time bomb because it can be viewed by thousands of people, thus a single fix can be amplified many, many times over. Because of this amplification, a CS agent who handles social media must have a higher degree of skill and product knowledge because they are speaking on behalf of the brand to potentially a much larger audience. The subsequent challenge is that Customer Support starts to cover more disciplines (e.g. marketing, PR) which could introduce complexities into the org. structure.

Q4. Can social media be a powerful enough interaction to convert someone from a detractor to an advocate?

The “turn-around” is the ultimate achievement in customer support, and the creation of “promoters” is a very common goal. Advocacy also has the potential of a strong multiplier effect because happy customers are likely to hang out with similar people who have the same potential to be happy, high-value customers. This is where our experts came out:

Eric Weaver – Yes, absolutely. Many detractors, accustomed to not hearing from brands, will vent vitriol or irritation toward a brand online. But when a savvy company is listening and responds to that detractor honestly and transparently, often the detractor can be won over to become an advocate, simply because they were listened to. Also, in their online complaints, detractors will often provide the details around their problem, allowing you to resolve their issue. When handled with speed and grace, this often leads to conversion to advocate. Places like TripAdvisor, which I consider to be a type of socialized media, are great public stages on which a brand or business can reverse the power of negative postings.

Harvey Hughes – Yes, social provides a great opportunity to create some “wow” with the customer. At Tom’s Shoes, they prioritize questions, and for the most common ones they create 60 second education videos, e.g. How to clean shoes. This rich content is very effective in addressing common needs and concerns, and leaves a much more lasting impression.

Not a Swiss Army Knife, but still a Great Toolbox Addition

It was interesting to see a general consistency in response to each question, suggesting that professional knowledge in this space is starting to coalesce.

Social Media is not a substitute for your existing loyalty initiatives, but it clearly can be a powerful incremental element of your strategy. A big thanks to our expert panel for helping further our knowledge of this loyalty marketing discipline!

 

ABOUT THE AUTHOR

Dave Ury is Marketing Director and Principal of Customer Insight & Lifecycle Marketing. He is an accomplished marketing leader offering over 20 years of proven success in relationship marketing including acquisition, CRM, retention, and win-back. Dave has successfully led national marketing efforts and cross-functional teams for large brands including Cox Communications, AT&T Broadband and RealNetworks. Recent clients include Cricket Wireless, Allrecipes.com, WhitePages and Smilebox. He earned his B.A. in Business Economics from the University of California, Santa Barbara, and his M.B.A. from the University of Colorado, Denver. – Read more.

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