Grouping customers into different RFM categories

 

Grouping customers into different RFM categories

In the examples above, each division for recency, frequency and monetary value is placed 

in an arbitrary position to place a roughly equal number of customers in each group. This 

approach is also useful since the marketer can set thresholds of value relevant to their 

understanding of their customers.

RFM analysis involves two techniques for grouping customers:

1 Statistical RFM analysis

This involves placing an equal number of customers in each RFM category using quin-

tiles of 20 per cent (10 deciles can also be used for larger databases) also shows one application of RFM with a view to using communications 

channels more effectively. Lower-cost e-communications can be used to correspond with 

customers who use only services more frequently since they prefer these channels, while 

more expensive offline communications can be used for customers who seem to prefer 

traditional channels.

2 Arbitrary divisions of customer database

This approach is also useful since the marketer can set thresholds of value relevant to their 

understanding of their customers.

For example, RFM analysis can be applied for targeting using email according to how 

a customer interacts with an e-commerce site. Values could be assigned to each customer 

as follows:

Recency:

1 – Over 12 months

2 – Within last 12 months

3 – Within last 6 months

4 – Within last 3 months

5 – Within last 1 month

Frequency:

1 – More than once every 6 months

2 – Every 6 months

3 – Every 3 months

4 – Every 2 months

5 – Monthly

Monetary value:

1 – Less than £10

2 – £10–£50

3 – £50–£100

4 – £100–£200

5 – More than £200

Simplified versions of this analysis can be created to make it more manageable – for 

example, a theatre group uses these nine categories for its direct marketing:

Oncers (attended theatre once):

● Recent oncer attended 612 months

● Rusty oncer attended 712 but 636 months

● Very rusty oncer attended in 36+ months

Twicers:

● Recent twicer attended 612 months

● Rusty twicer attended 712 but 636 months

● Very rusty twicer attended in 36+ months

2+ subscribers:

● Current subscribers booked 2+ events in current season

● Recent booked 2+ last season

● Very rusty booked 2+ more than a season ago. 

Product recommendations and propensity modelling

Propensity 

modelling is one name given to the approach of evaluating customer charac-

teristics and behaviour, in particular previous products or services purchased, and then 

making recommendations for the next suitable product. However, it is best known as 

recommending the ‘Next best product’ to existing customers.

A related acquisition approach is to target potential customers with similar character-

istics through renting direct mail or email lists or advertising online in similar locations.

The following recommendations are based on those in van Duyne et al. (2003):

1 Create automatic product relationships (i.e. next best product). A low-tech approach 

to this is, for each product, to group together products previously purchased together. 

Then for each product, rank product by number of times purchased together to find 

relationships.

2 Cordon off and minimise the ‘real estate’ devoted to related products. An area of screen 

should be reserved for ‘Next best product prompts’ for up-selling and cross-selling. 

However, if these can be made part of the current product they may be more effective.

3 Use familiar ‘trigger words’. That is, familiar from using other sites such as Amazon. 

Such phrases include: ‘Related products’, ‘Your recommendations’, ‘Similar’, 

‘Customers who bought …’, ‘Top 3 related products’.

4 Editorialise about related products. That is, within copy about a product.

5 Allow quick purchase of related products.

6 Sell related product during checkout. And also on post-transaction pages, i.e. after one 

item has been added to the basket or purchased.

Applying virtual communities and social networks for CRM

We discussed some of the psychological reasons for the popularity of social networks in 

Chapter 2 in the section on consumer buyer behaviour and in Chapter 9 we will review 

some of the related Web 2.0 marketing techniques that can be used for customer acquisi-

tion. But in this section, we consider why social networks have developed and how they 

can be used to develop customer understanding and for relationship building.

The reasons for the popularity of virtual communities today such as the social networks 

Facebook, Google+ and LinkedIn can be traced back to the nineteenth century. The 

German sociologist Ferdinand Tonnies (1855–1936) made the distinction between public 

society and private community (Loomis, 1957). Tonnies employed the terms Gemeinschaft, 

meaning ‘community’ (informal, organic or instinctive ties typified by the family or neigh-

bourhood), and Gesellschaft, meaning ‘society’ (formal, impersonal, instrumental, goal-

orientated relations typified by big cities, the state and large organisations). Membership 

of Gemeinschaft is self-fulfilling (intrinsic motivation), whereas being a member of a 

Gesellschaft is a means to further individual goals (extrinsic motivation).

Marshall McLuhan (1964) posited that ‘cool’ (meaning on-going and shared) and inclu-

sive ‘electric media’ (meaning telephone and television, rather than books) would ‘retribalise’ 

human society into clusters of affiliation. Nicholas Negroponte (1995) predicted that in the 

near future ‘we will socialise in digital neighbourhoods’. Manuel Castells (1996) has devel-

oped the concept of ‘networked individualism’, in which individuals build their networks 

online and offline on the basis of values, interests and projects, and believes that ‘our socie-

ties are increasingly structured around the bipolar opposition of the Net and the Self.

How to Create community through social networks

 How to Create community through social networks

The main social media pla

tforms which can offer a presence for companies are Facebook, 

Twitter, LinkedIn, Google+ and YouTube. Other social media platforms do exist, but they 

tend to have a smaller audience reach as they have a niche focus. The most commonly used 

options are:

1 Facebook company page. These are popular with customers for many types of compa-

nies as catalogued by Social Bakers (www.socialbakers.com/statistics/facebook). 

Facebook pages are designed to help businesses engage an audience and so promote 

their products and services. The members of the page are referred to as ‘fans’ who 

‘Like’ the page. These fans can then receive status update information from the busi-

ness page within their news feeds. Paid Facebook ads can be used to recruit new fans, 

but fans will also be attracted as other fans like the page or share information.

2 Twitter page. Twitter enables companies to set up their own page with communication 

made through messages that can contain up to 140 characters. Currently the pages for 

companies are the same as those for individuals with a short bio featuring the company. 

Crucially for communication, as with Facebook status updates, these messages can 

contain links through to the company website which contain relevant content or offers 

to engage the audience. Twitter is also commonly used for customer service. Some 

companies such as retailers Dell and ASOS have separate channels for customer offers 

and support.

3 LinkedIn Company pages and groups. LinkedIn is the most popular network to track 

and maintain professional contacts within the business world. Therefore, it is often 

utilised by academics, corporate executives and professionals. It allows users to promote 

their experience and expertise through resumes and professional recommendations. 

Companies can set up a company page which. similar to other networks, has status 

updates to communicate new products and services and users can comment on these. 

Many companies also set up their own group on LinkedIn which can cover a topic but 

is branded by the company. For example, jobs company OnlyMarketingJobs.com set up 

a group called Digital/Online Marketing Professionals (DOMP) which raises awareness 

of the brand although discussions are about digital marketing practice more widely.

4 Google+. Google+ is more recently established and also has company pages from 

companies like H&M and Cadbury. While these ‘flagship’ company pages are popular, 

others are less so and in 2014 Google declared that it wasn’t seeking to rival Facebook 

with Google+.

5 YouTube channels. These enable companies to post and host videos which users can 

comment on. The level of usage of these channels tends to be lower than that for other 

social networks so consequently they are not so widely used.

Before investing a lot of time in trying to build a community within a social network, 

it’s important for business to establish strategic priorities and processes that will give the 

best results. (We covered some of these decisions 

Creating your own presence

If a company sets up a community facility on its own site or sets up a separately branded 

community like the American Express Open Forum  which is 

targeted towards small and medium-sized businesses, it is more closely aligned to the goals 

and brand values of the website. Since registered members of the community will be on 

the company database, the community will provide opportunities for email marketing 

and research about the company and its products as part of the learning relationship. 

However, the brand may be damaged if customers criticise products, so some modera-

tion is requigave a good example of a community 

created by their brand on their site. Rather than having a separate community section, the 

community is integrated within the context of each car as a ‘second opinions’ review menu 

option in the context of each car. Interestingly, some negative comments are permitted to 

make the discussion more meaningful. However, they have not continued this approach 

at the time of writing this edition. Another approach used by Kia (www.kia.co.uk) is to 

feature selected reviews from an independent review service (www.revoo.com).

A potential problem with a company-hosted forum is that it may be unable to get suffi-

cient people to contribute to give the community ‘critical mass’. Communities are best 

suited to high-involvement brands, such as a professional body like CIPD, or those related 

to sports and hobbies and business-to-business.

Marketing to consumers using independent social networks

One potential benefit of marketing to virtual communities is that they are naturally 

formed around problems shared, benefits sought, interests etc. and so are naturally 

self-segmented. Segmentation develops organically around particular topics and inter-

ests – e.g. aficionados of quality coffee might debate the merits of various strains of 

coffee beans, of methods of preparation, of coffee machines and of service quality at 

coffee shop brands such as Starbucks. The owners of many specialist communities could 

be seeking advertising revenue (see Case Study 8 on Facebook), so they may accept links 

to merchants and display advertising if the match of product/service and community 

interests is close enough and the advertising doesn’t divert from the community. Although 

social networks such as Facebook and Google+ use advertising as a revenue source, for 

the advertisers responses tend to be low because the focus of users is on interacting, not 

on the ads.

Customer experience – the missing element required 

for customer loyalty

We have in this chapter shown how delivering relevant timely communications as part 

of permission marketing is important to developing loyalty. However, even the most 

relevant communications will fail if another key factor is not taken into account – this 

is the customer experience. If a first-time or repeat customer experience is poor due to 

a slow-to-download difficult-to-use site, then it is unlikely that loyalty from the online 

customer will develop. In the next chapter we review techniques used to help develop this 

experience.

Managing the digital customer experience for a brand used to be relatively straightforward; 

businesses simply had a website and an email newsletter alongside offline channels to sale. 

Today, the picture is far more complex, with the combination of touchpoints where mar-

keters seek to influence consumers stretching across paid, earned and owned media on dif-

ferent devices. Consider the customer-facing touchpoints of a brand’s online experience. 

These can include a desktop or mobile optimised site, mobile apps and company pages 

on social media. Company pages on social media today have a strong visual, interactive 

emphasis including Facebook or Google+ (text updates, video and image posts plus apps), 

Twitter (text updates can include images; video and Twitter cards enable interaction), 

LinkedIn (company pages and groups), YouTube (branded video channels), Instagram and 

Pinterest (image emphasis). Most companies seek to maintain a presence across all seven 

of these networks, although LinkedIn may be limited to careers. Even within offline chan-

nels, digital devices are being used to supplement the digital experience, as shown in Mini 

case study 7.1 on NFC in-store integration. For example, Debenhams, a leading UK retail 

adopter of mobile, shared this retrospective of their mobile development over the last two 

years or so. Speaking at the 2014 Mobile Marketing conference, Debenhams’ mobile mar-

keting manager, Sarah Bailie, explained: 

 Integrating online in store should be top priority for all multichannel retailers looking to 

create an experiential and destination shopping experience. Debenhams’ most valuable 

customers engage with the brand via multiple channels. 

 Creating effective digital experiences 

 Given the popularity of digital devices for finding out about brands and services, improv-

ing the capability to create and maintain these effective online brand presences is a key 

part of digital marketing. In the introduction we have described the range of different 

types of digital devices that offer digital interactions between a brand and its audience. For 

most businesses, the majority of interactions still occur on desktop and mobile websites, 

so this is where we focus in this chapter. Although social media have grown in importance, 

they are relatively unimportant in prompting website visits. ‘Effective’ means that the pres-

ence must deliver relevance and a satisfactory digital customer experience for its audience. 

At the same time, ‘effective’ means the presence must support and add value to the brand 

to deliver results for the company. Conversion rate optimisation (CRO) is increasingly being 

used by companies to improve the commercial contribution of online presence to a busi-

ness, as the Smart Insights interview introducing this chapter shows. 

 In this chapter, we will explore different practical actions that companies can take to 

create and maintain satisfactory online experiences. An indication of the need to produce 

a customer-centric online presence is given by Alison Lancaster, at the time the head of 

marketing and catalogues at John Lewis Direct and then marketing director who said: 

 A good site should always begin with the user. Understand who the customer is, how 

they use the channel to shop, and understand how the marketplace works in that cate-

gory. This includes understanding who your competitors are and how they operate online. 

You need continuous research, feedback and usability testing to continue to monitor and 

evolve the customer experience online. Customers want convenience and ease of order-

ing. They want a site that is quick to download, well-structured and easy to navigate. 

Using digital media to increase customer loyalty and value

 Using digital media to increase customer loyalty and value

The ultimate commercial aim of relationship marketing approaches such as e-CRM and 

social CRM is to increase engagement with customers leading to increased customer 

loyalty and so direct sales from these customers and indirect sales through advocacy. 

Understanding the different levers that contribute to increased engagement and loyalty 

amongst different customer groups should be the starting point in developing a customer 

retention and growth strategy.

In Chapter 2 we introduced the Loyalty Loop described by Court et al. (2009) in the 

classic McKinsey Quarterly white paper The Consumer Decision Journey. The paper 

discusses ‘Loyalty loop’, which shows opportunities for brands to reinforce the loyalty of 

their own customers or encourage switching after purchase during what it calls the ‘Enjoy, 

Advocate, Bond’ stage. They found that more than 60 per cent of consumers of facial skin 

care products conduct online research about the products after purchase – a touchpoint 

not normally considered in the classic marketing funnel. When consumers are pleased 

with a purchase, they’ll advocate for it by word-of-mouth including social media, but if 

a consumer is disappointed by the brand, they may criticise it through social media. Part 

of social CRM activities are to encourage online advocacy and limited negative word-of-

mouth. Presi et al. (2014) explored how customers who share their negative service expe-

rience by creating UGC in social media can be segmented according to their motivation. 

They found that altruistic, vengeance and economic motivations are strong drivers for 

user-generated content (UGC) creation after a negative service experience.

In their book, Groundswell (Li and Bernoff, 2011), advising on social CRM, Forrester 

analysts Charlene Li and Josh Bernoff advise using these five activities to manage CRM:

1 Listening – developing an analytics capability enabling you to monitor social 

conversations.

2 Talking – improving customer engagement capabilities (in both social and other chan-

nels) that enable you to respond to what you’ve heard.

3 Energising – harnessing the power of your ‘best’ customer to be active advocates for 

your brand.

4 Support – using social channels to help customers help themselves and others via 

collaborative and cooperative behaviours across social media.

5 Embrace – involve customers in the development and tailoring of your products.

Determining what customers value

Consider the different forms of online interaction a consumer can have with a brand that 

can determine their perceptions of satisfaction and influence loyalty. Figure 6.11 shows 

how, when using digital media for online retention marketing, our ultimate goal on the 

right of the diagram is customer loyalty. The factors on the left help to deliver two main 

drivers of loyalty. First, emotional loyalty, where loyalty to a brand is demonstrated by 

favourable perceptions, opinions and recommendations including social Tips and tricks for improving your social media platform sharing. The success factors at the top of the diagram are all related to the customer experience of 

online services (as we will explore further at the start.

 These tend to influ-

ence emotional loyalty the most, and these are important in determining customer satis-

faction. Of course, a favourable customer experience is very important to achieving repeat 

purchases – how many online sites have you continued to use after a poor level of service 

was delivered?

The second type of loyalty is behavioural loyalty, where loyalty relates to repeat sales, 

repeated site visits, social interactions and response to marketing campaigns. To achieve 

these repeat sales, companies work hard to deliver relevant marketing communications 

either through email and social media communications, web-based personalisation or 

through traditional media.

Measuring the voice of the customer in digital media

Online voice of customer (VoC) measures are useful for reviewing customer sentiment 

online. The satisfaction ratings we have reviewed are one example of VoC measures. 

Another approach, which we will explore is intent-satisfaction 

surveys where the reasons for why a customer is visiting a site are compared against their 

success in completing tasks and their satisfaction ratings. This is a key technique for 

improving online customer journeys.

Net Promoter Score (NPS) is a key VoC measure of advocacy originally popularised by 

Reichheld (2006) in his book: ‘the Ultimate Question’ is essentially ‘would you recommend 

us?’ The aim is to work out techniques to maximise this NPS. Reichheld explains the main 

process for NPS as follows:

1 Systematically categorise customers into promoters, passives or detractors. If you 

prefer, you can call them loyal advocates, fair-weather friends and adversaries.

2 Creating closed-loop processes so that the right employees will directly investigate the 

root causes that drive customers into these categories.

3 Making the creation of more promoters and fewer detractors a top priority so 

employees up and down the organisation take actions based on their findings from 

these root-cause investigations.

In practice, consumers are asked ‘Would you recommend [Brand/Company X] to a friend 

or colleague?’, answered on a scale between 0 (not at all likely) and 10 (extremely likely). 

The actual score is calculated by subtracting the percentage of detractors (those giving 0–6 

answers) from promoters (9–10s). The middle section, between 7 and 8, are the so-called 

passives.

The concept of NPS is based on economic analysis of the customer base of a company. 

For Dell, Reichheld estimates that the average consumer is worth $210 (five-year, Net 

Present Value), whereas a detractor costs the company $57 and a promoter generates $328. 

Online, Dell uses software from Opinion Labs (www.opinionlabs.com) to both gather feed-

back and follow up on negative experiences and so reduce the number of detractors with 

major negative sentiment.

So, the idea is that after surveying as many customers as possible (to make it representa-

tive) and show you are listening, you then work backwards to determine which aspects 

of the experience of interacting with a brand creates ‘promoters’ or ‘detractors’. Some 

specific approaches that can be used to help manage NPS in the online environment are:

1 Facilitating online advocacy:

● Page template contains ‘Forward/recommend to a friend’ options.

● Email templates contain ‘Forward to a friend option’.

● Facilitate customer feedback through a structured programme of emailing custom-

ers for their opinions and NPS evaluations and by making it easy for site owners to 

comment.

● Showcase positive experiences – for example, e-retail sites often contain options for 

rating and commenting on products.

● Involve customers more in shaping your web services and core product offerings, 

such as the approach used by Dell in their IdeaStorm site (www.ideastorm.com).

2 Managing online detractors:

● Use online reputation management tools for notification of negative (and positive) 

comments.

● Develop a process and identify resources for rapidly responding to negative com-

ments using a natural and open approach.

How Electronic customer relationship management E-CRM involves creating strategies and plans

 How Electronic customer relationship management (E-CRM) involves creating strategies and plans 

For how digital technology and

digital data can support CRM.

Digital marketing activities that are within the scope of E-CRM which we will cover in 

this:

● Using the website and online social presences for customer development from gener-

ating leads through to conversion to an online or offline sale using email and web-based 

content to encourage purchase.

● Managing customer profile information and email list quality (coverage of email 

addresses and integration of customer profile information from other databases to 

enable targeting).

● Managing customer contact options through mobile, email and social networks to 

support up-sell and cross-sell.

● Data mining to improve targeting.

● Providing online personalisation or mass customisation facilities to automatically 

recommend the ‘next-best product’.

● Providing online customer service facilities (such as frequently asked questions, call-

back and chat support).

● Managing online service quality to ensure that first-time buyers have a great customer 

experience that encourages them to buy again.

● Managing the multichannel customer experience as they use different media as part of 

the buying process and customer lifecycle.

From e-CRM to social CRM

The interactive nature of the web combined with email and mobile communications 

provides an ideal environment in which to develop customer relationships, and data-

bases provide a foundation for storing information about the relationship and providing 

information to strengthen it by improved, personalised services. This online approach 

to CRM is often known as electronic customer relationship management (e-CRM). 

E-CRM, can be characterised as sense and respond communications. The classic 

example of this is the personalisation facilities provided by Amazon where personal 

recommendations are provided through email marketing and personalised messages to 

site visitors.

we have seen the growing popularity of social media with 

consumers and as a marketing technique. It’s natural that a new marketing approach, 

social CRM has developed to determine how social media can be applied to develop 

customer relationships and customer value. The scope of e-CRM and social CRM crosses 

many business processes. 

The challenge of customer engagement 

 heralded customer engagement as ‘marketing’s new key metric’, given the 

rapidly increasing online media fragmentation and the challenges of keeping customers 

engaged with brands given the proliferation of choice. Customer engagement is sometimes 

used to refer to engaging customers on a single touchpoint, such as whether someone dwells on 

the site for a significant time or whether they convert to sale or other outcome. Instead engage-

ment really refers to the long-term ability of a brand to gain a customer’s attention on an 

ongoing basis whether the engagement could occur on-site, in third-party social networks or in 

email or traditional direct communications. Richard Sedley, commercial director of customer 

experience consultancy an international design consultancy, has 

developed the definition of customer engagement as: ‘Repeated interactions that strengthen 

the emotional, psychological or physical investment a customer has in a brand.’ 

 The commercial aim of engagement is to maximise customer value through using 

customer interactions to lead to more profitable relationships. 

developed a framework to measure online engagement through the 

customer lifecycle and also away from a brand’s own site, such as on publisher sites or 

social networks. 

 According to Forrester, engagement has four parts which can be measured both online 

and offline: 

● Involvement . Forrester says that online this includes website visits, time spent, pages 

viewed. 

● Interaction. This is contributed comments to blogs, quantity/frequency of written 

reviews, and online comments as well as comments expressed in customer service. (We 

could add the recency, frequency and category of product purchases, and also ongoing 

engagement in email marketing programmes, as discussed later in this chapter; all are 

important here.) 

● Intimacy . This is sentiment tracking on third-party sites including blogs and reviews, as 

well as opinions expressed in customer service calls. 

● Influence . This is advocacy indicated by measures such as likelihood to recommend, 

brand affinity, content forwarded to friends, etc. 

 It should be measured by data collected both online and offline. Forrester analyst Brian 

Haven says (Forrester, 2007): 

 Using engagement, you get a more holistic appreciation of your customers’ actions, 

recognising that value comes not just from transactions but also from actions people 

take to influence others. Once engagement takes hold of marketing, marketing messages 

will become conversations, and dollars will shift from media buying to customer 

understanding. 

 Benefits of using e-CRM to support customer engagement 

 Using digital platforms for relationship marketing involves integrating the customer data-

base with websites and messaging to make the relationship targeted and personalised. 

Through doing this, marketing can be improved through: 

● Targeting more cost-effectively . Traditional targeting, for direct mail for instance, 

is often based on mailing lists compiled according to criteria that mean that not 

everyone contacted is in the target market. For example, a company wishing to 

acquire new affluent consumers may use postcodes to target areas with appropriate. 

demographics, but within the postal district the population may be heterogeneous. 

The result of poor targeting will be low response rates, perhaps less than 1 per cent. 

Permission marketing or inbound marketing has the benefit that the list of contacts is 

self-selecting or pre-qualified. A company will only aim to build relationships with 

those who have visited a website and expressed an interest in its products by regis-

tering their name and address.

● Mass customisation of the marketing messages (and possibly the product). This 

tailoring process is described in a subsequent section. Technology makes it possible to 

send tailored emails at much lower cost than is possible with direct mail and also to 

provide tailored web pages to smaller groups of customers (microsegments).

● Increased depth and breadth of information and improve the nature of relationship. 

Digital media enables more information to be supplied to customers as required through 

content marketing. For example, special pages such as Dell’s Premier can be set up to 

provide customer groups with specific information. The nature of the relationship can 

be changed in that contact with a customer can be made more frequently. The frequency 

of contact with the customer can be determined by customers – whenever they have 

the need to visit their personalised pages – or they can be contacted by email by the 

company.

● Deeper customer understanding and more relevant communications can be delivered 

through a sense and respond approach. Examples of sense and respond communica-

tions include tools that summarise products purchased on-site and the searching behav-

iour that occurred before these products were bought; online feedback forms about the 

site or products are completed when a customer requests free information; questions 

asked through forms or emails to the online customer service facilities; online ques-

tionnaires asking about product category interests and opinions on competitors; new 

product development evaluation – commenting on prototypes of new products.

● Lower cost. Contacting customers by email or through their viewing web pages costs 

less than using physical mail, but, perhaps more importantly, information needs to be 

sent only to those customers who have expressed a preference for it, resulting in fewer 

mail-outs. Once personalisation technology has been purchased, much of the targeting 

and communications can be implemented automatically.

● Delivering loyalty programmes. Loyalty schemes are often used to encourage customer 

extension and retention. You will be familiar with schemes run by retailers such as the 

Tesco Clubcard or Nectar schemes or those of airlines and hotel chains. Such schemes 

are often used for e-CRM purposes, as follows:

a initial bonus points for sign-up to online services or initial registration;

b points for customer development or extension – more points awarded to encourage 

second or third online purchase;

c additional points to encourage reactivation of online services.

● Popular products are offered for a relatively low number of points to encourage repeat 

purchases.

● Opportunities for gamification. Gamification involves applying game-based thinking 

to a brand, business or organisation to engage and develop loyalty. Research shows 

that game play itself stimulates the human brain (releasing dopamine) and the now 

proven mechanics from gaming can be brought into marketing, and especially mobile 

marketing. Some key features of gamification applied to digital marketing are:

– creative and concept to engage;

– game mechanics to encourage play (badges, points, leader-boards, levels, 

interactions);

– game dynamics can be altered to reward and even penalise;

– game currencies to provide the motivation – this can be financial, status, need for 

doing good, pleasure and influence.

Marketing applications of e-CRM 

 E-CRM systems support the following marketing applications: 

1 Sales force automation (SFA) . Sales representatives are supported in their account 

management through tools to arrange and record customer visits. 

2 Customer service management . Representatives in contact centres respond to customer 

requests for information by using an intranet to access databases containing infor-

mation on the customer, products and previous queries. It is more efficient and may 

increase customer convenience if customers are given the option of web self-service , 

i.e. accessing support data through a web interface. 

3 Managing the sales process . This can be achieved through e-commerce sites, or in a 

B2B context by supporting sales representatives by recording the sales process (SFA). 

4 Customer communications management . Managing communications integrated across 

different channels like direct mail, email, mobile messaging, personalised web messages 

and social networks. 

5 Analysis . Through technologies such as data warehouses and approaches such as 

data mining, which are explained further later in the chapter, customers’ characteris-

tics, their purchase behaviour and campaigns can be analysed in order to optimise the 

marketing mix. 

 CRM technologies and data 

 Database technology is at the heart of delivering these CRM applications. Often the data-

base is accessible through an intranet website by employees or an extranet by customers 

or partners providing an interface onto the entire customer relationship management 

system. Email is used to manage many of the inbound, outbound and internal commu-

nications managed by the CRM system. A workflow system is often used for automating 

CRM processes. For example, a workflow system can remind sales representatives about 

customer contacts or can be used to manage service delivery, such as the many stages of 

arranging a mortgage. The three main types of customer data held as tables in customer 

databases for CRM are typically: 

1 Personal and profile data. These include contact details and characteristics for profiling 

customers, such as age and sex (B2C), and business size, industry sector and the indi-

vidual’s role in the buying decision (B2B). 

2 Transaction data. A record of each purchase transaction including specific product 

purchased, quantities, category, location, date and time and channel where 

purchased. 

3 Communications data . A record of which customers have been targeted by campaigns 

and their response to them (outbound communications). Also includes a record of 

inbound enquiries and sales representative visits and reports (B2B). 

 The behavioural data available through 2 and 3 are very important for targeting 

customers to more closely meet their needs.

How to Use valuable keywords on YouTube

 

How to Use valuable keywords

on YouTube 

Like Google, when uploading videos to

YouTube, you need to consider what

keywords you’re going to be targeting

for that video.

It’s no use simply posting a video to

your YouTube channel and expecting

visitors to flock to view it in their

thousands, no matter how good you think the quality of your videos are.

Sure, many videos do go viral, but they

are extremely few and far between so

please don’t rely on this method alone,

unless you’re in a highly unusual niche,

or with one hell of a fantastic set of

videos!

For the rest of us, we need to think about

what our potential viewers will be

typing into the search engines to find our

videos, rather than simply relying on

word of mouth!

And clever as it is, Google is not able to

determine the exact content of our videos

without keywords to guide it, so we

need to give it a bit of a helping hand.

When you do use keywords, make them

valuable keywords, phrases that people

are actually typing into the search

engines! More on this in next section.

Tip: Do not treat Google and YouTube

the same!

Unlike Google, the rules are very much

more relaxed with YouTube and they

need to be treated as quite different

animals.

I liken YouTube to how Google was 10-

15 years ago; it’s like the Hot Tub Time

Machine of internet marketing!

Many of the strict algorithms that Google

have imposed on their own search

engine simply don’t apply to YouTube;

you have much more of a free rein.

 To

YouTube, Panda and Penguin

(and Hummingbird) are simply cute

animal videos!

People make the mistake of confusing

Google and YouTube and will often

tread a little too carefully when adding

keywords in their titles, tags and

descriptions for fear of getting

penalized.

Yes, there are things you shouldn’t do,

(like simply repeating the same

keywords over and over, and remember

to keep them all closely relevant to your

topic) but equally there are plenty of

things you can do to put yourself way

ahead of the competition.

You simply can’t use too many keywords

and, believe it or not, the more

keywords the merrier! This is all

because the search engine needs as many

clues as to what your content is about as

it can get, unlike traditional websites

where Google and the other search

engines can determine what your site is

about by simply crawling your text and

links.

So you need to exploit this Achilles’

Heel; very few people do! This is one of

the big secrets to getting a ton of free

traffic on YouTube. And choosing the

right keywords is the major difference

between both Google and YouTube

putting you at the top or the bottom of the

rankings.

Let’s start by looking at your Video

Filename.

Your Video Filename

OK, probably not the most crucial

element, but we should start as we mean

to go on. Although only a small factor in

the whole scheme of things, it’s thought

that YouTube still uses your video file as

one indicator of your actual video

content. And it’s all about the

aggregation of marginal gains!

Not only that, but it keeps your video

library organized if, later on down the

line, when your videos start to number in

the hundreds. 

There’s a whole bunch of ways to make videos and with all the latest technologies at your disposal it’s now pretty easy to put a video on YouTube

 

There’s a whole bunch of ways to

make videos and with all the latest

technologies at your disposal it’s now

pretty easy to put a video on YouTube 

Many videos are shot simply using their

mobile devices and uploaded straight to

YouTube using a variety of applications,

which can do a pretty amazing job, in

fact.

But if you trawl through the YouTube

catalog you’ll find that the quality of the

videos does vary widely. In a way, that’s

the beauty and fun of YouTube: its sheer

anarchic nature. And it would be pretty

boring if all the videos were the same

and all had the same production qualities

with perfectly polished video and sound,

all conforming to some arbitrary

standard.

Now I’m not saying you too can’t

produce crazy, wacky videos if that’s

your style and it fits in with your

particular niche. If such videos are

engaging and fun for your viewers, then

by all means go for it. 

But for me, I tend to make informational

or instructional videos and they need to

have certain qualities in order to be

effective. In short, they need to be clear,

concise, easy to understand and provide

information that’s of value to the viewer.

And as part of this process you also

need to remember to put in a bit of

yourself into the videos. This can mean

putting yourself in front of a camera and

simply talking or simply narrating a

screencast video.

What doesn’t work so well is posting up

a self-running PowerPoint presentation

to a music soundtrack. It’s simply not

emotionally engaging to the viewer. 

sure you know the kind of thing I mean –

a presentation is whizzing past you to

loud or simply inane music and you’re

left with a mainly stunned emotion at the

end of it – if you even make it to the end

before switching off!

People will start to turn away pretty

quick with these types of videos and they

simply won’t come back. There’s simply

no level of trust built up between you

and the viewer when you do it this way.

The viewer will feel that you’re not

credible and may even feel insulted that

you won’t put yourself in front of them

and show your personality in some way.

And this interaction is important.

The audience needs to know that they

can trust you and like you and what you

have to say. This is what keeps them

coming back for more. And this is what

will ultimately lead to more sales!

So whatever you do, follow this simple

rule:

Tip: Use your own face, or at a bare

minimum, your own voice in all of

your videos.

Other points to note are:

1. You don’t need to be Mr Magnetism

when presenting your videos. I

know I’m not! So don’t try to be

something you’re not. So use your

own personality. It may feel a little

weird at first if you’ve never done

it before, but the more you do it, the

easier and more natural it will

become.

2. Speak clearly and concisely into

the microphone. Many YouTube

videos have very poor quality

sound, and strangely poor sound is

almost more distracting to me than

poor quality video, particularly

with screencast videos. It sounds

such an obvious point I know but

you really can lose visitors over it.

(I have a list of microphones I

recommend in the Appendix section

to suit all budgets).

3. If you’re doing a screencast video

remove all clutter and distractions

from your desktop – so lose the 300

icons and the picture of a naked

woman from your wallpaper! You

should ideally have just a ‘My

Computer’ icon at the top left and a

pastel-colored screen, and that’s it!

4. Make sure there’s no outside traffic

noise, kids running around, or other

distractions.

5. Prepare a detailed script and do a

couple of run-throughs first.

Remember, you have as many takes

as you want! Too many um’s and

ah’s can be extremely distracting. 

OTHER NETWORKS AND SOCIAL APPLICATIONS YOU MAY KNOW

 

OTHER NETWORKS AND SOCIAL APPLICATIONS YOU MAY KNOW 

 We could fi ll an encyclopedia with all the large and small social-media 

sites and networks. Many platforms that were yesterday ’ s media darling

and are still massive by any measure have slipped out of the spotlight and 

lost market share to their rivals. Remember Friendster? Even MySpace, 

which at about 100 million users ranks third among the social networks, has 

taken on the aura of an also-ran (although the platform is showing signs of 

new life lately). But even second-tier platforms offer millions of devoted 

users. Third-tier platforms, if they serve a well-defi ned demographic or 

special interest that ’ s important to your business, should also play a role in 

your social-media program. Most of these platforms are looking for reve-

nue sources, so there ’ s a wide variety of advertising opportunities to test. 

 Warning: Don ’ t spread yourself too thin. You ’ re better off doing an 

excellent job on the few leading networks than dabbling ineffectively in 

every little network you can think of. 

1. Flickr

 If you serve a visual market, try uploading your images to Flickr, the 

Yahoo-owned photo-sharing site. Of course, Flickr is a must for photogra-

phers and other visual artists, as well as models—it ’ s a great place for an 

online portfolio, and the network of millions could be a promising audi-

ence. Travel businesses and tourism bureaus should be uploading sumptu-

ous photos of their destinations. Fashion companies like Urban Outfi tters 

have been active on the site for a long time. 

 There ’ s very little statistical or case-study evidence on the effectiveness 

of Flickr for business, but it costs nothing to get on, upload a number ofimages, join several groups focused on your market or area of specialty, 

friend others, and see where it goes. One happy side effect of joining Flickr 

could be that your images start ranking for certain image-related searches 

on Google. 

 Beware, though: Although Flickr has fi lters and policies in place to try to 

keep pornographic and inappropriate content under wraps, it is evidently a 

big portion of what goes on at Flickr, and it can emerge somewhat without 

warning when you are connecting with new people and groups on the site. 

 Explore Chicago has a photo pool on Flickr of more than 11,000 images 

of the city, its people, and its happenings. 

 Urban Outfi tters has been using Flickr for years for posting and spreading 

images of its clothes, models, and customers wearing UO and to otherwise 

support its brand image. While the UO Flickr group is a loosely organized 

assemblage of professional and amateur photographers, as well as ordinary 

customers, the administrator ’ s guidelines are clear: “Please post only UO 

store design/window dressing, items purchased from the store, posing in 

UO clothing, catalogs/advertising campaigns, and photo shoots.” 

 The Nikon Digital Learning Center on Flickr is a great example of perfect 

alignment between a brand, its audience, and the social-media platform. 

Here, Nikon connects on the world ’ s biggest photo-sharing service with the 

world ’ s passionate photographers. Its primary purpose is not to sell cameras, 

but to share information, build a user community, and promote image shar-

ing around the emerging art and science of digital photography. 

 Unlike most Flickr communities, where user comments focus solely on 

the images, Nikon ’ s community supports many active discussions on top-

ics like “Has anybody used an aftermarket fl ash like Nissin on a d90?” By 

providing a home for conversations like these, Nikon makes itself a leader 

and a trusted brand in the space, helps enlarge the market for serious digi-

tal photography—and eventually, indirectly, boosts its business. 

2. Foursquare

 Especially if you operate bricks-and-mortar retail locations, local search 

results served up on mobile devices are your most exciting and fastest-devel-

oping opportunity. And like everything else, local search is getting social. 

 Foursquare is a popular mobile app that lets users “check into” physi-

cal locations like hotels, restaurants, and even doctors ’offi ces. Users can 

search Foursquare for local businesses within a given radius of their 

location. Built into the application are social-networking elements called 

friend fi nder and social city guide.

Thanks to these social-media features, whether she ’ s in a hair salon, an 

autobody shop, or a diner, a Foursquare user can post status updates 

about the place, which are broadcast across Foursquare and also inte-

grated with her Twitter or Facebook feed. Similar to Yelp or TripAdvisor, 

she can share her ratings and reviews of the business, ask questions about 

it, and see whether other members of their social network recommend 

the place. 

 Foursquare incentivizes individual users to explore their surroundings 

and post their fi ndings for all to share and it uses what it calls “game 

mechanics” (including the awarding of virtual “mayor” titles!) to incentiv-

ize people: “Our users earn points, win mayorships, and unlock badges for 

trying new places and revisiting old favorites.” 

 “One of the main reasons it ’ s gaining so much buzz is because those 

who ‘check in’ to places can instantly share these updates on Twitter and 

Facebook,” says Chad Capellman of the Boston-based agency Genuine 

Interactive. “This, in turn, means literally millions of people are receiving 

these updates. The latest numbers, extrapolated by Mashable, show that 

the service is approaching one million check-ins per day.” 

 In turn, business owners can use Foursquare to reach their mobile cus-

tomers by offering Foursquare discounts and prizes. The application offers 

owners “venue analytics,” like how often their business profi le or their 

specials are accessed. 

 Establishing a presence on Foursquare is free and easy, and the benefi ts 

are likely to grow along with the importance of smartphones and PDFs in 

our daily lives. Capellman offers step-by-step advice on how businesses 

can get the most out of Foursquare: 

 1. Claim your business location and verify you ’ re the owner. 

 2. Describe the benefi ts of your business (e.g., free parking, vegetarian 

menu, Spanish-speaking . . .) in the form of tags. 

 3. Write additional content about your business (descriptions of your services, 

customer-service philosophy, etc.) in the form of tips. Reviews of your 

business submitted by Foursquare users will also appear among your tips. 

 4. Get connected to other users. “Search all of the businesses within a 

mile or two of your practice, and make friend connections with people 

who have checked into those businesses,” advises Capellman. “In my 

own experience and in conversations with others, people seem more 

likely to reciprocate connections through Foursquare than they would 

through LinkedIn, Facebook, or even Twitter.

3. Groupon

 Groupon is a new group-buying concept, focused on local retail stores 

and attractions. Groupon members are offered big discounts—but only if 

a minimum number of other members sign on too. 

 Gap ’ s 50%-discount offered on the Groupon in August 2010 rang up a 

reported $11 million in sales, and in the process demonstrated some best 

practices for e-commerce in this new, more social Web 2.0 era. 

 According to Groupon spokesperson Julie Mossler, the Gap offer was the 

most successful Groupon promotion to date, ringing up as many as 532 

transactions per minute during its busiest periods Thursday morning. 

was so intense that Groupon had to manage the load by directing visitors to 

alternate landing pages in order to avert a server crash. 

 What I fi nd impressive about the Gap campaign is the sheer number of 

coordinated moving parts cross-promoting a single offer: 

• 15 million Gap and Groupon e-mail subscribers receive the offer, start-

ing at midnight and in staggered fashion throughout the day 

• The offer is tweeted to the 180,000+ followers of Twitter ’ s @earlybird

promoted tweet stream 

• Gap tweets the offer to its 30,000+ followers 

• Groupon manually tweets and Facebook posts on its pages dedicated to 

each of the 85 geographical markets where Gap ’ s offer is valid 

• Gap posts the offer to its 606,000 fans on Facebook

• Groupon ’ s 1,500 affi liate partners post Gap ’ s offer on their Web sites 

• A sponsored post appears above the fold on Digg

 All in all, it was a big win for Gap, and impressive evidence of how 

online promotion and social shopping, courtesy of Groupon, can drive 

sales to bricks-and-mortar stores. 

 “Our customers had been asking us to feature a national retailer, and the 

Gap deal was a perfect fi t for Back-To-School and even pre-holiday shop-

ping,” Mossler explained. “Gap even has stores where Groupon hasn ’ t 

launched yet; so, it ’ s a perfect way to reach new and existing Groupon fans 

with a deal they won ’ t fi nd anywhere else.” 5

4. iLike

 iLike is a “social music discovery service” that was bought by MySpace 

in 2009. With more than 60 million users, it ’ s a destination in itself, but more 

importantly it ’ s the leading music application on Facebook, Google, Orkut, 

hi5, and Bebo. If you ’ re a musician, iLike is a great distribution channel. If 

you serve a market that is into music, you can add interest to your Web site 

or your social-media pages by integrating with iLike ’ s developer tools. 

5. Meetup.org

 Meetup is the world ’ s biggest online network devoted to helping people 

organize in-person get-togethers of local community groups. 

 Since I think the bridge between online social media and offl ine action 

is powerful. 

HOW TO SUPPORT MULTIPLE SMALLER NETWORKS

 

HOW TO SUPPORT MULTIPLE SMALLER NETWORKS 

 We ’ re still at the stage in social media where businesses are getting a 

great deal of attention for building very large networks on Facebook and

for attracting 1 million-plus fans on Twitter. But there ’ s an exciting, and 

potentially even more powerful, possibility: building lots and lots of 

smaller networks. 

 Dunbar ’ s Number is a theoretical limit to the number of people with 

whom we can maintain stable, positive social relationships. It ’ s named 

after the British anthropologist Robin Dunbar, who fi rst proposed it based 

on his studies of primate groups, primitive human tribes, and historical 

records of medieval villages. 

 These are groups in which everyone knows everyone else and has a gen-

eral sense of their communal identity. Such groups are stable and cohesive, 

with little need of formal rules or restrictions. While no precise number 

has been settled on, 150 is a commonly cited estimate, and one mentioned 

in Malcolm Gladwell ’ s best-selling book The Tipping Point , which brought 

Dunbar ’ s concept to millions. 

 So, for a group to function as a strong, cohesive community—in which all 

the members recognize one another and share a sense of group identity and 

solidarity—it needs to stay relatively small. Dunbar ’ s number was an obser-

vation of groups in the physical world, but I think it has meaningful implica-

tions in the online social-media world. Two factors are at work here: 

 One, in a very large social-media group, each member knows relatively 

few other members; while there are no upper limits to how many people 

can “like” Shakira on Facebook, there is a real limit to how many relation-

ships any member can maintain with his or her fellow Shakira fans. As 

Phil Terry said , these groups function more like mailing lists 

than true communities. 

 Two, with most social-media groups brought together by a company or 

organization, the bigger they get, the harder it is to “message” the mem-

bers with relevant content. In the Shakira group, sure, everybody loves 

Shakira, and messaging is always going to be easy. But for any organiza-

tion serving multiple markets and different demographics with several dif-

ferent products, it becomes harder. 

 Now let ’ s think about the power and cohesion of smaller social-media 

groups dedicated to very specifi c communities. 

 I spoke with a marketing director of a bicycle and walking-tour com-

pany who talked of an emerging practice in his industry: They create doz-

ens and dozens of Facebook groups a year, dedicated to each destination 

and its specifi c dates. So as soon as they ’ ve booked a tour, travelers are 

invited to a Facebook network created just for them—the June 12-19 Tus-

cany bicycle tour group, say, or the February 2-9 Machu Picchu Inca Trail 

trek. In the weeks or months prior to their departure, they get to know their

tour leaders and their fellow travelers-to-be. They ask questions about 

what to pack, or how to train, recommend travel books to read, talk about 

past vacations, and upload pictures of themselves. 

 By the time they assemble on their fi rst day in Tuscany or Peru, they 

already feel like old friends, hugging and having a grand time. Group 

dynamics can sometimes be awkward in the fi rst couple days of a tour, but 

now the Facebook effect seems to erase that tension. The marketing direc-

tor told me that customer satisfaction has been off the charts since they 

kicked off the social-media program. 

 Envision these same travelers after their trip, posting their fond memo-

ries and uploading their vacation photos, hearing from the tour leaders, 

staying in touch, and perhaps planning future trips together. I can imagine 

“graduating” the members of this Facebook group into a destination-spe-

cifi c “alumni” group—say all the company ’ s former Tuscany travelers, and 

messaging them about upcoming tours to that and other destinations. 

 Any cohesive and focused group on Facebook can also be mirrored by a 

specifi c Twitter feed, so for example you could develop dozens of Twitter 

feeds based on information germane to each specifi c bike tour. Perhaps it 

would be of interest to the friends and family back home to hear several 

daily tweets about the weather and riding conditions, the lunch at the vine-

yard, the cozy Tuscan villa—these feeds could spread the word across a 

small but tight network and would probably inspire some future customers. 

 Building out several mini-communities is a daunting task, but the payoff 

could be huge. It ’ s an especially attractive approach for camps, retreats, 

classes, and schools. My alma mater, Middlebury College, has built Face-

book pages for each and every graduating class. That ’ s a highly effective 

way to keep classmates connected and thinking fondly of their school, 

posting updates for the alumni magazine, being aware of alumni events 

and reunions—and, no doubt, responding to fund-raising appeals. 

CAUSES, CONTESTS, AND GOING VIRAL 

 The California Travel and Tourism Commission launched a trivia game, 

promoted on its social-media pages, whose winners receive free airfares 

on Southwest or even a California vacation package. To sweeten the pot, 

California Tourism gave players extra points if they e-mailed a link to their 

friends via Facebook Connect. 

 I ’ ve mentioned a number of times the importance of hitching your 

social-media wagon to a “big idea,” a larger cause or lifestyle interest that 

goes beyond merely hawking your wares.

With its Chase Community Giving program, Chase uses its Facebook 

page to collect votes for which 200 charities will receive grants ranging 

from $20,000 to $250,000. 

 These examples get at a simple fact of social-media marketing: Your 

reach multiplies exponentially when you tap the power of the crowd. Giv-

ing fans something to “like” generates strong growth. But giving fans 

something to win, something to vote for, explicitly rewarding them for 

spreading the word—that ’ s what generates viral growth. 

Text to Win on the Scoreboard . Fans attending Chicago Bears games at 

Soldier Field responded to scoreboard prompts to text to a short code to win 

six free wings at Chicago area Buffalo Wild Wings locations. The text mes-

sage included a mobile Web site with store locations and promotion info. Big 

venues are a fantastic place for launching scoreboard text-message promo-

tions to extend sponsorships. Add a third dimension to in-arena promotions 

using SMS and the mobile Web. If you have a billboard at any arena, it is a 

perfect place to reach a captive audience with a text promotion to drive post-

game or in-game retail traffi c. You also have the opportunity to deliver ongo-

ing product messaging to consumers who opt in for your offer. 

Sin to Win. Mobile users are now turning to their phones to confess 

their worst sins. Virgin Mobile in 2004 introduced Sin to Win, in which 

customers were invited to send in their sins in order to relieve themselves 

of a guilty secret for a chance to win prizes for the best confessions. More 

than 10,000 people sent in their SMS confessions! 

 Budweiser donates money to Keep America Beautiful every time some-

one texts “RECYCLE” to “BEERS” (23377) up to a total of $50,000. 

The effort, part of the company ’ s Budweiser ’ s Better World initiative, 

spreads socially and draws attention to Anheuser-Busch ’ s conservation 

efforts. Currently the company recycles 99 percent of its solid waste, mak-

ing it one of the world ’ s biggest recyclers of aluminum at 800 million 

pounds a year. While production has grown, its water use has declined—

and renewable fuels are powering more of the brewing process. The com-

pany also keeps alive its tradition begun by Adolphus Busch in the late 

1800s of recycling the brewer ’ s spent grains into cattle feed. 

 Bud ’ s environmental text-messaging campaign, managed on the MsgMe 

platform from Waterfall Mobile, is just one of many uses Anheuser-Busch 

has found for SMS messaging. For instance, Bud relied on text voting to 

pick 32 winners worldwide to be sent to watch the FIFA World Cup soccer 

matches in South Africa and live in Bud House, a deluxe Cape Town villa. 

After the voting, the campaign was integrated with an online reality show 

anchored on a custom YouTube channel, and each of the 32 “cast members. 

HOW TO SET GOALS FOR YOUR SOCIAL-MEDIA PROGRAM

 

HOW TO SET GOALS FOR YOUR SOCIAL-MEDIA PROGRAM 

 For most everything they do, marketers have a particular goal enshrined 

as the driving purpose of their campaigns, the key metric to be tracked for 

purposes of measuring return-on-investment. For direct-response cam-

paigns, the metric will be sales or qualifi ed sales leads. For PR people, the 

key stats will be media mentions, reach, or impressions, and perhaps the 

paid-ad cost equivalent of free ink. Brand marketers will measure their 

impact by tracking market share, brand recognition, and brand attitudes. 

 But pity the poor social-media manager. She can rightly expect her 

efforts to pay off in any and all of those areas, but unpredictably, fl eetingly, 

and probably without leaving clear footprints. 

 And yet while most organizations are happy to indulge in some explor-

atory tire-kicking of a new frontier like social media, before any serious 

investment of time and money is made, top management will expect there to 

be some tangible goals and measurement of progress toward those goals. 

 As Dale Nitschke, former president of Target.com , puts it, “You cannot 

move resources to this new channel unless you can measure some of the 

results. 

Let me say right away that too shortsighted a focus on metrics—or too 

ambitious a goal—will doom a promising social-media program to a pre-

mature death. Just because you won ’ t vacuum up as much revenue as Dell 

doesn ’ t mean it ’ s not worth doing. What ’ s the value of being where your 

most Web-savvy and interconnected customers are? What ’ s the value of 

listening to what matters to them, of interacting with them directly and 

being a part of their online social circle? “Initially, it ’ s very qualitative,” 

points out Best Buy ’ s Mark Mosiniak. “Does it mean something to the 

customer? That ’ s very hard to measure.

What Metrics to Watch 

 You can track key performance metrics yourself through your analytics 

package, and you can augment your own tracking by enlisting specialized 

social-media tools like Trendrr, TruCast, Radian6, or any of the several 

others cropping up daily. 

 Most external social-media tracking tools focus mainly on sentiment 

tracking—what ’ s being said about your brand. They may employ spider-

ing and screen-scraping technologies to fi nd references to your brand or 

products, or those of specifi ed competitors, across the blogosphere and 

social mediascape. These services are not unlike Google Alerts, which fi nd 

references to your keywords in news releases, but they typically overlay 

trending over time, charting options, and other tools. 

 But don ’ t overthink things, either. The simplest approach may just be to 

issue unique discount or promotion codes any time you promote offers on 

a social network. “If you have a specifi c promo code you use on Facebook 

and Twitter, that ’ s the simplest form of tracking.” 

 Here are touchpoints on your Web site to watch: 

• Visits from social-media sites 

• Leads, inquiries, and catalog requests from social-media sites 

• Newsletter signups from social-media sites 

• Orders and revenue from social-media sites 

 Note: since these stats measure what someone does on your site after 

visiting your site, use caution, and remember that “correlation does not 

prove causation.” Many people may bop back and forth from your e-com-

merce site to your blog to your Facebook page and back again before mak-

ing a purchase. Don ’ t be too quick to say “Ha! Facebook caused a sale!” If 

you ’ re not doing multichannel tracking, you ’ ll never know. 

customer really came in the door in response to your trusty direct-mail 

catalog.

 Other metrics track your social networks and your impact on the blogo-

sphere, Twittersphere, and the Web at large: 

• On Facebook fan pages, Page Insights is a section page authors can track 

that measures post quality; the post quality rating is a measure of the 

percentage of users that have interacted with your page (“liking,” com-

menting, etc.). The star rating shows how your level of interaction com-

pares your page with others with similar-sized fan bases. 

• Track fans, followers, connections, or other measures of your network 

size. It ’ s easy and provides a useful indicator of your footprint on social 

media—but I wouldn ’ t read much into the data. 

• Track mentions of your brand name and key products using Google 

Alerts, Tweetmeme, and other social-media “listening” tools. 

Social-Media Command Center 

 What you watch is important. But until I learned about Gatorade ’ s 

social-media “Mission Control” room, I didn ’ t realize how important it is 

how you watch . 

 Gatorade Mission Control is a slick, glass-walled room glowing with 

the light of six huge, wall-mounted monitors. Other monitors and worksta-

tions cover a single curved desk, where as many as fi ve marketing staffers 

keep their eyes glued to Gatorade ’ s place in the social-media conversation, 

in real-time. One monitor charts tweets referencing the Gatorade brand 

and trending topics. Another shows several line charts tracking blog men-

tions of Gatorade as well as three rival brands. 

 The displays, custom designed for Gatorade parent company PepsiCo 

by IBM and Radian6, are visually impressive. But are they helping the 

company manage? 

 Gatorade ’ s Carla Hassan, senior marketing director for consumer and 

shopper engagement, answers an emphatic yes. 3

 For instance, in monitor-

ing responses to its Gatorade Has Evolved campaign, Mission Control 

quickly saw heavy social-media buzz developing around a song by rap art-

ist David Banner. Within 24 hours, the company had worked with Banner 

to release a full-length version of the song and distribute it to Gatorade 

followers and fans on Twitter and Facebook. 

 Gatorade ’ s tools are being used to tailor Web sites and landing pages to its 

top-performing topics and videos, based on social-media conversations. As

reduced its landing-page exit rate from 25 percent to 9 percent. 

 I ’ d also suggest that merely establishing a command center highlights 

the importance of social media within a business—making it more fun, 

more engrossing, and more likely to percolate into the culture of the com-

pany as a whole. 

 Hassan says the goal of Mission Control is to “take the largest sports brand 

in the world and turn it into the largest participatory brand in the world.” 

 To that end, Gatorade isn ’ t just monitoring the conversation, but partici-

pating in it as well. The company hosts events on Ustream and Facebook in 

which a sports nutritionist answers questions from fans. During the 2010 

Super Bowl, Gatorade invited fans to interact with some of its NFL stars 

through Ustream as they tested the new Gatorade G Series Pro drink. 

 If successful, the Mission Control strategy is likely to spread to other busi-

nesses within PepsiCo, according to Bonin Bough, director of global social 

media at the company. “We believe what we ’ re building here is an example 

of a sandbox of tools and processes we can use across the organization.” 

 To get a glimpse of the social-media command center in action, go to 

YouTube and search “Gatorade Mission Control.” 

WRITING A SOCIAL-MEDIA BUSINESS PLAN 

 You ’ ve already spent a lot of time on social media at this point, and 

now you ’ re getting ready to spend more money. What exactly are you 

going to achieve by being active in social media? And how are you going 

to achieve it? 

 Just as you would write a business plan for a new entrepreneurial ven-

ture, or craft a marketing plan for a major new product or category launch, 

you now need to write your social-media business plan. 

 You ’ re not trying to qualify for a bank loan, so don ’ t knock yourself out. 

Take the exercise seriously, but try to keep the document to fi ve to 10 

pages. The purpose of planning is fourfold: 

• Force yourself to think broadly and take the long view about your proj-

ect and its objectives. 

• Create a roadmap to follow with tangible goals. 

• Sell the project internally to whoever must approve funding. 

• Give yourself a framework to return to and revise as the project goes 

along.

The key ingredients for a good social-media business plan: 

Executive summary : Summarize why participating in social media is so 

important to your company, what your broad strategy is, and what goals you ’ ll 

achieve. 

Mission statement : Restate the company ’ s mission in light of the unique 

opportunities and nature of social media. 

Competitive and market analysis : Since about 80 percent of the online 

public is using social media, calculating the size of the market is a waste 

of time, although impressive. 

The 

main question: What are your chief 

rivals already doing on the social-media networks? How many fans and 

followers do they have, what campaigns are they running, are they driving 

PR, revenue, search traffi c, etc.? 

Marketing plan : Describe what platforms you ’ ll participate in right 

away, and show a rough time line for expansion into new platforms and 

opportunities.

Operations plan : Show how you ’ ll staff the effort and what the team ’ s 

responsibilities and deliverables will be. Describe your posting frequency, 

customer-service approach (CRM), and brief rules of engagement. Address 

how you ’ ll put safeguards in place so that social media won ’ t be a source 

of legal or brand-image problems. This is also the place to mention soft-

ware, consultants, domain names, and other things you ’ ll need to buy. 

Goals and objectives : Unlike a typical business plan, whose upside is 

forecast in the fi nancials, your social-media business plan will need to describe 

a number of important and quantifi able goals that are nonmonetary. See the 

section above on analytics for ideas. Project the number of new e-mail sign-

ups and calculate their value, do the same for fans and followers, or external 

links for search-engine value, dollars trackable to social-media campaigns, 

PR placements, or brand mentions. Try to separate the goals of outreach (to 

prospects and the media) from the goals of loyalty and retention (of existing 

customers). A good social-media program will yield fruit in both regards. 

Financials : These will be fairly simple. You ’ ll need to have budget num-

bers on the expense side and some quantifi able goals—that may or may 

not include sales—on the ROI side. Charts forecasting traffi c, fans, media 

mentions, or revenue are helpful tools both to sell the concept. 

HOW USER GENERATED CONTENT

HOW USER GENERATED CONTENT 

 Encouraging your Web site visitors to post their own comments, product 

reviews and ratings, and other material on your Web sites has three great 

benefi ts: 

 

1. It engages your customers emotionally and stimulates a stronger, deeper 

relationship with you and your brand. Even negative postings can serve 

a positive purpose by opening up a customer-service conversation that 

solves the initial problem and leaves the customers happier than they ’ d 

have been if no problem had occurred in the fi rst place. 

 

2. On e-commerce Web sites, customer-supplied reviews and ratings are 

given more credibility than any claims your company can make. 

 

3. Customer-generated content is a triple boon from a search-engine per-

spective. You ’ ll have customers creating new and often highly ranked 

“spider food” while you sleep. Their postings will rank well for the 

misspellings, slang, and informality that you would never use—as well 

as the superlatives you might never give yourself permission to use. 

And fi nally, customer-supplied content can attract valuable links from 

blogs and other external sites. 

 If your company is conducting e-commerce, that is, selling products 

online, introducing customer-supplied ratings and reviews is a no-brainer. 

Many e-commerce platforms now come with reviews modules built in, 

and third-party tools like PowerReviews and Bazaarvoice can be readily 

integrated with most sites. 

 Customer-supplied reviews are also a staple for restaurants, movies, in 

the travel and tourism business, and elsewhere. 

 In a survey of 1,000 online shoppers, 16 the E-tailing Group found that 63 

percent of shoppers consistently read product or service reviews before 

making a buying decision. Asked to name their top sources of online 

reviews, here is how they responded.

 Gardener ’ s Supply Company, a leader in equipment, supplies, and spe-

cialized tools for gardeners, partnered with PowerReviews to support cus-

tomer ratings and reviews on its site, More 

than 70,000 reviews have been submitted to date, a testimony both to the 

size and fervor of Gardener ’ s audience and the company ’ s diligence about 

asking for reviews; a couple weeks after any order, Gardener ’ s pushes 

product-specifi c e-mails, requesting feedback and linking directly back to 

the product page where a review can be submitted. Amazon does much the 

same—it is now best practice to solicit post-purchase ratings and reviews; 

without asking directly for reviews via e-mail, the growth of on-site reviews 

is painfully slow to nonexistent. And nothing kills an incipient customer-

ratings program faster than page after page after page exhorting visitors 

“Be the fi rst to write a review!” 

 Gardener ’ s uses review stars all over the Web site—product pages, cat-

egory views, search results, and in the e-mail program. Customer testimo-

nials also show up prominently, paired to the specifi c product they 

describe—or, in the case of testimonials referring, say, to a beloved Moth-

er ’ s Day gift, to any timely holiday or occasion. 

 “These reviews are completely authentic,” says Harris, “and they are 

completely perfect for the product or the occasion.” 17

 Case studies on the positive impact of reviews and ratings are compelling: 

• 77 percent of online shoppers use reviews and ratings when purchasing 

(JupiterResearch, August 2006). 

• The conversion rate nearly doubled, from 0.44 percent to 1.04 percent, 

after the same product displayed its fi ve-star rating ( Marketing Experi-

ments Journal ). 

• Shoppers who browsed the Bass Pro Shops “Top Rated Products” page 

had a 59 percent higher conversion rate than the site average and spent 

16 percent more per order. 

• Shoppers who browsed the “Top Rated Products” page at PETCO had a 

49 percent higher conversion rate and 63 percent larger AOV. 

 Bazaarvoice ’ s “Social Commerce Report 2007” found that user-submit-

ted product reviews and ratings boosted site traffi c, sales conversion rates, 

and average order values. Among e-commerce retailers in the United States 

and Europe who deployed reviews and ratings tools, 77 percent reported 

upticks in traffi c, 56 percent reported improved conversion, and 42 percent

reported higher AOV. Only 5 percent to 9 percent reported that ratings and 

reviews tools impacted their performance negatively—presumably because 

of the presence of negative feedback. 

 For online stores, ratings and reviews are the ideal user-generated con-

tent (UGC). Reviews can be a boon for your search-engine optimization 

efforts. Every time a customer rates one of your products, they create a 

new Web page linking to your product—enhancing your search-engine 

visibility even while you sleep. By the nature of user-created content, user 

reviews are conversational, informal, rich in the keywords searchers actu-

ally use, and often full of the kind of misspellings, slang, and colloquial-

isms that you as a brand-conscious marketer would never use—but which 

search-engine spiders gobble right up. 

 You can choose to syndicate your new product reviews out to RSS feeds 

and comparative shopping platforms like PowerReviews ’ Buzzillions, giv-

ing you additional exposure to Web shoppers. Expect to see a lot of addi-

tional convergence between user-submitted reviews and comparative 

shopping. Both are growing fast and will drive an increasing share of your 

traffi c. 

 Another emerging syndication platform for your product reviews is the 

new “rich snippets” functionality now being supported by Google. Rich 

snippets are a way to mark up the source code of your Web site to tell the 

search engines more about your products, reviews, and other fi elded data. 

Starred ratings and reviews already are beginning to appear on the Google 

search-engine results pages. 

 Currently, rich snippets Web standards exist for products, recipes, reviews, 

videos, people, and events. Clearly, many of these are perfect fodder for 

user-generated content. Already, Yelp, LinkedIn, TripAdvisor, UrbanSpoon, 

Rotten Tomatoes, and many other top UGC Web sites are using rich 

snippets. 

 “We ’ re convinced that structured data makes the Web better, and we ’ ve 

worked hard to expand Rich Snippets to more search results,” says Google. 

 Google ’ s Matt Cutts, the head of the search-quality and anti-spam team, 

is a big fan of the concept: “This one is destined to be a favorite for Web-

masters. Essentially, you use open standards (RDFs and microformats in 

the initial launch) to add additional markup to your Web pages . . . Then 

when Google thinks it will help users, we show a ‘rich snippet’ that has 

more information than a typical search snippet.” 18 Examples include star 

ratings, prices for products, serving sizes, and nutritional info for reci-

pes—all called out right on the search results pages and potentially har-

vested and syndicated elsewhere on the Web.

quickly solve the customer ’ s problem. If you do, the customer will likely 

volunteer to retract or edit the nasty review. 

 And as the old chestnut of the customer-service industry goes, the cus-

tomer who has a bad experience that you resolve wonderfully becomes a 

more loyal customer than the one who doesn ’ t have a problem in the fi rst 

place!

 Conversion rates are higher on products with less-than-perfect reviews 

(fewer than fi ve stars) than those without reviews at all, indicating that the 

customer feels that the product has been properly reviewed by other 

customers.

 This isn ’ t just about the product pages of your Web site. You should also 

leverage the value of customer-created ratings and reviews by: 

• Using them in your e-mail campaigns. 

• Syndicating them as RSS feeds. 

• Syndicating them to shopping portals (the third-party ratings-and-review 

tools are already cutting deals with comparative shopping sites, and you 

can expect more to come). 

 When using star-ratings and reviews in its e-mails, pet-supply retailer 

PETCO realized a fi ve times increase in click-through rates. 

 In A/B tests by Golfsmith, promotional e-mails that featured the star rat-

ings and reviews of top products drove revenues 46 percent higher per 

campaign.

 The takeaway is that customers trust and respond well to the voices of 

their fellow consumers. By transforming your marketing into a Web 2.0 

customer-to-customer communication, you can tap into that trust, and your 

results will benefi t.