Social Media-based Customer Loyalty Programs

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1 Social Media-based Customer Loyalty Programs

2 Industry-wide, organizations are searching for ways to use social channels to improve. Many are finding that they need the right tools and plans in place to improve their CRM strategy in an effective, measurable way. In this E-Guide readers will learn how to efficiently deliver additional value to customers via social media, tips to find balance when connecting with customers, and expert engagement tips from social media consultant Erik Qualman. By Rosemary Cafasso, Associate News and Site Editor Many companies are searching for ways to use social channels to improve their, but are discovering there is more to this effort than generating Facebook likes. The lure of social channels is significant because they hold the promise of immediate access to many customers and their personal information. Also, companies can more efficiently manage and track loyalty with the right social tools, such as listening tools or even free online analytics tools. A customer s value on social [media] is measured not just in their lifetime value to you, but also in their network and their propensity to talk about you on their network, said Denis Pombriant, president of Beagle Research, LLC in Stoughton, Mass. It s about turning a customer into an influencer. But, Pombriant and other industry observers caution that if companies do not correctly deploy social channels, they could end up actually hurting rather than helping their loyalty. Page 2 of 9

3 The key is to use social channels as an extension of a loyalty program rather than create a program with a social channel as the centerpiece. This is about a conversation on social media, said Ben Watson, principal customer experience strategist at Adobe Systems Incorporated in Mountain View, Calif. The reality is, we are dealing with a person, just like when they walk into a store, only I am just using a different channel. Give customers a reason to be loyal Ask if the level of intimacy is going to be appropriate, When the customer bought something from you, did they want a relationship? Ben Wastson, Adobe The more successful today are ones that use the channels to efficiently deliver additional value to customers, such as job-related content. In other words, customers need a reason to stay loyal, analysts said. Social media is great for visibility, but the wisest companies use it to encourage a call to action, said Jake Wengroff, global director of social media research at San Antonio-based Frost & Sullivan. In order to capture and retain interest, there has to be a steady stream of useful content for a customer. If it is no longer compelling, they will zone out. Wengroff, said he considers content marketing extremely important for building because it not only gives customers value but enables companies to easily measure the effectiveness of a campaign. Find the right balance when connecting with customers What seems to challenge many companies, however, is determining the right balance in delivering this content. The problem is when companies create a social loyalty strategy that is either too superficial or too personal. Social [media] opens the doors to mine more information about customers wants, needs and desires, said Kim Collins, a vice president and analyst Page 3 of 9

4 with Gartner Group in Stamford, Conn. But that s personal information. It will be interesting to see how this evolves. On the superficial side are that simply trade Facebook likes for a coupon. Analysts noted that while these bring in a fair share of customers, many of them are interested in the coupon only. They grab the discount and move on. The metric now is we have to have more likes than the other guy, said Gartner s Collins. You may hit that, but you still may not have much that s translating into more revenue. You have to realize the next layer. What are we getting for those likes? At the other end of the spectrum are companies that are getting very personal with customers. KLM Royal Dutch Airlines, for example, uses Salesforce.com s Radian 6 social monitoring tools to gather personal information customers have made public on channels such as Twitter. The airline uses that information to give customers a small gift while they are waiting to board a KLM flight. So far, KLM s strategy appears to be a big hit. But analysts said companies need to be careful when using customers personal data. If customers feel a company is crossing a line with personal information, they could be turned off. Ask if the level of intimacy is going to be appropriate, added Adobe s Watson, When the customer bought something from you, did they want a relationship? You need to question the appropriateness and sustainability and how it will reflect on your brand. Determine what an individual customer perceives as value When used effectively, social channels can be a big boost to loyalty. One way to use social information effectively is to determine where the customer is in the buying process. A customer at a decision point Page 4 of 9

5 is far different from a customer who is having a service problem. Each has a different idea of what kind of added value they want from a company. One of the better delivery mechanisms of added value is through social communities built around specific products or issues, analysts said. When companies create a social community and actively engage customers, they can share targeted content that is truly useful. By delivering added value to customers, companies will build relationships and increase loyalty in their customer base, analysts said. Often, brand ambassadors emerge from these communities and companies can benefit from loyal customers who essentially become spokespeople. They may be designated [as ambassadors] or reach some sort of customer level so they can respond to other customers questions on message boards, Frost & Sullivan s Wengroff said. There s a psychic reward in helping other customers. By Rosemary Cafasso, Associate News and Site Editor Erik Qualman is a social media consultant and author of Socialnomics: How Social Media Transforms the Way We Live and Do Business. Qualman advocates pushing forward with social CRM strategies with the understanding that mistakes will be made. According to Qualman, it is better for a company to do most any kind of social media engagement than to wait for the perfect opportunity. Qualman is planning to release his next book, Digital Footprint: Life, Leadership, Legacy, in December. It will examine how managers can avoid being controlled by the social tools that are supposed to help them improve productivity. SearchCRM.com caught up with Qualman to chat about his strategy for social media success and what new social tools mean for CRM. Page 5 of 9

6 You have said that when it comes to social media, companies will initially make mistakes or even fail. So how do you pitch that to upper management? Erik Qualman: The best way I have found to sell it up the chain is to explain it is a new shift and explain we don t have control over the customer. So ask what would happen if we didn t do anything. That s a lot worse than if you did something and made a mistake. You will make a mistake. But learn from it. What helps a lot is when you remember executives like sports analogies. So if you are trying to learn how to hit a curve ball, there ll be people who go up and they won t hit, but they will learn from that. Then there are people who sit there and watch and try to learn how to hit the curve ball. But that is impossible to do. You have to learn by doing. What would you recommend as a couple of low-risk early social media engagement strategies? Qualman: I ll use myself as an example of a small business. I m selling books, right? So, I can use tools on Twitter to see who is talking about Socialnomics. I can search for my name and I can start to see the watercooler conversations. So I can see someone saying, Hey, I read this book and I liked Chapter 5. It isn t even directed to me. But what can I do? I can reach out to that person. So what would a company do? Maybe blast a generic message. But if you want to get beyond that, you can look and see this person is a professor at the University of Wichita, as an example. So I can send a message that says, Thanks for reading my book; let me know what you think of it, and then I add Go, Shockers! I happen to know the [university s] team name. So that s much more personal. It also takes much more time. But now I have an engaged reader. Then I can ask him to write a review. Then, when the next book comes out, I can ping him and say, Not sure if you are looking for gifts for the holidays, but this new one is coming out. It s a soft sell and I am providing value. Do you do this or do you have help? Qualman: Right now I do it myself. I am hoping my publisher can help out. I get to all the ones who directly ask me a question. Page 6 of 9

7 How would a company scale that up? Qualman: There will be more opportunities than you can get to. You can t do everything. I decided to hyperfocus on Twitter and YouTube. That is what I would suggest. Focus on one [channel] at a time rather than a shotgun approach to everything at once. Also, not all tweets are created equal. So if there is someone excited about your product or upset about your product and has a high Klout [online influence measurement] score, you are going to respond to that person. In a perfect world, you would respond to the one that came in first, but you are going to respond to the one with influence. You mention Klout, which some industry experts have challenged as an accurate measurement of social influence. Do you agree? Qualman: I would agree it isn t a perfect scoring system. It is one data point to look at. What other tools would you recommend? Qualman: There are tools for managing your Facebook and Twitter accounts like when you use HootSuite and TweetDeck. You can get a lot of data if you want to get in there and mine it. You can drill down to see who you are influencing. It makes it easier to manage Facebook and Twitter, especially if you have a personal page, a fan page and a company page. The other tool is HubSpot. It grades your LinkedIn profile page and makes suggestions to improve it. It s great on SEO [search engine optimization]. It can recommend things like doing a blog. It will grade you and then tell you why [you received a particular grade]. How will these various tools integrate with core CRM systems? Qualman: Well, if you look at Salesforce.com, that s de facto CRM for a lot of companies. It acquired Radian6 and wants to integrate it into Chatter. This is probably the most recognized [corporate tool]. There are other tools, but there hasn t been an uber-tool yet. So how are those various tools being managed inside companies? Qualman: It s the wild West right now. God bless the people internally. They are just trying to get their jobs done. Page 7 of 9

8 That means there is a significant integration issue coming. Qualman: No question about it. We see that all that time when there is such a big change under way. Page 8 of 9

9 Free resources for technology professionals TechTarget publishes targeted technology media that address your need for information and resources for researching products, developing strategy and making cost-effective purchase decisions. Our network of technology-specific Web sites gives you access to industry experts, independent content and analysis and the Web s largest library of vendor-provided white papers, webcasts, podcasts, videos, virtual trade shows, research reports and more drawing on the rich R&D resources of technology providers to address market trends, challenges and solutions. Our live events and virtual seminars give you access to vendor neutral, expert commentary and advice on the issues and challenges you face daily. Our social community IT Knowledge Exchange allows you to share real world information in real time with peers and experts. What makes TechTarget unique? TechTarget is squarely focused on the enterprise IT space. Our team of editors and network of industry experts provide the richest, most relevant content to IT professionals and management. We leverage the immediacy of the Web, the networking and face-to-face opportunities of events and virtual events, and the ability to interact with peers all to create compelling and actionable information for enterprise IT professionals across all industries and markets. Related TechTarget Websites Page 9 of 9

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