Building consumer through Social Media

Mariana Antonescu

relationships

(Month and year of completion)

Executive summary

Table of contents

Literature Review
1.1. Customer Relationship Management In the late 1960s, e!itt suggested that the goal of "usinesses #as to $create and maintain customers% &1'( )ustomer relationship management ()*M) is gro#ing in importance due to the challenging "usiness en!ironment faced "y organi+ations thorough the #orld today( It is particularly critical in industries undergoing changes in traditional channel configuration( )*M is a means of addressing increasing competition, changing economic conditions and promotional dependence through the use of intimate customer ,no#ledge- ,no#ledge gained through relationship de!elopment and past mar,eting programs( )*M is increasing in prominence "ecause it focuses on current users #ho are the source of the ma.ority of "usiness re!enue and the "est option for impro!ing "usiness in uncertain times( /here are a num"er of #or,ing definitions for )*M( In fact the letters )*M ha!e "een used to identify )ontinuous *elationship Mar,eting, )ustomer *elationship Mar,eting and )ustomer *elationship Management( 0ach term represents the same process( According to Barran and 1erres (20034 5) )*M can "e defined as a process that ma6imi+es customer !alue through on7going mar,eting acti!ity founded on intimate customer ,no#ledge esta"lished through collection, management and le!erage of customer information and contact history( )*M is a"out perfecting relationships to ma6imi+e a customer8s !alue o!er time( 9urthermore :relationship mar,eting is mar,eting seen as relationship, net#or,s, and interaction8 (;ummeson, 199941)( In addition :)ustomer *elationship Mar,eting is an enterprise7#ide commitment to identify your named indi!idual customers and create a relationship "et#een your company and these customers so long as that relationship is mutually "eneficial8 (;am"le, Stone and <oodcoc,, 200=4 9)( According to Sha# (1991) )ustomer relationship management ()*M) is a model for managing a company8s interactions #ith current and future customers( It in!ol!es using technology to organi+e, automate, and synchroni+e sales, mar,eting, customer ser!ice, and technical support( 1.1.1. Benefits of CRM /he "enefits of )*M #ere neatly summari+ed "y ;am"le, Stone and 9oss (200=)4 )loser relationships #ith customers( >!er time, the company de!elops lin,s #ith customers through technology, ,no#ledge, information or e!en social ties( Such a tie gi!es the company an ad!antage( Similarly the more customers share information #ith a company a"out themsel!es, the more reluctant they are to repeat the process #ith a ri!al ()raig, 1990- ;ronroos, 1990, 199=?eppers and *odgers, 199@) Impro!ements in customer satisfaction( /here is a dialogue "et#een the company and the customer that ena"les the company to ensure that customer

satisfaction is maintained( /he dialogue ena"les the company to tailor products and ser!ices !ery closely to (indi!idual) customer needs and to de!elop ne# products and ser!ices to meet changing needs or e!en anticipate emerging needs ()lar, and ?ayne, 199@- ?almer, 199@- ?eppers and *odgers, 199A) 9inancial "enefits ensue( Bou gain4 1( Increased customer retention and loyalty7customers stay #ith you longer, "uy more from you and "uy more often (increased lifetime !alue)- 2( Cigher customer profita"ility, partly "ecause the costs of recruiting customers are reduced7indeed, they may e!en pay a premium for ser!ices( Apart from anything else you ha!e a lesser need to recruit so many if you #ant to do a steady !olume of "usiness( As each party learns to interact #ith the other, relationship costs on "oth sides fall( /here is an increased le!el of sales since e6isting customers are usually more responsi!e to your mar,eting efforts( Impro!ed customer retention and impro!ed employee retention may "e associated (*eichheld and Denny, 1990*eichhels and Sasser, 1990- 9ay, 199@)(

1.1. . The gui!elines for a customer relationship mar"eting strategy :/here are only three simple rules for ensuring the success of customer relationship mar,eting( Measure, measure, and measure8 (;am"le, Stone and 9oss, 200=43=)( Eirect mar,eters are accustomed to these rules "ut traditional mar,eting planners ha!e sometimes found this more difficult( Mar,et feasi"ility studies that lead to a product or ser!ice specification, follo#ed "y an in!estment feasi"ility study are used for large, comple6 pro"lems especially #here inno!ation or no!elty is a "ig factor( /here are many uncontrolled !aria"les in such situations that ma,e the tas, of precise measurement enormously complicated( /he ,ey to success for customer relationship mar,eting is data of as high a Fuality as can "e o"tained, constantly refined, associated #ith a series of mar,eting actions #hose effect is constantly monitored( Before de!eloping a relationship mar,eting strategy it is useful to consider 10 guidelines to ensure that e!aluation and measurement can "e carried out effecti!ely( 1( Is it the right thing to doG /he most important first Fuestion is :should #e do itG8 *elationship mar,eting has "ecome increasingly important as the "enefits that it "rings to "oth suppliers and customers are increasingly recogni+ed( Ad!ances in information technology ha!e pro!ided e!er impro!ing tools( It is therefore easy to get caught up in a tide of populism( He!ertheless relationship mar,eting is not necessarily the right approach for e!ery product, ser!ice or "rand( /here are limits to the num"er of relationships that an indi!idual or a "usiness can sustain( Sometimes the consumer .ust #ants to pay 20I for a spade #ithout entering into a relationship for lifelong horticultural management( Before you start, therefore, determine #hether the product, ser!ice or "rand meets the criteria for a relationship mar,eting approach( It is there sufficient scale, freFuency, competiti!e pressure, positioning and differentiation to #arrant the effortG Is it compati"le #ith long term strategyG If #e are .ust planning to dump products or to "lo# a competitor a#ay #ith an aggressi!e price #ar then relationship mar,eting #ill "e o!er e6pensi!e( If #e are positioning oursel!es as an ultra lo# cost, no frills supplier, consumers #ill not e6pect it( Sometimes the nature of the product or the mar,et can ma,e

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relationship mar,eting seem o!er intrusi!e( 9or e6ample teenagers may not #elcome direct mail from the company that supplied them #ith their first contracepti!e products( Sometimes #e may recogni+e that the resources reFuired to sustain a relationship effecti!ely at parity #ith our competitors are "eyond the current scope of the enterprise( If relationships are not sustained #ith apparent eFuality, #e run the ris, that some customers #ill "e made to feel second rate( Start #ith a customer perspecti!e( /he needs and attitudes of the ,ey decision ma,er in the customer8s "uying process are going to "e central to strategic communications planning( /a,e time to identify some crucial insights into #here customer !alue lies, identify a point of difference "et#een your product or ser!ice and competiti!e offers and see, to understand the difference that #ill e6ist "et#een "usiness to "usiness and "usiness to consumer( /he "etter that the ,ey decision ma,ers8 needs are understood, the more li,ely that the features, "enefits and ad!antages that #ill enrich the percei!ed !alue of the relationship can "e properly de!eloped and communicated( Jse research to gi!e direction constantly( Jse research and feed"ac, to gi!e direction continuously, not .ust #hen something goes #rong( *elationship mar,eting is "ased on a proacti!e mar,eting approach sustained "y an open dialogue, a t#o #ay communication( At the inception of the strategy, it may "e necessary to use research and sales forecasting companies to pro!ide pre7 mar,et assessment measures for planned programmes( /hese should then "e supported "y a com"ination of internally produced Fuantitati!e and Fualitati!e measures( Be especially careful #ith the Fualitati!e research( <hile focus groups are fast and ine6pensi!e, they are not the ideal choice for this sort of pro"lem, Fualitati!e research #ith greater predicti!e !alue, such as depth inter!ie#s or o"ser!ational studies might "e "etter( Eon8t get carried a#ay( Eo not get carried a#ay "y the tools of the trade( /echnology is a fine ser!ant "ut a poor master( /he most frightening claim in relationship mar,eting is :of course #e "elie!e in relationship mar,eting, .ust loo, at our ne# cal centre( In a large organi+ation these tools are certainly essential "ut putting them to #or, effecti!ely is a #hole different "all game( Are there people, processes and procedures in placeG Eo not loose sight of the "asics( /he call to action for the customer is pro"a"ly going to "e face to face contact mail or the internet( <hen designing your strategy, ,eep the mo!ement to#ards the act of purchase in the front of your mind( Jse a cascade approach of integrated, o!erlapping mar,eting acti!ities in tune #ith the customer8s preferred contact media, actions to ensure that a planned num"er of customers hits ta,e place in the right seFuence( /arget and customi+e( *elationship mar,eting entails a targeted, customi+ed dialogue "et#een mar,eters and customers or potential customers( It ena"les the dissemination of appropriate messages for the initial con!ersation of suspects into prospects or sales and for compliance #ith the right audiences( /his means that the dialogue may not "e identical foe each audience, e!en in promotional print li,e a ne#sletter( *elationship mar,eting can "e the means for "uilding a customer data"ase not only for a single product "ut also for other corporate "rands that "enefit the target consumer( Mar,eters often employ mass media in the short term to trigger a sustained, direct, response7 dri!en data"ase mar,eting effort( /he response is "est channelled into dedicated teams #ith the right I/ support and access to rele!ant data( /raining

for these teams coupled #ith computer generated scripts ensures consistency of response( Ma,e sure that e!eryone in the enterprise ,no#s #here these teams are and #hat they do( A( Be consistent( )onsistency is !ital( *elationship mar,eting campaigns are often multifaceted( It is therefore important to ensure commonality of message and design across all contact !ehicles, including people( /he more consistent the customer interface, the greater the impact and the greater the opportunity to "uild a long term competiti!e position( /his implies continuous training and e6cellent internal communications( It also implies measurement across the #hole range of these interfaces( 3( Stay legal( Jnder 0uropean Jnion directi!e 95K@6 "rought into effect in >cto"er 1993, companies are permitted to transfer personal information including names, addresses and personal profiles across "orders( Co#e!er the country to #hich the data are "eing e6ported must ha!e in place a national la# on pri!acy and a regulatory agency monitoring the use of such information( Such countries, such as JS do not ha!e such la#s( )*M depends on the collection and use of indi!idual customer information( In addition as companies "ecome increasingly glo"al, it is !ital that this information is accessi"le to sales, mar,eting and customer care agents #orld#ide( 9( Deep it simple( >n the other hand most customers are more then #illing to gi!e you information if you .ust gi!e them the opportunity( /hese opportunities for data collection and measurement occur much more freFuently than most companies allo#( /his does not necessarily mean that they #ish to complete a long Fuestionnaire at each point of contact( A fe# simple, clearly #orded Fuestions can yield a "uild up of data that pro!ides the "asis for monitoring important trends in customer needs( 10( Stay alert( Hot all mar,eting pro"lems are relationship "ased( >ne JD charity decided that data protection la#s #ere restricting its appeals for funds "ecause it could not legally use the "eneficiaries of its a#ards to target possi"le donors( In this case the "eneficiaries #ere mentally ill and it #as "elie!ed that their relati!es and friends #ould ma,e the "est targets( /he pro"lem here is really one of positioning the product (charita"le donations) rather than relationship "uilding( 1.1.#. $eveloping the capability for relationship mar"eting According to (;am"le, Stone and 9oss, 200=4113) there are si6 ma.or techniFues for de!eloping a relationship mar,eting strategy capa"ility4 1( Strategy de!elopment( /he general approach to managing customers is de!eloped from o!erall corporate strategy and mar,eting strategy( /he lin, to high le!el strategies is important as significant in!estments and changes in many areas of policy, processes and structures are reFuired( /hese must "e considered as part of corporate strategy so that senior managers can assess the in!estment needs and ris,s( 2( Eata management( ?rocedures to identify, collect, clean (ensure accuracy, a!oid duplication, cross reference to e6isting data), analyse and interpret data( =( )ommunications de!elopment( Era#s all the analyses together to produce a case for changing ho# you manage your customers in relation to the associated in!estment and profit implications( Ee!elop a pro.ect plan to

manage and monitor implementation( /his includes achie!ing "uy7in to the concept from all le!els of the organi+ation( /he messages and the :selling le!ers8 to different groups in the enterprise #ill !ary( 9or e6ample the field sales force #ill "e loo,ing for different things from the finance director( @( )apa"ility de!elopment( Ee!elop the main processes and systems to support the customer relationship mar,eting strategy( >rgani+ation de!elopment in terms of culture (training and recruitment) infrastructure and s,ills, #hich #ill pro!ide the resources to deli!er relationship mar,eting( )hanging culture may "e a long term process( Co#e!er culture underpins performance capa"ility( It is not .ust a case of pro!iding tools4 people ha!e to #ant to use them and then ,no# ho# to use them( 5( /actical planning( ?lan and de!elop mar,eting programmes designed around the relationship mar,eting planning process( /hese #ill use the customer data to target indi!idual customers, communicated through !arious media and contact customers or in!ite customers to contact you through the resource capa"ility( 6( Implementation( /he essence of relationship mar,eting is measurement, #hich includes not only monitoring and control "ut also feed"ac, to o".ecti!es and strategies( 1. . Customer Loyalty :)ustomer oyalty is a state of mind, a set of attitudes, "eliefs and desires8 (;am"le, Stone and 9oss, 200=4163)( <e could call this :emotional loyalty8( )ompanies "enefit from customer8s loyal "eha!iour conseFuent upon these attitudes and "eliefs( /he focus of the resulting loyalty approach #ill "e on maintaining a special place in the mind of the consumer( It #ill try to ma,e the consumer feel that their loyalty is "eing re#arded "y a stronger or "etter relationship, !isi"le perhaps in a higher le!el of recognition or ser!ice( An emotional loyal may "uy from a supplier "ecause of the relationship, e!en #hen the purchase does not meet all o".ecti!e criteria( oyalty is also a "eha!ioural inclination( It precludes loyalty to some other suppliers "ut not to all of them( A customer can "e loyal to more than one competing supplier( <e could call this :rational8 loyalty since it ma,es sense for some types of situations( Cere the focus of the loyalty approach #ill "e on incenti!es that reinforce "eha!iour patterns( 1. .1 Basis of customer loyalty% Table 1: Basis of customer loyalty Basis of loyalty 0motional *ational 1. . . $egrees of loyalty Basis of relationship mar,eting approach Managing loyalty is a constant theme of the company8s approach to managing customers oyalty management ta,es place through schemes to reinforce :loyal8 "eha!iour(

Hot all customers are eFually loyal, nor #ill one customer al#ays demonstrate the same degree of loyalty all the time( oyalty is de!eloped "y approaches that reinforce and de!elop a positi!e state of mind( /he aim is not to ma,e all customers loyal "ut to impro!e the loyalty of those customers most li,ely to respond( Eifferent people respond to different things( Some respond to incenti!es, some to differentiated mar,eting, some to high general standards of ser!ice, some product e6cellence and some to strong "randing( In addition some consumers #ill accept s#itching "arriers more easily than others( /he relationship "et#een loyalty and purchase "eha!iour is not linear as fig 1( illustrates( In product area such as "an,ing or utilities, many customers go through their #hole li!es #ithout e6periencing supplier !ariety, so their loyalty is ne!er really tested( Jnder conditions of deregulation and ne# competition, it may ta,e some time "efore any real emotional loyalty "uilds up( It may therefore "e important to "uild "eha!ioural or promotional loyalty schemes Fuic,ly if competition is a"out to "e introduced, simply "ecause the customer loss rate #hile competitors are sampled could not "e afforded( Such loyalty is "est sustained "y pro!iding e6cellent customer !alue so that any comparisons that s#itchers may ma,e sho# the original company in the "est light( 9ig 1

1. .#. &hich customers !o you want to be loyal' :)ustomers are not eFually !alua"le nor are they eFually attracti!e8 (;am"le, Stone and 9oss, 200=4 1A6)( It is therefore important to consider #hich customers you #ant to attract and ho# you #ant them to "eha!e( Jnless a loyalty scheme designed to change "eha!iour reinforces and adds !alue to the "rand, the changed "eha!iour #ill last only a little longer than the scheme( )ustomer loyalty schemes, "y definition are not of this ,ind( Many schemes are effecti!ely data "ased promotional continuity programs( Case example: Tesco club card In 1995 /esco introduced its clu" card loyalty scheme( Shop !isits increased "y 16L and share of total grocery spend #ent from @=L to @6L( By May 1996, /esco had displaced its main ri!al Sains"ury8s in the top spot, partly due to its loyalty scheme(

Co#e!er it had issued 202M million in !ouchers and a further 100M million plus #as spent on the clu" card infrastructure( /esco claims a .ustified return on its in!estment "ut some analysis #andered #hether the company had in effect simply computeri+ed a long term promotional scheme( Cuge amounts of data #ere generated and the tas, of analy+ing it #as li,ened to trying to drin, from a fire hydrant( He!ertheless /esco continued to de!elop the scheme and "y 2002 #as not only dominant in the JD grocery mar,et "ut had made significant progress in se!eral other countries( oyalty schemes ha!e the "enefit of yielding customer data that can "e used for targeting and may therefore sa!e other forms of mar,eting communication spend( /he /esco scheme #as regarded as successful "y mar,eters "ecause for the first time certain groups of #omen recei!ed personali+ed promotions targeted specifically at them and they responded "y increased purchasing( It is usually helpful to distinguish categories of customers, so as to influence emotional or rational loyalty more precisely4 1( /rue freFuent users4 of the product, ser!ice or company 2( Affinity customers4 are not such freFuent users "ut li,e to indentify #ith the company( Acti!e affinity customers are responsi!e to offers from the company and may focus on collecting the scheme8s currency( /hey ha!e a high propensity to recommend other customers or in!ol!e reference groups such as family or "usiness colleagues in using the same products or ser!ices( =( Intermittent customers4 "uy !ery infreFuently and "ase their decision on the offer at the time of the purchase( Eata mining ma,es it possi"le to identify the characteristics of different ,inds of8 good8 customer( /hese might "e emotionally loyal, high !alue, cross7"uyers or "rand respecters( /he aim is to predict customers of higher future !alue, #ho can then "e targeted "y loyalty scheme offers( /he customer data"ase should therefore "e #idely accessi"le to other areas of the company to support this role, a reFuirement that tends to "e grossly underestimated( According to (Butscher,1993) the po#er of this approach is particularly great #hen customers elect into such relationship and ideally pay for mem"ership "ecause of the "enefits they recei!e( ?eople #ho .oin these sorts of affinity clu"s tend to "e emotionally loyal and share information a"out themsel!es openly( 1. .(. The Loyalty )ri! Jnderstanding the loyalty position is the ,ey to de!eloping a more tightly targeted communication plan( /a"le 2 illustrates ho# data mining can "e used to dra# up a loyalty grid( In this e6ample, three types of data might ha!e "een used4 actual sales history "ased on 9*A) (freFuency, recency, amount, category) share of #allet calculations measures of emotional loyalty "ased on simple attitudinal research /he e6act form of the grid depends on the nature of the "usiness and the competiti!e position #ithin it( If customers can "e mapped on to a loyalty grid, a "asic orientation for the loyalty scheme can "e determined along #ith an indication of #here to spend the mar,eting communications "udget( /he intended effect of these actions is illustrated in fig( 2( /his relates spend "ased on rational loyalty, #hich the scheme is

designed to encourage, promotional responsi!eness (measured in terms of the additional profit yielded "y the customer8s response to promotions) and emotional or attitudinal loyalty( /he general thrust of the mar,eting effort is to push customers from "ottom to top (increase "eha!ioural loyalty) and from left to right (emotional loyalty)( Table 2: The use of data mining to build a loyalty grid *ctual or Loyal +witchers, multipotential profit sourcers Large *etain !ia account Spend most to management, ma,e loyal may"e cut management costs Me!ium )apitali+e on loyalty "y incenti!es and product "undling )onsider other channels or minimal managment Spend loyal to Competitor loyal

Manage cost7 effecti!ely "ut loo, for moments of truth (such as contract rene#als) ma,e Manage them "ut !ery cost effecti!ely other

small

)onsider passing to ?ass to other channels channels

Fig. 2. Effect of a loyalty scheme on users and responders

Single minded users Ee!otees

?assi!e customers intermittents

affinity and

Acti!e affinity customers and a!id collectors

Cigh )ustomer spend on core product or ser!ice

o#

o#

*esponsi!eness to promotions

Cigh

1. ... Customer ac/uisition-six steps to success :)ustomer acFuisition is the process of gaining ne# customers8 (;am"le, Stone and 9oss, 200=4130) 1( Set o".ecti!es( /he starting point for any acFuisition programmes a simple financial calculation to determine the allo#a"le mar,eting cost per acFuisition( In other #ords ho# much you can afford to spend to acFuire a customer( It should "e determined "y the e6pected lifetime !alue of a customer, as opposed to short term profit( : ifetime !alue is the profit e6pected from a customer o!er their e6pected life #ith you8( 0motional loyalty (#hich produces recommendations) up selling and cross selling all increases lifetime !alue( Strictly spea,ing it should "e calculated using discounted cash flo# techniFues "ut most mar,eters use a figure "ased on spend o!er a fi6ed num"er of years( /he duration of this term is related to the duration of the :lifetime8 and the length of the "uying cycle( 9or e6ample a parent is li,ely to "e in the mar,et for high !olumes of detergent #hile there are children at home perhaps 20 to 25 years( AcFuiring a customer at the "eginning of this period can yield a !ery high lifetime !alue if loyalty is managed successfully( Co#e!er ,eeping the customer loyal in such a highly competiti!e mar,et is e6pensi!e( Many Fuite loyal customers #ill s#itch to try out competiti!e offers since detergent falls into the :stream of transactions8 category and many s#itch "ac, later( /his reduces the lifetime !alue e!en of loyal customers( If lifetime !alue cannot "e calculated, it may "e possi"le to use short7term appro6imations( 9or e6ample the cost of achie!ing the initial sale(s) or return on in!estment from the initial sale( Co#e!er, lifetime !alue is a "etter criterion for targeting customers to "e acFuired( >ne reason #hy a good customer data"ase is so !alua"le is that it allo#s you to trac, long term "uying patterns as a "asis for lifetime !alue calculations( 2( If the customer data"ase contains information a"out the indi!iduals, response rates and purchase histories, it can "e used as the starting point to e6amine #hich media sources and communication strategies #or, "est( <here little or no history e6ists, de!eloping a profile of e6isting customers #ill help to target ne# customers( Many companies use customer satisfaction Fuestionnaires for this purpose( Mar,et segmentation is essential in understanding and differentiating the mar,et( Broad "ased research may not target the right customers( ?areto8s 30K20 rule may #ell apply- indeed in some cases research has sho#n to "e more li,e 90K10( /he reason for the smaller proportion is that these are the high !alue or :good8 customers( It is usually more producti!e to pay more attention to your most profita"le customers "y focusing your mar,et research and customer satisfaction research on them( At the same tine it is important to "e alert to the meaning of consumers8 precise stated reFuirements( Ans#ers to Fuestionnaires should "e compared carefully( Hormali+e results, #hich allo# the miserly scorer to "e compared #ith the generous scorer, so that e6ceptions do not s,e# results( =( /argeting for ne# customers( /argeting should "e "ased on profiling the customer "ase( /he aim is to loo, for suspects #ith similar characteristics to your "est customers( A special case of targeting is :mem"er get mem"er8 schemes (,no#n as M;M)( /his is often used "y mem"ership and credit card organi+ations( Mem"ers tend to recruit people similar to themsel!es( M;M is

a good option if the Fuality of the data"ase is poor or if mailing lists are hard to acFuire( M;M is targeted #ord of mouth ad!ocacy #ith a "onus "uilt in for e6isting customers( 9or e6ample, ?referred Eirect is a direct selling motor insurer( 9or a t#o year period it relied e6clusi!ely on M;M campaigns, using Mar,s NSpencer !ouchers as an incenti!e( @( Media( /he allo#a"le media cost per sale is a component of the allo#a"le cost per acFuisition and o"!iously enough, is a function of the lifetime !alue of customers( >ther !aria"les to consider in the media plan include4 o *each4 the larger the audience, the more !ia"le mass media #ill "e( o Media cost4 #eighted against the li,elihood of response o Media a!aila"ility4 you may ha!e to #or, hard to find the right com"ination of media to suit a particular campaign( o Media accessi"ility4 do your prospects for recruitment pay enough attention to the medium for it to "e a successful recruitment de!iceG o Media #eight4 this is a measure of the Fuality of each medium( A component of most media models, it is a figure ascri"ed to the !alue of different mar,et segments( In a sense it is a measure of effecti!eness and response rates( 9or e6ample if the target is males aged @1 to 50 in the 101,000I to 110,000I income "rac,et, each hit on a target might "e gi!en a !alue of 1( A hit on a male in the 91,000I to 100,000I income "rac,et might "e gi!en a #eighting of 0(95( o /he num"er of stages4 reFuired to achie!e the right response( /he more comple6 the product or ser!ice, the more comple6 the recruitment process is li,ely to "e( 9or e6ample some industrial eFuipment products may reFuire t#o or three letters, a catalogue, t#o or three phone calls and se!eral direct sales !isits ;ood media models ta,e all of these factors into account as #ell as additional factors such as "uyer fatigue and attention loss o!er a long campaign( *esponsi!eness to a particular medium diminishes as e6posure increases( ;enerally, the more an ad!ertisement is used, the lo#er the response( Eou"ling the si+e of ad!ertisements, the #eight of mailing pac,ages or dou"ling their freFuency, #ill less than dou"le response rates( Multiple media campaigns are usually more cost7effecti!e as they are less suscepti"le to the la# of diminishing returns( Co#e!er they are more difficult to co7ordinate( 9or e6ample, if the timing of a promotion through one medium slips such as a letter referring to a /O campaign, then the effect may "e counter producti!e( In the past, many direct mar,eters focused on immediate impact as opposed to the cumulati!e impact of se!eral communications( As far as instant results are concerned, selecti!e mar,et co!erage #here the same prospect is not hit t#ice #ill normally out pull high freFuency( /his contrasts to the philosophy of general ad!ertisers, #ho prepare media plans "ased on reach (the total num"er of prospects co!ered) and freFuency (ho# often the ad!ertisement appears)( /he general approach is illustrated in fig = 5( )ommunication( /he offer made to potential ne# customers is a function of "uyer "eha!iour( Eepending on the product or ser!ice, the campaign may target immediate "uyers, trial "uyers, highly Fualified enFuirers or loosely Fualified enFuirers( /hese decisions #ill affect the creati!e treatment, the offer and the num"er of stages needed to complete the "uying cycle( /he creati!e

treatment also depends on the "rand personality #hich determines for e6ample #hether a communication is product or offer led( 6( Sales( >nce the sale is made, the process of de!eloping the relationship and retaining the customer "egins( A good first step, often o!erloo,ed "y large companies, is to than, the customer for their order( >n the other hand, this is not a good time to in!estigate #hether the customer ser!ice and retention procedures are solid enough to cope #ith a large influ6 of customers(

1. .0. Customer retention-six steps to success 1( Identification( /he first step is to identify and !alue the "est customers against an agreed criterion of profita"ility( It may "e that smaller "ut regular "uyers contri"ute a greater profit margin and lifetime !alue than one time large "uyers( 2( Analysis( /hrough profiling and trac,ing of customer purchase histories "ased on 9*A) promotional responses and sources of "usiness are !ital here( /hese analyses also help identify the potential mar,et of similar customers for the acFuisition programme( /his is sometimes referred to as a mar,eting audit( Many financial institutions ha!e "een surprised to learn ho# many customers and families are multiple purchasers of their products #hen they ha!e underta,en this ,ind of analysis( =( Streaming for targeting( >nce each customer record had "een analysed and scored for potential !alue, it is accessi"le for selection( /he criteria for selection include not only potential profita"ility "ut also customer accessi"ility, "y direct mar,eting or "y other techniFues( In addition to the usual range of mar,eting communications, most companies ha!e access to a series of customer contact points at nominal cost( /hese are ,no#n as :free

rides8 and are ignored surprisingly often( /hey include statement stuffers, product dispatch stuffers, in!oices and account letters, opening and closing letters, catalogues, calls from customers and point of sale or ser!ice contacts( <hile some industry sectors ta,e significant ad!antage of free rides, others do so partially or not at all( 0!en a deli!ery note can "e accompanied "y a simple feed"ac, form #ith three or four Fuestions( @( )ontact strategies( /he aim is to re#ard customer decisions to stay loyal and to increase purchasing( Eifferent media are :"undled8 according to their relati!e strengths in order to achie!e the greatest effect( 5( /esting7 it is al#ays #orth ha!ing a continuous series of tests to esta"lish optimum timing, freFuency, offer and creati!e treatments( <ithout these, the profita"ility of loyalty programmes can "e difficult to esta"lish( 6( 0!aluation (model "uilding) 7 the o".ecti!e of a retention programme must "e to ma,e it #orth#hile for customers to "e loyal #hich is #hy a thorough understanding of customer8s "eha!iour is !ital( It is sometimes necessary to achie!e a delicate "alance "et#een marginal income and customer irritation( In any retention programme, all possi"le contact points #ith customers must "e re!ie#ed, competiti!e messages must "e ta,en into account and optimal freFuency must "e tested( 0!aluation is therefore "ased on a careful modelling e6ercise( /he model should "e refined continuously through lin,s to the customer data"ase "y periodic "ut regular research( 1. .1. Loyalty management-six steps to success 1( Eefine o".ecti!es( /he need to de!elop a loyalty approach o!er and a"o!e e6isting mar,eting, sales and ser!ice approaches should "e indentified as part of an o!erall customer relationship mar,eting audit( /his might re!eal, for e6ample4 competiti!e attempts to target precisely your "est customers, falling repurchase rates among your "est customers, falling le!els of emotional loyalty, increasing s#itching rates a#ay from your products or ser!ices( 2( Adopt a definition of loyalty that ma,es strategic sense( /here are circumstances in #hich emotional loyalty is not feasi"le( In some mar,ets, such as personal computers, commodification has ta,en place( )ompanies and their products ha!e "ecome undifferentiated, although often this is due to the supplier8s o#n mar,eting and ser!ice failures( In such cases, de!ising incenti!es to re#ard specific loyal "eha!iours may "e the only approach( Co#e!er it is usually "est to start #ith the aim of "uilding emotional loyalty, perhaps "est paraphrased as the desire to do "usiness #ith the company and not #ith its competitors( =( Jnderstand customers and their propensity to "e loyal( <hether using the loyalty approach pays, depends on customers, their needs, their "asic attitudes to "uying in general and to each particular supplier of a product or ser!ice( It is therefore critical for a company introducing a loyalty scheme to esta"lish, usually through research and testing, an understanding of #hich groups of customers are strategically important( /he propensity of each of these groups to respond to different mar,eting, sales and ser!ice approaches must "e determined( 9*A) analysis is needed and the customer data"ase must "e used to monitor responses( Based on the definition of loyalty adopted, measures must "e o"tained to sho# changes I purchase "eha!iour and changes in loyalty(

@( Ee!elop and Fuantify the loyalty approach( Murphy and Suntoo, (1993) ha!e pointed out, as ha!e others, that satisfaction and loyalty are associated #ith different trigger points( A supplier #ho concentrates on high Fuality may reduce satisfaction le!els if, say deli!ery times suffer as a result( >n the other hand, to increase product or ser!ice attri"utes "eyond a certain standard may "e #asteful( A computer ,ey"oard has to meet certain minimum standards of performance "ut creating a truly e6cellent ,ey"oard may not influence the ma.ority of "uyers, although it may #ell influence .ournalists( 5( Eeli!er the loyalty programme( <hat distinguishes the loyalty scheme is consistency( /his should come through in all the ,ey areas such as4 "riefing for mar,eting ser!ice suppliers such as ad!ertising and direct ar,eting agencies or in house maga+ine pu"lishers, customer ser!ice definitions, staff training and moti!ation, acFuisition or adaptation of customer facing information systems, setting pricing and terms of payment( 6( Measure and e!aluate( oyalty approaches must in the end pay off "y producing "etter sales and profits than #ould ha!e "een yielded #ithout the approach( 1. .2. Table #% Elements affecting the /uality of a customer relationship *elationship component )ontacts #ith company staff 9actors affecting the Fuality of mar,eting relationships as seen "y customers 0asy contact accessi"ility #ith the right person, prefera"ly the same person each time( good physical accessi"ility "y #ay of par,ing, opening times, limited Fueuing, etc using information pre!iously pro!ided "y the customer personal recognition of the customer or prospects the right le!el of friendliness, helpfulness, courtesy, sensiti!ity and empathy complete product or ser!ice information, eg price, location and deli!ery times that are clearly communicated control in the right place, #ith the customer or #ith the supplier as reFuired i(e recogni+ing #here the customer #ants to lead or to follo# speed or ser!ice responsi!eness and empo#erment (to handle enFuiries or complaints) diagnostic s,ills (#hat is the real

 >ut"ound contact management (mail, telephone, sales, !isits, deli!eries)

?hysical ser!ice en!ironment Brand image

need) "ac,ed "y fle6i"le scripts in dialogue 9ollo# through, ,eeping the customer informed of status( /rust and confidentiality8 rele!ance and personali+ation intelligi"ility, communications must "e easy to understand accuracy in the pro!ision of ser!ices or products Speed7time7"ased competition is a ,ey factor( 9reFuency of contact (not too much or too little) Interest ,eeping in touch #ith #hat the customer is doing( /iming in relation to the customer8s inclination to pay attention or in relation to the timing of the "uying cycle( in, #ith in"ound contacts, in other #ords ta,ing account of customer feed"ac, )lean, ie an attracti!e local en!ironment )onte6t, eg at a location #here others are recei!ing ser!ice at same time 0asy to na!igate to and #ithin the supplier location )omforta"le, lo# stress An accepta"le image in terms of security, !alue, empathy, ?ro.ected image matches percei!ed image, #hich matches deli!ered image( In other #ords, the supplier does #hat he promises to do, directly or "y implication )onsistency across transactions Puality and !alues for money of the product or ser!ice Speed of deli!ery <hether loyalty is re#arded and the incenti!es or terms of the re#ard

/ransaction !alue

Safety7percei!ed to "e ris, free <hether users costs are recogni+ed( 9or e6ample, if the supplier recogni+es #here effort or input is "eing passed to the customer "y re#arding the acti!ity(

1.#. +ocial Me!ia Much has "een #ritten a"out SM and its rising importance in engaging customers( A consumer8s engagement #ith a "rand can "e measured along a continuum from no a#areness, through to early engagement, and may"e, if you are luc,y (and cle!er), onto ad!ocacy( As for any relationship, the strength of feeling #ill de!elop and !ary o!er time and, as in any healthy relationship, "oth parties should "e a#are of feelings so they can react accordingly( )onsumers are much more trusting of friends and colleagues than they are of /O ad!ertising or corporate communications( )onsumers tal, to each other li,e ne!er "efore through a multitude of social channels( Social :media8 contains :con!ersations8( i,e any con!ersation, in a cafQ or "ar, for instance, the content !aries( Some con!ersations are serious and some fun, some are short and some long, some happy and some angry and intense( /houghts, opinions, ideas, .o,es, conRdences, e6periences, photos and !ideos are shared "y indi!iduals to small net#or,s and can "e rapidly ampliRed into larger net#or,s of people, #ithin a location, nationally or glo"ally( )onsumers8 e6periences are naturally part of this con!ersation and "rand and ser!ice e6periences are discussed openly and fran,ly #hether organisations are in!ol!ed in the con!ersation or not( In this #ay, consumers are "ecoming more po#erful( As opinions amplify, so "rand performance #ill "e impacted( /he locus of control in the "randS consumer relationship is shifting from "rands to consumers( Brand mar,eting is "ecoming less a"out pushing messages out to consumers #ithin a static relationship, and more a"out the "rand "eing part of the dynamic con!ersation, listening, ser!ing rele!ant contentK e6periences to earn the trust of consumers( )learly monitoring the "u++ and inter!ening, #hen appropriate, has ad!antages to "rand managers in any "2" or "2c en!ironment( /his monitoring can lead to a "etter understanding of consumer "eha!iour and feelings of the mood in the mar,et( It can lead to changes in strategy, ser!ices, products, promotions, pricing channels and so on( Brands are using SM in #ays other than listening and inno!ating( )onsumers of all ages interact #ith SM content on mo"ile de!ices, ?)s, ,ios,s, at home, at play, at e!ents, at #or,, on holiday or #hen tra!elling S in .ust a"out any situation S in much greater, and e!er increasing num"ers than "efore( In a sur!ey of 1A00 JS Internet users, Hielsen >nline found that A= per cent engaged in SM at least once per #ee,( 0ngagement #as deRned as reading a "log, !isiting a social net#or, or reading (andK or commenting on) a message "oard( /he research estimates the total JS SM audience at 12A million( Brands that really understand ho# their consumers "eha!e on and offline are ta,ing ad!antage of an unprecedented opportunity to engage #ith their target consumers, sometimes in small groups, through content and online "rand e6periences( /he currently accepted rule is that 90 per cent of SM users .ust !ie# content, #hereas 9 per cent edit it (for e6ample, pro!ide a comment or re!ie#) and 1 per cent create "rand ne# content( /his percentage proRle is !ery different in some segments of the population( If the content engages the consumer, the consumer may

do nothing, "uy the product directly or interact in some #ay( /he interaction may "e !ia a comment on 9ace"oo,, #hich may not reFuire a response or it may lead to a 141 e6change #ith the organisation, through #hate!er channels are right for the e6change( /raditional ad!ertising com"ined #ith SM content and other response !ehicles (for e6ample, on pac,) #ill generate interactions, #hich can "e managed through a com"ination of SM and, for some consumers at some times, communications through more traditional )*M channels( 0arly pioneers ha!e called this com"ination of SM and )*M, S)*M( <e" 2(0 social media applications such as /#itter and 9ace"oo, create ne# opportunities for firms to impro!e their internal operations and to colla"orate in ne# #ays #ith their customers, "usiness partners, and suppliers( <hile the press pro!ides much anecdotal e!idence of social media adoption "y a #ide !ariety of firms ranging from the 9ortune 500 to !ery small "usinesses, achie!ing and measuring "usiness !alue from social media continues to pose challenges to many organi+ations( 9or e6ample, in 2009, McDinsey pu"lished the results of a sur!ey of nearly 1,A00 e6ecuti!es #orld#ide a"out their companies8 use of a #ide range of <e" 2(0 social media platforms( /he study included use of !ideo sharing (e(g(, Bou/u"e), "logs, micro"logging (e(g(, /#itter), and social net#or,ing (e(g(, 9ace"oo, or hosted online communities) for internal purposes or to connect #ith customers, e6ternal partners, or suppliers( /he results sho#ed that 6@L used <e" 2(0 platforms internally, 56L to communicate #ith customers, and @0L to #or, #ith e6ternal partners or suppliers( Eespite #idespread deployment, a"out one7third of all respondents reported that their applications had yet to pro!ide measura"le "enefits either #hen used internally or #ith customers or "usiness partners( ()ompanies reporting "enefits #ere more li,ely to "e !ery large firms, those in "usiness7to7"usiness relationships, and hi7tech companies( See Bughin, T( and Miller, A( $Co# )ompanies are Benefiting from <e" 2(04 McDinsey ;lo"al Sur!ey *esults,% McDinsey Puarterly, Septem"er 2009, a!aila"le at http4KK###( mc,inseyFuarterly(comKhome(asp6() /he #ays consumers communicate #ith each other ha!e "een changing dramatically o!er the last decade, and the same is true for ho# consumers gather and e6change information a"out products and ho# they o"tain and consume them( /he rise of a plethora of ne# media has pro!ided consumers #ith e6tensi!e options for acti!ely pro!iding information on ser!ices and products4 ::/he digital inno!ations of the last decade made it effortless, indeed second nature, for audiences to tal, "ac, and tal, to each other88 (Eeighton and Dornfeld 2009, p( @)( He# media ha!e also empo#ered them to promote and distri"ute their o#n offers S consumers today ser!e as retailers on eBay, media producer7directors on Bou/u"e, authors on <i,ipedia, and critical re!ie#ers on Ama+on and /rip ad!isor- they do all of this and more on 9ace"oo, and MySpace( And they no longer reFuire their computer to do so S through high7tech mo"ile phones, porta"le computers and portals such as /#itter, real7 time information e6change has "ecome an integral element of consumer "eha!iour any#here and anytime( Jser7generated content has "ecome a mass phenomenon, #ith 9ace"oo,, MySpace, Bou/u"e, <i,ipedia, and /#itter all "eing listed among the /op 15 #e"sites, accounting for more than 11 per7 cent of glo"al internet traffic, as of April 2010 (Ale6a 2010)( /his de!elopment threatens esta"lished "usiness models( ?rinted ne#spapers and maga+ines are facing a ma.or crisis (0dgecliffe7Tohnson 2003), as consumers mo!e from print to digital media and piracy and digital channels ha!e se!erely hurt the music industry(9inancial /imes2009)(Media analysts ha!e noticed a

decline of /O ad!ertising effecti!eness (Maddo6 2003), resulting from ne# digital options for !ie#ing /O con7 tent (e(g(, digital !ideo recorders, online portals)( )ritical #e"7 sites (e(g(, untied(com for Jnited Airlines) and "rand spoofs #atched "y millions !ia Bou/u"e (0l"erse 2009) challenge the "uilding of "rands( At the same time, the rise of ne# media also creates e6tensi!e opportunities for ne# "usiness models( In the ne# media uni!erse of user7generated content, "rands still play a pi!otal role S consumers share their enthusiasm a"out their fa!ourite "rand !ia /#itter, Bou/u"e, and 9ace"oo,( Some of them e!en help other consumers sol!e product7related pro"lems for free, #hich reduces ser!ice costs and increases Fuality (Math#ic,, <iert+, andEe*uyter2003)( He# media offers companies multifarious #ays to reach consumers, communicate #ith them, and measure their communication, "ro#sing or purchase7related "eha!iours( /hese options are !alua"le for mar,eting in general, "ut should "e of particular rele!ance for customer relationship management, #hich employs ,no#ledge on indi!idual customers for crafting indi!iduali+ed mar,eting acti!ities( Ma,ing use of the opportunities pro!ided "y ne# media (and a!oiding its dangers) reFuires a thorough understanding of #hy consumers are attracted to these ne# media and ho# they influence consumers8 affect and "eha!iour( He# strategic and tactical mar,eting approaches must "e de!eloped, #hich are in line #ith the characteristics of ne# media and their effects on customers( +ocial Me!ia !efinitions Social media refers to acti!ities, practices, and "eha!iours among communities of people #ho gather online to share information, ,no#ledge, and opinions using con!ersational media( )on!ersational media are <e"7"ased applications that ma,e it possi"le to create and easily transmit content in the form of #ords, pictures, !ideos, and audios (Safa,o N Bra,e, 2009, p(6)( 9urthermore :Social media mar,eting is any form of direct or indirect mar,eting that is used to "uild a#areness, recognition, recall, and action for a "rand, "usiness, product, person, or other entity and is carried out using the tools of the social <e", such as "logging, micro "logging, social net#or,ing, social "oo,mar,ing, and content sharing (;unelius, 2011, p(10)( According to Merriam <e"ster Eictionary online, SM is defined as $forms of electronic communications (as #e"sites for social net#or,ing and micro "logging) through #hich users create online communities to share information, ideas, personal messages, and other content (as !ideos) According to <i,i !est $SM descri"es #e"sites that allo# users to share content, media, etc( )ommon e6amples are the popular social net#or,ing sites li,e 9ace"oo,, MySpace( $SM is the media for social interaction using highly accessi"le and scala"le pu"lishing techniFues( SM use #e" "ased technologies to transform and "roadcast media monologues into SM dialogues% <i,ipedia $Interacti!e forms of media that allo#s users to interact #ith and pu"lish to each other, generally "y means of the internet% <i,tionary

Cere is ho# <i,ipedia defined Social Media4 :participatory online media #here ne#s, photos, !ideos and podcasts are made pu"lic !ia media #e"sites through su"mission( Hormally accompanied #ith a !oting process to ma,e media items "ecome 8popular88( Social Media e6panded definition4 social media is the democrati+ation of information transforming people from content readers into content pu"lishers( It is the shift from a "roadcast mechanism to a many to many model, rooted in con!ersations "et#een authors, people and peers( Social media uses the #isdom of cro#ds to connect information in a colla"orati!e manner( )ontrary to the general perception of SM "eing restricted to net#or,ing #e"sites li,e 9ace"oo, and /#itter, the SM encompasses all the ser!ices that facilitate creation sharing and exchange of user generated content. SM is the media that allo#s one to "e social or get social online "y sharing content, ne#s, pictures, etc, #ith other people( &hat is 3ew Me!ia' He# media are #e"sites and other digital communication and information channels in #hich acti!e consumers engage in "eha!iors that can "e consumed "y others "oth in real time and long after#ards regardless of their spatial location( <e no# discuss the defining characteristics of ne# media( Eigital( /he digital character of ne# media implies that there are !irtually no marginal costs for producing e6tra copies of digital products and that indi!iduals can easily distri"ute their creations to a glo"al audience #ithout ha!ing to pass through traditional ::gate ,eepers88 such as pu"lishers( Any"ody #ith an internet connection can "log, #rite re!ie#s, report on ne#s e!ents "oth "ig and small, or share a song, !ideo or e!en no!el #ith the #orld( ?ro7acti!e( )onsumers use ne# media to contri"ute to all parts of the !alue chain, ranging from superficial articulation (re!ie#s on retail or fan sites) to e6tensi!e co7creation (testing ne# ::"eta88 products and reporting fla#s to the company, or e!en collecti!ely de!eloping open7source products such as the 9irefo6 "ro#ser- Coyer et al( 2010- Drishnamurthy 2009)( Oisi"le( )onsumers8 ne# media acti!ities can "e seen "y others( 0ntries made "y a consumer in forums, "logs, and social communities can "e trac,ed "y other consumers as #ell as companies( Mo"ile ser!ices use information on consumers8 spatial position as reported "y ;?S, =;, and I? addresses for generating location7sensiti!e messages, offers, and mar,et differentiation (e(g(, different offers and prices for film do#nloads)( *eal7time and memory( He# media can "e accessed "y consumers at the time they are produced, allo#ing consumers to share e6periences in real7 time #ith /#itter, chats, and "logs( Such comments and re!ie#s are often also a!aila"le indefinitely, so that potential customers may "e reading a"out negati!e (and positi!e) cus7 tomer e6periences for years into the future (e(g(, the 2001 Couston Eou"letree incident- Snopes 2006)( Memory is also crucial for personali+ing future interactions(

J"iFuitous( He# media allo# consumers to reach (and "e reached "y) other consumers and companies almost any#here at any time through their mo"ile de!ices( /hey can read re!ie#s of a prod7 uct #hen shopping in a retail store, and can post re!ie#s of a ne# mo!ie #hen the credits are still rolling in the mo!ie theater on opening night( Het#or,s( )onsumers use ne# media to participate in social net#or,s, #hich ena"le them to create and share content, communicate #ith one another, and "uild relationships #ith other consumers (;ordon 2010- i"ai et al( 2010)( <hile 9ace"oo, and MySpace are most prominent, communities are allotropic and include massi!ely multiplay online games (MM>;s) such as <orld of <arcraft and sites for e6changing e!erything from ,nitting techniFues (e(g(, ra!elry(com) to statistical ad!ice (e(g(, s7ne#s)

The 4in!s of +ocial Me!ia At this time, there are "asically si6 ,inds of social media( 1( Social net #or,4 these sites allo# people to "uild personal #e" pages and then connect #ith friends to share content and communication( /he "iggest social net#or,s are 9ace"oo,, /#itter and i,n,edIn 2( Blogs4 perhaps the "est ,no#n form of social media, "logs are online .ournals, #ith entries appearing #ith the most recent first( =( <i,is4 these #e"sites allo# people to add content to or edit the information on them, acting as a communal document or data"ase( /he "est7,no#n #i,i is #i,ipedia@, the online encyclopedia #hich has o!er 2 million 0nglish language articles( @( ?odcast4 audio and !ideo files that are a!aila"le "y su"scription, through ser!ices li,e apple i/unes( 5( 9orums4 areas for online discussion, often around specific topics and interests( 9orums came a"out "efore the term $social media% and are a po#erful and popular element of online communities( 6( )ontent )ommunities4 communities #hich organi+e and share particular ,inds of content( /he most popular content communities tend to form around photos (flic,r), "oo,mar,ed lin,s (del(icio( us) and !ideos (Boutu"e)( ;) Micro "logging4 social net#or,ing com"ined #ith "ite7si+ed "logging, #here small amounts of content (:updates8) are distri"uted online and through the mo"ile phone net#or,( t#itter is the clear leader in this field ( Myfield,2010, p(1@7 2A)( /o help organi+ations engage #ith, ,no# and understand "etter SM Diet+mann et al( propose a frame#or, that defines SM "y using seven functional "uilding "loc,s( /hrough this frame#or, the implications that each "loc, can ha!e as to ho# firms should engage #ith the SM are e6plained( 9or e6ample in,edIn focuses primarily on identity, reputation and relationships #hereas Bou/u"e focuses primarily on sharing, con!ersations, groups and reputation(

*!vantages of +ocial Me!ia According to Diet+mann et al( (2011) the "eha!iour of consumers on the internet had changed from simply e6pending content, reading it, #atching it, "uying and selling products or ser!ices to no# ta,e a more acti!e part "y utili+ing !arious platforms li,e content sharing sites, "logs, social net#or,ing sites and #i,is7 to create, modify, share and discuss internet content( According to his article this represents the social media phenomenon #hich no# has the capa"ility to significantly impact a firm8s reputation, its sales and e!en sur!i!al( Social media platforms are customer centric ()hua et al(, 2009) Allo#s companies to get closer to customers and, "y doing so, "uild relationships, increase re!enues, reduce costs and increase efficiencies( Catano and )harters (2010) propose $social media mar,eting as )ustomer *elationship Management% )onnect and engage #ith audiences( Cence "uild relationships through communication and listening( ;et opinions a"out ne#ly introduced products on the mar,et ;et feed"ac, a"out productsKser!ices (through user re!ie#s) ?ro!ides the "usiness #ith the potential to acFuire ne# customersKfans ?ro!ides the "usinesses #ith the opportunity to manage their online reputation Social Media and 9ace"oo, in particular has facilitated t#o uniFue consumer e6periences of interest to "rand mar,eters4 /he a"ility for consumers to identify "rands of interest and connect #ith them has ena"led sharing "et#een "rands and consumers in ne# #ays( Brands and their consumers can no# create t#o7#ay relationships and share content, ne#s, and feed"ac,(

Social media also ha!e facilitated inno!ati!e #ays of sharing information a"out "rands "et#een friends( <hether consumers are !oicing their affinity for certain "rands or their e6periences #ith products and ser!ices, 9ace"oo, not only encourages this type of sharing "ut can accelerate its reach and !irility(

The )oal of *ll +ocial Me!ia /he goal of all Social Media in a Business )onte6t is to 0ngage ?eople 0ngagement leads to#ard a desired action or outcome( 9or an employee, the desired outcome may "e a more efficient #or, process that reduces a product8s time to mar,et( 9or a customer, the desired outcome may "e an additional purchase or a strong recommendation to a friend( In this research #e e6amine social media from customer point of !ie# (Saf,o N Bra,e, 2009, p(1A)( )oals of +ocial Me!ia Mar"eting 9i!e of the most common goals of social media mar,eting are4 1( *elationship "uilding4 /he primary "enefit of social media mar,eting is the a"ility to "uild relationships #ith acti!ely engaged consumers, online influencers peers, and more( 2( Brand "uilding4 Social media con!ersations present the perfect #ay to raise "rand a#areness, "oost "rand recognition and recall, and increase "rand loyalty( =( ?u"licity4 Social media mar,eting pro!ides an outlet #here "usinesses can share important information and modify negati!e perceptions( @( ?romotions4 /hrough social media mar,eting, you can pro!ide e6clusi!e discounts and opportunities to your audience in order to ma,e these people feel !alued and special, as #ell as to meet short7term goals( 5( Mar,et research4 Bou can use the tools of the social <e" to learn a"out your customers, create demographic and "eha!ioural profiles of your customers, find niche audiences, learn a"out consumers8 #ants and needs, and learn a"out competitors (;unelius, 2011, p(16)( &hat +ocial Me!ia can !o an! can5t Martin 2010 descri"es #hat Social Media can do and can8t <hat Social Media )an Eo <hat Social Media )an8t Eo *aise your !isi"ility to clients, prospects Sell a product that is of poor Fuality or and media poorly positioned in the mar,etplace Celp you stay in touch more easily and Ma,e you an o!ernight millionaire #ith more freFuency #ith !alua"le "usiness contacts 0na"le you to connect #ith people all 9orce people to "uy a product #hich does around the #orld at a fraction of not meet their needs traditional costs Impro!e your search engine !isi"ility Ma,e up for a "adly designed #e"site Increase the li,elihood of successfully ;uarantee your story #ill get pic,ed up connecting #ith reporters, "loggers, for front page co!erage on a "ig name re!ie#ers, and opinion leaders #ho may pu"lication endorse your product( Introduce ne# prospects to your sales Deep people listening if the message isn8t

funnel and "uild your opt in list

rele!ant

6ow !oes +ocial Me!ia !iffer from Tra!itional Me!ia Social media is participati!e4 the audience is assumed to "e part of the creati!e process or force that generates content Social Media isn8t a thing in the sense that direct mail or /O ad!ertising are "ut is rather a colla"orati!e process through #hich information is created, shared and destroyed( The !ecision ma"ing unit 9ig( Eecision Ma,ing Jnit

/raditional mar,eting has al#ays ad!ocated a#areness of the Eecision Ma,ing Jnit or EMJ (see 9igure =(1)- ho#e!er, it can only "e a stepping7off point for SH mar,eting( /he pro"lem #ith the EMJ as a model is that passi!ity is implied( In small "usinesses different sta,eholders can ha!e different scenarios, eg initiator and user "ut not "uyer( <ith SH sites the concept of the EMJ still applies as different sta,eholders #ill fulfil differing roles #hile contri"uting to the online de"ates( Co#e!er, it is further complicated "y the use of multiple media channels and the sta,eholders #ho act this #ay are ,no#n as multitas,ers( Eifferentiation ("y support and Fuality) is particularly rele!ant on eBay #here hosts of sellers offer identical products #ith little :price8 differentiation( Jsers reflect on the seller8s reputation as the unethical practice of artificially raising prices #ith false "idders is a ma.or concern( /hat said, the economic do#nturn of 2003K09 sa# further pressure on sellers to offer lo#er prices as reduced user disposa"le income increased the moti!ation to acFuire cheaper products( <hen not in recession or economic hard times non7price factors play increasingly important roles( In fact, if you differentiate your products and goods sufficiently you may e!en increase online prices as "uyers #ill often pay more to deal #ith suppliers of good reputation, deli!ering on promises and support( +ocial Customer Relationship Management Eentitions of S)*M ?aul ;reen"erg 2 has an e6cellent deRnition of S)*M4 S)*M is the "usiness strategy of engaging customers through SM #ith goal of "uilding trust and "rand loyalty(

As SM is all a"out customers, our deRnition is : S)*M is ho# #eU Celp you engage #ith us, #hene!er you need to, #here!er you are, in #ays that are con!enient to you pro!ide you #ith the personal e6perience you need to ,eep you engaged, informed, interested and may"e e!en entertained transact #ith each other, or through third parties, in #ays that are mutually !alua"le get to ,no# each other o!er time so that #e can tailor #hat #e do (and ho# #e do it) #ith you in mind8 The ob7ective of +CRM Increase trading prot S)*M supports the #hole customer management strategy and lifecycle( It should lead to increased sales (through increased a#areness and engagement) and decreased costs( 9igure @ illustrates the areas of "eneRt(