Infosys-Oracle Blog : Revisiting Customer Loyalty from a 'social' angle

Guest post by
Srinath Pydimarri, Senior Consultant, Infosys

I've been a loyal customer of a particular Indian bank, whom I'd call Bank XYZ for convenience sake. My perception of loyalty stems from the fact that I've been banking with them for the whole of my professional life, have taken multiple loans, setup FDs and have their credit card. I've always been prompt at paying my EMIs as well as credit card bill. In fact, some of their Customer Support executives address me as a 'privileged customer'. However, what pains me is that they haven't increased the credit limit on my credit card. It surely has left me surprised and disappointed. In fact, I keep advising my friends to take the credit card from a competing bank. Something which I tend to do using social media as well - Facebook and Twitter. Interestingly the bank still perceives me to be a 'loyal' and a ' privileged' customer. I believe this is a scenario which commonly occurs across all industries and with all types of customers (retail / business etc). 'Social' customers today are increasingly using social media to constantly share their opinions/displeasure, amongst other things, about the brands / products they use. Such a behavior is nothing unlike the Word of Mouth (WoM) that organizations have known for a long time now. The only difference is that this has become easier, more prevalent and has greater impact, thanks to the availability and extensive usage of social channels.

From a Customer Loyalty standpoint, organizations have always focused on the purchasing behavior of the customers. Loyalty scores typically take into account the frequency, value, 'recency' of purchases and the duration of association with the organization. However, loyalty models don't include the social behavior aspect; more so because of lack of mechanisms to track customer social behavior and tag it to existing loyalty models. We see this as a significant gap as organizations would miss a great opportunity to identify who their true 'brand loyalists / ambassadors' and who their 'brand detractors' are. In our opinion, this insight is extremely important for organizations to customize their loyalty programs such that they reward their brand loyalists and placate the brand detractors - both efforts aimed at increasing the customer life-time value and reduce churn.

It may come as a pleasant news for organizations to know that including the social aspects of a customer - profile / behavior etc, in ascertaining customer loyalty can be made a reality. We believe the following 3-step approach can help organizations in this aspect -

Identifying the influencing behavior and sentiments from customer conversations
This would require the employment of a robust Social Analytic engine. There are quite a few Social Analytics tools available today that are capable of recording sentiments (positive, negative etc.) based on customer posts on a particular brand / product in social channels. In addition, some of these tools can also identify 'influencers' amongst the customer community - people whose opinon/WoM has greater impact on peers in their network. These sentiment and influence analytics algorithms provide two key insights related to a customer - brand perception and influencing ability. These two insights, have a greater value-add from an organization perspective when combined together (For e.g. identify customers who have strong positive perception of an organization's brands and is in fact capable of influencing his network strongly).
Capturing social behavior insights at individual customer level and integrating with existing enterprise data
Customer insights on their brand perception and influencing abilities, as stand-alone data points, may not serve marketers to a great extent if a detailed customer profile isn't available. Such a need makes integration of social customer insights from Social Analytics engines into existing customer records / profiles within enterprise CRM systems an imperative. It helps create an enhanced customer model which takes organizations closer to achieving a Customer 3600 view. From a technical perspective, it needs regular run-of-the-mill integration between Social Analytics tools and enterprise CRM, and some amount of configuration within CRM suites to accommodate social data.
Enhance loyalty models to include social attributes
Many organizations are already using Business Intelligence (BI) applications or Loyalty modules in tandem with their CRM to be able to profile their customers from a loyalty perspective. Comprehensive loyalty modules, which include customer profiles as well as purchasing history, are employed for this purpose. It'd be fairly easy to extend these models to include the social attributes which could now be available as part of customer profile information itself. A key aspect of this exercise would be to arrive at a suitable loyalty model - defining weights for the social attributes, loyalty calculation mechanisms, defining new loyalty categories etc. One would be surprised at the additional, deeper customer insights that can be observed as a result of this exercise.

In fact, at Infosys we're developing solutions that validate the feasibility and value add of this concept and we'd love to hear your thoughts on this.

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