It is so common now to run into all kinds of Facebook and Twitter pages such as law firms, accounting firms, retail businesses… I mean even the President has a Twitter! It is no surprise that the influence that a customer has through these media is more powerful than most would assume. The potential everyone has to make a thought go viral in a matter of seconds can make or break your business.
Take a look at this article from Forbes written by Anthony Leaper that explains how social media amps up the value of a customer.
The other week my colleague Vinay Iyer posted a blog that looked at how a company might use social media to improve its relationships with their customers. Some companies are already doing this, but it’s also clear that some companies also have a learning curve here about what constitutes a service that customers value and what constitutes stalking.
Stalking aside, this has led me rethink the question of the value of a customer. Once, when life was simpler and there was no such thing as social media, one could often calculate the value of a customer in a relatively straightforward manner: It was a matter of how often, in what volume, and for how long, might this or that customer purchase your product. Do the math, and that was what that particular customer was worth—and you could then make decisions about what you might or might not do for that customer (in terms of discounts, services, etc.) based on the value of that relationship. If your customer was on a contract, that value was particularly easy to assess: simply multiply the rate of the fee (by month, day, or whatever period), by the number of periods and that was the value of a given contract.
That’s far too simplistic a model today. A customer might sign a two-year contract for any number of services—a cell phone, a broadband TV service, software offered as a service, and so on—and the value of that contract is easy to calculate. At, say $100 per month, the value of a two-year cell phone contract is $2,400. But that does not begin to consider the value of the influence a customer might have in the age of social media.
If at some point your company begins to fail to deliver the service that the customer expects, that customer is going to become irritated. If that continues, the irritation will grow and sooner or later, as Vinay’s experience attests, spill over into Facebook, Google+, Twitter, LinkedIn and other social media venues.
This is the outcome you very much want to avoid. Irritated Customers have supportive Friends. They may have a few; they may have thousands. The dangerous fact, though, is this: it almost does not matter how many friends they really have. A single Facebook post that describes a jaw-dropping failure on the part of your company may, if stupefying enough or if told in a funny or snarky manner, be repeated, retweeted, “liked,” and “shared” innumerable times. Then, before you can say Jennifer Anniston Sex Video, the Irritated Customer’s snarky comments about your service have gone viral and everyone—even people several degrees of separation from the Irritated Customer’s set of Friends—is talking about it. Everyone is aware of it. And everyone has been influenced by it.
Suddenly, that single Irritated Customer, whose value may come to $2,400 under the old models of calculation, may have discouraged tens of thousands of your potential customers from considering your service. Ten thousand potential customers lost, at $2,400 per contract, is $24 million in lost revenue over the course of two years.
What would you have spent to have avoided that loss? To what lengths would you have gone to avoided discouraging ten thousand potential customers if you could have?
The answer to those questions begins to help you understand the real value of each customer in today’s world. With the amplifying effect of social media, the value of a customer can be much, much larger than ever before. Certainly not every customer’s comments will go viral. But how many have to go viral for you to feel the impact?
There is a flip side to this, though, that is important to point out: the positiveeffect of a customer’s excitement can be as powerful as the negative effect. If you can discover and address an Irritated Customer’s concerns quickly and effectively, then you have a singular opportunity to convert an Irritated Customer into a Delighted Customer. Their delight, particularly if seen by many in the social media world, may move thousands of people into the column of potential customers who are now predisposed to consider your services—when they may have been on the fence before.
That said, remember my earlier post about the inability of a certain high end automobile manufacturer to replace the failed run-flat tires on my car? Well its back on the road now, and the brand owner was most concerned about my experience! One of their top executives, once he learned of my plight, took every opportunity to expedite resolution and make amends, while seeking to learn how they could do things better in the future. This has inspired serious conflict in Mrs. Leaper’s loyalty to them. She hates the run-flat tires, but has never seen a company take that much interest in making good with the customer before! Thus, they may have delivered a potentially game changing response, and well done to them!
Ultimately, we can think of this as the Butterfly Effect of social media: one person’s tweet or one person’s status update can become amplified through the power of social media—until that flutter of emotion becomes a virtual cyclone of influence. It could move customers towards you or away from you, and which way it goes really depends on how quickly and effectively you deal with customer concerns. Deal with them quickly and well, and the long term benefits can be huge. Your customers become your advocates, which can be far more helpful than a lot of ads. Fail to do so, and you cannot predict what may fall out as a consequence.
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