When was the last time you said to yourself: "Wow, I'd recommend this product or service to a friend"? Within the last month? Six months? If you have to think about this question, you've already made
my point. Over the last 50 years, outsourced manufacturing, poor customer service and an overall commoditization of products and services have served to erode consumers' affections for most brands.
While the idea of diminished customer loyalty may be disheartening--after all, if customers aren't loyal, they don't rave about your brand to other customers and they certainly
can't be tricked into forking over a greater share of their wallet--all hope is not lost. In fact, smart brands like Dell, Ford and Sears are starting to see increases in brand affinity as a result of
their social endeavors.
Before we talk about some of these examples, let's start by reminding ourselves why loyalty is important. Arguably the biggest benefit is highlighted in an article by
loyalty guru Fred Reichheld, titled "Leading with Loyalty." Based on research Reichheld's employer, Bain & Company, conducted last year, "companies that enjoy [the] 'loyalty effect' grow at better
than twice the average for their industry."
If doubling your growth rate isn't enticing enough in and of itself, Reichheld also proves in his landmark book, The Loyalty Effect, that "as
little as a 5 percent increase in retention can improve a company's bottom-line profitability between 25 percent and 85 percent, depending on the industry." Not too shabby, but also easier said than
Let's take a look at how a few well-known companies are using social media to dramatically improve their customer loyalty:
- Dell Computers: As recently as 2005, Dell was
struggling mightily to keep its customers. Complaints of poor customer service combined with a scathing barrage of bad press stemming from stories of laptop batteries catching on fire led CEO and
founder, Michael Dell to tap current "chief blogger" Lionel Menchaca to help right the ship. Through a campaign of open and honest communications via the Dell blogs and proactive participation by its
employees in Dell's support forums, customer satisfaction and loyalty have started to come back in full force.
- Ford: It's no secret that the auto industry has come under heavy
scrutiny over the last 12 months. The big three in particular have suffered huge PR and sales hits during that time as they attempt to figure out what's next. During that time, Ford made a giant leap
into the world of social by bringing in social media head Scotty Monty. Through tools like Twitter, Scott's blog and Ford's Sync My Ride community, they have slowly begun to win back customer and
influencer confidence. Ford still has a long road ahead, but they are reaping the benefits of being reconnected.
- Sears: you'll be surprised to find out that the company you used to
know as Sears is not your father's department store. In fact, you may be surprised to know that Sears launched its SKU community last summer, and now has more than 200,000 members.
According to VP of Community, Rob Harles, Sears is starting to see some little wins with their community: "Overall, customers are starting to feel that they are being listened to, core members skew
toward being some of the most valuable/profitable customers and the ability to reach out to customers and solve their issues proactively is definitively turning around customer perceptions." Rob
mentioned that in one extreme case, the SKU community turned a client from "I would never shop with you again" to "I have put my store card back in wallet."
If Dell, Ford and Sears can do it,
why can't you? For anyone interested, here are a few steps to help get you started:
- Listen first - You may already know why your customers aren't as loyal as they might
be. If you don't know, you should start by listening to what they are saying.
- Engage - Unless you are one of the lucky few brands that instill passion in your base, think
about giving your customers a reason to engage with you. This is most easily and simply accomplished by offering compelling content that is not about your company's products, but is germane to the
customers' lifestyle. Wrapping this content in social tools makes it more scalable and repeatable.
- Measure - If you are diligent about putting steps one and two into
practice, make sure you measure. Not only will it help you gauge the effectiveness of your program, it can help you get more funding to fuel it--especially during tough economic times like we're
living through now.