October 4, 2010 in Blog, Business, Social Media by malte

Customer Retention Management via Social Media

Customer Retention Management (CRM) is one of the current, omnipresent buzz words in marketing and business publications. Increasing Customer Satisfaction is the starting point for every CRM Strategy.

Let’s take a scenario where, so far, the foundation for the relationship has been laid, but now needs to be built upon so that it endures. A strong relationship is built around dialogue, conceptually speaking through interactive communication. The development and rise of Web 2.0 allows small and medium sized businesses to keep a dialogue alive throughout the whole span of a business/customer relationship. Social Media enables the company to communicate, interact and build a lasting relationship with customers. Most organizations probably have a well-designed website, but this is no longer sufficient in this day and age. A website is simply a cyberspace business card. If we make a comparison with human relationships, no-one would claim to have a fulfilling relationship with someone by merely repeatedly studying the other person’s CV or business card.

This same assertion is true of a company’s customer relationships. Nowadays the internet is part of our mainstream culture, offering social interaction 24/7. The fact that people live and socialize online is something modern service-oriented organizations cannot afford to ignore.  Businesses cannot afford to stand still, but have to wake up to the prevailing reality. Not least that social media enables many retailers to receive more orders than through catalogues.

Online Feedback: Online customer feedback and complaint management made online is not uncommon. Customers like to share their dissatisfaction and appear to be more comfortable voicing their opinion this way. Acting proactively – i.e. giving space on a company’s online forum for complaints – enables an organization to handle negative word-of-mouth within their own parameters. For a leading hotel chain this could mean that the traditional contact centre broaden their remit to detect customers voicing their views online and react proactively. Tools like Google Analytics help to filter postings and messages relating to a given organization throughout the internet, whether on social communities like Facebook, Orkut and LinkedIn, or on personal blogs. Word-of-mouth behaviour plays a significant role in estimating the value of a customer and must be prioritised. Social media are an ideal medium for sharing experiences about a service encounter and recommending – or not- the company to a third party.

Limitations: There are two main issues with this approach. First of all, customers may feel that organizations are harassing them as they follow up on online postings and this may lead to a feeling of being manipulated and spied upon. Secondly, many employers feel uncomfortable about letting their employees reply to internet postings about their brand and company, without consulting with PR first. Therefore a healthy balance between empowerment and guidelines has to be reached. Placing excessive restrictions on employees’ social media interactions limits their ability to respond to consumers in an authentic way.

Conclusion: Social media is cost effective and interactive. It can offer insight into word – of – mouth behaviour, most especially when used in conjunction with traditional communication channels. Social media is rapidly becoming the preferred communication alternative in CRM, as follow – up calls, direct mailings and traditional email marketing begin to strike consumers as irritating and can come across as aggressive and pushy. Social media relationships can appear more organic and friendly as internet postings (to a certain degree) are perceived as enjoyable. Relevant Facebook postings, for example, appear between several other news updates and can help to remind former customers about the brand and service, without being ‘in your face’. Furthermore these messages may lead to a viral effect as customers share postings (e.g. Twitter or Facebook) within their online peer group.

Malte Kempen