Forrester report: redefining high-value customers

25Mar08

image Mary Beth-Kemp from Forrester has recently completed a new report that Edelman contributed towards that has tried to look at the value of influencers in a connected world.

Mary has previously explained that marketers need to integrate an individuals social value (knowledge, involvement, participation, contacts) into their plans.  My take from this is that by identifying and promoting the ambassadors of a brand, a firm can achieve far more sales than an ad could ever do.

This is a serious area that has far-reaching consequences. Often I am queried whether there is any tangible benefit from exploring the issue of influence. However, when you look at some of the facts that Forrester make, you can clearly see how companies will inevitably change the way they market themselves to take advantage of their own customer evangelists. The quote below seems to back-up Forrester’s earlier findings that looked at how agencies need to evolve:

In 2012, US marketers will spend more in social media than they do on online display advertising today 1

Forrester continue to say that any investment a firm makes in social media will be wasted if companies do not change their way of valuing customers, such as:

1) Focusing on direct financial value only

2) Ignoring the social side of customers

Mary concludes by explaining:

Many firms value customers primarily based on how much they spend with them. However, in this super-connected world of Social Computing, influential consumers drive purchase decisions and have an enormous value for a brand. Marketers should now include the social value of consumers in their valuation algorithms — using the social value scorecard — and offer sophisticated award systems to the most valuable consumers: the Ambassadors.

There is some pretty good science behind this which I think is the key point. Many people have the gut feel that they need to invest more in social media but do not have the proof points to back-up their arguments. I hope that Forrester’s research will help them.

On a final note, the issue of using your customers as evangelists is not a new concept, however evolving this practice for online social media is something that people are only just beginning to appreciate the complexities of. It will be interesting to see whether Forrester’s prediction of social media spend will live up to the hype.

ENDNOTES
1 Online display advertising weighs in at an investment of $6,126 million in 2007, and Forrester forecasts that social media spend will top $6,910 million in 2012. See the October 10, 2007, “US Interactive Marketing Forecast, 2007 To 2012” report.

• All graphs and quotes are Copyright © 2008, Forrester Research, Inc



3 Responses to “Forrester report: redefining high-value customers”

  1. 1 Neil Casey-Johnston

    Given the insight that online tracking, relational databases and research provides us with today, I think it troubling that some companies fail to look beyond the financial bottom line. Fifteen years ago Differential Marketing went beyond looking at the direct financial contribution of a customer – adding in measures of recency, frequency, behaviour – any attribute that could identify present and future value, a shift towards advocacy. And all that was in an age when consumers would still return coupons clipped from the press.

    If that approach still holds its own today, I would argue that most companies would not ignore influencer communities – the concern will be investing in what they fear may just be this year’s fad (as in consumer social networking).

    Whereas over a decade ago influencers, peers or advocates communicated by word of mouth, today it’s more likely to be by social media – is this not just a shift in targeting?

    Surely the challenge to marketers to measure the true value of an ‘Ambassador’ via social media is tracking the data – I could start to score customers based on their contribution to my company’s own blog because I have the intelligence but once those influencers go elsewhere, somewhere more impartial say, that is going to make evaluation more difficult….keen to know how that scorecard can be compiled…

  2. Hi Neil

    Great points – I don’t think it would be fair of me to give away Forrester’s IP by copying their scorecard – however, as with most companies attempts to measure influence, this version is not perfect. However, it is much better than most versions so I would recommend you had a look at their report.

    From a personal point of view, I am certainly aware of the power of peer recommendations. I have just bought a holiday and decided which hotel to go to based upon the reviews of several independent sites. I still believe that this form of marketing is in its infancy and that those firms that embrace it will certainly help them move into a leadership postion moving forward.


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