In this second post, I am applying another topic from the article to SMS:
Industry publications like to report on how social media affects customer loyalty. I would like to ask the exact opposite question: How does a customer loyalty strategy affect social media?
I remember a significant discussion in business school about the implications of customer loyalty. Are loyal customers really more profitable? Produce more sales? Cost less to serve?
Our article ‘The Mismanagement of Customer Loyalty,’ says no. Again, this article is from the June 2002 Harvard Business Review. At the time, the authors were reacting to costly CRM programs with ineffective measurement tools.
They suggest companies use a more complex measurement of future profitability, and split the customers into 4 groups. Then, follow completely different loyalty strategies for each group. I.e. Don’t spend time acquiring or appeasing the customers outside your most profitable group.
Fast forward to 2011. How does this play out in social media? Most brands want as many likes as possible. They may consider social a no-cost platform to acquire fans (which is not strictly true). Either way, there is hardly any discernment.
If companies practice segmentation in real-life customer relationship management, why not in social networks? Is every follower equally worth the time and money spent in strategizing and community management?
I believe that someday, Google plus’s ‘circles’ will be a great tool for segmenting fan base. In lieu of that tool, the other option is to simply optimize your social media strategy for the segment of fans you want, not necessarily the ones you have.
Every brand wants a large number of fans. But remember, some fans have a greater WOM potential than others, at the same cost. I hope that the analytics of sound CRM strategy can be adapted to online followers. Then we’ll have a better concept of what loyalty means online and in social WOM.
Application: Now that you have scored a large fan base, don’t be afraid to explore segment-specific content