On the Internet and social media, several emerging and overcoming trends in the engagement in customer loyalty have been identified over the years. According to Gartner’s Hype Cycle for Emerging Technologies in 2009, informative corporate blogs started to emerge and were transformed into micro blogging in 2010.   

 

Furthermore, Nidhi & Vadana (2011) found out that increasing consumer-brand knowledge contributes to increased consumer perceived value in a brand, which is directly linked to greater consumer brand loyalty. In their research, corporate blogging was pointed out to be a useful organizational tool for brand propagation and interaction with customers.  Corporate blogging is a way to shape brand perception by adding to the knowledge about organizations, brands and products. In addition, blogs are no longer a subculture of the Internet. Instead, they have become a mainstream informational resource.

 

According to Gartner’s Hype Cycle for Emerging Technologies 2012, crowdsourcing appears to be the technology trigger attracting more and more customers, communities and thereby emerging as a tool for corporations to build loyalty and brand engagement on the Internet and social media.

 

Figure 1. Gartner’s Hype Cycle for Emerging Technologies in 2012

 

Typically, crowdsourcing has been seen as the tool for corporations to engage in allocating resources for customers and potential customers for product development and innovations. Basically, a customer is engaged in product development and sales process through crowdsourcing platforms.  A customer is expected to be loyal to a product or a brand from the first purchasing decision by continuous feedback and product development. There are several examples of corporations using various crowdsourcing platforms in their R&D and marketing co-creation e.g. Lego Cuusoo and Nokia Map Creator

 

Many companies operating in the B2B sector find it hard to engage a customer on the Internet in R&D crowdsourcing and marketing co-creation. B2B technology companies most often utilize crowdsourcing through various separate extranet and customer portal solutions with customer information and marketing. However, the best results with maximum efficiency would be achieved by integrating separate customer communication systems into the corporate main communications interface by UCC (Unified Corporate Communications and Collaboration).
Reichheld & Teal (2006) discussed aspects of loyalty by managing customers as assets and how customer assets must be valued. Creating value for customers builds loyalty, and loyalty in turn builds growth, profit and more value. As a marketer, you must be able to quantify and predict customer duration and lifecycle cash flow.

 

Figure 2. Why loyal customers are more profitable. (Reichheld & Teal 2006, modified)

 
It can be assumed that marketing communication channels  on social media decrease customer acquisition costs (e-leads), increase  revenue growth and cost savings (e-commerce) and bring fast spreading referrals ( “i economy” with “likers” and “followers”) with price premiums (online customer clubs) compared to traditional marketing communication channels.

 

Figure 3. How likely is it that you would recommend (your company, product or service) to a friend or colleague?  (Reichheld 2003, modified)

 
In order to measure customer loyalty and engagement, Reichheld (2003) introduced the NPS (net promoter score). It basically means measuring the customers who are the most eager to promote your company, service or product to friend or a colleague. The net promoter score (NPS) can be defined by the percentage of promoters minus the percentage of detractors. The NPS can be very easily utilized to measure the engagement in products or companies among e.g. crowdsourcing communities, mobile services or other Internet or social media services.

 

Figure 4. Enterprises have multiple barriers when trying to tie social media with revenue (Altimeter 2012)

 

According to a survey by Altimeter, a consulting company (2012), there are multiple corporate barriers tying social  media to revenue of which the most common is the inability to tie social media to business outcomes due to lack of expertise. The measurement of social media poses as much of a challenge to organizations and processes as it does to technology.

 

Corporate marketing and communications channels and platforms for crowdsourcing and co-creation on social media are almost endless, but the key challenges in making decisions still remain.

 
1. How will you build up customer loyalty and increase the net promoter score of your company through social media channels?
2. How will you utilize the social media channels integrated with existing marketing channels for profitable customer assets?
3. How will you measure the results of profitable customer marketing, communications, co-creation and crowdsourcing on the Internet?

 
For more questions related to social media and crowdsourcing for customer loyalty, engagement and profits, please do not hesitate to contact:

 

Hanna-Maija Kiviranta
M.Sc., econ, senior lecturer of global marketing and business

Mobile +358 40 584 8938

E-mail: hanna-maija.kiviranta@jamk.fi

 
Sources

Gartner’s Hype Cycle for Emerging Technologies in 2012. (8/10/2012)

Etlinger, S., Owyang, J. & Jones, A.: Social media ROI Cookbook – Six Ingredients top brands use to measure the revenue impact of social media. Altimeter research 07/2012.

Reichheld, Frederick F. & Thomas Teal: The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Harvard Business Press. 2006.

Reichheld, Frederick F.:”One Number You Need to Grow”. Harvard Business Review. 12/2003

Sinha. N. &  Vadana, A.: Corporate blogs- A web 2.0 approach to increase consumer brand knowledge. International Journal of Business Economics and Management Research. 2/2011.