Matrix: Companies Should Factor ‘Social Influence’ Into Total Customer Value

Case Study: An Influential Mom Blogger Caused Mainstream Crises
Popular blogger, Heather Armstrong (@dooce) was dissatisfied with her non-working Maytag appliance.  Following protocol, she called their support number, yet her issue was not solved.  Stonewalled, she argued/warned the support staff that she was on Twitter, yet didn’t receive special assistance.  Escalating further, she then flexed a muscle and told them she had over 1,000,000 Twitter followers –yet the support rep did not budge.  Finally, she blogged and Tweeted against Maytag, initiating a boycott by her followers, “DO NOT BUY MAYTAG” and continues to chronicle her experience on her blog.  While critics suggest she wielded her power with irresponsibility, the point is moot, what matters is her social influence was not factored into the support triage decision making process –making a minor support issue a PR issue now on Forbes.

Just as companies factor in value of a customers celebrity status, buying power or customer loyalty –companies must factor in social influence or put themselves at risk. That’s right, customers with more Twitter followers are more likely to get better service and support than those that don’t.

Trend: Consumers Becoming Influential Using Social Technologies

  • Companies Already Give Preferential Treatment To Famous and Wealthy Customers. Companies have given high influence customers preference for years.  Take for example, shopping malls in the Los Angeles area have private entry ways for celebrities to enter the mall and receive priorty treatment.  Or, how B2B companies cater to their top customers with special event days, golf outings, or other clients with deep pockets.  Companies know that not all customers are valued the same, and as a result, treat them differently.
  • With More Consumers Adoption Social Technologies, the Problem Will Get Worse. The tide is rising, in fact with more consumers adopting social technologies, the amount of voices that companies will need to deal with will increase in volume.  Treating each customer with the best possible service and support (Like Zappos unique culture) is ideal –but not realistic.  Companies are ill-equipped to support millions of customers in real time on the social web.  They must have prioritization programs in place to handle the high risk/opportunity accounts quickly.
  • Companies Who Don’t Factor In Influence Put Themselves at Risk. Companies can choose to not factor in the social influence of customers, but will be putting themselves at risk.  It’s just a matter of time before a company has a social blowup, and by not trying to handle priority customers could cause a small issue to quickly escalate into a larger one.  Also, savvy competitors who factor in social influence can swoop and acquire high influence customers from companies that don’t. Your goal, is to stay off this list.

Matrix: The Four Phases How Companies Factor Social Influence

Description Benefit Risk/Costs
Do not factor in social influence Companies treat all customers the same, regardless of number of readers, followers or social influence. It’s cheap, companies don’t have to spend resources to understand if a single customer can influence others. Run the risk of not prioritzing a customer that could influence others, resulting in missed opportunity or greater PR risk.
Ad Hoc: Companies factor in social influence as it surfaces, such as a customer explicitly staying their influence, or a service member proactively having to find it. Companies don’t have to invest in a program or system that tries to calculate this influence. May miss opportunities of serviing a high influence customer, or may not realize a potential social crises till it’s too late.
Absolute Influence: Companies factor in total number of Facebook book friends and activity, number of Twitter followers and assign a raw number. Easy to calculate, and expect future Social CRM tools to do this with ease in the future. Data may not be accurate: Numbers can be manipulated and gamed, resulting in companies misallocate resources. Risk of alienating consumers without social influence.
Relative Influence: Companies factor in the true influence a customer has over their actual market –ignoring factors that may not be relevant. Finally, companies can focus on those customer with social influence that impact other prospects and buyers in their specific market Such a program is hard to setup and costly, and will require constant inputs and tuning.  Risk of alienating consumers without social influence.

Companies Must Factor In Social Influence

  • Recalculate The Customer Lifetime Value Quotient. For years, companies have factored in the total value of customers over their entire lifetime, Stanford has methods to calculate this called the Customer Lifetime Value formula.  These formulas factored in ability to be a repeat buyer, income level, and size of purchases over time.  Just as companies spend more time with customers with deeper pockets, they should also spend the appropriate type of attention with followers that don’t.
  • Yet Recognize, that Not All Social Influence Is the Same. To be efficient, companies shouldn’t reward those with spammy followers they got from an overnight follow script, but recognize that influence isn’t always about quantity, recognize there are at least two types of social influence:  The first, absolute influence is the total size of the individuals influence. Take Scoble for example, who has over a 100,000 Twitter followers and probally 100k subscribed to his blog is influential in a broad market.   However, his relative influence within the high-end fashion market is low. D&G must factor in both types of influence in understanding how to deal with customers, therefore while Scoble’s absolute influence is high, his relative influence to the fashion market is low.
  • Expect New Technologies To Address This Problem. We’re seeing a whole group of companies emerge in the Social CRM space that are trying to address parts of these problems.  Eventually, we should expect CRM systems to automatically indicate to customer facing employees the level of influence customers have.  In the most radical future, customers may choose to broadcast their preferences to retail stores before the walk in based on preferences and past purchases in order to receive a better experience. If this happens, companies can match with their social influence, and treat them accordingly.

I look forward to hear from you: have companies treated you differently because of your social influence?  What companies are doing this now?  What are the risks of doing it or not factoring in social influence?

75 Replies to “Matrix: Companies Should Factor ‘Social Influence’ Into Total Customer Value”

  1. As always, a very smart post. Your guidance is spot on, and showcases the value of productive listening across physical and digital spheres of influence. Thanks for the thoughtful analysis!

  2. I kinda disagree. In stories like this, I notice that companies really only respond when someone like the person you mentioned has a lot of followers and consequently a lot of influence. I have yet to see a story where someone with say 500 followers got a response from a company. I think companies should develop better customer service via social media, but their motivation to respond is directly correlative to the number of followers someone has.

  3. Thank you for helping to increase the visibility of the enormous task now in front of service and support organizations. I see the “perfect storm” brewing with respect to customer experience as customers are armed with mobile phones and are ready to Tweet if they are frustrated or wronged.

    Yes, incorporating online social influence is difficult for many companies to take on. It has taken years for organizations to use CRM as a strategy rather than as a set of tools (sounds a bit like social media, eh?). Nevertheless, as you stated Jeremiah, companies must figure out how to embrace their customers and do the right thing for them.

    This doesn't mean bend over backwards for all customers (or even all demanding customers). It is important to treat all customers well and none poorly. However, companies do need to factor this influence into their “most valuable customers” modeling so they can take care of their best customers.

    However, the potential for problems comes when customers get wise to this and start expecting to be treated differently/better in social media. That is already starting to happen (sometimes rightly so).

    I feel strongly that the organizations should focus on creating strong customer relationships, taking care of problems quickly when they occur, and empowering evangelists. We can then watch as a strong community model takes over in customer service and support where customers are helping each other get what is needed (when possible), and customers who are advocates will partner with companies to improve service and support based on customer needs.

    This is very exciting time to be in the customer service business. Challenging, but exciting!

    Thanks again, Jeremiah.

  4. Actually, I think the problem is fixing customer service, not factoring the potential social threat of one customer over another. The media impact is the effect; the challenge for businesses is to fix the cause.

  5. That's pretty idealistic to expect that companies will recognize that. They'll recognize it when a person can reach over ten thousand or over 1 million people. Those are the new stories we read about. They'll care a lot less if it's less. True social influence is dictated by the number of followers a person as well as how well as how much those followers are invested in the message the influencer is putting out. I'm not saying that someone who has 500 followers doesn't have some social influence, but companies won't respond unless its of sufficient number that they can see how it will impact that most precious of concerns to them: ROI

  6. Thanks, Jeremiah. I am very familiar with this pact, introduced at the Customer Service is the New Marketing conference a few years ago (this month!) when we first met. It is good stuff; here's to hoping more companies (and customers) take it to heart and start creating plans to execute this strategy.

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