Social Media Spawns a New Era in Customer Intelligence
What are customer strategists without the right data? Ill-prepared. Much of their customer ignorance, however, hasn’t been their fault—often the information was just unavailable or very difficult to obtain. Until recently, customer strategists have been able to glean demographic and behavioral information, but attitudinal information has been more elusive.
Prior to the development of traditional CRM systems, sales and marketing departments relied heavily on demographic data to market to prospects, using factors such as age, gender, geographical location, household income, and more. But this data didn’t do much for customer-retention efforts, which is why CRM became so popular.
Traditional CRM technologies enabled customer strategists to capture, track, and analyze behavioral data such as RFM (recency, frequency, and monetary) values, which yield answers to the following questions: When was this customer’s most recent transaction with us? How frequently does she transact with us? How much money does she spend with us, on average? These systems also helped companies evaluate the cost of doing business with each customer, which led to a better understanding of customer profitability.
However, customers’ buying behavior may not accurately reflect their attitude toward a company or its product or service. One customer or prospect may be thoroughly enamored by a service or product, but unable at the time to make a purchase. Another customer might be frustrated with a company, but locked in to a contract or so heavily invested in existing products or services that it would be too inconvenient to leave.
In the first scenario, a company might come to the wrong conclusion about the happy, inactive customer or prospect—ignoring him completely, or sending him the wrong marketing material.
In the second scenario, behavioral data may incorrectly suggest that things are OK with the frustrated customer as she continues to use the products or services; given the opportunity to switch, however, she may. Here, transactional data indicates that she’s behaving like a loyal customer, but the reality is that she’s not. What’s worse is that she could be venting her frustration to her colleagues, friends, family, and extended social network, ostensibly tarnishing your company’s reputation. Attitudinal intelligence would shed some light on both scenarios.
Fortunately, we’re entering a new era in customer intelligence, which will reveal a wealth of attitudinal data. Social media enables customers to express their feelings about a particular company, product, or service—information that companies have been clamoring to obtain for years. Armed with this valuable feedback, companies can, without conjecture, quickly make decisions about their customers, products, services, policies, procedures, etc., and significantly improve customer loyalty and advocacy.
There’s a lot of hype around social media. However, don’t feel compelled to jump into it blindly. In this special issue, we’ve dedicated every page—as well as this month’s online Viewpoints—to the theme of social media, gathering strategies, thought leadership, and tales from some early adopters. In particular, be sure to see the features (beginning here) and our exclusive Maturity in Social Media chart, developed in conjunction with some of the industry’s top thinkers.
You’re not too late—far from it. In fact, you’ll find that if all you’re doing right now is listening to customers via social media, you’re off to a very good start. But it’s only a start.
For the rest of the June 2009 issue of CRM magazine — The Social Media Issue — please click here.
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Maturity and Social Media: You'll Be Social (Soon)
CRM magazine's Social Media Maturity Model, the launching pad for a discussion of the next five years of social media.
Who Owns the Social Customer?
CRM magazine's in-depth report on the state of social media in CRM.
The New Connections of Social Media
I don't care to belong to any social network that will accept me as a member.
Social Media from A to Z
An alphabetical glossary of what you need to know about social media.
The 7 Benefits of Online Customer Service Communities
A new Forrester Research report highlights the return on investment in social media communities.
The Next-Generation CMO Knows Something You Don't Know
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Why Customer Intelligence Is a Bright Idea
Forrester Marketing Forum '10: Analyst David Frankland urges marketers to use "customer intelligence" to drive business strategy.