CC BY
10
ЭКОНОМИЧЕСКИЕ НАУКИ
THE IMPACT OF SOCIAL MEDIA TOOLS ON COMPANIES' CUSTOMER RELATIONSHIP MANAGEMENT
Pachitanu (former Ionescu) Andreea
Teaching Assistant, Ph.D., Bucharest University of Economis Studies, Bucharest
ABSTRACT
The present paper has as main objective identifying and analyzing the most important social media tools used by companies in their customer relationship management efforts. It also aims to highlight the impact of these social media tools on the overall business results of companies.
Using social media tools is essential to customer relationship management, because it not only helps companies understand their customers, retain and deliver personalized services to them, but plays an equally important role in converting casual visitors into potential clients and furthermore, into active consumers.
Keywords: customer relationship management, social media, online marketing, marketing strategy
JEL Classification: M31
Introduction
The rapid growth of new communication channels, commonly referred to as social media, provides organizations a great deal of information, as consumers join and create online communities in increasing numbers. Companies which monitor and act on these findings see a unique opportunity to improve their business performance. This may mean changing the way products are developed and marketed. These new information channels require a rethinking in the definition of customer value for the current top management of companies and finding suitable methods and tools for evaluating the effectiveness of their marketing efforts through social networks.
This article highlights and classifies the most important social media tools used by companies and their specific way of use in order to achieve the stated marketing goal - customer relationships, also presenting an example of each individual instrument.
Using online marketing tools in general and social media tools in particular, is essential to customer relationship management, because it not only helps companies understand their customers, retain and deliver personalized services to them, but plays an equally important role in converting casual visitors into potential clients and furthermore, into active consumers.
Academic literature review
Online marketing uses the power of computer networks, online communication and interactive virtual environment to achieve marketing objectives [8], so it is not necessary to use paper, telephones, or face-to-face meetings.
Andreas Kaplan and Michael Haenlein [7] define social media as «a group of online applications that are based on the ideology and technology behind Web 2.0 and enable the creation and exchange of user-created content.»
Social Media emerged in 1971with the sending of the first e-mail between two computers. In 1978 through the Bulletin Board System, users were able to send data between them. But only in 1994 did the first online social networking site appear which was called Geocities and which enabled users to create their own online site. TheGlobe.com improved user experience in 1995 when it gave users the possibility to customize their online experience by creating and publishing their own content, but also being able to interact with people who had the same interests as
them. In 1997, AOL Instant Messenger was launched, it became very popular because of the real-time communication that it offered, while sixdegrees.com launched a social networking site that was able to create a personal profile where one could add friends [11].
The year 2002 was singled out by the launch of social networking site Friendster, a new concept that proposed connecting online real life friends. From this point on, the networking sites have moved their focus from connecting online users already present on platforms who have similar interests, to attracting and connecting friends and acquaintances from real life, that are present or not on such platforms. After launching the social networking site, the total number of users increased to 3 million in the first 3 months. Immediately after this success, MySpace appeared in 2003, which was at first designed as a clone of Friendster. Actually writing the code for MySpace social network lasted only 10 days. Their launch was the beginning of a golden period for social networks, among the ones that emerged being Tribe.net, LinkedIn, Classmates.com, Jaiku and Netlog.
In 2004 Mark Zuckerberg launched a social network called at first The Facebook. At the beginning it was only meant to be a network for students in the United States. It was initially launched at Harvard College, and within the first month of release more than half of the 19,500 students were subscribed
[17]. Two years from its release, Twitter was launched, a social network that allowed following what people write based on the user's area of interest, without the need of an online relationship. The main difference between Twitter and other social networks is that the messages sent cannot be longer than 140 characters
[18].
For a better understanding of the importance of using social media tools in managing customer relationships, some researchers have examined the way the internet is used by the companies in their relationships with the clients and online communities [1]. Bradshaw and Brash [4] have pointed out the fact that organizations have become more efficient in managing customer relationships by using the internet and the instruments associated to it.
The companies need to improve their ability of serving their best clients and transform them into loyal customers, as well as identifying and attracting potential clients, for sustaining a
profitable increase. However, there is a continuous need to examine, empirically, the impact of using the internet on the different dimensions of customer relationship management, like understanding customer behavior, offering personalized services and gaining their loyalty.
Previous researches have examined the usage of digital instruments in managing customer relationships, both in SMEs and large companies [5, 6, 10], in the field of services and B2B [3], as well as in different geographic regions [1, 5].
As a consequence of the fact that the number of website visitors has rapidly grown, the competition among organizations has intensified. The companies are confronted with difficulties in differentiating themselves from competition and gaining new clients. Therefore, companies rethink and redesign new methods and means to increase sales and profits. Relationship marketing and the accent put on customer relationship management is not a new phenomenon. This perspective has been extensively discussed in the marketing literature of the past decades. The concept of relationship marketing was introduced in the services marketing by Leonard Berry in 1983. On the services and B2B market, where there are a limited number of clients and/or where the interactions with the clients constantly appear, it is easier for a company to preserve its relationships.
Therefore, client relationships are determined by the success of the business, as loyal clients tend to become less sensitive to price changes and more attentive to the relationship established with the companies. Reichheld [13] stressed the fact that profits can grow as a result of customer retention. This is why, companies that do not focus on managing customer relations, risk losing a considerable number of internet clients, in favor of their competition.
Through the instruments used, internet becomes a virtual meeting place between companies and clients, which collects information about them. Arnott et al. [2] suggest that the interactivity offered by online instruments increases companies' capacity to understand customers' behavior and helps them offer clients the services they want and need. Therefore, using online marketing tools has a positive impact on understanding customers' behavior.
The most important social media tools which can be used by companies in attracting, maintaining and developing profitable long term relationships with their clients are: social networks, blogs, RSS feed, content communities and instant messaging. Each of the tools mentioned above are presented further and also the way they can be used for achieving the established marketing purpose - creating relationships with clients.
Research methodology
The information society we presently live in is predominantly characterized by the boom of digital information, which nowadays can be accessed from anywhere at any time through IT&C (Information Technology and Communications). Based on a desk research, the description and classification of the most important social media tools were studied, together with their use by companies in the efforts of establishing relationships with customers. Of course, specialized articles on the subject from international journals in the field and their results have been the main guide for this paper.
Social media tools used in customer relationship management
Online marketing tools can be categorized according to the company objectives concerning customer relationship management. Thus, one can mention tools that have as main purpose the conversion of consumers into customers (website,
email marketing, online advertising, SEO) and instruments that are designed to develop long-term relationships with customers (newsletters and social media tools). The social media tools that can be used by companies for achieving customer loyalty are: social networks, blogs, RSS feed, content communities and instant messaging.
Social Networks
Customers buy from people they know and trust. At first, clients trust the brand because they trust the managers of the company, its specialists and/or its employees. That is why companies should treat the public image of its employees very carefully. An online community has as main objective to connect people with similar interests.
Social networks' rate of usage has increased, not only in Romania, but also worldwide. Many argue that social networks have become so popular in such a short time just because they offer people new ways to do what they love: to have conversations, to joke, to share stories, to give advice and generally spend time with others (even only virtual) [12]. In some cases, people connect to such social networks in a general fashion, just because everyone else does it, as it often happens with Facebook.
Thus, marketers and advertisers cannot ignore this important opportunity to develop relationships with customers through social networks. Nowadays, the number of such sites reached more than 150, among the most important being: facebook.com, myspace.com, flixter.com, LinkedIn, hi5.com, and so on, each with a specific audience.
Brian Solis points out that social networks such as Facebook, Myspace, Twitter, Yelp and other online communities should turn online marketing into an opportunity to engage and interact with customers [14]. Marketing experts from organizations must learn how to use such instruments to create a profile for the company, as well as to interact with other members of the network and create relationships with them.
Blogs and RSS feed
Perhaps the best known and the oldest element of social media, blogs are basically online journals with dated posts displayed in reverse chronological order. Dan Zarella [15], describes a blog as a type of content management system (CMS) that makes it easy for anyone to publish short articles called posts. He explains that blog software provides a variety of social features, including comments, blogrolls, trackbacks, and subscriptions that make it perfect for marketing purposes and stresses the fact that blogs make great hubs for other social media marketing efforts, as they can be integrated with nearly every other tool and platform.
Even if many firms use blogs intensively and even encourage their employees to do so, this type of social media does not come without risks. On the one hand, dissatisfied or disappointed customers can engage in creating protest websites or blogs to criticize the company offerings or to file virtual complaints [16], resulting in the public availability of negative and damaging information about the company and its products or services. Furthermore, companies can also be surprised by some employees writing negatively about them on blogs, after they have encouraged them to be active online, a consequence they have to accept.
RSS feeds (Really Simple Syndication), also called web feeds, are a mean of sending content, a format for sending news and content from news sites' or personal blogs. RSS is important because it allows information on updates to online resources without resorting to emails or newsletters, thus reducing the
possibility of receiving spam and viruses.
Content Communities
Content communities, or media sharing sites, enable and ease the sharing of media content among people, as their name so vividly suggests. They organize and share particular kinds of content, the most popular content communities tending to form around photos (Flickr), bookmarked links (delicious), videos (YouTube) [9] and PowerPoint presentations (Slideshare). One major challenge for companies active in this area is the risk of content communities becoming a platform for sharing copyright-protected materials, as users are either not required to create a personal profile page or if they are, these pages usually only contain basic information, such as the date they joined the community and the number of videos shared. Although major content communities have specific rules that ban and remove such illegal content, it is sometimes difficult to avoid popular videos from being uploaded to YouTube. Conversely, the high popularity of content communities makes them a very attractive communications channel for many firms, such as Cisco, Microsoft, Apple and Google, which rely on content communities to share recruiting videos, as well as keynote speeches and press announcements, with their employees, investors and public.
Instant messaging
The usage of the interactive dialog window (chat) as a direct communication tool has as main purpose getting in touch with customers, in order to answer questions related to the products bought, instructions for using the products. The great advantage offered by this tool is enabling real time communication with an actual representative of the company. This is an application that facilitates direct communication between clients and company, as a response to their desires of introducing human interaction in e-commerce. By offering consumers the opportunity to ask for details about the product bought, by directly answering their questions, companies generate an increased level of satisfaction for the users of this application.
Conclusions
From all that is happening around the world in terms of Social Media, it is clear that this phenomenon and concept is not only a youth fad, or something perishable, but it is an evolution of the media, which is likely to become a new component of the marketing communication mix. Companies must understand that nowadays they target a different type of consumer (especially in the 15-29 age group) who does not read newspapers anymore (at least not on paper), speaks more on the mobile phone, trusts friends, colleagues or family more than experts, uses TV more for video games, sees the Internet as a social experience, wants to be listened to and heard, have the freedom to express himself, and to whom one has to speak in its own language through instruments which are available to him and he uses.
In all this culture of the individual, social media gives us another opportunity to interact and dialogue, to be part of a community, to help us develop through «serious games», as business simulations, to keep in contact with each other regardless of the physical distance, to be informed and to get help in real time. New approaches to strategic and tactical marketing must be developed, which are in tune with the characteristics of new media and their impact on customers.
Social media has become an extensive market research system. It allows companies to search the market and find out what target consumers think and feel, but it is equally an essential
link in establishing, developing and maintaining profitable long-term relationships with their customers.
References
1. Adam, S., Mulya, R., Deans, K.R., Pallhawadana, D., «E-marketing in perspective: a three country comparison of business use of the Internet », Marketing Intelligence & Planning, 20, 243-51, 2002.
2. Arnott, D.C., Bridgewater, S., «Internet, interaction and implications for marketing», Marketing Intelligence & Planning, 20, 86-95, 2002.
3. Berthon, P., Pitt, L., Katsikeas, C., «Executive insights: virtual services go international: international services in the marketspace», Journal of International Marketing, 7, 42-63, 1999.
4. Bradshaw, D., Brash, C., «Managing customer relationships in the e-business world: how to personalize computer relationships for increased profitability», International Journal of Retail and Distribution Management, 29, 520-29, 2001.
5. Dutta, S., Segev, A., «Business transformation on the Internet», European Management Journal, 17, 466-76, 1999.
6. Hamill, J., Gregory, K., «Internet marketing and the internationalization of UK SMEs », Journal of Marketing Management, 14, 1998.
7. Kaplan, A. M., Haenlein, M., «Users of the world, unite! The challenges and opportunities of Social Media », Business Horizons, Vol 53, Nr. 1, 2010.
8. Keller, K.V, «Cybermarketing », AMACO, New York, 1995.
9. Mayfield, A., «What is Social Media?», 2008. Accessed 10th March 2016 at http://www.icrossing.co.uk/what-we-think/
10. McGowan, P., Durkin, M.G., Allen, L., Dougan, C., Nixon, S., «Developing competencies in the entrepreneurial small firm for use of the internet in the management of customer relationships», Journal of European Industrial Training, 25, 12636, 2001.
11. Mashable, «The history of Social Media Infographic », 2011. Accessed 10th March 2016 at http://mashable. com/2011/01/24/the-history-of-social-media-infographic/
12. Medical Marketing&Media, «Socialution: The Evolution of Social Media», 2011. Accessed 10th March 2016 at http://www.mmm-online.com/socialution-the-evolution-of-social-media/article/196821/
13. Reichheld, F., «Loyalty-based management», Harvard Business Review, 71, 64-74, 1996.
14. Solis, B., «Humanizing social networks: Revealing the people powering social media», 2009. Accessed 10th March 2016 at http://www.briansolis.com/2009/03/humanizing-social-networks-revealing.html.
15. Zarella, D., «The Social Media Marketing Book», Sebastopol: O'Reilly Media, 2010.
16. Ward, J. C., Ostrom, A. L. «Complaining to the masses: The role of protest framing in customer-created complaint web sites» Journal of Consumer Research, 33(2), 220—230, 2006.
17. Wikipedia, «Facebook», 2013a. Accessed 10th March 2016 at http://en.wikipedia.org/wiki/ Facebook
18. Wikipedia, «Twitter», 2013b. Accessed 10th March 2016 at http://en.wikipedia.org/wiki/ Twitter
