SAS: Rising Social Media Demanding Businesses to Rethink Customer Value

Social media such as Facebook (News - Alert) and Twitter are helping organizations engage their customers and improve consumer relationships, according to a research report from the Economist Intelligence Unit.

Social media has greatly strengthened customers, who can now voice their opinions. Organizations are quickly hiring staff to respond to customers, but they still risk undermining the customer relationship because of inconsistent responses or untrained staff.

 Those who handle it correctly, according to the report, are seeing their business grow, turning critics into champions and improving both customer experience and relevance.

 “Instead of focusing on revenue or profit associated with an individual’s or household’s transactions, organizations are now starting to think about the value of influence and collaboration – particularly given the growth of social media,” said Jonathan Hornby, Marketing Director at SAS, the company that sponsored the report.

Hornby recommends that organizations begin improving that experience by “using technology (in real time) to filter out noise and direct conversations to the most appropriate member of staff – wherever they may be in the organization – not just the staffers in your social media hub.”

That filtering process begins with improved customer value metrics. “We are basically talking about how organizations can better optimize resources to keep customers happy, mitigate risk and grow the business profitably. It all starts with a better understanding of which customers have the potential to grow or constrain profit,” Hornby added.

Social conversations are messy and unstructured. Nonetheless, it is possible to capture social media activity and derive meaningful information from it using analytics, said the researcher.

“Calculating influence based on how many Twitter followers someone has, or friends on Facebook or re-tweets is only the beginning,” advises Hornby. “What you are really after is an understanding of how many people took action based on a recommendation or negative posting from a customer.”

SAS (News - Alert) said its social media analytics can help companies identify connections that exist among online consumers and how much conversation flows between an individual network. When cross-referenced with sales data, SAS can then identify if existing customers’ behaviors are influenced or impacted by the sudden velocity of online conversations.

“Organizations can then assign an average value associated with behaviors like online conversions, or sale of a new product or service,” adds Hornby.

Developing new ways of understanding, analyzing and engaging with customers requires investment. According to the report, enterprise-wide change requires a compelling business case. “An empire in social media can’t be built on the back of a few Excel spreadsheets,” Chris Brogan, President of New Marketing Labs, is quoted as saying.

The report says that the kind of metrics that organizations are capturing now is no longer sufficient to drive the degree of change needed. In the report Brian Solis, principal at Altimeter Group, says, “You have to show your top executives, through business language, business numbers and real concrete data that there is an opportunity here that they must consider. It's going to take more than mentions of your brand, or sentiment, or share of voice."