Social Media and Customer Loyalty: Why is it important?
Organizations need to understand the conversations that can be happening at each part of the customer journey.
Why do people engage in social media when they are thinking about making purchasing decisions? According to McClelland’s Human Motivation Theory, social media meets a trio of needs:
- Power – individual’s desire to control environment
- Affiliation – need for friendship, acceptance, and belonging
- Achievement – need for personal accomplishment, closely related to egoistic and self-actualization needs
McClelland’s theory of Human Motivation built on Maslow’s basic needs that human beings have, in order of descending importance: physiological needs, safety needs, and the needs for belonging, self-esteem and “self-actualization”. McClelland expanded this idea to learned motivators, which are a need for power, a need for affiliation, and a need for achievement.
how does this work in practice? In the real world, it isn’t possible to understand or influence all of the people all of the time. Additionally, the influence will not be equal. In practice, these means that Marketers need to focus on the best customers. Traditionally, this has been done through the target marketing process.
Relational marketing can be defined as the strategy of marketing where it’s important ‘…to identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties are met; this is done by mutual exchange and the fulfillment of promises.” (Gronroos 1994). Ultimately, it’s about having customers, not just aquiring them (Berry, 1983).
In the relationship marketing sphere, the focus is much more about the process, which is possibly the biggest implication of this approach. Looking at the process shifts the emphasis from products and brands to a focus on internal activities within the organization, that will foster living, ongoing systems that maintain and develop repeat custom and customers.
When it comes to the issue of loyalty, that’s not straightforward; there is more than one type of loyalty, according to O’Malley(1998):
Types of Loyalty
- True Loyalty – First purchase behavior
- Latent Loyalty – Not a regular, repeat behaviour; occasional
- Spurious Loyalty – Due to little difference which keeps a customer loyal
- No Loyalty – Customer move around from retailer to retailer as there is little benefit and difference perceived
Relational marketing came from services marketing and it was evocative of network thinking. So now complicated networks is very much part of how companies compete, particularly in the remit of social media.
Network marketing allows companies to have authenticity. As we saw in an earlier post, the strength of weak links can be used as a conduit of information. Social media is one such way of using a network to get information out, and also learn more about specific audiences, too.
Alliances and partnerships can provide the assets needed to pursue short-term opportunities. Additionally, they can also provide the capital required to purchase
What’s the value of a network? One authority, Peter Hinssen, argues that networks are essential in many spheres, such as biology right through to warfare. Most current trends are driving towards networks, and this provides great opportunities for entrepreneurial organizations who wish to take part in these opportunities.
What’s the research on networking?
Kanter(1994) did research into successful networks. Kanter noted that alliances need to provide mutual benefits, and value has be created together. Kanter also found some evidence of cross-cultural differences. For example, Americans tend to take a narrow opportunistic view of relationships, whereas Asian companies more adept at working together and hence get the most out of the relationship; European companies fell inbetween these extremes. Ultimately, it was found that alliances cannot be controlled by formal systems but require a dense web of interpersonal connections and communications.
One interesting idea is the concept of social commerce, which aims to break down social media and it’s relationships with customers (Yadav, 2013).
It’s not clear, or proven, that social media will definitely sell products and solutions. Yadav et al set out to try and understand if it is possible to optimize social media and social networking environments for marketing and selling products and services, and to show how and when these links occur. Yadav et al put forward the Social Commerce framework:
Yadav et al set out a framework that is aimed at articulating social commerce as an increasingly important part of online purchase behavior and decisions. In their paper, they discuss social media’s role for need recognition, pre-purchase activities, the purchase decision itself, and post-purchase activities. These activities are considered in terms of their moderating product and media platform characteristics.
One aspect that’s pervasive is the strength of weak ties (Granovetter, 1973) in communicating the information throughout the network. This is called out in the Platform section.
It’s important to note that not everyone is involved in social media, and the thought of having too much choice can be complex and difficult for consumers to navigate. Additionally, it’s not possible to assume that all products will have the same amount of interaction on social media. If someone is wildly tweeting about their favourite washing powder, then that might be considered rather odd. However, if someone is wildly tweeted about their new iPhone, on the other hand, then this will be considered acceptable; in fact, it may be regarded as part of their need for affiliation, as per McClelland’s theory of motivation.
There is no ‘holy grail’ of understanding customer decisions, but frameworks such as the Yadav research can help organizations to understand the conversations that can be happening at each part of the customer journey.