Impacting the bottom line with customer experience management and social networking July 15, 2010

I watched an interesting webcast titled ‘Using Social Media to Enhance the Customer Experience’ today on the American Marketing Association site for webcasts. Dan Burke and Jeff Westover from Autonomy shared their thoughts and experience on Meaning Based Marketing and Computing. Here are a few interesting points and facts from their presentation added with some examples and analysis by myself managing customer experience in social media. This is a good read whether you are in B2C or B2B industries.

As the number of social media platforms are growing, managers are increasingly frustrated with managing customers interactions in various channels. People are aware that they should be listening to their customers, but there is just so much noise. Lots of the marketing systems and metrics in use give only a historical account of what has taken place when brands need to be present and engage customers in real time.

Listening vs. Understanding

A good example of the difference between listening vs. understanding what your customers are talking about is McDonald’s. According to Dan and Jeff, there is a new tweet with the word ‘McDonald’s’ every seven seconds (see for your self http://twitter.com/#search?q=mcdonalds). While this may appear wonderful for marketing people, a closer look at the content reveals that 90% of those communications relate to someone giving directions: ‘Turn left at the McD’s'… The meaning based computing and marketing that Autonomy offers is designed to filter out that kind of noise and give you only the information that is relevant for business.

A lot of the solutions out there for understanding what your customers are talking about are either linguistic or XML and Boolean systems. The challenge with the former method, Linguistic, is that its often a lot of manual work where you can go through small amounts of data. You can get nice descriptive data of what people are talking about, but you don’t necessarily know how authentic the data is in representing views of others.

The challenge for the latter, XML and Boolean, is that the code is quickly outdated. You need to have the list of keywords altered by experts so  it fits the changing the world. Furthermore, you can miss out on a lot of relevant discussion since you don’t necessarily know all the words that people use to discuss about things that are relevant to their lives and thus your business.

What this means is that marketing and brand managers are usually pre-occupied with discussions related to their own brand and product names, when they should be listening to what people are saying when they are talking about their life, their goals and challenges. This is exactly why Google claims that YouTube is the number 2 search engine in the world – people type in ‘How to do xyz?’ into the search.

A few years ago I had dinner with a couple of marketing people from JVC’s unit producing accessories for divers. Before our meeting, I did a few searches on Google and sure enough – if you put in the brand name, most hits are to the company’s website. If you put in the product names, you get a first bunch of review sites followed by brand sites. If you put in ‘How to make a video?’ or ‘best video cameras’, a search that consumers would realistically make, the brand sites are nowhere to be found. So much for marketing and brand managers ‘controlling’ discussions related to their products.

In the webcast, Dan and Jeff promote the probabilistic method understanding customers. It is a self learning and updating, language independent and robust system that can cover large domains. This is the basis of their meaning based computing and marketing software.

Wisdom of the Crowds

Customers are more and more going to social networks to ask and answer questions as well as rate companies. Linked in and Yahoo answers are places where people go to talk about not maybe products but problems they have. Companies must actively be present solving the problems of customers or potential customers.

Thomas Fredriksson at Snoobi, a Finnish web analytics firm, presented a nice case study of My Starbuck’s Idea. The site allows people to post, rate and discuss ideas to improve Starbucks. In their first year, the site generated 75 000 ideas for improvement out of which 25 were implemented. Though the number may be small, anyone working with innovations knows how hard it is to get that many good ideas out of your own people. Plus the customer engagement and advocacy the site enticed is amazing.

Social Media Impacting the Bottom Line

The managers I speak to often think that social media is useful only for B2C companies that want to increase brand awareness and loyalty. The IBM ‘Listening for Leads’ program is evidence that even B2B companies can use social networking to drive sales and impact the bottom line. IBM sales staff actively build an subject-matter expert image for themselves in the eyes of customers in a specific industry with blogs and twitter accounts. The idea is to talk about things relevant for your customer’s business, not about your own products and services.

Specialized ‘seekers’ at IBM regularly scan online discussions and government agency sites listing RFP’s (request for proposal) to find potential customers looking for information to certain problems. Providing help in that situation is a great way to start the sales process early. For more information on the IBM Listening for Leads program check out this eMarketer case study.

Twitter is a social networking tool that I feel is undervalued and constantly gets misunderstood as a site where people send short status updates about their insignificant little lives. IBM uses Twitter to promote customer events, which include  webinars, podcasts, virtual trade shows or physical trade shows. Followers get information about special promotions and even  individual reps use Twitter to keep their own customers updated about interesting news, events and other relevant issues.

Find special deals on @DellOutlet

Dell is another example of a company that has turned Twitter into a sales channel. According to research by Danand Jeff, the company created the @DellOutlet to quickly move inventory and offer quick buys. So in this case its OK to talk about yourself and your own products, because your customers are following the account to get good deals. The account is now among the top 50 Twitter accounts with nearly 1,6 million followers and has generated more than USD 3 million in revenue.

Making your Offering More Relevant

Dan and Jeff quote  interesting data published by Accenture  (2007) stating that the average company churns 50% of their customer base in 5 years. According to the study negative perceptions about customer experience is the second most cited reason for customer flight immediately after price. I think this goes to show that managers often don’ know who their customers are, what they are doing on your website, and what they really want.

I posted earlier news related to a company called Frosmo here in Finland as I have been doing research on the company for several years now. The CEO of the company, Mikael Gummerus, told me about his philosophy during a chat we had the other day. I agree with him that all companies, regardless of if you are in B2C or B2B, need to understand the rules of social networking and how they apply to your business. For B2C companies, social networking is not only about raising brand awareness or deepening emotional tie customers have with you company. Its a way to send personified messages and create a more relevant offering for each individual customers. Similarly, for B2B companies it is a great tool for lead generation as the example of IBM shows us.

Dan, Jeff, Mikael and many other managers I have interviewed for my research emphasize that now it easier than ever to join social media. You don’t have to build your own site and try to teach people to spend time there. Its often a question of simply integrating into existing systems and using the wisdom of the crowds discover and share solutions. If you look at the Frosmo gaming tournament system for flash-based skill games on Facebook, there are a couple of elements that make it a social media service.

First, each registered user is recognized by name and greeted upon entering the service. Facebook Connect integration allows the service to also recognize who that persons friends are. Second, the game is designed so that its more fun with friends. You can advance and achieve goals faster if you invite friends to join your team. This is a simple way to entice advocacy and virality. Third, players get personified messages for example about what has happened in the game since you last logged in. This gives people the feeling that something fun and relevant is taking place in the game every day and you don’t want to miss out on it. Fourth, knowing who your customers are and what they do enables sending them personified special offers. This is a way to sell more. If a person hasn’t logged in for a while, a small incentive may bring that person back. Lastly, its important to understand all the different types of customers your company has. Some segments may bring in most revenue, but others may be important in word-of-mouth. Smart marketing performance metrics also measures virality and advocacy. People who bring with them lots of new players through e.g. their Facebook wall posts and status updates are rewarded in the Frosmo World.

I’m continuing my research on Frosmo and hope to publish interesting findings after the summer.

If you are interested in Dan and Jeff’s  full webcast, its available here on the AMA website. I’m not sure how long they will keep it online.