social media researchCould “ethical” bribery be setting your business up for failure?

If your company’s social media interactions revolve around advance announcements of sales, special offers and insider-only promo codes – to the point where receiving these things is the primary motivation for your fans and followers – then you’re essentially bribing customers to stay.

In this case, social media merely provides a pleasant, whitewashed cover for the bribery.

Thus, the very activities you’re hoping will improve your relationship with customers might well be actually hurting your reputation with them, making those customers less likely to pay your full price without balking.

This article will reveal four ways to build customer loyalty without bribery.

The Slippery Slope

How did your efforts get so off-track?

The downward slide started when you confused customer retention tactics with building true customer loyalty.

Here’s Harvard’s resident expert on service excellence, Francis Frei, explaining the difference between the two:

Francis Frei

“When companies pay customers to try out their products and services, it’s part of a customer acquisition program.  When companies pay customers to remain customers, it’s part of a customer retention program.

When companies invest in activities that increase customers’ willingness to pay, they have a customer loyalty program.  When a loyalty program works, it increases the chance that your customers will choose you over a lower-priced competitor.”

In other words:

  • Retention programs bribe customers with frequent-flyer miles and “buy 10 get 1 free” cards.  They add economic incentives for current customers to return for their next purchase.  This is hardly a bad thing, but when done too often, it habituates customers to incentives, which promotes economic considerations over brand preference.
  • Loyalty programs increase brand participation among high-value customers to forge bonds that trump economic decisions.  This can mean getting their input on strategic decisions, providing insider-only access to certain products and privileges, and more.  After customers have helped design the next-generation widget, they’re emotionally invested in buying and using it.  Even more so if, as a privileged insider, they’re provided with early access to those co-created products, or even exclusive access to special products as a sign of recognition for their efforts and input.

So what does this have to do with social media?

With social media, customers wish to interact with each other at least as much as they do with the business.  So to create a real customer loyalty program – and the premium price differential that goes with it – you have to create a customer community.

What’s that you say?  You already have a community?

What you likely have are thousands of single customers who have given minimal consent and “opt in” to receive communication from you. That’s not a community.  Heck, that style of one-way communication isn’t even a relationship.

Fortunately (and as you might expect), an appropriate social media strategy can transform your email list into an actual community.

Here are the 4 key elements to real communities along with the primary ways social media can foster each of them:

#1: Repeated Interaction

If I go months without seeing or talking or cross-posting or interacting with your company in some way, well, you’re probably a pretty peripheral part of my life.  The same goes for your customers.

But a sincere email traded back and forth once or twice a week for a couple of weeks in a row changes all that.  You’ve gained top-of-mind awareness as a conversational partner.  Your company has gone from an “it” to a “person” (or a “thou” for you Buber fans out there).  You could rightfully consider me part of your community.

And yet email is an extremely clumsy and intrusive platform for this kind of exchange.  Facebook, Twitter, an online forum, a Wiki or even blog comments all represent far superior methods of fostering this kind of day-to-day interaction.

But take note: what you’re looking for is back-and-forth between members, and between your company’s representatives and members.  One-off comments and one-way communication won’t cut it.  For a dramatic illustration of the difference, just compare Copyblogger’s comment section to your own blog’s comments.

#2: Interaction Involving Built-up Meaning

If your forum members or blog commenters or Twitter followers don’t have inside jokes, community-specific allusions, and their own slang, you probably don’t have a real community. It’s a harsh standard, but it’s the truth.

Unfortunately, you can’t create these things for your community.  You can only create an environment that will foster their creation. And the best way to do that is through engaging in projects that matter, which leads us to principle #3…

#3: Actual Consequences of Community Interactions

Something has to be at stake.  For communication to move past chit-chat, social grooming, and opinionated bloviating, there has to be a task or a mission or a conflict.

When people work toward a shared goal – when tomorrow’s discussion builds on today’s and so on – then decisions matter. Prior conversations matter.  And that’s when allusions, references, inside jokes, and slang build up as a natural result.

To continue with the Copyblogger theme, the whole “third tribe” meme that started off with a simple blog post and evolved into a separate community and learning site is a perfect example of this.  Third Tribers know exactly what is meant by that term, and by allusions to James Chartrand’s Underwear.

So to achieve Real Community Elements 2 & 3, you need to come up with a galvanizing goal – a project that people want to be a part of and would be willing to donate their time, efforts, and skills to.  Provide the platform(s) for interaction and the galvanizing goal and you’re off to the races.

Seth Godin routinely does this by providing an impetus and platform for meet-ups collaborative projects and ways for his fans to help him support his book launches.

#4: Separation of Outsiders from Insiders

Back during the initial flap following the iPhone’s barely-two-months-from-launch price drop, Seth Godin suggested that Apple offer early adopters the following considerations:

“Free exclusive ringtones, commissioned from Bob Dylan and U2, only available to the people who already had a phone. (This is my favorite because it announces to your friends – every time the phone rings – that you got in early).”

“Free pass to get to the head of the line next time a new hot product comes out.”

“Ability to buy a specially colored iPod or an iPod with limited-edition music that no-one else can buy.”

Rather than dealing with price drops by providing discounts or store credit, Apple could have provided increased recognition and therefore increased loyalty and willingness to pay a premium to maintain that loyalty and recognition.

Yet despite being one of the clearest paths to high profit margins, most companies fail to do these kinds of things at all, let alone do them through the very platforms and technologies most suited to them.  Instead they misuse social media and abuse their brand equity through ill-advised retention strategies.

What Loyalty Programs Does Your Organization Have?

How have you transformed your company’s email list or “group” into a real community?  What galvanizing goals have you used to inspire community involvement and crowdsourcing?  What special recognition do you give to your brand insiders?

Let us know your thoughts and ideas in the box below.

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  • I think this post is logically sound and makes a cogent argument for helping companies get better at Social Media. And please Jeff, dont take this as a personal attack (its not) but I think the last thing companies need is better info on how to indoctrinate people into their products via Social Media.

    Indoctrination is so pervasive in our society; social media was the first time in history of the human civilization where unwashed masses could access same distribution channels as the deep-pocketed corps. Lets keep it that way.

    Do we really need another Marlboro mile?

    Sorry, i dont mean to rant. I’ve posted a series of article on this issues for those who care to check them out

    If the quality of the article is measured in user-engagement (and I think it is) then this is an excellent article sure to receive a lot of comments. Thnx Jeff

  • Jeff


    Thanks for reading and commenting. After reading your article I had to smile at the analogy you use: “Hiring someone to be social on your behalf… is like sending someone else to your own birthday party” ; )

    But I think you’re making a few assumptions about this blog and my article in particular. First, SME isn’t for Corporations per se, but about businesses. And while giant corporations like BP might not know how to be social, or even make a public statement without inserting an oily boot into their mouth, that doesn’t mean all companies don’t. There are plenty of small to medium sized businesses run by passionate people who know how to be social, but aren’t quite sure how to translate that knowledge to the online world.

    Second, Social Media isn’t just about being social. And neither is any social interaction in the real world for that matter. It’s also about being persuasive. In fact, I wrote my previous SME article on this very fact. Just click on my byline at the top of this page to check it out.

    Third, the thrust of this article is actually a good message for businesses (even corporations) to hear, and one that I would think is congruent with your own stance: it’s saying you shouldn’t adopt a commercial mindset during SM interactions, that to do so cheapens your relationships and may end up hurting your ethos in the long run. So I rather think that this message would actually lead companies AWAY from a path of attempted indoctrination.

    – Jeff

  • David

    Businesses really need to take a hard look at what you’ve said here. I had a client in the home contracting industry. He is very ethical, but used a tactic I had a hard time agreeing with…paying for referrals from customers. If you found out that a friend or neighbor referred a business to you and got paid for it, how much confidence would you have in that recommendation? Always leaves me a unsettled.

    The fact is discounts, etc. are far easier than the hard work of creating a remarkable customer experience.

  • Jeff


    Payment for a referral can absolutely muddy the waters. It can be done transparently, especially if there’s an incentive for the person being referred as well, but absent full disclosure it’s never a good idea.

    My point is simply that a customer retention programs, while they can be worthwhile, are often done in the name of customer loyalty, and therefore keep businesses from launching true customer loyalty campaigns.

  • Vanessa Coppes

    I am soooo guilty of this! I will definitely take action to create a “community” vs. “a land of freebie lovers”. You have to put in the time to create a great network. The people who trust and like you, will come. i have to keep telling myself that 🙂

  • While managing an independent retail store in a neighborhood of other small businesses, I witnessed the rebound effect of constantly offering discount/freebie/incentive programs (and saw how it hurt not only their bottom line, but their name or brand). People always expected coupons, deals, or the lowest prices, as those retailers became known for using them, and some of the businesses with higher quality products or services had to change their offerings to fit those expectations.

    In contrast, activities that increased participation with the businesses worked really well to build a core group of ‘fanboys’, influencers, etc. out of the whole customer base, and those people came to be almost as vested in the business as the owners!

    Social media gives you the technology for building a community, but people also have to become vested in the business in order to create a community. You can’t build it, as you said in #2.

    Excellent article, thanks!

  • Sam

    How do you define community? Is it a couple of really loyal customers, a number in relation to a database or followers, or every customer being loyal?

  • Jeff



    While community is a notoriously hard thing to define, I think that the four characteristics above function as a good “working definition” of community. The degree to which people self-identify with the group, the degree to which the group has at least some signs of shared culture though it’s own jargon or in groups, and the degree to which there are common – or communal – goals that members are willing to contribute towards are all functional characteristics of a community.

    In practical terms, yes, you will need a core group of very loyal customers and a larger number of participative customers. You don’t need all your customers or even all your repeat customers to participate. I don’t know what the “critical mass” is as far as number of participants, but the number is probably lower than most people think. Enthusiasts react well to companies willing to listen to their input and cater to their needs. And that word tends to spread pretty easily and quickly from what I’ve seen and experienced.

    – Jeff

  • Our company manufactures art rubber stamps and has developed an active online community of folks who collect and use our product to create cards and scrapbooks for their loved ones. Several of them have developed an attachment to our little characters and even proudly declare that they have them all. We try not to just announce new product but to hold contests, show samples of great work (by our staff and our fans), and even have a design team made up of casual users we located through their great work on their own blogs. But for all the community building content and even shared jargon, we cannot get very many folks to comment on our blog posts or our fb fan page. How can we get them out of their little shells on our page..on their own blogs you can’t shut them up! We want participation, and we think we encourage it, nay, we even reward it by showing their great work to the world…but it’s like pulling teeth.

  • Guest

    I agree…BUT

    Almost no company can achieve this level of engagement. Really. Getting such an impassioned community for a brand that they creaet inside jokes? That is the stuff of best-selling novels…blockbuster movies…A-list celebrities…Apple! Not the majority of small businesses that fuel the economy.

    It’s still good to keep in mind, but I’m not going to lose sleep over it.

  • Jeff


    First, congratulations. Second, I’m guessing that, despite your lack of blog comments, you *have* seen a boost in business from all this. And if so, try to keep in mind that if you’re selling a premium product at a premium price and these fans are routinely paying that premium to buy your product, well, isn’t that the best comment of all?

    OK, now that I’ve got that out there, let me ask you a few questions that might help steer you in the right direction:

    When you hold contests, what kind of contests are they? Are you holding communal design contests where people can submit their designs for a new stamp and get feedback from the group? Are they passionate discussions about the virtues and drawbacks of one type of rubber over another that’s commonly used to make the stamps and over which one your company should use?

    I’m asking these questions because where I think you might be failing to connect is on principle #3. Have you galvanized the group with an exciting project that requires their input and does that input have to come in the form of blog or forum comments?

    Let me know. And thanks for reading and commenting!

    – Jeff

  • Jeff


    I’ve seen flashlight geeks get this worked up over a new flashlight design/proposal for a company. I’ve seen knife aficionados get worked up about a new folding knife design being debated by a cutlery company. And yes, I’ve seen niche software end-users get all kinds of excited about seemingly boring and unglamorous software. One thing the internet reveals for sure is that, no matter who weirdly offbeat your obsession or passion is, there is a whole legion of like-minded weirdos willing to join you in a discussion about them.

    So I don’t believe that this level of engagement is quite as unreachable as you claim. You are not talking about creating allusions and inside jokes for the wider culture, just within your small core customer fans who you are actively engaging in meaningful projects, discussions, design in-put sessions, etc. Also, this is just one sign of real community – not the only sign or the only goal of a worthwhile loyalty program. The larger point is to focus on loyalty instead of only going after retention and fooling yourself into believing that you’re “engaging” people.

  • Jeff,
    What a great post. I have been railing against the so-called loyalty programs for years. Not only do they only create “loyalty” as long as you keep giving the store away, but they hurt your profit dramatically. I watched a keynote speaker at a big conference talk about his loyalty program – a ten percent store credit after six purchases. Then he asked the crowd, “Do you think you could grow your business 5% with this method?” at which point the crowd cheered loudly. Now, my math might be suspect, but giving away 10% to grow your business 5% doesn’t make any sense (cents?). I agree with you whole-heartedly that creating fans through how you connect and listen and share is both a stronger form of loyalty and more profitable. Social media is just a new tool for making those connections and keeping them going even when the customers are not in your store.

  • Great post Jeff! I have been on the path of re-examining how I use social media, this post along with Don Crowther’s Social Profit Formula has taken my Social Media Marketing strategies on a new turn!

  • Jeff

    Thanks, Katey!