How to Measure Social Media’s Impact on Customer Retention
The cost-effectiveness of social media has vaulted it to the top of the list of tools used to improve customer retention. But how do you measure whether social media is affecting your ability to keep customers?
To examine this, let’s look at a case study of a company that has excelled at connecting with customers in social media spaces.
What We Can Learn From Comcast
If you’ve been following companies using social media, then you’re sure to be watching what Comcast is doing.
They were presented with a difficult challenge of dealing with a perception of poor customer service and trying to change that perception.
This is evidenced by over 6300 people who are fans of the Facebook page called “I Hate Comcast.”
They did a combination of things in order to meet their objective. Frank Eliason, who Business Week called the most famous customer service manager ever, started the @ComcastCares Twitter account (he’s since moved on). This has now expanded to multiple Twitter accounts from their digital team that all start with @Comcast, my personal favorite being @ComcastBonnie. They also have several Facebook Fan pages with the Comcast fan page being the primary channel where they provide customer service to Facebook users.
In my personal experience, I had an issue with Comcast that I tweeted about and several things happened. Almost immediately, I received a reply from @ComcastBonnie asking if she could assist me. My issue was then transferred to a national response person who told me he was following up on my issue and would get back to me.
It took a few attempts but my cable got installed and I spoke to an amazing person who addressed my issue and was determined to make me happy, despite the issues I faced. So how should Comcast measure whether their efforts mattered? There are a few key metrics I recommend you examine.
#1: Customer Retention Rate
Will I stay with Comcast longer than a customer who never interacted with Comcast’s social media team? Compare the retention rate of customers who interact with social media channels versus those who don’t, whether it is through your customer service efforts and separately for any leads that have been generated.
Each month the customer stays with Comcast is worth a certain amount of revenue to the company. Assign an average dollar value to customers at different points in the life cycle and compare the value of a social media customer versus a non-social media customer based on retention rates.
#2: Decreased Operational Costs
Do customers who get assistance from the social media team tend to contact the customer service phone number more or less? It generally costs less to service a customer online than over the phone, depending on the company’s operational setup. Report how many customers were handled, the average time to resolution, the cost and the savings.
#3: Increased Usage of Self-Help Options
Do customers who interact with the social media team use the online customer service option at your website more or less? Online help centers typically facilitate customers finding answers on their own, which is certainly less expensive than a customer calling the service phone number. Report on how many social media customers went to this section of your site versus non-social media customers and show how much the company saved.
#4: Customer Saves
How many complaints were you able to turn into opportunities? I call these saves. They are customers who exhibited some key actions that can lead to a cancellation, but the customer either comes back or doesn’t cancel as a result of social media interaction. These customers are worth money to your company, so make sure to measure their value in your overall return on investment numbers.
#5: Customer Complaints Turned Into Raves
Do social media customers share their experience with others more or less than non-social media customers? What percentage of social media customers are likely to recommend your company to a friend?
Customers who interact with the company on social sites are more likely to have a “viral” tendency and love to share their positive and negative experiences with their friends, followers and fans. How many shared negative comments versus positive comments do you see? How far did they reach?
Are social media customers more or less likely to buy additional services? How much revenue was generated from cross-sells directly from social media compared to non-social media customers?
#7: Improved Process Innovations
How many issues handled by the social media service team led to process innovations to prevent the issue in the future? How much money will this save the company in lost customers each year? How much money will it save the company in employee time to handle the issues?
Because social media measurement is fairly new and many companies are just getting started, it’s important to measure everything against a control group so you can compare the rates of change.
For those in the early stages of their social media strategy, the numbers may not be “big” yet, but it’s the propensity of the customer to convert better, be more loyal, be more likely to use online resources and tell their friends about their experience that show the short-term and the long-term value for the company. Empowering customers and social media team members to become change agents and spearhead process improvements that will save the company time and money is priceless!
Comcast has a great story of how they’ve turned social media into a customer retention tool. We are all sad to see Frank Eliason leave Comcast, but we are looking forward to seeing great innovations from Citibank as he takes the helm as senior vice president of social media.
How are you measuring social media’s impact on customer retention? Did I miss any metrics that are valuable to your firm? What challenges are you facing in your ability to measure? Let us know in the box below.