Social media 'key to customer loyalty' - professor

Social media is undoubtedly a buzz word for marketing professionals, but it's also an evolving format that has radically changed the way buyers and sellers interact on the global market. Consumers have access to, and now demand, much more information from corporations that want their business. That information is being shared between growing networks of customers who seek each other out for insight into, experience with and even warnings about products and their producers. Conversely, companies reap a great deal of benefit from the new platform - whether it's Facebook, Twitter, Yelp or TripAdvisor - by getting access to individuals who are actively in the market and ready to buy what the company is selling.

With accountability from customers also comes an opportunity for companies to explain decisions, ask for feedback and even respond to complaints, said Niklas Myhr, a professor at Chapman University in California who is currently teaching a social media marketing course in Prague in partnership with the Anglo-American University. Myhr spoke with The Prague Post Jan. 21 about the growing role and changing nature of social media, and how it's helped organize the clutter of a saturated advertising market.

The Prague Post: What strikes you off the bat in terms of the different approaches U.S. and European companies take toward social media marketing?

Niklas Myhr: Here, you see people may not go and try to get as many "weak" connections as possible, whereas in the United States, people have always been great at networking. Americans are even accused sometimes by Europeans as being shallow or superficial, so you have some cultural differences. I've been in the United States for over a decade now, and I've seen the benefits myself of these weaker links: They can help you get a job, introduce you to new opportunities and generally help you avoid being too incestuous in terms of your professional life and what information and opportunities you get.

TPP: You've had a career in marketing, and certainly social media has not been present throughout your whole professional life. How have you seen marketing change?

NM: One of the many manifestations has been a paradigm shift. Marketing used to be focused on transactions, on trying to make a profit today. You knew how much you put into a campaign, and you were able to see the output of that. It was much more short-term focused.

What people have realized is that it's better to build long-term relationships with customers, not just because it's better to be nicer, but because studies show that it's five times less expensive to get old customers to come back in and buy products than it is to attract a new customer off the street. People tune out a great deal; marketing is so cluttered these days, and you really have to offer an incredible discount to get first time buyers in. Now, the best marketing is word of mouth and building loyalty.

You can use social media tools to build loyalty by staying in touch with consumers between purchases, especially for durable goods. That way, consumers have a connection with the brand. Customers like hearing about companies, but not in the marketing speak that used to be in glossy brochures or other promotional materials. Now, you see company presidents even participating in online forums, where customers can share uncensored complaints that the company can respond to, acknowledge and explain. By showing what's behind the corporate facade, you're able to foster this loyalty.

TPP: It's clearly a huge concern on the individual users' side that companies are benefiting from data culled from social media platforms. What do they get out of this new shift in marketing?

NM: I'm seeing the potential for consumers to benefit from this type of loyalty and relationship. For example, if you're loyal to Sony electronics, you can save a lot of time by knowing much more about whatever category of electronics you're interested in. You know it's consistent, and it's worked for you. You save a lot of time by not having to do a serious evaluation process for each purpose.

If a company betrays that trust by selling you a disappointing product, customers of course feel that the company has taken advantage of that loyalty. Word of mouth comes into play, here. Word of mouth, of course, has always been around. It used to be that if you were happy with a product, you'd tell three of your friends. If you were unhappy with a product or company, you'd be likely to tell 10 of your friends. Companies have to do more than ever to keep their customers happy, because with social media, if they're happy, they'll tell 50 friends, and if they're unhappy, they might even start a dedicated hate blog.

Take the "United breaks guitars" example. A customer's guitar was broken while being transported by United [Airlines]. He filed complaints for nearly a year, and United did not reimburse him. He wrote three songs about it, uploaded them to YouTube, and all of the sudden, they had about 10 million views. United offered to reimburse him, but at that point, he didn't accept it, and they did something else instead. I believe they donated some money to a music foundation or school.

TPP: So, is this a sign that customers today have more power than before?

NM: Absolutely. I think the power balance has changed a lot. I tell my students: It's not a question of the specific tools in marketing, but rather it's about recognizing that the so-called outbound method is much less effective - that is, companies that are pushing their message out onto potential consumers. Now, there is this idea of "inbound" marketing. Companies can capture that by creating a presence online via social media so that when people are ready to buy something, they can search for advice from what other customers are saying or look up a company using Google.

Companies, as a result, need to have a good reputation online. When people are searching for a company, it needs to be ready with a website. The value of that person is 10 times more than the average person because that person is actively researching the market. With outbound marketing, it was less effective, even if you were targeting your ads on the right TV show and demographic.

Consumers are armed with much more information now. The best way companies can establish trust is by being out there, by providing customer testimonials, and that's how they can build the longer-term relationships.

Claire Compton can be reached at
ccompton@praguepost.com