Social media channels further shift the power away from companies to their customers. In its first incarnation the web provided customers with far greater choice than previously as new entrants bypassed traditional blocks such as access to traditional channels. Faced with poor service or monopolistic pricing, customers could more easily find an alternative. Social media compounds this by providing dissatisfied customers with not just a voice, but a microphone, amplification and bandwidth to boot.
Not surprisingly, companies used to broadcasting brand propaganda are struggling to cope with inconvenient dissonance. For these businesses their
objective is simply to shove socks in the megaphones of the disgruntled. Customer experience enthusiasts take a far more optimistic perspective, enthusing about how social media enable companies to better understand their customers as communication becomes a conversation. Dialogue results in valuable service improvements with customers appreciating the better experience – not least the novelty of feeling they are being listened to – and spending more with the company.
The problem with this rosy scenario is the assumption that because social media enables businesses to listen more closely to their customers, they will choose to do so. The traditional monologue marketing approach is as much a function of mind-set as it is of media. It is not that companies haven’t been able to listen in the past, it’s just that they have chosen to focus more of their marketing spend on broadcasting messages. And when they have chosen to listen, the conversation is frequently dominated by the questions that the business wants answered rather than the points that customers want to raise.
It is an uncomfortable truth that most of us (marketers included) prefer talking to listening, indeed find the latter quite hard as anyone who has participated in an active listening exercise (e.g. having to repeat what was previously said before giving an answer) will attest. And this has certainly been the case traditionally with marketing spend. As a very rough and ready guide, data from the Advertising Association suggests that what is spent on advertising and direct marketing is eight times that spent on market research (based on MRS data). Before the recession, the ratio was 10:1.
Now too much should not be read into this economy-wide ratio – not all market research really constitutes listening to customers and indeed there may be other listening initiatives not captured in the MRS data. But there is evidence to suggest that some of the old prejudices have started to play out in social media deployments – marketers seeing Twitter, Facebook and YouTube as channels for delivering special offers and being overwhelmed when customers have used them to respond.
Consequently if your company is going to make the most of your social media deployments, you need to take a dispassionate look at how willing and able you are to listen to your customers.
Marketing Talk-Listen Ratio
The starting point is to calculate your company’s marketing talk-listen ratio – how much you spend on talking compared to how much you spend on listening. Inputs to the talk side of the calculation would include:
- Expenditure on advertising, direct marketing and promotional activities
- Staff costs of all marketing personnel working on outbound communications (including through social media)
Inputs for the listening side of the calculation should include:
- Expenditure on market research
- Staff costs of marketing personnel involved in customer insight collection
- Staff costs of teams involved in all customer-facing analytics activities – analysing web-site traffic, social media, interaction and transaction histories
Ideally the calculation would encompass all customer-facing functions, not just marketing. It would allocate the time spent by sales and service teams to listening and talking buckets – whether on the phone, face-to-face or reading and responding to emails. But this would be time-consuming. More importantly, communication in these areas is more 1-2-1 and more naturally a two-way process. If a listening deficit exists, it will typically be in marketing – ‘marketing communications’ being about outbound messaging in most companies.
The talk-listen ratio is intended as a reality check – for businesses to understand how they prioritise currently. As such it does not need to be 100% correct. But it is also just the first step – not all listening is equally effective in improving customers’ experiences. Listening is shaped by the questions we ask and the questions businesses want answered typically fall into three categories:
- How valuable is a customer or group of customers to us?
- How can we improve the service we provide to customers?
- How well are we doing with customers?
All three are important, so a balanced approach is required. But the distinctions are not generally recognised with the risk that too much investment is made in one to the detriment of investment in the others.
The first question promotes what might be termed selfish listening – the mind-set it reflects is ‘what’s in it for us?’ Its aim is to help a business allocate resources to where they will obtain the best return. This category would include expenditure on ascertaining which markets, segments and customers are most attractive for the business to serve, such as market research into the size, growth, profitability of particular geographies or segments. It would also include expenditures on analyses of customer profitability and life time value.
From a social media point of view, into selfish listening would come social network analysis to identify influencers and prioritise engagement efforts. Equally it would include efforts to identify when influential customers have blogged or tweeted about problems that could potentially damage brand equity so their issues can be swiftly resolved.
This type of listening provides little if any benefit to customers as a whole. It may result in some customers – the more financially attractive and influential – receiving more attention. Equally the least financially attractive will experience a reduction in service levels.
Calling it selfish listening is not intended to demean it, just describe it accurately – its value is one-sided. As a result it is often prioritized above the other forms of listening. All business relationships involve conflict between what is in the business’ best interests and what would deliver greatest value to customers – most directly with regard to price – and managing that trade-off successfully is critical. Overemphasis on the business’ interests will result in a declining customer base. Insufficient emphasis will result in lots of customers but not much profit. If all listening is selfish, profitability in the short term may improve but the long term ability to serve customers is diminished.
The second question is a prompt for service listening, the most important form of listening for generating revenue growth. It encompasses all efforts to understand customers’ needs – both stated and tacit – so that products and services provided can be improved. This should benefit both company and customers, better understanding of needs resulting in a better experience for customers and increased revenue for the business.
Into this category comes expenditure on different types of research into customer needs such as surveys, focus groups and observation by user-centric design experts. It also includes investments made in analysis to better understand what creates value for customers through mining transaction, interaction and social media data. It would also include the use of social media to collaborate with customers (and perhaps suppliers and partners) to identify areas where current services can be improved, generate ideas for new ones and pilot them once they have been developed. Finally aspects of competitor research – understanding which doing well and why – can also be characterized as service listening.
The other aspect of competitive intelligence – benchmarking performance against competitors – is scoring listening which is prompted by the third question: ‘how well are we doing?’ This includes all attempts to score customer satisfaction whether after a website, telephone or social media interaction or as part of an annual survey. It also includes expenditure on reporting solutions to determine performance on the key customer outcomes – acquisition, retention and growth – and the key internal metrics identified as driving those results such as number of leads generated, lead conversion ratio, timeliness of deliveries, completeness of deliveries, the number of complaints, the frequency of first time query resolution, average resolution time and many others.
From a social media perspective, scoring listening includes investment in analytics solutions that track membership, likes, followers, contributions, mentions, sentiment and buzz and any other metrics that are reported on.
Scoring listening typically ranks highly in businesses listening expenditures. As well as quantifying corporate performance, the scores are frequently used to evaluate individual performance. The problem is that it only gives half the story – to quote systems thinker Peter Senge, “coaches who manage their teams by looking at the scoreboard never get very far”.
Scores tell a business where it has to improve but without necessarily explaining how. Ensuring there is a qualitative explanation to close the feedback loop is critical. And this is where the real power of social media lies – customer generated content is qualitative. It can be analysed and quantified, but unlike a customer satisfaction survey where valuable qualitative insights are often lost in the qualiquantification trap as researchers seek to capture a score, the explanations for the scores are readily available.
Social media channels provide the means for all three different types of listening. More importantly, they provide a means to integrate the different forms of listening in a holistic way. But for this to happen, businesses must recognise that the additional transfer of power to customers the proliferation of social media enables and the concomitant need to listen more attentively – commit to investing more in it, ensure they are listening to the whole story. If that is the case, social media deployments will deliver on the promise of improving customers’ experiences. If not, they won’t and in all likelihood the expected gains in customer acquisition, cross-selling, growth and profitability in the business cases developed to justify these deployments will fail to materialize.