Building Customer Relationships and Advocacy with Social Media John I.Todor, Ph.D. The Whetstone Edge, LLC Director, The Social Media Academy

Let’s Cut to the Chase! Social Media is important to businesses for 2 key reasons… Businesses need to regain influence… Over 70% of people now participate in Social Media, and Online Customer-to-customer “conversations” heavily influencing purchase decisions.

But, what is really happening? At the 2009 Online Community Unconference … … Community managers were concerned that less 30% of customers signed-up for their communities… … and that less than 5% of them are actively engaged! Why aren’t these people more engaged? What about all these? Then there are Potential Customers! Customers Signed up

They need to learn from customers so they… Also, business need to be more… … customer-centric … are more relevant … build stronger customer relationships, and … turn more customers into passionate advocates But, typically less than 5% do all the talking and they are not representative of all customers.

… the winning differentiator is no longer Customer Relationships are Important its the level of engagement — the degree to which a company succeeds in creating intimate long-term relationships with the customer . Economist Intelligence Unit, 2007 That was before the economic crisis. Customer relationship are even more important now! product or price,

Advocacy is also critical… Advocates in retail businesses, for example… … Spend more than other customers … Increase their spending year to year … Tell and draw people like themselves into stores Not surprisingly, the most profitable retailers have the highest proportion of ADVOCATES But… On average, less than 25% of retail customers are advocates. This spells OPPORTUNITY! IBM Research, 2008

Psycho-economic framework… At The Whetstone Edge, we have developed a… … that explains… … why some social media initiatives push customer towards indifference not engagement, and… … create Mindshare Barriers! … while the exceptions successfully Win Mindshare , and build relationships customers find valuable.

That’s the Psychology, what about the ECONOMICS? … desire for the company’s offering grows When customers are engaged and find relationships meaningful they increasingly take on these characteristics… … they become less price focused … forgive snafus … seek advice on big issues … value and trust the relationship … have high-lifetime value, and … become ADVOCATES Contrast this with indifferent customers who shop for the best trade-off between price and convenience

We have used our Psycho-economic framework to analyze the effectiveness of following types of social media initiatives… External networks like facebook Shared content Social bookmarking Peer review programs Building Brand reputations Co-creation Crowdsourcing Online Communities You are invited to learn how!

John I. Todor, Ph.D. is teaching a 3-session, online course on… Building Customer Relationships and Advocacy with Social Media On September 22, 24 & 29, 2009 For more information on The Whetstone Edge, LLC go to: www.TheWhetstoneEdge.com To register or for more information: www.SocialMedia-Academy.com This course is Sponsored by the Social Media Academy