Last week we summarised The Ultimate Question 2.0, a handbook on Bain Consulting’s popular open source customer loyalty solution – The Net Promoter System – based on the simple idea that thriving in a customer-driven world of empowered consumers requires a mission-critical pursuit of customer loyalty, and that the best proxy for whether a customer believes you’re worthy of their loyalty is to ask them whether they’d recommend you (the ‘Ultimate Question’).
Whilst the book contained a wealth of practical recommendations for creating more promoters (customers who would recommend you) and fewer detractors (customer who wouldn’t), it only briefly touched on the role of social media. Fortunately Bain has published a parallel report on just this topic; Putting Social Media to Work. Here’s the speed summary.
Smart investment in social media can pay off because social media attracts your most loyal customers, who spend 20% to 40% more with you than other customers; customers choosing to connect with you over social media score on average 33 points higher on the Net Promoter scale (-100 to +100) – the industry-standard proxy for customer loyalty.
The opportunity is to use social media not only as a channel for customer service, talent recruitment, advertising and PR but also a value delivery channel to drive customer loyalty (including activating the advocacy of your super-promoters – customer who not only would recommend, but do recommend). Companies that understand that social media is a powerful self-selecting customer loyalty platform for driving total customer value (lifetime purchase value and referral value) invest considerably more in social media than the $750,000 a year spent by the average billion dollar company.
The key to success is to make an outcomes-based business case for social media investment. Smart companies adopt a two-pronged approach for doing this
Comparing differential effectiveness and efficiency of social media to achieve established business objectives with established solutions and their established metrics (e.g. generate leads, recruit talent, deliver service)
Demonstrating the broader value of social media as a value-delivery channel for delighting (and thereby retaining) the company’s best customers (loyal ‘promoters’)
Pioneers in smart social media investment include Dell, Walmart, Starbucks, JetBlue and American Express); winners base their investment on 5 key principles
- Link social media efforts to concrete business objectives – (such as increasing lifetime value and referral value of customers – or driving trial, or increasing awareness)
- Focus and tailor your efforts to target your key customers – your loyal ‘promoters’ your referring ‘super-promoters’, opinion-leading ‘influencers’ and even your bad mouthing ‘detractors’; JetBlue has a real-time Twitter customer service recovery force, that monitors social media for shared bad experiences with a view to putting it right
- Build a social media organisation to deliver results – this requires a decentralised cross-functional team with its own command and control structure that is empowered to act
- Monitor and measure the results, then close the loop – the real value of social media is to ‘close the loop’, extracting insights from social media to enhance the value proposition – not ‘social media analytics’ (social media analytics companies score on average -60 (cf 30 for average for other sectors) on the would you recommend NPS question – sentiment analytics are particularly dubious). Social media should be measured against its cost-effective and efficient ability to deliver on key business objectives, i.e. it’s competitive ROI vs alternative solutions
- Be flexible and adaptive – it’s still early days – companies are learning in real time and need to continuously experiment to determine how social media can add value (benefit-cost) to companies and customers. Realtime, location-aware and personalisation are three promising areas for value delivery by social media