New Strategies for Managing Social Relationships – SRM

Jeff Ambs — Mon, 04 Jan 2010 17:05:21 +0000

Back in 2002, when we were trying to get our new catalog company off the ground, we quickly learned the value of a customer. The old saying “it is easier to keep a customer than get a new one” came to life when we were buying names of prospects and less than 1.2% of them became customers. The house list was our bread and butter and we learned how to squeeze every last drop of value out of it. We quickly became experts in segmenting our list using the RFM model: Recency, Frequency and Monetary value. It worked well. A new customer was a live customer and we did everything we could to let them know they were valued and keep them engaged. We incentivized heavily to increase purchase frequency and treated our best customers like royalty. Now, segmentation goes much deeper and CRM models have become much more sophisticated, but the same fundamental principles still apply. Today, with brands engaging customers through social channels, how are these relationships managed? What are the rules in a world driven by return on engagement not return on investment? Social Media is changing the brand-to-consumer relationship driving the need for new strategies to take advantage. We call this new strategic approach Social Relationship Management (SRM).

SRM focuses on three areas: Engagement, Crowdsourcing and Monetization. Social Networks offer so many fantastic features it naturally creates an engaging experience. Brand-to-fan dialogue, photos, videos, polls, custom content, etc. It is a rich tool kit for brand managers. And, as fanbases grow, they can be mined for valuable insights. Which name do you prefer for our new granola bar? What feature would you like to see on our next video game? Your fans have opinions and they want to be heard. For most brands, the numbers are not there to be statistically significant, but it is a fast and free way to get a quick read and supplement your market research. The real question is how do we leverage our fans to increase sales? Certainly there are tried and true options: special offers, promotions, discounts, sweepstakes, gwps, etc. However, the risk lies in breaking the brand-to-consumer unwritten social code. “Do not heavy sell me on my social network” or at least too much. Social networks are not advertising channels, and fans are very leery of brands that sell rather than engage. An exclusive offer every now and then is welcome and keeps the site valuable to the fans, but excessive promotion, especially those found in other channels, is just advertising.

So what is an ideal SRM ratio? Certainly there are no clear rules on this, but the 80/20 rule is a great place to start. 80% of communication should be engaging content revealing more brand insights and drawing the fans in closer. The remaining 20% should align with the brand value. I’ve seen a large discount retailer provide numerous promotions and offers on their site and judging by the extensive comments, it is very well received. It aligns with the low-cost value offering and it is what their fans expect. Obviously premium brands would take a different approach. To start, I recommend an 80/10/10 content platform then let the testing begin.

Social media is evolving so quickly, the industry is still determining the best practices to take advantage. We take what we know and evolve, test and mold into actionable strategies for today’s social business environment. If you don’t have a clear SRM strategy for your brand’s social presence the 80/10/10 Engagement, Crowdsourcing, Monetization ratio is a good place to start.

Agent-X » monetization

New Strategies for Managing Social Relationships – SRM