4 Tactics to influence the new, SOCIAL consumer!

Traditionally the value of a customer was measured by his ability to purchase a company's products and services or CLV (customer lifetime value). But now with consumers recommending products and sharing experiences on social networks, the purchase cycle has changed. It is becoming increasingly necessary for companies to measure their social influence. Therefore, as shown below, value of a customer increases with customer revenue as well as social influence, also known as social CLV or CLV 2.0.

So what tactics can Marketing deploy to influence the social consumer?
There are 4 tactics that can be deployed depending on level of customer's revenue and social influence.

4 tactics to influence the social consumer

CLV 3.0: Measuring Co-Creation Value of a Customer

credits: redheadedfrog

While social media finds a way into the enterprise, it is imperative for companies to take a look at an essential metric that measures how much each customer is worth in monetary terms - CLV or customer lifetime value (you may also refer to HBS' CLV Calculator).

However with social CRM's capability to centrally store data that measures and reports on social media activities, there comes a need to revisit how we measure the value of our customers on the basis of two primary actions that they are actively performing -

• Referring actions - Like, share, recommend existing products and services resulting in Customer Referral Value
• Innovation actions - Co-create new products and services  resulting in Customer Innovation Value

Customer Referral Value:

With customers liking, sharing, recommending, influencing our products and services, we need to add the customer's referral value (CRV) to the current CLV metric. (sources: definition by Daniel, Oracle's Tara Robert) 

So CLV 2.0 or social CLV looks something like this: 

CLV 2.0 = CLV + CRV, 

where CRV is Customer Referral Value.

Customer Innovation Value (new metric):

While a very large percentage of users recommending our products and services, there is also a small yet relevant base of customers willing to co-create our next product or service (ref: Starbucks, Dell). These are truly high value, high potential customers. Companies that are able to strengthen relationships with such customers will gain sustainable competitive advantage. And this is the future of competition!

So CLV 3.0 would look something like this:

CLV 3.0 = CLV + CRV + CIV, 

where CIV is Customer Innovation Value.

So how do you think companies can measure CIV? Is there a science to it yet?

And should companies tweak their loyalty programs to reward customers who have made contributions of outstanding significance to a company's profitability, measured in terms of monetary, social, and innovation value? Maybe call it "Customer Lifetime Value Rewards" :) ?... what do you think? (Pardon the analogy to Grammy's Lifetime Achievement Awards!)

(Check out my next posting on how companies can leverage the purchasing power and social influence of their consumers.)

Social media's big push within the enterprise (finally!)

Six years after the term Web 2.0 was defined, it's extremely heartening to know that social media is finally entering the enterprise in a big way with the blessings of Oracle and Salesforce.com!

With Oracle's acquisition of Virtue and Collective Intellect, and Salesforce.com's acquisition of Buddy Media, social media and the new facets of customer engagement and innovation will finally begin to see the light of day within the enterprise in the form of social CRM - a key customer relationship management offering that will plug into social media platforms such as Facebook, Twitter, etc and provide the missing piece of the 360 degree view of the customer.

Through these acquisitions — and the eye-opening price tags behind them — Oracle and Salesforce.com show that the business world is getting ready for social media. It’s no longer considered a fad, definitely not just hype, and not going away any time soon. Businesses must care about social media because it’s clear that consumers already do. - Forbes

What does this mean for Marketing and IT teams?

Marketing will now be able to centrally create, publish, moderate, manage, measure and report on social marketing campaigns and activities on social media platforms such as Facebook, Twitter, YouTube and Google+.

So suit up, IT... and get ready to shake hands with Marketing and drive the social CRM story forward...  what say?