Archive for February, 2011

Connecting Customer Lifetime Value with Social Media

February 23rd, 2011

By Bruce Weinberg and Paul Berger, Professors at Bentley University

Let us express upfront our sincerest apologies for using a somewhat academic voice in this blog post!

“Customer lifetime value” (CLV) is a very important relationship marketing concept. It is the present value of the net cash flows (from all purchases) that an organization expects to receive from a customer over his/her “lifetime.” While the definition is straightforward, the mathematics used in computing it can sometimes get messy and involved (don’t worry, we have PhDs from MIT). Marketers use it to think about customer acquisition and retention (i.e., long lasting relationships), rather than focusing solely on the initial transaction. Indeed, when used effectively, CLV can lead to improved marketing decision making and increased profitability.

We believe that CLV is a mathematical kindred spirit with social media, in that they both can be important mechanisms in relationship marketing. Further, we believe that CLV can work hand-in-hand with social media to satisfy senior management’s thirst for quantitative accountability from social media. With all due respect to Cuba Gooding, Jr., “show me the ROI” has always been the mantra for proof of performance. CLV can absolutely play an important role in not only identifying the value of social media but also in effectively leveraging the value of social media (i.e., helping organizations use it more effectively).

In order to do this, we extend the notion of CLV to incorporate/consider social media and propose the concept of “connected customer lifetime value” (CCLV). CCLV includes not only the present value of the net cash flows from a customer’s purchases over time, but also the present value of the net cash flows from others’ purchases who were influenced (to purchase) by that customer through social media. Just to be clear, we are saying that there are two important components: CCLV = purchases by a customer + purchases by others who were influenced (to purchase) by that customer through social media.

Using CCLV can change dramatically whom marketers value as customers! When using CLV, marketers would target customers based on their expected purchases. Customers who are expected to purchase relatively little over time have relatively little value. However, when using CCLV, these very same customers could have relatively high value to a marketer if—this is the cool part—their influence on others’ purchasing decisions was great (and positive), resulting in substantial volume of purchases (by others). It is conceivable that a customer who makes relatively few purchases could be the most valuable customer to an organization, courtesy of social media and the influence it enables!

We are not saying that this is necessarily typical; although, we know that consumers typically search online for consumer opinions/conversations before making a purchase. The important messages here are that a customer’s economic worth can be based on his/her purchases and on influence through social media, that CCLV can quantitatively show the value of social media, and that CCLV can be used by marketers to leverage social media in making decisions.

Posted in Bruce Weinberg, Customer Lifetime Value, Customers, Marketing, Profitability, Relationship Commerce, Relationship Marketing, ROI | 8 Comments »

Fueling the Social Media Engine: How Building Relationships Online Drives the Growth of Brands

February 16th, 2011

By Luis Gallardo, Managing Director of Global Brand & Marketing at Deloitte

The world’s most successful brands go the distance. Beyond logos, colors, and shapes, brands endure over time and geography, attempting to do what no other commodity or service offering before them could do—or better yet, promise.

Brands are expected to perform, and customers expect nothing short of that promise. In fact, one must think holistically about the brand by understanding how multiple stakeholders are interacting, sharing, and perceiving the value of the promise across hundreds of brand touch points around the world. Then, one must get personal by understanding how emerging media and other Web 2.0 communities impact the development and maintenance of meaningful relationships—an emotional bond and distinctive brand experience for customers and stakeholders.

Is your organization capitalizing on emerging media technology as a key brand-enhancing activity to help differentiate it from the competition?

At Deloitte, the largest private professional services organization globally, social media is not just another buzzword. We boldly anticipate the success of social media in helping our people and clients to step ahead in the marketplace. Pragmatic in our approach, we are building on the success of several social media marketing campaigns to continuously grow our brand within the professional services market.

Our recent success with the 2010 Deloitte Fantasy Football engagement program, for example, allowed our 170,000-member firm practitioners, as well as our clients, to highlight their pride in cultural diversity, their love for the game of soccer, and a relentless approach to staying a step ahead of the fantasy competition during every World Cup match game. In addition to being an all-around fun game, Deloitte Fantasy Football was a strategic brand-building initiative that relied heavily on the power of building relationships online via social media channels, peer-to-peer recommendations, and real-time collaboration among colleagues, friends, and clients.

Social media platforms (Facebook, Twitter, and LinkedIn, in particular) played an integral role in sustaining the momentum and energy behind the campaign, week after week. In fact, the results of the campaign exceeded our expectations:

  • More than 80% of Deloitte member firms actively promoted this event, leveraging unique opportunities for local market fit.
  • There was a ten-fold jump from Deloitte Australia’s original 3,000 participant count in 2006 to an impressive 33,848 total number of participants who registered to play the game in more than 160 countries.
  • More than 61 percent of the Deloitte workforce participated in the competition, complemented by a respectable level of client participation at 34 percent.
  • More than half a million unique online visitors from 162 countries and territories came to the competition site. More than 15 percent of these visitors had not previously visited a Deloitte Web site.
  • Each visitor spent an average of 7.38 minutes visiting the Web site—an equivalent of more than 4 million page views.
  • The Deloitte Fantasy Football campaign directly impacted our overall social media profile. We grew our official Deloitte Facebook page during that time from a fan base of 2,000 to more than 77,000 active users. Deloitte now has the largest global Facebook presence among its professional services competitors.
  • More than 40 Deloitte member firm practitioners from the South African firm acted as “green dot” reporters by blogging about the spirit of the live games.

Deloitte continues to shift perception from being just one of the Big Four to being the market-leading private professional services organization—in a category of one. To help accomplish this goal, Deloitte Fantasy Football (as well as other brand engagement programs) allowed our network of member firms to build on the exciting momentum of the world’s largest sports phenomenon, while exposing stakeholders to a variety of brand messages that appeal to clients and talent. By supporting these relationships in online social media applications such as Facebook, YouTube, Twitter, LinkedIn, and blogs, Deloitte continues to break away from the pack.

Using social media as part of the marketing mix, Deloitte is able to authentically embrace the interests of its people and clients in a non-traditional way. From weekly engagement levels provided by Facebook metrics to a whole new database of potential clients, social media is a strategic business driver with the potential to positively impact lead generation, brand reputation, and risk, as well as advancements in thought leadership and new product development.

Posted in Blogs, Branding, Collaboration, Competitors, Customer Experience, Customers, Engagement, Facebook, LinkedIn, Luis Gallardo, Marketing, Relationships, Strategy, Thought Leadership, Twitter, YouTube | 1 Comment »

People Have the Power: How Social Media is Changing Business and Why the Old Guard is Terrified

February 9th, 2011

By Barry Libert, Author of Social Nation: How to Harness the Power of Social Media to Attract Customers, Motivate Employees, and Grow Your Business

For as long as anyone can remember, the expression “those who have the gold, rule” has worked. But times are changing. Today, the power is shifting to the masses, and they are using the power of the sheer size and capabilities of the Internet to make sure their voices are heard. And this is making the old guard—existing management teams, boards, and investors—terrified for lots of reasons.

Most companies and their leaders have perfected business processes and competencies focused on making, marketing, and selling “things”—not listening, facilitating, and sharing information and experiences. The skills and technologies (command and control and assembly lines) required for the former are different from those required for the latter (empathy and compassion and social media). However, I think it is time for the old guard to get on board and recognize they have a unique opportunity to participate in the revolution—or risk losing their heads the way Marie Antoinette did.

Understand the Power of Social Media

The unprecedented growth of Facebook (550 million users), Twitter (200 million), bloggers (150 million), and text messaging resulted because there were tremendous unfulfilled demands by customers and employees that were not being met by traditional organizations or tools. These demands were basic: to communicate and connect. Further, the demands were profoundly valuable and important to almost all constituents—to be heard, connected, recognized for their contributions, and ultimately, self-actualized.

Facebook and other social media entities surfaced to satisfy those needs and reap the benefits, along with the organizations that invested in them.

Embrace the Voice of Your Customers and Employees

Most traditional organizations don’t have a team—let alone a senior ranking professional—charged with building their social media initiatives and developing their communities. If we look back just 10 years ago when e-commerce was first taking off, traditional leaders of brick and mortar companies thought that e-commerce was just a passing fad and would only be used for selling technologies. Obviously, they were wrong, and the same is true for social media and community engagement.

We are just at the beginning of a structural shift to the socialization of organizations. It’s important to build your social media team now, so you can join the conversation and hear what your constituents have to say. Don’t let the voices of your customers and employees go unheard.

The Crowd Can Help You Grow and Prosper

Regardless of what you think of your employees, customers, prospects, or alumni, there are more of them than you. Most importantly, you never know where the next great idea will come from, which could include your existing people or people from outside the four walls of your organization (and by extension, your partners). Research has repeatedly shown that crowds have wisdom, expertise, and passion that can help you grow and innovate.

It doesn’t matter how big your company is or how long it has been around. The growing size and popularity of social media signals a seismic shift from institutions and their leaders to individuals and their peers (e.g., communities). It’s time for a new organizational model: “business by the people, for the people” (not by the leaders, for the leaders). Leaders have to learn to become true followers of their constituents (customers, employees, partners, etc.) and join the social media revolution. It’s time to ask yourself if it’s better to be terrified of the masses or to join them and ensure your future success. It’s your choice.

Posted in Barry Libert, Blogs, Crowdsourcing, Customers, E-Commerce, Engagement, Facebook, Innovation, Listening, Marketing, Text Messages, Tools, Twitter | 1 Comment »

Using One-to-Many Technologies to Create One-to-One Experiences

February 2nd, 2011

By David Harkleroad, Chief Marketing Officer at Hay Group

I’m re-reading Neil Rackham’s B2B classic, Major Account Sales Strategy. While written in 1989, it is still remarkably relevant—and he would have included a section on social media had it existed at the time!

Neil asked experienced B2B sales professionals about the hardest part of selling, expecting to hear, “getting a consensus of needs when several different people are involved in the decision” or “getting customers to see that the need is urgent enough to justify action.” Surprisingly, they said, “getting in the door in the first place!” He concluded, “if you’re trying to penetrate a new account, the easiest starting point is to find a receptive individual—somebody who’s prepared to listen.”

To find those receptive individuals, B2B firms traditionally rely on business developers—or, as any Mad Men aficionado knows, the Roger Coopers or Pete Campbells—who leverage relationships, cold call, or, in its modern day equivalent, spam (does anyone ever open those?) to get in the door. As an aside, many B2B business leaders confuse these prospecting activities (a one-to-one activity) with marketing (one-to-many), much to all of our chagrin.

Today, social media, as many thoughtful B2B marketing peers have learned, offers real opportunities for marketing success by, in essence, using one-to-many technologies to create one-to-one experiences. To build those connections takes time, creativity, repetition, and the right content—similar to any other marketing approach. The challenge is tweaking that content to raise brand awareness, and more importantly, to create sales leads and conversations. A few simple, cost-effective ways to experiment:

  • Make it easy for people to opt in to your content. Listen to what your targets have to say, and create content that both supports your marketing objectives and matters to your online audiences. At the same time, think through a clear call to action for every touchpoint you have online. Offer a clear and simple way to connect for additional information, and track those leads.
  • Have a content hub. A blog isn’t realistic for everyone, although that is the ideal. Consider creating a robust microsite as a center for information on a key topic. It’s a nice platform for external audiences but can also effectively rally internal audiences and salespeople. Or, for those without the corporate resources, a social media news release, such as those found at PitchEngine, can house a variety of multimedia content. Whatever the method, offer clear ways to connect or to solicit input.
  • Build relationships with bloggers. As Kevin Briody notes in The Very Basics of Blogger Outreach, you must identify the right bloggers—and get to know them. This is the time to roll up your sleeves, because there is no “easy” list. However, there are some sources that can help point you in the right direction: Alltop, Google Blog Search, and Technorati. Once you identify a few key bloggers, look around their sites for any helpful information on blog rolls or lists they might produce themselves, such as this one, which offers a robust community of management and leadership bloggers.
  • Engage on Twitter. It’s critical to build your followers before you launch a social media campaign. Adam Holden-Bache provides six useful steps to find your B2B audience on Twitter. Listen for a while. Check to see if your LinkedIn connections are on Twitter. Scan for any customers, prospects, key bloggers, and competitors.

At Hay Group, these efforts have already generated one-to-one meetings with organizations we want to do business with. And our consultants report much more receptivity to meeting requests, which is perhaps the most satisfying result, since it increases their confidence to go open some more doors.

What tactics have worked for you? Please share your successes, so we can all learn.

Posted in Awareness, B2B, Blogs, Competitors, Content, David Harkleroad, Google, Lead Generation, LinkedIn, Marketing, News Releases, Prospecting, Public Relations, Relationships, Sales, Spam, Trackability, Twitter | 1 Comment »