Could “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:
“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.
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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.
#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.