New measures of value are needed so that organisations know how best to direct engagement efforts; revised engagement strategies can be improved with customer analytics
Re-envisioning Customer Value, a report from the Economist Intelligence Unit, sponsored by SAS, the leader in business analytics, found that the rise of social media has required companies to re-evaluate the way they determine customer value, which in turn can reshape customer engagement strategies. Measures of customer value that focus solely on transaction activity capture only a fraction of an individual's behaviour and potential value. The report also identifies a clear need for technology to help organisations maximise social media efforts.
"Many organisations are questioning how they account for value," said Jonathan Hornby, Marketing Director at SAS. "Instead of focusing on revenue or profit associated with an individual's or household's transactions, organisations are now starting to think about the value of influence and collaboration – particularly given the growth of social media."
That growth has put the customer in a stronger position. Anyone can have a voice and everyone expects "human" near-real-time responses. Organisations operating without improved customer value metrics are hiring staff to monitor and respond to virtually everything – which is difficult to scale – not only because of the sheer volumes of activity, but the risk of having inconsistent responses or staff that are untrained in the art of risk mitigation. Marketers recognise that handled correctly, these interactions can grow the business, turning critics into champions and improving both customer experience and relevance.
Hornby recommends organisations begin improving that experience by "using technology (in real time) to filter out noise and direct conversations to the most appropriate member of staff – wherever they may be in the organisation – not just the staffers in your social media hub."
That filtering process begins with improved customer value metrics. "We are basically talking about how organisations can better optimise resources to keep customers happy, mitigate risk and grow the business profitably. It all starts with a better understanding of which customers have the potential to grow or constrain profit," Hornby added.
Social conversations are messy and unstructured. Nonetheless, it is possible to capture social media activity and derive meaningful information from it using analytics.
“Calculating influence based on how many Twitter followers someone has, or friends on Facebook or re-tweets is only the beginning,” advises Hornby. “What you are really after is an understanding of how many people took action based on a recommendation or negative posting from a customer.“
For example, with SAS Social Media Analytics, companies can help identify connections that exist among online consumers and how much conversation flows between an individual and his/her network. When cross-referenced with existing operational data stores that contain web traffic or sales data, SAS can then identify if existing customers' behaviours are influenced or impacted by the sudden velocity of online conversations.
"Organisations can then assign an average value associated with behaviours like online conversions, or sale of a new product or service," adds Hornby.
Understanding a person's social reach combined with his/her propensity to share thoughts becomes the method to extrapolate value, and in turn help update segmentation rules and adapt treatment strategy.
Developing new ways of understanding, analysing and engaging with customers requires investment. According to the report, enterprise wide change requires a compelling business case. "An empire in social media can't be built on the back of a few Excel spreadsheets," Chris Brogan, President of New Marketing Labs, is quoted as saying.
And so far the potential wider business benefits of deeper customer engagement have been hard to quantify. The report says that the kind of metrics that organisations are capturing now is not sufficient to drive the degree of change needed. In the report Brian Solis, Principal at Altimeter Group, says, "You have to show your top executives, through business language, business numbers and real concrete data that there is an opportunity here that they must consider. It's going to take more than mentions of your brand, or sentiment, or share of voice."
"Technology has surpassed what was previously thought possible," said Hornby. "SAS Conversation Centre, a module of SAS Social Media Analytics, can use all the variables we have discussed here to prioritise and direct conversations to the most appropriate member of staff – in real time – creating a better experience for customers and a brighter future for the organisation."