Barriers have fallen: empowered by social media, consumers are becoming the new “bosses” of corporations and a powerful source of feedback. Thus companies must learn to effectively engage them, to reward them and to positively respond to online criticism, says customer relationship management guru Paul Greenberg.
He is the author of ‘CRM at the Speed of Light – Essential Customer Strategies for the 21st Century’, the first major customer relationship management manual of the 2.0 age, when the relationship between companies and consumers is moving as rapidly as an electrical impulse. His book has been included by Asian business schools in their list of essential readings and has become a global bestseller. He is now a guru, regularly invited to preach his new way of conceiving organisations. Why? Greenberg looked at the concept of the corporation through the lens of the web and reevaluating it in a completely new light. He saw that consumers have become a reference community. Services have become a two-way pact between customer and company that must be renewed each with each transaction. And companies, today, need to become brands, supported by constantly connected social networks. He explains how the flowing tide of the web has broken down the barriers within and around companies, redesigning their structure. “Today the relationship with customers is circular and constant; it can no longer be limited to a complaints department. Corporations need a total change of attitude,” he explains, clarifying that the change required is, first and foremost, a cultural one.
In what way?
They have to think of the relationship with customers as a core business on a par with production itself and apply the same depth of analysis to it.
What do you mean?
The consumer, or rather the community of consumers, is a source of data, market trends and feedback on products, It can be involved in production itself and is also the source of brand values.
The traditional channels no longer exist. We need to think about the model of social networks; communication can’t be top-down any more. It has shifted and now it’s between equals. So the value of the product, and of the company itself, is traded and increased or reduced through networks
Is that why it’s necessary to involve the customer?
It’s necessary to know him, for a start. Companies communicate continuously with their customers. But do they know who their customers are?
You think they don’t?
I think they could know them better and value them and their presence, as a strength of the company. Technology offers new tools, and then there are various techniques.
Can you give us an example?
There are many. The first method that comes to mind is “co-creation”, which began with video games companies. To modify a game, they could either ask a programmer, maybe someone very good at creating games but who never played them, or they could ask the users who played the game and knew the product. And they realised that the latter was more effective.
For the user, it’s like a prize to be in touch with the management of the company. But for the company, it’s precious to receive suggestions from the people who play every day and know the strengths and weaknesses of the product. The customer gains in gifts, like free games or other rewards, while the company gains an undeniable advantage, better than any market research.
The term “reward” makes it sound like a game.
But reality isn’t like that. It’s a technique for involving people, and it’s no accident it’s called “gamification”. It means giving the customer the chance to be rewarded for achieving a goal, by following certain rules.
Can you give us another practical example of customer involvement?
The offers on Amazon: if you order one of our new releases in the next 48 hours you get a 15% discount.
Where is the active role of the customer there?
It’s a form of engagement: the offer comes from the company, but it’s the customer who takes the decision, thereby taking on an active role. Give me a choice, that’s what customers are asking for.
So basically it’s about taking advantage of the consumer’s desire to play an active, creative role?
Yes, but then companies need to be aware that the consumer really is a protagonist. The more aware I am, the better the results I can achieve.
What are the positive effects of engagement?
The customer has a personalised interaction with the company. According to Forrester Research, 65% of consumers feel the need to interact in a direct and immediate way with a brand. But that’s not all: 36% of them go online to find out about a company’s reputation before buying or recommending a product.
Can you give us the name of a company that has handled this process well?
Take the case of Giffgaff.com, a British telephone app for mobile devices based entirely on the role of consumers, who are all “bosses” of the company.
And how does it work?
If someone has problems or questions on the app, they can ask other users for information. And the users who help others are rewarded with free calls and recharges. And there’s more. When the company was founded, there was a limited budget for advertising, so they couldn’t do an expensive promotional campaign.
So what did they do?
They launched a tool for sharing videos and, more importantly, tools for creating your own videos, with prizes for the best ones. In one month the app had 1.2 million users solely through word-of-mouth on the web.
So sharing, including data sharing, is everything. Isn’t that risky for the company?
Handling data correctly depends primarily on how big the company is. But there’s no doubt that in order to perform well in the digital market companies need to install a data registration system that’s easy for the company to use and consult, and frequently analyse consumer behaviour.
How can you avoid invading the consumer’s privacy in a disrespectful way?
I also believe the consumer has the right to see all transactions that include his or her personal data. But the general rule is “If you don’t want it to be known, don’t write it.”
Is it possible to guarantee the security of consumers’ data and the company’s own data too?
The problem is that you can’t truly guarantee it. Anyone who says differently is lying. We know that even the most sophisticated data protection systems have been infiltrated by hackers. You can only do your best to protect it.
These days, consumers can destroy a product and the reputation of a company via social networks. Don’t you think it’s an excessive power and a risk for companies?
That’s true, although sometimes this power is overstated.
In what way?
It’s true that consumers have never before communicated so much. And it’s true that they have the upper hand, but only apparently so, because everything depends on how the company reacts to any negative viral campaign.
First of all, the company needs to know what sort of reputation the user-consumer has on the web, and pay greater attention to so-called “community influencers”. I’ll give you a very clear and absolutely personal example: one day my Twitter account was blocked and as I hadn’t opened it with my email address, I couldn’t do anything, I didn’t have access. The only course of action was to call Twitter support. And that’s where the surprise came.
What was it?
Twitter had no technical support service for “normal” users. It only had one for companies that requested a paid service. Now things have changed.
How did you solve the problem?
I used another social network to complain. I explained the problem to my Facebook fans and a Facebook senior executive sent an email to a Twitter senior executive saying: look, Paul Greenberg has had his account blocked, do something about it. At that point they contacted me and said look, we’ll sort it out within three hours. Twitter was scared the public would criticise them. I didn’t do that, but I thanked my Facebook fans for their help. So, the power is there, but how it impacts on the company depends on the behaviour of its managers and its support service.
And if a complaint goes viral how should they react?
In that case, your power increases, but fewer than 1% of complaints go viral on the web these days. A perfect example was the case of the musician Dave Carroll, who wrote three songs about the fact that United Airlines had broken his guitar in the hold and didn’t want to reimburse him. He posted the videos on YouTube.
What was the result?
He got 150 thousand views in a week and 5 million in a month and a half, forcing United Airlines to review its policy. Now refunds get paid within a week.
Do you think non-digital native companies are at a disadvantage in this new area of business?
I think they simply need to work twice as hard. And it’s by no means certain that they’re all capable of successfully managing the change. The problem for them is mentality. Which is much harder to change. But they’ve got to start.
Where should they start, in your opinion?
Simply reorganising their customer service is not enough in itself. They need to understand that rethinking companies’ external relations also means changing their internal relations.
So employees need to become active players with the company too?
Without a doubt. Intensify listening to staff, circulate ideas more within the company, make space for people with more innovative ideas. Because a transition on this scale requires new approaches and the right idea could come from anyone in the company.
Compliments of Pirelli – a member of the EACCNY