twitterblog                  txt       Social Loyalty:  A New Way to Make Friends    and Influence Business
Social Loyalty: A New Way to MakeFriends and Influence BusinessMeet Amy. She is 32 years old and works as a store manager ...
Human Nature on Steroids                                                                                                  ...
Social LoyaltyBefore devising a strategy to build social loyalty, the first step is to understand its definition. If tradi...
Two Ways to Leverage Social LoyaltyNo one has cracked the code of how best to build social loyalty online. But two strateg...
blogto view both people’s profiles.” It is basically a visual representation of a one-to-one relationship online.  With se...
the teamCan Elbeyli                                          Marc Ruggiano                      Don Peppers               ...
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Social Loyalty

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Social Loyalty

  1. 1. twitterblog txt Social Loyalty: A New Way to Make Friends and Influence Business
  2. 2. Social Loyalty: A New Way to MakeFriends and Influence BusinessMeet Amy. She is 32 years old and works as a store manager for a local clothing retailer in Chi- twittercago. Amy is active on Facebook, LinkedIn, Twitter and has her own music blog on Tumblr. She usesthese sites to keep up with family, friends, coworkers and fellow music fans. She also visits socialmedia review sites like Yelp, TripAdvisor and Mint.com to learn about new travel ideas, get helpmanaging her money, and offer her own opinions. When Amy developed a presentation for her boss about a new clothing line, she tapped into herfashion connections on LinkedIn for help. Before planning a vacation to Germany, she asked her Ger- This white paper explores how companies can:man friends on Facebook for advice. And when the latest U2 record came out, she wrote a scathing • Leverage the power ofreview on her blog about how it fails at trying to recapture their “Joshua Tree” sound, sharing it with social groups and indi-her music fan friends via Twitter, Facebook, and her blog. viduals online to build Amy is an example of today’s typical social media user. While she is an individual online, she is social loyaltyalso a member of numerous unstructured social groups. In some groups she is an influencer. In oth- • Develop interconnecteders, she is looking to be influenced. People and businesses have the ability to interact with her to contacts and under- standing with customersbuild both personal and professional relationships. The social media landscape is one of simultaneous individuals and groups. Companies that un- • Generate ROI and bottom-line impactderstand these nuances in the one-to-one, one-to-many, and many-to-one world can build engage-ment and loyalty. Amy’s Social Spheres of Influence and Experience Amy is both an individual and a member of numerous groups online. Facebook Twitter Linkedin Tumblr Amy music family blog fans coworkers friends Source: Peppers & Rogers Group© 2011 Peppers & Rogers Group. All rights protected and reserved. 2
  3. 3. Human Nature on Steroids txtThe collective intelligence of consumers interacting together can have astounding implications. Human beings are naturally social – we want to be with other human beings, and the feeling thatothers want to be with us is pleasing. We like to go to parties, and we enjoy telling stories, pass-ing along rumors, playing games, keeping secrets, laughing, entertaining, and being entertained.These actions make us “human.” They are human nature. As important as our social nature is, however, within just the past few years technology has in-jected it with steroids. We are being transformed into a dynamic and robust network of electronicallyconnected people in a worldwide, always-on festival of creating and sharing, collaborating, editing,publishing, uploading, entertaining, critiquing, commenting, helping, learning, and having fun. Companies that can tap This has immense implication for how we make technological progress, because progress owes much into this potential withmore to our social nature than to our knowledge or intelligence, per se. The conveniences we take for individual customers as well as groups cangranted today, from frozen pizza to Wi-Fi, represent the accumulated improvements and innovations of accelerate their ownmany generations of human beings documenting and sharing their ideas with others over time. progress while building The truth is, no matter how brilliant any single individual may be, acting alone he or she could not customer loyalty.possibly make even the simplest tool or device in use today. Nearly every artifact around you that is“manmade” can only be produced through the collective efforts of many, organized in a way that is fartoo complex for any single person to understand fully. Today’s technologies are injecting our social nature with steroids. One of the first and longest-term ef-fects of this is likely to be a further acceleration in the rate of economic progress. Companies that can tapinto this potential with individual customers as well as groups can accelerate their own progress whilebuilding customer loyalty. Another effect is the ability to build social loyalty in a different way. Understanding a person’s online social activity provides companies the opportunity to make an emo-tional connection with customers and prospects in this new, vibrant environment. By tapping into cus-tomers’ passions, there is the potential to deepen engagement, build the brand and grow the business.Companies can extend their loyalty strategy to meet the unique attributes of the social media world. Social Engagement Drives Loyalty Considerably Peppers & Rogers Group conducted a study of 306 online shoppers in the fall of 2010 to ask them about their propensity above average 19% in our industry to be socially loyal. If your participation in a loyalty program When your family, friends, or colleagues buy a specific rewarded you as an individual as well as brand, how much does it increase your likelihood to Considerably above average 19% Considerably rewarded you as a part of a group (friends, buy the same brand? in our industry above average 19% in our industry family, co-workers), would you be more like- ly to join? Not at all 8% Small extent 47% Yes 60% 40% No Moderate extent 38% Considerably above average in our industry 19% Large extent 7% If your participation in a loyalty program re- How often do you use Facebook? Do you own a warded you as an individual as well as re- smartphone? warded you as a part of a group, would you Hourly 3% be more likely to recruit friends, family, and Considerably above average 19% Daily 35% in our industry co-workers to join? Yes 68% Weekly 21% No 32% Monthly 17% Yes 50% 50% No Never 24%© 2011 Peppers & Rogers Group. All rights protected and reserved. 3
  4. 4. Social LoyaltyBefore devising a strategy to build social loyalty, the first step is to understand its definition. If traditional define itcustomer loyalty is defined as customers’ emotional and rational attachment to an entity on a personal Entourage(1to1) level, then social loyalty leverages the “influencer” factor of social networks while becoming more A social sphere of fam-relevant as customers reveal their interests and social behavior by engaging with their friends, family and ily, friends, co-workers and other connectionscolleagues; what we at Peppers & Rogers Group call their entourage. that a person interacts Elements such as emotion and two-way dialogue definitely exist, but they are also the fundamental with online. Depending on the situation, theyrules of traditional loyalty marketing. The unique factor of social loyalty is the way it allows consumers can be influencers of anto get together and label themselves with their distinct characteristics in a way that tells companies what individual, or influencedthey need and what their interests are. Those companies that can provide the correct environment to fa- by an individual.cilitate interaction, smartly observe, and respond in a customized manner will reap the benefits. Influencers The good news is that many of these networks already exist. Most consumers have already tagged > People with a large number of friends, wallfriends, family, and colleagues on Facebook, Twitter, LinkedIn, etc. They “like” and “suggest” brands, posts, activity (share,products, services, and events, they join “groups,” and they share details about where they are and where like, etc.) on Facebookthey’re going through Foursquare, Plancast, TripIt, and others. In other words, most consumers have al- > People most followed and tweeting peopleready publicly segmented themselves. on Twitter, specifically Influencers within the social media spectrum, as in the offline world, are of the highest value. They within niche categories that appeal to yourare classified as most the active and “social” people in these networks – people with highest and most companybranched reach. When investing extra effort, resources, and money in a subset of customers, make sure > Well-connected peoplethey are influencers. More specifically, if you want to send a discount coupon to one of your customers who participate in relevant groups onwho shopped from your website, see if he has a lot of friends and if he tweets often. LinkedIn Leveraging these valuable customers is simply an extension of current segmentation strategy. Social > Mayors of Foursquareloyalty will in a way enrich the customer data companies have on customers. In addition to customers’ locations important to your industry orvalue to the company and usage behavior, it will identify priority customers, where and how they use your companyproducts, and other useful nuggets consumers drop on social media. The cherry on top is that companieswill get to communicate with these groups/networks directly through the social media platforms, an ef-ficient and quick way to create positive return rates. sales direct mail radio Company The Evolution of Social Loyalty A TV email Interactions between companies and their customers has evolved from one-way communication to two-way dialog, and is now moving toward interconnected phone PR contacts and understanding. sales Stage 1: Company A pushes messages to the mass market Stage 3: Company A creates a learning relationship with individual direct mail radio customers, but also understands how they interact with other spheres Company A of influence. Enlightened companies will interact with all of these groups TV email sales within the context of the individual to encourage social loyalty. ect direct mail radio PR phone Company sales direct mail A radio TV V Company em email A TV email PR phone sales entourage PR phone ect direct mail radio Stage 2: Company A creates a dialog with individual Company customers to develop a learning relationship A TV V em email personal sales PR phone experiences ect direct mail radio Company A TV V em email PR phone information Source: Peppers & Rogers Group© 2011 Peppers & Rogers Group. All rights protected and reserved. 4
  5. 5. Two Ways to Leverage Social LoyaltyNo one has cracked the code of how best to build social loyalty online. But two strategies have emergedas potentially beneficial.1. Incorporate social segmentationAs previously mentioned, simply expanding a segmentation strategy to add social media insight can bea first step. The idea is to segment customers based on social media engagement levels (influencers etc.)and directly communicate with them. This approach still requires some analysis and segmentation, butworks as a one-to-one marketing activity to leverage a good customer’s sense of loyalty. Forward-thinking companies are beginning to create a sub-dimension within these networks that func-tions on an integrated platform to drive loyalty—collect information, segment users based on behavior,needs, and demographics, and act accordingly. For example, retailer Urban Outfitters identifies recent pur-chasers who are also on Facebook and considered influencers or connectors. The company encouragesthese customers via opt-in email communications to like or recommend the product they just purchased, aswell as ask friends to “rate my outfit.” The goal is to get their friends to see their recommendations on Fa-cebook and visit UrbanOutfitters.com. In addition, Urban Outfitters uses social media to win back dormantcustomers with email campaigns and social media promotions based on insight gathered from those sites1. Social Loyalty Program in Action Understand how your customer base is engaged with social media, gain insight, and develop targeting opportunities. Customer Segmentation Customer segmentation Social Integration based on value, needs Social Audience • Extended and behavior Segments customer base Enriched customer • Improved customer insight and target engagement groups with integra- • Accelerated social tion of social media media presence information Influencer Social Media • Accurate market Groups positioning Participator Social media user profiles based on 2 • Match customers to social behaviors • Leverage social Spectator social network volume and for integration 3 media for marketing of information activities Neutral activity • Develop target groups 1 • Understand your customer base by segmenting them based on different dimensions • Identify social media groups within your customer base Source: Peppers & Rogers Group2. Create a full-fledged, integrated social loyalty programThis is where the true benefit of social loyalty can be seen, but it also involves the most complexity. Brandscan reward customers in traditional ways – visiting venues and making purchases – but they will alsoreward customers for their engagement in social media and their interaction with other customers of abrand, simultaneously as individuals and groups. Social media platforms are evolving to be more customized, making this concept more possible toexecute. Facebook, for example, added a Groups feature in October 2010 so users can categorize theirfriends and family. And in November 2010, the company launched “Friendship Pages” to show exactlyhow specific friends interact. According to developer Wayne Kao, “they contain the public Wall posts andcomments between two friends, photos in which both are tagged, Events they RSVP’d for together andmore. You’ll be able to see a friendship page if you are friends with one of the people and have permissionGetting Social: Integrated Social Marketing. Presented at the MErkle CRM Executive Summit 2010, June 7-9, 20101© 2011 Peppers & Rogers Group. All rights protected and reserved. 5
  6. 6. blogto view both people’s profiles.” It is basically a visual representation of a one-to-one relationship online. With segmentation happening naturally online, it opens up the potential for companies to take ad-vantage of these valuable social connections. Let’s look at a hypothetical telecom example. Imagine amobile telecom provider launches a new loyalty program called “Telecom X Entourage.” Customerssubscribe through Facebook by clicking the “Facebook Connect” icon on the homepage and then en-tering their customer ID to link to their account. Members can invite their friends via Facebook and startclustering social networks within the system. As for the data collection, “Facebook Connect” and “Sign-in With Twitter” programs allow the telecomcompany to integrate its website with these platforms. Everything can happen within the environmentsusers already visit. Telecom X can track the friends customers invite to the program and whatever custom- With segmentationer enters in his Facebook and Twitter profile. The company can encourage customers to visit its website happening naturallyas well to collect more data. online, it opens up the New members can register as individuals or connect to a friend’s “Entourage.” After a few months, potential for companies to take advantage ofwhen the company has enough data to analyze patterns and behaviors of these “entourages,” it offers these valuable socialcustomized plans to Entourage members. Groups can select a price plan as an entourage, get a lump sum connections.of minutes to be shared within the entourage, etc. Individuals can also earn personal rewards based on The Evolution of Social Loyalty Below is a hypothetical example of a social loyalty program for a music-themed loyalty program. Rewards and pre- miums are experienced individually but they are earned socially. Members move up in status for both the individual and group levels as they hit individual value and behavior thresholds and expand their entourage. Individual Group From “Fan” to “Rock Star” From “Garage Band” to “World Tour” Enrollment Engagement Advocacy Experience Source: Peppers & Rogers Grouptheir individual and group behavior, needs, and value. What’s more, the company can collect feedbackright away online, and use social media tools to build a one-to-one dialogue with them. As mentioned earlier, the power of the group should not be ignored. Peppers & Rogers Group conducteda study of 306 online shoppers in the fall of 2010. It found that 60 percent of respondents would be more like-ly to join a loyalty program if their participation rewarded them as both individuals and part of a group.ConclusionThe social media ecosystem continuously evolves to mimic real-world personal interactions. There isopportunity for businesses to mix online and offline loyalty in their own unique ways. Companies thatunderstand these nuances in the one-to-one, one-to-many, and many-to-one world can build engage-ment and social loyalty. It’s a changing world, and those with the courage to try something new canreap rewards in the form of strong customer relationships in both the real and virtual worlds. n© 2011 Peppers & Rogers Group. All rights protected and reserved. 6
  7. 7. the teamCan Elbeyli Marc Ruggiano Don Peppers Marji Chimes Tom Schmalzl Liz GlagowskiAbout the TeamThis paper was written by a team of consultants, editors and marketers at Peppers & Rogers Group whohave a passion for social media and a deep understanding of customer loyalty strategy and executionincluding Peppers & Rogers Group co-founder Don Peppers (twitter @dpeppers), Partner Marc Ruggia-no, Consultant Can Elbeyli (twitter@CanElbeyli), Editor Elizabeth Glagowski (twitter@1to1mediaeditor)and marketers Thomas Schmalzl and Marjorie Chimes (twitter @mchimes).About Peppers & Rogers GroupPeppers & Rogers Group is dedicated to helping its clients improve business performance by shiftingfocus from transactions to managing relationships. As products or services become commoditiesand globalization picks up speed, customers have become more demanding and harder to satisfy.They hold the keys to higher profit today and stronger enterprise value tomorrow. The same appliesto governments. Constituents hold the keys to public institutional trust today and higher competitionand quality of life tomorrow. We help clients achieve these goals by building the right relationshipswith the right customers over the right channels. We earn our keep by solving the business problems of our clients. By delivering a superior 1to1Strategy, we remove the operational and organizational barriers that stand in the way of profitablecustomer relationships. We show clients where to focus resources and efforts to improve the perfor-mance of their marketing, sales and service initiatives. For more information, visit www.peppersan-drogersgroup.com.© 2011 Peppers & Rogers Group. All rights protected and reserved. 7

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