Loyal customers deserve more: Jerry Smith

Smith was speaking at a lunch seminar organised by the Italian Chamber of Commerce on 4 March, held at the Foreign Correspondents' Club in Hong Kong.

“These days there’s a new job title, the chief customer officer, who reports directly to the CEO not the CMO,” said Smith. “It’s a department all to itself and a sign that marketers need to become more consumer-centric.”

Part of the problem is that marketers still regard digital as a broadcast medium, chasing likes for the sake of likes and not realising that the same principles that apply in customer relationship management (CRM) apply in social media.

“Don’t count the people who ‘like’, like the people who count,” quipped Smith. Marketers shouldn’t assume that earned media is ‘free’, he continued. “It doesn’t really work like that; customers don’t wake up in the morning thinking, ‘I’m going to be company X's brand ambassador and create content for it all day long’.”

The truth is, creating content and converting consumers costs money, as the shift in budgets shows. According to Smith, 13 years ago, 90 per cent of media budget went into paid, owned media was the corporate website and earned was PR. Three years ago, 80 per cent was in paid, 7 per cent in owned and 13 per cent in earned. In 2013, it’s expected that marketers will allocate 51 per cent of their budgets to paid, 25 per cent to owned and 24 per cent to earned.

The wider online audience can be broken down into three distinct types, said Smith: The freeloader, who consumes and doesn’t share, makes up 83 per cent; the newscaster, who shares but doesn’t do much more, makes up 15.4 per cent; and the influencer who not only shares but has enough sway to encourage others to do the same is just 1.5 per cent.

“I entered CRM because I believe that key loyal fans make or break a brand," he said. "In the past 10 years we've [become] all excited about digital and forgotten about the key principles of differentiated marketing. Why are you treating your best customers the same way you’re treating people who may never come back?”

Customer value now extends beyond purchasing power, continued Smith. “Let’s take a real example: 'Linda' spends $33.18 but is a brand switcher, has low social-media influence and is unwilling to collaborate with the brand to create content. Jennifer on the other hand, spent less than Linda, only $25.63 but she’s a mummy blogger with 1500 daily followers and she’s willing to co-create with brands. Adding the purchases she’s influenced she’s now worth $2,063.67.”

Brands cannot afford to ignore the difference this makes and risk losing their ‘Jennifers’, Smith urged. “Marketers must take network value into account and create social bonds with their more valuable customers.”

He pointed to Nestlé Thailand, which created Circles, a social-networking platform that rewards users with points based on their degree of sharing and influence. The point-system allows the brand to segment customers according to network value. “This network is overlaid on a decade-old CRM programme. Because they’re already in the programme, they’re loyal and this system allows us to also collect network data, to have a dialogue with these Thai mums and reward them for sharing,” he explained.

“Beyond the free iPad photo competitions that gain a spurt of images for your brand, look at building a long-term engagement strategy like this with customers that are creating content for your brand,” concluded Smith.