 | Issue: | Global-ICT 2014 |
| Article no.: | 16 | |
| Topic: | Hear them roar: How the amplification of the customer voice on social media impacts customer lifetime value | |
| Author: | Richard Owen | |
| Title: | CEO | |
| Organisation: | Satmetrix | |
| PDF size: | 210KB |
About author
Richard Owen is President and CEO of Satmetrix, responsible for all aspects of strategy and day-to-day operations.
Previously, he was Chairman and CEO of NASDAQ-traded AvantGo, Inc., the leading provider of Enterprise Mobility Solutions to Fortune 1000 companies. AvantGo was successfully sold to Sybase, Inc. Before AvantGo, Richard spent eight years at Dell Computer Corporation in various executive positions, most recently as vice president of Dell Online Worldwide. He was responsible for all aspects of Dell’s Internet strategy and online business revenues on a worldwide basis—building Dell’s online business to cover 50 percent of the company’s sales volume. Richard began his career as a consultant for KPMG Management Consultants, where he worked for European high-tech manufacturers in the EMEA region on marketing strategy and business development, including Hewlett Packard and Apple.
Richard holds a Bachelor’s degree from Nottingham University in England and a Master’s degree from MIT Sloan School of Management.
Article abstract
Relatively few businesses have developed a truly holistic view of the customer journey, in part because it’s hard to break away from a functionally-driven organizational structure. Sales sells, dedicated teams handle early life experience and then some kind of support function worries about the customer after the product is in use. In a pre-lifetime value universe, the customer stays sold and marketers may not even know who the customer is. All of these discreet functions line up and perform their separate tasks with a view to optimizing efficiency and effectiveness at the functional level.
Full Article
It’s 1995, and the internet commerce revolution is in its earliest days. Few could see the potential of this technology to transform sales and service, but the opportunity is not lost on Michael Dell, the iconic direct PC sales entrepreneur. For a pioneer in direct sales, the opportunity for direct internet commerce was a technology revolution made to measure for a business like Dell, and within 5 years it was conducting more than half its business through the internet.
Today, social media represents the same transformative opportunity for businesses that can see its application, but – like in 1995 – the winners will be those who see the new context for this technology. For the social web, it won’t just be about commerce, and it won’t just be about advertising. It will be about the opportunity to harness the customer experience.
It couldn’t come at a better time. There has been a gradual awakening of corporations to the realization that the customer experience they execute is one of the biggest factors driving growth and profitability. When we developed the Net Promoter® methodology in 2003 along with Fred Riechheld of Bain & Company, we discovered that our index, the Net Promoter Score (NPS), linked powerfully to several meaningful business metrics. Industry by industry, NPS leaders outgrew their competition, generated higher profits and enjoyed lower customer service costs. NPS laggards almost never secured a meaningful share of growth or profits. Lead your industry in NPS, or go home.
In the ten years since, this fundamental insight has only increased in impact. The impact of word of mouth as an efficient engine of growth has distanced companies like Amazon and Starbucks from the rest of the commercial universe. And as corporations – led in many ways by telecommunications and financial services firms – have shifted their customer accounting from sales to customer lifetime value, the economics of churn and customer development have taken their place alongside, if not replacing, the economics of customer acquisition. Today’s winners don’t just win customers. They win them for life. We have not been surprised to discover that the customers who turn negative and become detractors generate a net loss – not profit – over their lifetime.
And then – via social media – the voice of the customer went loud, and public, in real-time.
It’s loud because social media amplifies the resonance of customer feedback through the leverage of networked followers and audiences. Sure, the people writing opinions on your product or service may not actually be your customers. They may not be fair in their appraisal. So what? Your customers are listening without this context or filter.
Public because the letter of complaint to the CEO from a disgruntled customer now becomes a viral video shared for entertainment.
And it’s real-time because, well, that over-hyped movie that won’t survive the week? Now it won’t survive opening night as people tweet their disdain. Oh, and in the interest of fair play, the artsy indie release that’s truly original will find an audience without having the marketing dollars to support it.
Like e-commerce, it’s not unusual for businesses to apply prior rules to new opportunities. Our previous generation of internet technologies started with commerce and moved onto advertising, so it’s natural for companies to view the social channel as primarily a communication conduit. Advertisers have jumped on a new audience (well, the same audience with a different hearing aid) to push their message, only to discover that new rules apply and social marketing requires far more relevant, quality content to engage an audience that must subscribe rather than be broadcast to.
Service organizations saw it differently, and spotted social as an important check-box channel to enable customer contact, with the added risk and benefit of the entire support experience being conducted in full sight of the public. Small initial volumes made support easy, but businesses now realize that they run the risk of educating their customers that broadcasting complaints is a more effective way of getting responsive support than using the highly controlled, IVR driven support channels that companies have meticulously constructed for them.
However, the critical insights with respect to integrating social data into the customer experience require a somewhat different frame of reference – that of the customer journey.
Relatively few businesses have developed a truly holistic view of the customer journey, in part because it’s hard to break away from a functionally-driven organizational structure. Sales sells, dedicated teams handle early life experience and then some kind of support function worries about the customer after the product is in use. In a pre-lifetime value universe, the customer stays sold and marketers may not even know who the customer is. All of these discreet functions line up and perform their separate tasks with a view to optimizing efficiency and effectiveness at the functional level.
The customer, of course, doesn’t see it the same way: increasingly interacting with the brand in an ever-cycling pattern of consideration, purchase, trial, consumption and re-purchase. They don’t care about the optimization of any particular function. They don’t care if support is outstanding. They care about the sum of the ongoing experience, and they express that viewpoint through their Net Promoter Score status of being a promoter, passive or a detractor. For them, the journey isn’t linear – it’s continuous; they’re both prospects and customers at the same time, and social is just one communication mechanism that expresses their viewpoint and informs their decision.
The new era solution is a real-time integrated view of the customer journey that informs the business along the same lines as the customer behaves, and with today’s customer experience management techniques and technology it’s achievable. Here’s how it works:
First, we should recognize that the Net Promoter Score is a brand-level aggregation of the complete customer journey. Every event that defines the journey has its primary value in its linkage with NPS, and hence overall financial performance of the company. Outside that context, individual events in the customer life don’t mean a whole lot. We care about NPS because, as a new era Willie Sutton might have said, “that’s where the customer lifetime value is.”
Second, we should recognize that social data – where customers opine on products or brands – is an alternative source of data on all aspects of the journey, with the advantage of being real time and widely available – but with a few significant drawbacks. It’s unprompted (nobody asks the customer to post a review) so it’s out of the control of the company and hence outside the boundaries of its existing customer data. You don’t know who it is and you don’t control the dialog. It’s unstructured – they aren’t responding to a survey. So it will take a sophisticated set of tools to make sense of the data. And it has a poor signal to noise ratio; sources like Twitter are particularly noisy and short on content.
But it can’t be ignored – running away isn’t an option. Surveying customers to death won’t fly in the face of abundant customer driven feedback – it needs to be integrated. Social data needs to be filtered, classified, normalized, and converted into a form into which it can be consumed within the context of the overall customer journey.
It’s early days, and heady days. Leaders already have a line of sight on this approach and are seeing their customers through a lifetime economic lens, colored by their Net Promoter Score and informed by their understanding of the customer journey. Now they will integrate the social voice of the customer into that journey as a major ingredient in the execution of their operations. With effort, they will increasingly refine their management of the customer in line with the customer’s view of the brand. And, through listening to the customers’ preferred communication channels, it will pay dividends for the leaders.
