FreshNetworks Blog

While a consumer drives down their road, what triggers their decision to go to Tesco as opposed to Sainsbury’s? As they switch on their laptop to shop online, is it Ocado.com or Waitrose.com they visit?

While the flat economy keeps consumer consumption weak, retailers are looking to pull levers other than just price to build brand loyalty.

Short term vs. long term customer loyalty

Price differentiation is clearly unsustainable and confusing for consumers in many cases. Whilst price matching might be good for the consumer in the short term, it negatively impacts the bottom line and does not lead to increased loyalty in the long term.

In a recent study by loyalty360 it was revealed that 84% of respondent retailers use some form of loyalty strategy, but surprisingly less than half (48.8%) believe their initiatives are working.

Therefore, what can drive loyalty in the longer term?

Having a single view of the customer is increasingly challenged by consumer uptake of multichannel. A consumer expects to be able to research a product or service using one channel, order it via another, and potentially take delivery via a third, with the expectation that the retailer is aware of each and every activity and delivering a consistently seamless service.

Consumers also expect the same authentic brand experience whether they are communicating via a brand’s website, social network, or speaking face-to-face with a representative.

How can social data be used?

So how can brands use social data to drive loyalty? How can it help make every moment memorable for the customer, while still affordable for the retailer? Beyond responding to customer service queries in twitter and other social networks where else can social build customer loyalty?

One way is by using social data to anticipate future customer behaviour. For instance, by seeing what is trending and delivering a better marketing message accordingly. This could take the form of tweaking a website in real-time, with the intention of more prominently displaying items customers are discussing online and showing a propensity to purchase. In this way the brand is clearly identifying with its customers in real time and using that data to make it easier for them to find the things they like.

Another example is if a customer has a goal to lose weight, their supermarket could use the data they have collected through a traditional loyalty programme (in relation to the customer’s food purchases), and make that data available to them to calculate their calorific intake. This data powering an app could then be used by the customer to manage their diet, making them more likely to continue shopping with that supermarket in particular because it is collecting their data and using it to benefit them.

These are just a few ways in which social can play a big role in driving and maintaining customer loyalty, and ways which give the customer benefits beyond discounts for being loyal.

Image credit: Karen V Bryan

The relationship between a brand and the customer is a complex one. It can be fickle or it can be very strong, it can be two-way or it can be all take take take. Sometimes the customer has all the power – they know they want pizza but they’re not tied to a particular brand and so could make a different choice with each purchase. Other times they may be very brand loyal; they may love a brand so much they will almost always go with them. In this scenario what you often find is that the customer is significantly more passionate about the brand than the brand is about the customer.

This makes sense when you think about it. Imagine a brand like Virgin Atlantic. Lots of people like flying with them (and a few don’t, but let’s not focus on them today). Imagine they had  5,000 strongly loyal customers, people who loved flying with them and would always choose them if they could. For each of these individuals it’s a lot easier for them to be passionate about Virgin Atlantic than the other way round – they only have to be passionate about one thing, Virgin would have to be passionate about 5,000. It’s just not that easy to do this.

But being passionate matters. Traditionally there has been a concept of brand which essentially put types of consumer within a particular brand’s sphere of influence – “this is what an Abercrombie and Fitch customer looks like” was the way that many thought of things. But the consumer has much more control than this. They are really at the centre of the relationship. A brand should be thinking  of themselves as part of a consumer’s  personal brand rather than the other way around “we want to attract the kind of people who drink Innocent Smoothies and fly Virgin Atlantic”.

In this environment it’s critical that you move the relationship from give give give to something that really is two-way. You need to love your customers. Something that isn’t easy to do. People like Virgin Atlantic (and other airlines) try to do this with loyalty schemes. They reward their best (ie their highest spending customers) with perks like free access to their lounges on departure. But this doesn’t necessarily reward the customers who are most passionate about you. These may not be your biggest spenders, but they may be your most important influencers, amplifying word of mouth. They’re probably the ones who purchase your product every time they make a purchase in this category, even if that isn’t that often. But between purchases they’ll be the ones telling everybody they know how great you are.

So how do we love these people back as much as they love us. It’s not easy, but social media can really help and during the holiday season for the next month or so we’ll be showing you a few ways that you can love your customers.

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Some more reading

• Trends for 2009: Radical Transparency
• Will online communities by airlines help their brands take-off?
• Social Media + Community = a new approach to creating customer loyalty
• Web 2.0 Summit 08: Tony Hsieh (Zappos.com)
• Zappos: Above and beyond customer service

Next week I’m speaking at the SocialMediaInfluence conference in London on Measuring Influence and Audience online. It’s a tricky subject and looking around today I have been unable to find any examples of an approach which has been successfully and repeatedly applied.

The problem appears to be that whilst there are a whole range of metrics that we can measure in social media (see The Social Organisation blog for a fairly comprehensive list) but none of these truly gets to the crux of the problem. What we want to do is know is to measure the influence that a single blogger, commenter or video upload has. What is the value of a blog post praising Coca-Cola in terms that Coca-Cola could understand and measure. As many of our clients ask us, what’s the ROI of encouraging this kind of activity.

The answer is that it’s difficult to measure, not because we don’t have a range of metrics (we do) but because at the moment our understanding of what causes a particular post or a particular individual to be influential is limited. We can measure proxies, such as trackbacks, links to the site from other sites (and the number of links to the sites that link there). But these really only reflect an inherent influence that we still haven’t measured.

What we really want to know is how influential is everybody that is exposed to an piece of content, and how influential are all the people they influence. Of course calculating this number would be difficult if not impossible. And the information you need to gather would be huge. It really wouldn’t be worthwhile.

Which is why some more basic measure is needed. Take the sites like Dell’s Ideastorm and MyStarbucksIdea. These get peers to vote posts up or down depending how relevant they think they are. You can then migrate only the more popular posts to the front page or the top of the list. This kind of rough approach might be a crowd-sourced way of measuring influence. We know that the most popular posts are those that people in the community think the brand needs to listen to most. Perhaps this is the only measure of influence we need.

It’s been a while since the last installment, so apologies for that. This time we’re going to look at a few principles for engaging people online.

1. Understand who you want to engage. The first stage is critical – know who you want to engage. This may be a certain type of consumer, your most loyal customers or maybe people you are targeting in the future. Do some work to understand these people, what makes them tick and what inspires them. What do they do online at the moment and where do they hang out? Get a real and full understanding of the people you want to engage so that you know how to approach them, what content and discussions are relevant to them, and where to find them.
2. Explore what’s in it for them. You’re engaging people and they’re engaging with you – it’s a two-way process. To make sure that you get the most out of people you need to make sure there is something in it for them. They may not be as enthusiastic to learn about your latest product as you think (or maybe just hope) they should be. Whatever you’re engaging them with, and however you’re doing it, make sure there really is something in it for them.
3. Create a space people feel comfortable in. Think of hosting a party or inviting friend over for a chat. You know that the party wouldn’t be good if the venue and atmosphere wasn’t right; or that the chat would be abrupt if the chairs were uncomfortable. Online it’s critical that you create a space that people feel comfortable in. If you are to truly engage with them you need to make sure you create a space they want to visit and then want to return to. Work on the previous two stages to get this right.
4. Be open and honest in the way you engage. Honesty is critical online. You need people to trust you and to do this in the online space it’s best to be clear and frank about who you are and what you’re doing. Don’t pretend to be something you’re not and don’t pretend you’re looking to do something you’re not. People will trust you more if you’re honest with them, and if you want this engagement to be most successful then you want them to be honest back.
5. Reward participation. Don’t reward with payment or free products, but reward by letting people know you care. They want to engage with you and will be even more motivated if you show them how this engagement is impacting you. Feedback to them any changes you make on the back of this engagement, let them inside the firm and make them a real part of the organisation. People want to help and want to feel a stronger link to a brand they love and so make the most of these feelings and use them to your advantage.

Whether you are engaging people through blogs, email newsletters, their social networks or your own online communities, these principles are critical. The online space is different to traditional means of engaging with or marketing too customers and so it’s critical that you take a new approach. Honesty really is the best policy.

Next time we’ll be looking at how you can make use of video and photos online as part of a social media strategy.

People talk about your brand everywhere online. A search in Google would find hundreds if not thousands of places where people are talking about or commenting on your brand. You could be mistaken for thinking that the rise of social media has led to people being exposed to more discussions about your brand that you don’t control. And you might think this is dangerous and get concerned about each of those hundreds or thousands of discussions.

But the mistake in this analysis is to assume that every discussion is equal. They’re not. A blog that criticises your brand but is read by hardly anybody is of very little importance to you. In fact the majority of discussions about your brand will each only have a very small audience. You don’t need to occupy yourself with them all, but rather with those which are repeatedly discussing you, or those that have significant influence.

This raises the question of how you measure influence. Aside from a very small number of well read bloggers, it is difficult at first glance to identify how influential somebody is online. You could look at how many posts they’ve made on a forum – but if nobody is reading them then that’s not a great measure.

Of more use is to measure the network effect that an individual has. How many forums or blogs are they active on and how many people read their posts on these sites? How many social networks are they a member of and how many friends do they have there?

These measures are much more useful when it comes to measuring influence – if somebody posts something about your brand how many different people will see it and how much will they trust the poster?

To some extent these measures can be made into a simple formula. Take each social network that somebody is a member of and give it a weighting for importance – so one that is more specific to your brand or product might be weighted more than a generic social network. So, taking a brand that sells baby products, a social network specifically for mums might be weighted twice as heavily as a Facebook. You can then multiply this number by the number of contacts you have on each site to get a measure of influence by site. And sum them to get a measure for the poster overall.

For example, Poster A has 100 friends on a Mum’s site (weighted 2) and 350 friends on Facebook (weighted 1) would have a total influence measure of 550. Compare this with Poster B, with 150 friends on a Mum’s site but only 70 friends on Facebook. Their influence measure would be 370.

So Poster A is about half as influential again as Poster B.

This is a good basis for a measure of influence and a way of finding the people you need to track and engage online. The problem at the moment is that the data needed to make this formula work isn’t readily available. Back to the drawing board maybe.