Do social networks hold the key to customer insight?

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By: Wise Marketer Staff |

Posted on March 1, 2010

Do social networks hold the key to customer insight?

Social networks have the potential to provide instant and valuable customer feedback, but how can marketers capture and analyse this data and apply it to understand transactional and behavioural shifts? According to Paul Alexander, chief executive for customer insight specialist Beyond Analysis, catching the buzz might even surpass the quality of traditionally researched customer data.

Despite appearing to be a risky strategy in terms of control over a brand, one area in which marketing innovation is developing rapidly is in the use of social networks as a customer communication channel.

But a more interesting development has been the use of social media as a customer data source. But how can marketers go about getting the most out of this relatively new source?

According to Alexander, "You can try to predict the future, or find some clues as to what it might look like, by looking in the consumer transaction data rear view mirror, with the idea that by looking into the data of the past we will be able to see the future. This is great if you're a supermarket like Tesco and you see the consumer on a regular basis, but not every company has that luxury."

If your interactions with customers are irregular or infrequent, it can be hard to identify behavioural trends from transaction data alone. In that case, identifying customers' needs, wants and desires, as well as the evolution of their relationship with you, is tricky at best. Recognising what your customers really need to help shape business processes (such as marketing, product innovation, and operations) becomes an inexact science.

Despite these challenges, one of the great benefits of looking at behavioural data is being able to understand what consumers are really doing through their actions, not just through their words. This is invaluable because what a customer thinks and what a customer does can often be quite different.

For example, if a British consumer has purchased a packet of chewing gum and you ask them which brand it was without looking, they are likely to tell you it was either Wrigley's or Orbit, because consumer awareness of those brands is so high. However, while 83% of consumers surveyed actually declared their gum to be one of those two brands, it can't possibly be true because their combined market share is currently less than 19%.

It is important, therefore, to understand both what your customers think and what they do. Before the advent of social media, there was little choice in how you gathered feedback from consumers - in fact your choice was basically groups or questionnaires, both of which bring inherent challenges of their own.

Questionnaires and focus groups are by definition a limited set of specific questions or chosen topics. They can also be far too limiting. They can channel the consumer into a frame of mind that is designed to bring out a desired set of answers, and will not necessarily challenge marketers to find new ways of thinking about or approaching business, products or services.

What if you didn't have the consumer in the room, or sitting looking at a piece of paper? What if you could listen to their conversations without having to interrupt them? What if you could look at their ideas about how to evolve your product or brand?

"A few years ago when one of our first graduates started in the business he and I were discussing Amazon and eBay over drinks after work. Not a single one of his purchasing decisions were being made based on marketing from the companies selling the products, and he didn't even trust the advice of his friends. He was using social media - conversations unfettered by corporate interest - to make his product choices," explained Alexander. "Nowadays, it seems that everyone has an opinion on the rise of social media sites, with many actually having a go at Tweeting or Facebooking or checking out the most competitive prices for their latest gadget, even if only to see what the fuss is all about."

So, while this is not a new phenomonon, this development is still critical to the much tallked-about "360 degree view of the customer". Apart from what customers do and what they feel, social media also allows marketers to better understand how they talk about the brand or product to others. Through the well documented explosion of sites such as Twitter or Facebook, marketers have an ever-growing data source at their disposal, and it's one which has the potential to help them understand their customers and build stronger relationships with them.

One example of this is Dell, who took on board the criticisms of the 'Dell Hell' community and not only improved key areas of service but also created one of the strongest online communities managed by a corporation, with over 5 million unique views of their web site (Direct2Dell) each month. This is a prime example of how using online feedback as an input into brand development and innovation can improve customer relationships.

However, as exciting as the opportunities presented by social media are, there are also some challenges that need to be addressed. One of the big issues is how to extract meaningful insight from the social networking environment. The phenomena of 'text mining' and 'sentiment engines' are on the rise but these typically these require a high level of human input, so they tend to be very labour intensive.

There are even artificial intelligence (AI) engines with the capacity to learn, but ensuring that the wider context of a specific piece of text is fully captured is something only a real human being can do effectively for the time being.

There is also the question of how much importance should be given to findings - for instance how meaningful is "buzz" and to what extent is it affected by the "band wagon effect" and the "herd instinct". In other words, is this buzz in social media really linked to real-world behaviour, or is it just background noise of little commercial consequence?

Ultimately, to derive real value from social media, marketers should not shy away from investing in a systematic approach to sentiment analysis, which shows the extent to which the discussions which are taking place online are positive or negative, and to which they are really influencing consumers' attitudes and behaviours.

Hwever, transactional data, qualitative research, and social media 'buzz' cannot really help you fully understand the customer when considered in isolation. But by linking these data sources together, the story of a consumer's journey with the brand can be assembled. This provides a powerful asset that can be mined, analysed, segmented, and used to create more meaningful and actionable customer insights, which in turn will help to create competitive advantages.

The benefits of this 360 degree view can be seen in sectors and markets that are already using Web 2.0 data to enrich their understanding of customer bases and to manage customer relationships. Examples include Coca Cola, Dell, Kleenex, Microsoft, Starbucks, and Nokia.

What should be noted, though, is that there is a danger that the hype about social media - the belief that it is somehow the 'Holy Grail' of customer understanding - may prevent organisations from using it in a meaningful way. Its real power can only be felt when it is viewed in the wider context of what customers actually do and how they feel about the brand. Seeing how consumers talk about the brand is only a small part of the total picture.

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