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?

  • Jeremiah,
    I agree with the general sentiment of your post, and yes, some consumers wield more social influence than others, but I believe it's operationally easier for companies to treat all customers the same. It's possible one day customer service will have systems to determine which customers have greater social influence, but in reality, most customer service departments are lucky if they can accurately verify that I paid last month's bill on time.

    Instead of heaping yet another consideration on top of a corporate function that already sucks, why not focus on fixing what's broke for the benefit of everyone?

  • Typo, board should be broad.

  • Thanks, this is fixed.

  • Brands have customers, companies have products.

    I totally agree with your point, Jeremiah. Social influence is gaining more and more momentum, and brand-to-consumer relationship must extend beyond engagement, first to understand who and with which reach influences most the buying habits, and second to analyze the content of their interaction.
    I wrote about brands dematerialization (http://www.debaillon.com/2009/11/the-new-laws-o…) and the fact that the buying act is more an issue of relationship and influence than a direct relation with the product. But “user experience” is mainly a customer-centric view, while Social CRM tools will soon allow us to go beyond that, and get useful insights about “use experience”, about the way those influencers are using the products (and pollenizating the Social Web about it).
    Maybe Peter Drucker, who put marketing (not consumer) at the center of enterprise begins to be listened to 😉 Factoring 'social influence' will also help companies in much more fields than sales and customer support (both concerned by the buying act), from supply chain to R&D.

    Parallel to Customer Lifetime Value Quotient, would should be aware of the emergent, and important, opportunity to calculate a Product Lifetime Value Quotient, also refactored with social influence in, which will help in drawing an end2end line between product design and the customer.

    My best.
    Thierry

  • This is a great post. I agree with the first comment that all customers should be treated equally, but that doesn't mean high-priority cases shouldn't be handled first. If companies are using social media monitoring tools that track influence, you see which negative comments could be the most potentially damaging to your brand, and as a result, they need to try and rectify that problem ASAP.

    Influence is very important when it comes to social media, and brands need to take note and integrate it into their customer service solutions with some kind of social media monitoring.

  • This is a great post. I agree with the first comment that all customers should be treated equally, but that doesn't mean high-priority cases shouldn't be handled first. If companies are using social media monitoring tools that track influence, you see which negative comments could be the most potentially damaging to your brand, and as a result, they need to try and rectify that problem ASAP.

    Influence is very important when it comes to social media, and brands need to take note and integrate it into their customer service solutions with some kind of social media monitoring.

  • Thanks Chris, good perspective, sounds like you believe in phase 2, sort of the 'ad hoc'

    Customers are treated equally now by many companies, so why would that stop when social influence is factored in?

  • a) if a company is sophisticated enough to create different customer experiences based on social influence, why can't they fix the experience for everyone b) who says the long tail of social influence doesn't have infinitely more impact?

    My argument is really one of budget and priorities. Does it make more sense to invest in improving the customer experience across the board, or invest in identifying social influencers and funnel them into a premium customer experience track?

  • Btw, I'd love to see the social impact of a leaked 'treat some customers better than others' memo.

  • The first thing I do at a restaurant is start typing on my iPhone and ask the server their name. The implication is that I can make you famous with social media. And I will. They need to make it a good experience because they may not respect the opinion of one customer, but they are going to respect the 1,000 people following me.

  • The key is the relative influence. Absolute influence is a numbers game and one that really doesn't represent true influence. Few people have such broad influence to change things outside of their area of expertise. I think we will see many companies make the mistake of relying on absolute influence (which isn't really).

    At viewsflow we are taking the approach of measuring influence at a more granular level (in this case by topic) in order to capture relative influence.

  • Great idea Jeremiah.

    We have built this 'relative influence' (or topic-by-topic expertise weightings) on lots of people in the business & professional domains. I mean it's obvious that Scoble will be able to live for free.

    You can take a look at some of our topic-based weightings: e.g. http://www.viewsflow.com/user/sean-park
    and http://www.viewsflow.com/user/robert-scoble or
    http://www.viewsflow.com/user/simon-cast

    This is just a friendly exposure of what is in our database.
    Wd love to chat and get your input in this.
    Best wishes
    Azeem

  • Great idea Jeremiah.

    We have built this 'relative influence' (or topic-by-topic expertise weightings) on lots of people in the business & professional domains. I mean it's obvious that Scoble will be able to live for free.

    You can take a look at some of our topic-based weightings: e.g. http://www.viewsflow.com/user/sean-park
    and http://www.viewsflow.com/user/robert-scoble or
    http://www.viewsflow.com/user/simon-cast

    This is just a friendly exposure of what is in our database.
    Wd love to chat and get your input in this.
    Best wishes
    Azeem

  • Jeremiah, good idea. To Tom's point, many companies have a hard enough time factoring in traditional measures of customer value into their customer service communications. Incorporating social influence is a great idea and a logical next step, but there is so much to be worked out there (first of which is measuring social influence).

    While there are emerging tools out there that attempt to measure these factors, I don't know of any that can truly measure influence yet, and easily integrate that into the data layer of existing CRM platforms.

    Both now and In the future, companies should focus on CLV and build their strategies and design their organizations around meeting the needs of the most valuable (and most growable) customers.

    Tying in social influence certainly makes sense, but practically, there is still a lot of work to be done to make that a reality.

  • I couldn't agree more. Companies cannot overlook the fact that that the public is becoming more and more “picky” every day. Today society is impatient, spoiled, and can have very loud and influential voices, such as Heather Armstrong.
    Research demonstrates that times have changed and the easiness of consumers to switch to competitors with equal or better service is incredible compared to 10 years ago. And with social media growing, people are unafraid and actually anxious to speak up and talk back to those gigantic corporations that still believe (but now long-gone) they have a bigger say.

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  • I doubt you'll find that memo, however I do know there are 'high priority' accounts at previous companies that I worked at received special urgency treatment. We called those “strategic accounts”

  • Good points Tom, the key here is that some folks are going to potentially cost more (through brand damage) or could be larger advocates as they are influential –therefore brands should pay more attention to them.

  • Thanks Thierry. I don't think the brand diminishes completely, but some of it's embodied into the relationship between consumers.

  • Is there another point here – 'bad' service has always been around, and when the staff giving 'service' don't feel empowered/respected/capable, customers often bear the brunt of their unhappiness. This may be a result of their personality, frequently it is a result of a corporate culture where one element in the value triangle (staff, customer, shareholder) is being ignored/undervalued/underdeveloped.
    Surely actually having engaged, valued, skilled staff is a critical component to satisfaction? Identifying 'known' influence at a current point in time to differentiate service has a couple of issues:
    1. Does the employee actually care about doing a good job and know what to do? People will be people!
    2. What about lifetime or related influence? (in the same way we now focus on lifetime projected financial value, a minor twitterer may be a major later)
    3. What about non-online influence? (If I am the procurement person for a chain, Maytag may regret my disappointment just as much as an uber twitterer)
    4. How do you map value? How do you map who is who? How much energy and resources can you afford to put into this effort?
    I'm not saying social influence doesn't have a place, it is a factor (with others) to consider.
    Looked at another way, online broadcasting may also be a way for people to surface experiences that previously were invisible, and raise issues that need addressing in ways other than 'oiling the squeaky wheel' and papering over the highly visible negative experiences.
    If a customer has had great experiences with a product/brand, and believes in them, they will be brand ambassadors online and offline, and will also be less likely to be influenced by the reported experiences of other (unknown) users.
    Equally, 'un-important' customers may be put off by the very visible differential treatment the socially enabled get, and react by seeking companies who don't differentiate …!
    So maybe, upping the game overall for staff and customers is the best way to keep customers, and turn them into your brand and product guardians (radical I know!).

  • Very timely topic. I’d argue many popular programs – like the NYTimes Wine Club – have come from similar analyses.

    The issue for retailers is how to turn this practice into something that is fair and predictable, and not subject to individual whims. From radio stations to grocery stores to night clubs, payola lifts both short-term business and can lead to their ultimate demise. I understand the once-popular Vegas hotspot Prive crashed and burned from exactly this kind of thing.

    I’m excited by hybrid programs from companies like Intel and others that incorporate social network activities as well as total spend to rate and reward their customers.

  • The most intriguing turn here is that for an influence value calculation to matter at all it must be catered to the industry at hand or even more specifically to the type of situation at hand. Knowledge of who industry influencers are and how to calculate relative influence in any given situation would require real-time updating and likely complex algorithms. Given their expertise in real time, algorithm based value estimations, masses of data, and the recent development of the “social graph” I'd say Google's in a good position to provide such measures to companies.

    Even if Google (or others) can determine relative value scores, assigning dollar values to the opportunity cost of not helping an influential customer (or value gained through amplification of positive experiences) is beyond my imagination. Jeremiah, do you have any thoughts on how businesses can determine the ROI of implementing systems of various valuation complexities?

  • kelbyj

    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!

  • I agree on the importance of social influence, but could it also lead to unwanted customer segmentation?

    Perhaps I missed it in the comments, but I’m wondering how you would deal with issues that may have high impact but are initialy spread by people with low influence? Isn’t this exactly what happened to Kryptonite? Prioritizing social influence will not help you with these cases, will traditional sentiment monitoring probably would?

  • Maayanroman

    Google has only part of the story. Future CRM systems will be able to match existing customer records and the social influence they have from public social networks like Facebook, LinkedIn, their blog and Twitter.

  • I agree with you and many of the other commenters, social influence is only one factor to the overall formula of customer value. My point is simple, it can't be ignored as a single consumer that's influential can quickly change the viewpoints of other customers.

  • I'd generally agree with you Brian and Tom, most companies lack a sophisticated support strategy, yet this can't be ignored any longer. With power shifting to customers, they can now self-support each other on tools like GetSatisfaction, Yahoo Answers, and Facebook, companies need to adjust to this growing change.

  • Interesting Mike, you're taking consumer empowerment to the Nth degree.

    Are the servers every offended? Do they even know what Twitter is? I'm not sure I would do that, as I don't want the server to feel I'm 'strong arming' them.

  • Exactly, that's the highest level, 'relative' influence, but how will a company do granular influence measurement in a way that's fast and cost effective? Expect to see tools emerge that measure social influence and couple the data with existing customer records in CRM.

  • Tom

    We agree. Most companies have a less-than-fantastic support strategy. Yet, we have to recognize that there's been a power shift to customers –service and support can no longer idly sit by.

  • TaylorEllwood

    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.

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  • beckycarroll

    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.

  • I love your matrices @jowyang. I love to explain concepts visually but some times nothing solves articulation of a concept like a matrix. Yours are all laden with goodness. This one was particularly valuable to me right now. Thanks

  • Awesome in depth stuff Jeremiah, I think we have started evaluating everything that is anywhere related to being in the social business cycle.I think they should provide the best service possible to all there consumers and make sure they do the reputation management in a better way in comparison to normal people for a few specific and influential consumers.
    I think the customer service efforts should be the same for everyone with an added value apart from just answering there questions, when it comes to recognizing people with social influence we should give them rewards for being there user.
    An example which comes into my mind is from Mahindra & Mahindra an Indian automobile manufacturer{they sell tractors in USA as well}, they give away customized vehicles to all the noted successful people who have been there users before.
    Thanks for sharing your insight on the topic.

  • jonathansalembaskin

    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.

  • Jonathan, or the bigger solution is to build better products, but given that consumers are often price sensitive over quality sensitive –that's not always going to be the case.

    We can't expect customer service to ever improve completely.

  • Becky, you might want to check out this this customer company pact

    http://www.ccpact.com/

  • Taylor, but that's my point. Someone with 500 followers is potentially 500 more influential that someone with 1. Companies must recognize this.

  • TaylorEllwood

    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

  • beckycarroll

    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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  • Too bad about Heather Armstrong's Maytag experience. There's a simple solution for businesses: Just do what you say you are going to do. Then, it doesn't matter whether a client has 1 Twitter follower or 1,000,000,000,000,000,000,000 Twitter followers, the issue solves itself.

    Jeremiah, that's a fantastic matrix you've provided. I have a few clients who will really benefit from reading this. Thanks!

  • Good point. But the answer remains to be found in constant improvement of operations vs. focusing too many resources on trying to stop-gap the imperfections via social media. Better service trumps all alternatives.

  • This has the potential to turn customer service into a popularity contest. I would be repulsed by a company who, upon filling out a customer contact form or a complaint form, asked how many Twitter followers I had.

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  • At the very least a company should create an escalation protocol for someone who mentions Twitter?

  • At the very least a company should create an escalation protocol for someone who mentions Twitter?

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