Posts tagged Social Media
How to measure social media
Sep 7th
There is much talk in marketing circles about how to measure the impact of social media. Some measurements are hard, such as actual campaign response and conversion rate measures. Others are a bit softer, such as measuring campaign reaction frequency and tone (e.g., positive, neutral, negative). While both are valid measures, I do think we have been missing a broader, yet critical component of our measures—the overall financial impact of word-of-mouth (WOM) spread.
It occurred to me today that I may already have a way to measure WOM influence and the impact of social media.
Years ago, I came up with a simple equation to measure what I called, the “Residual Value of a Customer.” In other words, this is a calculation to determine value of an average customers’ impact on your business relative to their individual influence on other customers. Keep in mind that this was before the internet and social media tools, so the sphere of influence of an individual customer was generally much less—maybe 7-10 people total. However, I think the logic still applies today.
The Residual Value of a Customer takes into account the annual sales to a customer, the expected tenure as a customer, and the estimated number of people influenced. For example, if “Customer A” spends $150 a year with a company and the average tenure is three years, then “Customer A’s” value to the organization is $450. However, if “Customer A” recommends the product/service to just one other customer who follows the same spending/tenure patterns (as the average), “Customer A” now has a residual value of $1,350.
Let’s take this thinking a step further. Recent research has suggested that the average Facebook user, for example, has 120 friends. The average user may interact meaningfully with between 10 and 20 Facebook Friends within a 30-day period. Using the calculations above, let’s say “Customer A” influences 20 friends within a 30-day period. “Customer A” now has a residual value of $27,000, as do each of those 20 friends who adhere to the average customer measures. In this first circle or ripple of influence the residual value of these 21 customers is now more than one-half million dollars over the next three years, assuming the averages spending and purchasing life remains consistent.
These are significant numbers, and all brought about by one customer sharing experiences with a circle of friends.
I have used this model a number of times to demonstrate the power of WOM marketing programs to senior management. It is simple to understand, and proven using average customer sales and tenure numbers. In the majority of the cases, I’ve been successful in gaining support from senior management for at least testing WOM or now, social media, programs. I have also used the Residual Value of a Customer to demonstrate the opportunity cost for not engaging in WOM.
In the spirit of sharing, I’ve created an online version of the model for you to use here: Residual Value of a Customer Calculator. Feel free to use this model and share with others.
I’d appreciate your feedback.
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Are your customers loyal or lazy?
May 27th
“I don’t know whether I’m loyal, or lazy,” tweeted a friend of mine last week as his eye doctor ran more than 30 minutes behind. He seemed as frustrated with himself for not finding another provider, as he was with his doctor for wasting his time. Granted, there may have been a patient emergency or an unforeseen situation with that caused the delay; yet, others with appointments were expected to endure without being alerted to the problem and given the option to reschedule. While this particular situation is most prevalent with professional appointments, we all know of similar situations that occur in our own businesses and organizations.
Customer loyalty, like friendship, is built on a mutual understanding and acceptance of one another. At minimum, the relationship between the customer and the organization requires:
> Honesty
> Integrity
> Consideration
> Empathy
> Respect
> Humor (maybe not required, but certainly helpful)
While the customer easily gives these qualities, organizations with which they purport to have a relationship often do not reciprocate. From an organization’s perspective, a customer relationship is all too often built only on revenue generated. Specifically, the value of that relationship is measured on the number of purchases made and the size of those purchases. When a customer recognizes that their loyalty is measured only by these factors, such as with supermarket loyalty programs, they become fickle about the relationship. Laziness creeps in and whoever has the best sale prices or is closest to home gains the customer’s favor. When this happens, the relationship becomes a commodity for the customer, as it is already for the organization.
To prevent customer laziness, organizations need to think of customers more as friends, than as dollar signs. Put yourself in your customers’ shoes and ask yourself the same questions you might ask about your friendships, for example:
Do my customers…
1. Feel like they’re “my only customer” whenever we get together?
2. Talk about our relationship in a positive light with their other friends?
3. Tell me when I’ve done something wrong and give me an opportunity to make it right?
4. Share their lives and stories with me because they know I care about them and the relationship?
5. Count on me to deliver whenever they’re in need?
6. Desire to spend more time with me and take every opportunity to do so—wherever I may be?
7. Show passion about our relationship (brand)?
8. Believe that every action I take is in their best interests?
9. Feel that they’re desired?
10. See tangible and long-term value our relationship?
If you can truthfully answer yes to most of these questions, your customer relationships—and long-term customer loyalty—are in good shape. If not, you have some work to do.
Do keep in mind social media tools make it very easy to build and cultivate customer loyalty today. You can connect anywhere at any time and have a meaningful conversation with customers. There’s really no excuse for not putting time and effort into building these relationships. Not doing so will make it easy for the customer to decide if he’s really loyal, or just lazy.
Can you afford lazy customers? No, I didn’t think so.
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People are talking. Are you listening?
Apr 28th
Hearing is a funny thing.
One can hear, but not be listening. One can listen, but not really hear what’s being said. Either way, the conversation goes on just the same. People are talking to you and about you, but you may not be making the connection that its “you” who is the topic of the conversation. Take it from a guy who has had the benefit of hearing impairment most of his adult life.
Those same conversations go on about organizations and brands every day. Everyone talks, but few organizations really listen. It seems to me that most organizations are “hearing or listening impaired,” and the older the organization the worse the problem. Granted, most organizations try to hear what is being said, but some are still using an old-fashioned hearing aid (ear trumpet). There are others who let their hearing aid batteries weaken, or worst of all, still others have removed their hearing aids because they don’t like what their hearing.
Don’t believe me? Do you work for any of these organizations?
The Ear Trumpets
Organizations listening to customers with the ear trumpet funnel many voices down a long tube where only the loudest are heard. In an organization, this is like sending all the calls to “customer service” or the “help desk.” The ear trumpet solution works poorly for the hearing impaired and even worse for organizations. Think about it: just because the organization is not hearing the softer voices doesn’t mean friends, neighbors, and competitors aren’t.
The Weak Batteries
Those organizations that operate on weak batter power for their hearing device miss critical elements of the conversation with their customers. The conversations continue, but the organization picks up only bits and pieces—like a conversation with your mom on a bad mobile phone connection. She keeps talking; unfortunately, you’ve dropped enough of what she is saying that don’t realize you’ve been offered a free trip to the Bahamas… and declined to go. The same thing happens with customers when an organization only hears parts of the conversation—good opportunities are lost.
The Not Listenings
The organization that removes its hearing device, or has decided not to buy one in the first place, does not want to participate in the conversation with its customers. It would rather yell at a customer and hope a few want what it’s selling, than open up a conversation with the customer about needs, values, and expectations. Who likes to be yelled at all the time? Not me, and I’ll bet not you. Aside from great products and exceptional service, all customers really want is to be heard.
Social media tools help level the playing field for organizations that are “hearing impaired.” It’s like having a pair of super-charged, digital hearing aids that help you amplify just those frequencies you need to hear. This ability to listen, hear and actively engage in conversations 24/7 allow your organization unbelievable opportunities to learn from your customers, correct your mistakes, and build a loyal following.
Now, turn on those hearing aids and engage in conversation. You’ll be surprised what you will learn when you start listening again.
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The non-interested followers
Apr 10th
Posted by 
Dave in Social Media
Using just 140 characters, folks are striking up conversations around world on a variety of topics and in “real time” with Twitter. If you are not already familiar with the tool, essentially users get a “platform” from which to speak about their passion (similar to a blog) that occurs at the speed of instant messaging. Like blogs, it creates a medium where everyone has a voice; like instant messaging, it is sometimes irreverent. (If you’re not familiar with Twitter, Fortune Magazine published an informative article in August 2008, The true meaning of Twitter.)
Once you have a Twitter account you’ll need to “follow” someone to get the most out of the tool. This means you’ll be listening (or reading) to what that person has to say. As an information junkie, I follow those who talk about things that interest me. Although, I have to admit following a hundred or so simultaneous conversations can sometimes be daunting. Nonetheless I learn new things daily, I’ve found a great breeding ground for new things to think about, and I find new sources of information relevant to my interests. Because these topics interest me, I can also contribute something to these conversations.
On the flip side, some may desire to follow you and here’s where it gets a little sticky. Not everyone thinks the way I do and follow people who engage in topics of interest. Some believe that it is the size of the network that’s important. I would like to think the general idea behind Twitter was “relevant conversations” with others; therefore the size of your network would be somewhat limited by those with similar interests. Unfortunately, like rabid “network marketers” some desire to follow solely so someone in your network may see them and investigate the latest “business opportunity” being pitched or product sold. Those people are simply trying to increase the size of their network. I dislike this approach, as it seems to me that the “follow” is somehow disingenuous.
Consider this: When you met your neighbor the first time, did you work to find common interests, or were you pitched all-purpose, non-toxic cleaning solutions that he or she happened to be selling? I dislike the latter and will avoid that neighbor for a while.
The same is true online, and especially with Twitter. It’s very easy to “unfollow” someone. You can also block your updates, as I do, so that you must approve everyone who follows you. I like this because it gives me the opportunity to manage my “implied endorsement” of those who follow me. I review every website and Twitter stream of every follow request, and make a conscious decision as to the “fit.” If there is not a fit, I decline.
Social media tools are specifically designed to build conversations. Think about it like talking with your neighbor across the back fence, only you’re talking across Internet. Shared ideas and interests are paramount to building personal credibility and friendships. Twitter and other online tools can accelerate credibility building, but they can destroy it just as quickly.
For me Twitter is not about building a large, non-interested following. It’s a waste of everyone’s time and erodes credibility of the followers. I hope those I follow feel the same way.
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PRESENTATION: Marketing Out of the Box
Apr 17th
Posted by Dave in Cultural Change
Marketing Out of the Box
Please note that this presentation is Dave Harkins’ work created in other partnerships or organizations and the design templates have not been changed. Additionally, this content may now be dated but can still be used as an idea starter for your specific needs. Read the rest of this entry »
