What if going viral was the beginning of the end for your company instead of a dream come true? Or, spending hours on end tweeting, posting, and conversing was an epic waste of time? What if you could get past the hype and discover the real secret to social media success? Would it change how you use the channel for your business?

Participation in social media is relatively new to most traditional marketers. When you come to the channel from a direct marketing background as I did, it’s natural to look for landmarks and guidance through unfamiliar territory. Landmarks are hard to find because social media is vastly different from every other channel. Guidance is questionable because most of it is based on the experiences of people creating personal brands instead of established businesses.

Being a direct marketer, I’ve spent the last few years doing what direct marketers do. I tested. And, I tested some more. I followed the guidance of the people who preceded me and documented the results. When my results were less than stellar (translation: dismal), I compared what we were told to do with what the guides were actually doing. I found that many of the leaders were buying followers, using bots, and generally speaking, misleading people who wanted to learn about the channel.

There were many times during the process of learning about social media that I was tempted to walk away from it. The ugliness of communities warring over perceived slights was almost too much to handle. Please feel free to call me stubborn for continuing to persist. Some of my best friends do. But, before you do, you should know that there was more to it than an unwillingness to accept defeat. I saw something in all of the chaos and misdirected guidance that can make the difference between a company’s success and failure.

There is a secret to social media success that has nothing to do with viral marketing, very little to do with fan/follower acquisition, and everything to do with customer relations.

Viral campaigns are extremely rare, attract hit-&-run shoppers, require extensive resources to manage, and are impossible to replicate. Social media is much more than a rainbow chasing channel. It is an opportunity to convert transactional relationships into interactive ones.

Social media isn’t an acquisition channel, it is a retention tool. Think about that for a minute. Social networking is better at keeping customers than it is at getting them. If this is true, then most social marketing strategies start at the wrong place. They begin with the platform and creating content designed to attract conversation. A better approach is to begin with your customers and let them guide you.

Coca-Cola figured this out pretty quickly. Well, in fairness, they lucked into it because their fans built their community. The corporate decision to adopt the community instead of dismantling it was a stroke of genius, but the heavy lifting was done by the fans.

Odds are that your company isn’t like Coca-Cola with avid fans that invest their time in creating a community to honor your products or services. You have to do the heavy lifting yourself. It’s possible that you’ll get lucky if you start with the platform and try to attract customers. But why take that chance?

Wouldn’t it be better to start with your customers and let them guide you? After all, improving relationships with your customers should always be your primary objective. Here are some tips to get things started:

• Capture your customers’ social media user information at every touchpoint. Have your IT team add some fields to your database to store the data. If they can’t do it, get a better IT team. Use other tools to store the information until the new team gets everything set up.
• Use the captured information to budget your resources. The platform that has the most customer participation gets the most resources. This is no different from managing your catalog campaigns. Put your money where you get the most return.
• Establish benchmarks so you can see cause and effect even when measurable metrics are hard to capture. It’s possible to measure the unknown if you create a good foundation.
• Measure the value of customers by acquisition and participation source. You may find that the new customers coming in aren’t as valuable as the ones who are cycling out. The sooner you know this, the less money you’ll lose.
• Reach out to your customers via the social channels. They are easier to recognize now that you’ve captured their handles. Talk to them and start something special.

Social media provides a way for direct marketing and catalog companies to get to know their customers. It’s a shame to waste that opportunity on pipe dreams of rainbows, unicorns, and viral campaigns. And, who knows? You might just become the next big thing.

In 1999, the marketing world was in the midst of change. A few visionaries had already seen the future and grabbed for the Internet golden ring. Amazon was heading towards the World Wide Web Hall of Fame while Barnes & Noble was struggling to find the sweet spot between ecommerce and bricks & mortar.

A niche retailer in Atlanta caught the Internet wave early in 1996. They used it to quickly expand their business. New customer acquisition was at an all time high. Initial average orders were 22% higher than normal. Promotions were attracting people from different demographics. Everything was wonderful except for the decreasing bottom line. Their profits were declining as sales were increasing.

A review of the RFM (recency, frequency, monetary value) analysis didn’t show any oddities. There weren’t any service issues that would affect profitability or loyalty. Product and marketing costs were holding steady. None of the normal issues that affect profitability were present. We had to dig deeper.

Analyzing acquisition and retention gave us the first glimpse of the problem. New customers stopped buying after one or two purchases. Typically, the normal life span for a new customer was approximately ten years for this company. Now, two months was a long life for a growing segment of the database.

The normal attrition suspects were rounded up and eliminated. Prices hadn’t increased. Service was top notch. Marketing was spot on. The only obvious candidate was increased competition from the Internet.

Not willing to accept the obvious as the right answer, we continued to dig and found some similarities between the people who stopped buying:

- Their first orders were placed on the Internet
- They had never received a catalog prior to the first order
- 67% of the orders were shipped to alternate addresses
- 43% of the orders were seasonal

It was our first formal introduction to hit-&-run customers. They are people who place orders but don’t match your customer profile. The items they order may be for gifts or a one-time special event, but this market segment will never become life-long customers. The best customer relationship management strategy won’t have an effect.

There have always been customers like this, but prior to the Internet, they were too few to have a significant effect on profitability. Companies were protected from this phenomenon because it wasn’t easy for people outside their target market to find them. Google changed that.

The easy access to companies around the world has increased the number of hit-&-run shoppers for every company with an Internet presence. Eventually, they transition out of the marketing cycle, but every marketing dollar invested in customers who have completed there lifespan is wasted. The sooner you can identify them, the less they affect your bottom line.

If your customer relationship management (CRM) strategy isn’t working as well as it should or used to, you most likely have a hit-&-run customer issue. It is impossible for CRM to work with people who have zero interest in your products or services. The first step to finding the answer is to conduct a customer acquisition and retention audit. It shows you how well your acquired customers are retained.

Note: Everything you need for a comprehensive customer acquisition and retention audit is in the Customer Loyalty Toolkit. All you have to add is the data.

Social customers are people who buy from your company and actively promote it online. They may be any place within the life cycle. These customers are extremely valuable. When they mention your brand to their community, they provide social proof that your company, products, and services are good. Their value doesn’t stop there. These customers are consistently proving to order more often and place higher average orders than their non-social counterparts.

In most companies, social customers are only a small segment of their customer file accounting for 1% – 8% of the total number. The count is consistently growing, but connecting the dots between social and customer activity is challenging. Google+ is the only social platform that requires people to use their real name. None of the networks provide access to email addresses at this time. The lack of reliable information makes searching for your customers online is a tedious and inaccurate process.

Capturing user information at customer touchpoints is the best way to connect with the people who matter most on the social networks. When they provide the connection data, you know they are interested in connecting with you and what platforms they are using. The number of social platforms is increasing every day. Investing resources to create a presence on all of the platforms will not generate a return on investment. It is better to focus your efforts on the two or three platforms where your customers are most active.

Establishing a social media presence requires participation from marketing and customer care. The best strategy is for the marketing team to handle the outgoing content and promotional messages and customer care to manage the daily interaction. People speaking to you or mentioning your brand indicates that they are interested in connecting with your company. Your customer care team is already well trained to converse with customers and prospects. Social media uses different tools, but the needs are the same. People don’t want to wait for someone to find the answers to their questions.

Connecting with customers on social platforms moves us directly into one-to-one marketing. It allows companies without bricks-and-mortar stores to establish relationships beyond transactions. The benefits are great when it is done well. The challenges are different from other channels but can be overcome. Creating a solid foundation for capturing information and building a community of customers and viable prospects is critical to the long term success.

Measuring the effect of social activity requires a good benchmarking strategy that allows you to see cause and effect. If you don’t have one, establish it before heavily investing in the social side of your business. If you aren’t measuring the results, you risk wasting valuable resources that could be used to grow your business.

This post is an excerpt from our new guide, “Marketing to the Customer Life Cycle.” It is part of the Customer Loyalty Toolkit which also includes “How to Measure Customer Acquisition, Retention & Costs” plus two worksheets that simplify the process. The Toolkit costs $20. Yes, this is a great value. No, I haven’t lost my mind. The $20 bundle price is an introductory special.

Click Here for More Information about the toolkit

Long ago in a galaxy far away exceptional customer care kept people coming back for more. Companies worked overtime to wow their customers. Adages like “the customer is always right” were corporate rules to live by.

Then things changed.

Companies became less focused on delivering exceptional experiences and customers cared less about having them. Sometimes you can look back and identify the catalyst that started the change. It’s only a theory, but I think that the economy contributed to the corporate decisions to scale back service and life challenges kept people from noticing enough to care.

A recent study by the Corporate Executive Board found that service was four times more likely to lead to disloyalty than to loyalty. Customers who had to put forth a high level of effort to resolve issues were more disloyal 96% of the time even when the solution was satisfactory. With the demands of today’s life, people don’t have discretionary time to invest in purchases. Simply put, easy trumps exceptional when it comes to delivering what people want.

The first step to making it easy for your customers is taking a walk in their shoes

Ask people unfamiliar with your business to “shop” it on a regular basis. Give them a list of things to find or do and a rating card for them to complete. Fix the problems and monitor the results. (This is presuming that you have a benchmarking system in place so you can see the effect. If you don’t, get one.)

Next, spend some time thinking about ways that you can streamline the experience and then test your ideas to see what works best. Since people have different preferences, consider adding quick step processes to your current systems instead of replacing them. Here are some ideas to consider:

• Add one-click buying to your website.
• Place QR codes in your catalog or direct mail piece. When scanned it should land on the item with an option for one click buying.
• Use transactional emails to provide status updates every step of the way when people place orders. If you tell them before they ask, they’ll be happier and you’ll reduce your customer care costs.
• Create a comprehensive and easy to navigate frequently asked questions page on your website. People have been trained to look for FAQ’s. Making it easy for them to find the answers increases sales, satisfaction, and search results. Updating it often improves the information and your search results.
• Make your website easy to navigate. If in doubt as to what to do, copy Amazon. They invest heavily in testing to see what works best.
• Use your analytics to improve your game. Website metrics tell you a lot more than how many visitors go to your site. Drill down into the data to find where people get lost and find ways to keep them moving towards purchasing.
• Go mobile. Make your website mobile friendly.
• Rethink the shelving reset process. Relocating items may increase impulse buying, but it can also alienate customers. When people pop in for a quick purchase and have to search the store to find the item, it doesn’t make them happy.

As always, test everything. Testing is the only way to know if your new idea is brilliant or a bomb.

What was your customer retention rate in 2010? Did it increase or decrease? Did the buying patterns change? Do you know your numbers or do you need a moment to look them up? Or, are you clueless when it comes to customer retention analytics?

Falling into the clueless category is understandable because customer retention rates are challenging to measure and often disguise themselves as a soft metric. It takes months, sometimes years to accumulate enough data to accurately measure customer retention. Why bother?

A 5% increase in customer retention can increase profits 25% – 50%.

And, that is a conservative number. We’ve seen as much as a 110% increase in profits with a 5% increase in retention. Do I have your attention now?

We’re also seeing an increase in customer retention rates for clients with an active social media presence. It’s too early to draw conclusions, but the numbers are definitely trending up. Which brings us back to the question, “what do you know about your customer retention?” If you don’t know what your customers are doing, how can you measure the effect of your social media strategy?

Customers come and go on a regular basis. They typically follow a pattern as they progress from Active Buyer to R.I.P. (Rest in Peace). This pattern varies by acquisition source, product, service, and channel activity. Identifying the different patterns and rates allows you to find the points where you lose customers. Once you know where they drop-off, you can implement retention strategies or stop investing marketing dollars. The appropriate choice depends on individual circumstances.

It’s not too late to start measuring.

Customer retention analytics require historical information. If you have three to five years of history, you can establish retention and attrition benchmarks. The process has secondary benefits, too. It reveals people who are good targets for reactivation and highlights trouble spots if they exist. Once the benchmarks are defined, future analysis will show the effect of all of your marketing on customer loyalty.

Your social media activity is part of the marketing that affects customer retention. How much depends on your strategy and community. Updating your rates each quarter provides a map of your progress and an early warning system if something fails. Getting started now helps you determine the effectiveness of your social media strategy. Who knows? You may find that ROI you’ve been missing.

Note: If you find digging through mounds of data for the customer retention nuggets to be a bit overwhelming, let us do it for you. Click here for more information.