It is particularly important to satisfy valuable customers because attracting new customers, on average, costs five to eight times more than retaining old ones. Many executives are familiar with this idea; a survey conducted by Forrester Research that showed the number of companies focusing on customer retention has nearly doubled in the past year. One way to do so is by identifying the customers that matter most – those customers that generate the most value for the company and drop those that cost more than they contribute. Therefore, businesses should calculate each customer’s lifetime value (CLV) and customer equity (CE). These values represent the present value of all future profits obtained from a customer over his/her life of a relationship with a firm. From these calculations, companies can make educated decisions about who they should direct their marketing campaigns to and who they should not waste their money on.
In this new, social economy, the best tactics are a blend of traditional and new methods for understanding the customer base. Social media makes this process more difficult to do, but offers a richer set of information about the customers. There are some customer “watch points” that cannot be easily quantified, but should be monitored by companies to get a broad understanding of their customer base. As defined by the Word of Mouth Marketing Association (WOMMA), WOM marketing is “giving people a reason to talk about your products and services, and making it easier for that conversation to take place. It is the art and science of building active, mutually-beneficial consumer-to-consumer, and consumer-to-marketer communications.”
One example is WOM marketing, which includes other phenomena such as: going viral, product buzz, community building, and cause marketing. The nature of this kind of marketing makes it difficult to monitor. Yes, there are tools available for social media monitoring such as Techridgy, Tweetbeep and a host of free and for pay social media monitoring services, however, none are comprehensive. Therefore, many organizations use a variety of tools and manual processes for tracking social media buzz. As popular social media outlets continue to spread, the scope of this job is broadening. WOM now not only includes audible conversation, but emails, blogs, tweets, SMS messages, podcasts and other venues. However, companies can use advanced technology to track what people are saying. The greater complexity is in managing the outcomes of the WOM and developing systems to use the information strategically within the organization to inform innovation, increase customer satisfaction, identify brand evangelists, and manage sales.
Organizations can take a variety of steps to use the information they receive through social media monitoring for the benefit of the bottom line. This entails four basic tasks:
- Educating consumers about the firm’s products and services
- Identifying like-minded consumers and providing an accessible medium for them to openly communicate and share information
- Observing and analyzing how, where, and when information and opinions are being shared
- Listening to supporters, detractors, and neutrals and responding promptly and appropriately
What this all means is that businesses need to carefully monitor their brand in order to serve companies best. They should track upswings and downturns in customer behavior and explore how consumers perceive their brand both before and after the launch of marketing campaigns. Companies need to identify the most powerful influences on their market. This all relates to the concept of satisfying your customers. Before you can please your customers, you have to know who your customers are and what they are saying. With more people plugging into the 21st century and more online communities emerging, the input into companies’ customer base is exponentially increasing. If monitored effectively, this input can become a company’s most valuable source of customer feedback. In addition, if used appropriately, a company can satisfy more customers and prosper from the increased business.