Blanchard: On average, it costs a company 6x more to acquire a customer than it does to not lose that customer in the first place. Think about that. Most companies don’t know that. They go on focusing on customer acquisition because that’s all marketing knows, and they haven’t yet figured out that customer service isn’t just a complaints department. So most companies spend 6x more than they should for the lion’s share of their sales growth. Meanwhile, how many even bother to look at their customer erosion problem. How many CEOs can tell you how many customers they lose year to year, how many are currently orbiting away, and why? How many businesses have a department that focuses on customer retention? You see how much of the pieces of the puzzle are missing? Companies are leaving money on the table. They aren’t leveraging their existing customers properly, and so they aren’t seeing the real value of social channels.
For the sake of argument, let’s say that you’ve decided that social channels are ineffective in terms of customer acquisition. It just hasn’t worked for your business. More traditional forms of advertising and marketing are much more effective. Take a step back. What do you see? Traditional marketing and advertising are your customer acquisition drivers. Social activity becomes your customer development and customer retention driver. Does that make sense? Now you are starting to build a media ecosystem that truly drives business development. Peer to peer engagement, social listening, community management, these things drive customer development and retention. The “social” in social business.
So now let’s circle back to content and “content is king.” If your objective in social media is to drive customer development and customer retention, how will that affect the type of content that you will produce for those channels? It changes the focus of that content, right? In fact, it changes the type of activity you are going to be focusing on. You are going to find yourself spending less time on social marketing content and more time on discussions and engagement. Less time on promotion and more time on building value. Companies that do this tend to get a lot more from their social business programs than companies that merely focus on publishing content and measuring likes and impressions. Their results that can be measured in terms of real sales dollars, improved customer retention (lifetime customer value) and a steady stream of customer referrals (which, ironically, plays into customer acquisition). There’s a deeper piece to the ROI question and a ton of tactics you can use to make it all work, but that’s the basic premise. That’s the core mechanism behind every successful social business program that I have run into. Every single one. 1) Focusing on acquisition, development and retention as very clear and separate business drivers, and 2) leveraging the right communication channels to drive the right kinds of outcomes. That kind of clarity of purpose, coupled with specificity of activity in support of your objectives, is what drives results (and not just in social). Once you focus on driving ROI in specific ways, the tactics drive the results and you know what and where to measure ROI-specific outcomes, (usually at the point of sale) and it just becomes a matter of connecting the dots between activity or program spend and net gains from that spend. It takes a little work but it isn’t as hard as it seems.
Newman: So what’s the biggest takeaway?