Sunday, August 28, 2011

The Emerging RFMInow Model for Customer Service, Marketing and Social Media

Do you gift people for praising you in social media? Do you over-deliver to particular customers because of their sizable social media footprint?  Should you? While it is not standard operating procedure for many brands, there have been great examples of companies who listen to social media, recognize opportunities to create viral goodwill, and act in very real and immediate ways. Done right, the results of these actions are greater than the sum of their parts.

Perhaps the earliest such example that comes to mind was Michael Arrington's April 2008 dustup with Comcast. Upset that his internet service was down, the well-known tech blogger turned to Twitter and started complaining about Comcast. Turns out Comcast was listening. Frank Eliason, a former Comcast executive who is now with Citibank, reached out by phone to find out what he could do to help. The situation pleased Arrington and garnered great media attention.

Wheat Thins sent a delicious box
of snacks to thank me for blogging
about them. I loved the snacks &
my cat enjoyed the box they came in.
Three-and-a-half years later, similar tales of social media disasters and opportunities turned into PR coups are more frequent, but this sort of data gathering, connecting, listening and acting are still not par for the course for most companies. This is why Morton's Steakhouse earned plenty of WOM and media attention (including in UK's Daily Mail, PC Magazine and Forbes) by showing up at an airport to give a steak to a hungry traveler who tweeted a joking plea. And last week I had my own "aha" moment in the form of a gift of  Wheat Thins--a thank you for blogging about Wheat Thins' program of thanking people who mention them in social media. (How meta!)

Are these authentic signals of gratitude or just good business? Is there a difference? Would Morton's have shown up bearing a delicious steak had the Twitterer not been Peter Shankman, who has 100,000 followers on Twitter and a Klout score of 88? Peter thinks so; he blogged, "I’m a bit of a steak lover... (and) I’ve developed an affinity for Morton’s Steakhouses... I’m a frequent diner, and Morton’s knows it... I think it’s about Morton’s knowing I’m a good customer, who frequents their establishments regularly."

Peter suggests that this act of generosity wasn't due to his social media status but his RFM at Morton's. RFM is a broad way of considering the value a specific customer has to a business; it stands for Recency, Frequency and Monetary Value. The more recent a customer's transaction, the more frequent the purchases and the greater the spend, the more value the customer represents to the business.

I think Peter is naive (or feigning it) if he thinks Morton's would drive 47 miles roundtrip to deliver a steak to a good customer whose tweet reached just 50 followers. However, I also do not believe that Morton's would have lifted a finger to help Peter if he were not a regular tweeter about steaks and a great customer of the steakhouse chain. It was the combination of Peter's loyalty to Morton's, his social media influence and his instant of need that brought about a serendipitous moment for customer and brand.

Peter's situation represents the new model for integrating customer service, social media, marketing and public relations--a new model that builds on the old, tired RFM approach using the new tools at our disposal. Let's call this new approach RFMInow:

  • Traditional RFM: Know the customer
  • Influence in social media: Connect with the customer, and 
  • Real-time customer service that delivers now: Listen constantly.

Like any three-legged stool, RFMInow can be wobbly when the three legs do not work in concert. If a brand reaches out with a lavish expression of appreciation to a consumer who lacks a rich, existing relationship with the brand, the result can feel fake and trigger alarms about brand authenticity. An effusive gift to a customer who has little influence cannot produce corresponding viral benefits or ROI. And without the agility to recognize a customer's need and immediately act upon it, the brand misses the chance to rise to the occasion in exactly the right moment.

There are challenges to implementing an effective RFMInow model. First, some social media "experts" whine that considering a person's influence makes any action less than authentic, but it's time we mature and appreciate that business needs demand we scale the effort and expense to the potential benefits. Second, care must be taken to avoid violating FTC regulations governing endorsements; any action that creates a material relationship between brand and consumer must be disclosed when the consumer subsequently tells others about the brand.

Perhaps the biggest challenge to RFMInow is that it sounds easy but is not, at least not for organizations of even modest scale. To know customers, brands must earn their business, develop ways to collect consumer data, and implement robust CRM systems. To connect to customers, brands must earn their trust, create connections in preferred social media channels, implement powerful social media management programs and integrate all of that social and CRM data. And to listen constantly, brands must have the right empowered employees using the right listening tools to find opportunity and act in the moment.

Wheat Thins' thank you gift is an example of RFMInow. As is the case with most consumer packaged brands, Wheat Thins lacks good RFM data on its customers--they can't know how many packages of Wheat Thins I purchase, but they do know I've tweeted and blogged about the brand. (In this case, the low cost of the reward reduces the need for detailed RFM.) The brand recognized that I have moderate influence on Twitter and that other sites aggregate my blog posts. In addition, the brand acted quickly--they asked for my address two days after I posted the blog post and the tasty gift arrived days later.

Wheat Thins and Morton's cannot afford to reward every customer for each tweet or post, but the brands can look for the right convergence of RFM, social media influence and moments of opportunity. What are your brand's moments of opportunity--the instant in time when someone tweets about your brand, or the minute one of your customers is in need but hasn't picked up the phone to let you know? Are you aware who your customers are in social media and are you listening?

RFMInow will become common for companies within a few years, but at the moment it's RFMIlater for most organizations.


alexlang said...

Very insightful post - I like the breakdown into three "circles" of activity. One other key aspect I think businesses need to realize is what "now" means to them - a reaction within the hour? Within the same business day? Longer? In my opinion, a 2 hour "lag time" in social media is acceptable - unless the customer explicitly posted to the company's own twitter account/forum/...

Augie Ray said...

Thanks, Alex!

I am not sure there is a single answer to what "now" means. It would be different for every brand and category and also, I think, different in different situations. Had Morton's waited a couple hours to act, they would've lost the opportunity. But Wheat Thins acted in two days, and that was plenty quick enough for me. That said, I think two hours is a decent starting point for the conversation; in fact, that's our loose standard that we use at USAA.

Thanks for the comment!