Interaction with friends, family, colleagues and customers through social media sites and applications is now a part of everyday life for many of us in almost every age and demographic group (see diagram, Percentage of internet users using social networks, by age group).
It is no surprise, then, that around 70 per cent of FTSE 100 companies and all the major energy retailers are using social media in some form or another. However, research by Ernst & Young suggests that only 15 per cent of customers believe organisations are doing a good job when managing and interacting with their customers through social media platforms. This casts real doubt as to whether utilities are generating the returns expected from their social media activities and investments.
So how can utilities deliver real value from their social media investments? Take a look at the UK population and a very interesting picture emerges. The customer is fundamentally changing. Consumers from Generation X (those born c1965-1980) and Generation Y (those born in the 1980s and 1990s) have shown a strong digital affinity and have enthusiastically embraced recent technology advances such as mobile and social media. The formative years of these customers were very different to that of their parents, the “baby boomers” and grandparents, “traditionalists”. As a consequence, a big part of life for Generations X and Y is digitised and lived through online technology. This has had a profound effect on their personal values and expectations, which is critical for three key reasons:
Different expectations and behaviours. They create their own content and share their opinions. They believe they have the right to speak and the right to be heard. They expect choice and are loyal only to innovation.
Generations X and Y comprise half the UK population. This is set to grow by 40 per cent by 2020, so this customer already makes up a significant and growing proportion of a utility’s customer base.
Their peak spending is ahead of them. With the oldest of the Generation X customers just turning 47 years of age, the vast majority have yet to hit their peak spending, which in the UK typically occurs at around 44-48 years old.
Given these fundamental changes in technology and customer behaviour, many companies, including utilities, are investing in social media to support their customer interactions and growth objectives.
Utilities that are able to engage in a meaningful way with those communities of their customers that use social media and, as a result, generate real value from their social media activities and investments, will become what we have identified as “socially adaptable”.
Such companies understand what customers want, they set the right goals, use real metrics, and understand how customers expect their brand to engage.
Let us look at them one at a time. It is vital to have absolute clarity as to the customer needs that the social media channel is there to address. Why is this important? Because it influences the entire design of the channel itself, from the content that is created by both the brand and the community, to the operating model the social media channel exists within, to the community of followers it attracts. Ultimately, it influences the nature of the value and scale of financial return the channel creates for the brand and the organisation.
Recent research featured in the Harvard Business Review shows there is often a significant disconnect between the reasons customers engage with brands through social media and the reasons organisations believe their customers are using social media to engage with them. Contrary to popular belief, it seems that not every customer is itching to query their utility bill over Twitter. Most of them want you to give them something for free (see diagram, Top reasons for connecting with brands).
The same research also shows that organisations can often get overexcited and believe that customers want to do everything through social media. This lack of focus can often lead to poorer customer engagement, misallocation of resources, high costs and ultimately poor returns on social media spend and investment.
We recently worked with a client that had previously invested in social media self-help videos to reduce call centre demand. However, as this social media activity did not address a real customer need and was not integrated into the customer service journey, it failed to reduce call volumes or cost to serve, and therefore failed to achieve the expected return on investment.
This leads us on to the second characteristic of successful socially adaptable brands. They set the right goals and hold themselves to account using real metrics.
All too often social media activity lacks focus because organisations start with the social media data they have gained from listening to activity created on their channels. Then they form insights which define the social media interventions made, which in turn drives the metrics used to measure performance. Most of the time these tend to be “fluffy” metrics that are not linked to real business value.
Socially adaptable brands start by having absolute clarity as to the business goal or objective their social media activities are going to achieve. They move on to define the social activities or interventions required to achieve these goals, and then use reliable social monitoring techniques to gain credible sights and measure performance through a scorecard of real and supporting social metrics. This can deliver real value, such as improving customer retention through more effective social interventions.
Finally, socially adaptable brands understand how customers expect their brand to engage in a social context. Typically, social interactions are expected to be:
· transparent and open – in a social world, it is the community that owns the channel, not the organisation. Hence, the organisation is expected to behave and interact as a member of that community, not as its owner. Censorship should be avoided;
· proactive and informed – brands listen to the community and intervene as required, for instance to rectify genuine complaints;
· consistent and integrated – in their interactions with customers across channels.
Yunus Ozler is a director in the utilities retail advisory practice and Mark Bennett a senior manager in the customer advisory practice at Ernst & Young
This article first appeared in Utility Week’s print edition of 30th November 2012.
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