9.2 Social Media
Social media typically cover all interactive media outlets in which consumers can comment on or contribute to the medium's content. As the Internet becomes one of the most important distribution channels, and a major source of customer information and empowerment, social media, also referred to as Web 2.0, are increasingly influencing how customers interact with each other and how businesses use social medial tools to manager customer relationships. Internet users are turning to one another as trusted sources for their purchase decision making. In riding this social media wave, marketers have significantly increased their marketing budgets on social media channels. For instance, Internet advertising spending in the USA increased by 23.1% in the first half of 2011, to $14.9 billion, from $12.1 billion for the same period in 2010, according to Interactive Advertising Bureau. Some of the popular social media channels that marketers are increasingly adopting include blogs, social networks, content communities, and social coupons:
Blogs are online journals, and are often a virtual storehouse of information. A corporate blog is a powerful tool for firms to create consumer involvement with their marketing activities and to keep customers informed about the company and its product offerings [2]. A recent addition to the world of blogs is micro-blogging. Micro-blogging sites such as Twitter are also popular social media channels that can reach out to millions of users. Many companies such as General Motors, H&R Block, and Kodak are using Twitter as the primary communication portal for customer service, and the feedback has helped to turn around their company image and improve CRM initiatives. Blogs are often combined with podcasts and video casts, digital audio or video that can be streamed or downloaded to portable devices.
Social networking platforms such as Facebook, Myspace, and LinkedIn allow users to create their profile and build a personal network that connects them to other users. The market research firm eMarketer estimates that advertising revenues on social networking platforms would reach nearly $7.72 billion worldwide in 2012, a 71.6% increase compared to 2010. Identifying and targeting micro-segments of consumers, starting dialogs with consumers, and building brand awareness are all benefits that firms can profit from by establishing and managing their presence on one of these platforms. Companies such as Papa John's, RedBull, and Target have used Facebook as a means of creating a new portal into their ‘world.’ While Papa John's engages in free give-aways for ‘liking,’ RedBull has essentially transposed its web site onto its Facebook page, and Target has used its page as a platform for promoting its CSR (Corporate Social Responsibility) efforts. All three companies have used distinctly unique approaches, with the same common goal of raising and improving brand awareness.
Due to the proliferation of social media into everyday marketing, researchers have started investigating ways to measure/quantify a user's influence in the social media realm in a manner that would be of use to marketers. For instance, Kumar et al. [3] provide a research approach to measure social media ROI and customer's word-of-mouth value by creating the Customer Influence Effect (CIE) metric. This metric measures the net influence wielded by a user in a social network and helps in predicting the user's ability to generate viral information spread. The study also develops another metric – Customer Influence Value (CIV) – to link word of mouth to the actual sales generated. When this method was implemented at HokeyPokey, a chain of ice-cream retailers in western India, the research findings show that social media can be used to generate sales, increase ROI, induce positive word of mouth, and spread brand knowledge.
Content communities are web sites that organize and share particular types of Web-based content such as videos (e.g., YouTube, and Google Videos), photos (e.g., Flickr and Picasa), social bookmarks (e.g.,
Digg.com and Del.icio.us), publicly edited encyclopedias (e.g., Wikipedia), and public forums (e.g.,
epinions.com) among others. For instance, Kohl's uses YouTube as a channel to introduce its new product offerings instantly to millions of users. Similarly, H&M has been successful in collaborating with well-known designers to bring the latest chic fashion to its target customers and feature its new collections through YouTube.
Social coupons are web sites that offer online daily deals and discounts, such as Groupon and LivingSocial. Such sites have attracted substantial attention from customers and businesses alike. Social coupons provide customers with significant discounts (ranging from 50 to 90% off) while providing small-business owners guaranteed revenue and a flood of new customers. According to Groupon, the firm received a huge demand for its services: about 13 million people have registered to receive its e-mails, and 35 000 businesses are waiting to be featured on its site.
Looking ahead, these forms of social media are expected to continue growing at a rapid rate. Given the existing technological development pace, social media are also expected to enable further collaboration and social connection among customers. Three major changes are expected to take place. First, there will be an increasing interaction between customers and firms. This phenomenon will lead to more direct involvement of customers in many aspects of the firm's business, such as product design, advertising, and branding. To CRM implementation managers, it also means opportunities to acquire customer feedback on firms' products, improved customer relationships, and increased customer loyalty. Second, there will be increased interaction among customers, which will lead to increased prominence of online communities, which in turn will gradually become a trusted source of information for consumers. Finally, social networks will play a key role in becoming the intermediary medium between consumers and brands. Social networking firms such as Facebook and Twitter have begun aggregating information regarding user profiles, information, and connectivity that can serve as an important source of customer-level data for businesses. It is therefore important for CRM implementation managers to be cognizant of such developments in the marketplace and make use of such avenues for their information needs. In light of the influence of such new technologies on marketing, the following issues warrant attention from academics and practitioners:
- What will be the right customer metrics to measure customers' value given the prevalence of online communities? What changes are required to the customer valuation models in order to accurately incorporate customers' values in terms of their adoption and usage of social media activities?
- Do older consumers with less developed social graphs have the same needs as the younger generation? How can marketers address this difference?
- How can firms make use of the vast information provided by social network providers to develop and implement CRM strategies to satisfy specific customer needs?
- Are social coupons really helping small and medium-size businesses ensure long-term profitability? What type(s) of customer segments (new or existing, local or walk-in, etc.) should businesses target in order to achieve maximized long-term profitability? [4]
- How can social networking be applied and evaluated in B2B and B2C settings, and to what extent will the user characteristics pertaining to CLV affect/influence online customer-to-customer (C2C) exchanges? [3]
