Can Social Marketing Save Customer Service?

Let’s face it: Many large corporations are currently facing a no-win situation when it comes to customer service.

According to a March, 2009 Forrester report titled “The State Of Service Provider Customer Service”, the number of services offered by “service” companies is increasing, while the amount of money they are able to spend on customer service is decreasing.

Yes, lower cost channels such the Web, e-mail and instant messaging have offered some relief but many of the new “outposts” are poorly designed and often result in greater frustration than waiting in long phone queues.

To that end, there is a new breed of customer service that’s starting to evolve and it’s riding in on a white horse called “social.”

Yes, you may have heard of this phenomena, as it’s come in the form of support communities, third-party sites like Get Satisfaction and now through social networking darling, Twitter. The big question, however, is can “social” customer service help, or even potentially save the corporate function known as customer service?

Before we get too far down a path, we should discuss why customer service is arguably more important than ever.

For starters, so many products and services have become commoditized, other than price – which is not an insignificant factor. Customer service is one of the last things left that differentiates one company from another. Do it poorly, and your customers will leave.

On the flip side, when done well, customer service can actually increase loyalty. And if you’ve ever read Fred Reichheld’s manifesto titled “Leading with Loyalty” you know that companies that enjoy the “loyalty effect” grow at better than twice the average for their industry.

If doubling your growth rate isn’t enticing enough in and of itself, Reichheld also proves in his book “The Loyalty Effect” that as little as a 5% increase in retention can improve a company’s bottom-line profitability between 25% and 85%, depending on the industry. Not too shabby, but also easier said than done.

With that as a backdrop, let’s look at a few examples. These companies are not only using social media to improve their loyalty, they’re also making money and receiving major public attention for their efforts.

Zappos. In some ways, Zappos is a bit of an anomaly because not only does it tap into the power of social – namely Twitter – to serve clients, but the shoe merchant has been known to regularly refer customers to competitor sites when a particular brand or style is out of stock.

While this practice may seem crazy, CEO Tony Hsieh realizes that sometimes a short-term sales hit can result in a long-term customer relationship. By the way, as a result of leading the charge as Zappos’ chief tweeter, he’s amassed more than 1 million followers since he joined Twitter just over a year ago.

Intuit. Intuit is a granddaddy in the world of social customer service. With support communities built around its different product offerings, the software company lets its employees and its customers answer customer-service questions. While this hasn’t alleviated a need for phone support, it has shifted the more complex calls to the more expensive phone channel, while also giving some major SEO juice.

Comcast. One of the few public companies in the world that has not just one but eight employees dedicated to delivering customer service on Twitter, the cable services provider has seen the future of social customer service.

Led by the man BusinessWeek calls “the most famous customer service manager in the U.S.,” Frank Eliason and his Twitter team have become the poster children for using social networking to surprise and delight Comcast customers. Not only do Comcast’s customers love the immediacy of the Comcast team’s responses, they also regularly comment on the fact that they feel like they know Frank – something that goes a long way toward increasing loyalty.

If Zappos, Inuit and Comcast can do it, why can’t you? For anyone interested, here are a few steps to help get you started:

Listen first. You may already know why your customers aren’t as loyal as they might be. If you don’t know, you should start by listening to what they are saying.

Engage. Unless you are one of the lucky few brands that instill passion in your base, think about giving your customers a reason to engage with you. This is most easily and simply accomplished by offering compelling content that is not about your company’s products, but is germane to the customers’ lifestyle. Wrapping this content in social tools makes it more scalable and repeatable.

Measure. If you are diligent about putting steps one and two into practice, make sure you measure. Not only will it help you gauge the effectiveness of your program, it can help you get more funding to fuel it – especially during tough economic times like we’re living through now.

Aaron Strout is CMO of Powered, a social marketing firm based in Austin, TX.