Social Media Conversation. Yes, but at what cost?

There were some outstanding blog posts last week that explored the idea of the SPEED of social media communication changing traditional business models. This was social dialogue at its best.

Jay Baer started the conversation with a series of posts that included Why Social Media has Ruined Your Advantage.  He postulates that the social channel is unique in that businesses are using the same playbook that consumers are using in their daily lives. This rapidly breaks down barriers and eliminates the shroud of mystery that businesses have used as an advantage for centuries.

In my own writing, I’ve characterized this barrier as an “ether” in the marketplace that has kept customers asleep.  Many banks are profitable from fees and charges that customers overlook or don’t understand. AOL still receives income from dial-up subscriptions people forgot they have on their credit cards, or don’t understand they don’t need any more. The transparency of the web will dissipate this ether over time.

Tom Webster continued the conversation in his post Be Careful What You Wish For.  He wonders if the social web challenges tried and true business models and raises an unrealistic expectation of customer service.

These posts helped coalesce some of my thinking on a topic I have been pondering — Everybody is rushing to join the social media conversation.  But at what cost?

The cost of dissatisfaction

Years ago, I led an effort to re-engineer a customer service model for my company.  I used an academic study from the University of Michigan as my guide (can’t find it now) that stated there is a diminishing return to satisfying ALL customers.  More or less, once you get over 98% customer satisfaction, the cost of satisfying that final 2 percent is not economical. So, achieving 100 percent customer satisfaction is impractical for many businesses.

I see this playing out on the web every day.  There is a core group of haters who will bellyache no matter what you do or say to appease them.  When we had the “ether,” we could afford to ignore them. But now their comments are public on company Facebook pages and other social platforms.   A few vocal haters can be thunderous, hijack your social media efforts, and raise service costs exponentially. The ether has dissipated, and the 2 percent are now in control.

With so many conversations streaming at us, do we even have the ability to discern which complaints are legitimate any more? Are we conditioning consumers to game the system through complaints because of the easy rewards they can garner from companies who auto-respond with coupons and freebies? What is the cost of THAT over time?

Does every conversation sell stuff?

I’d like to introduce a radical concept. Businesses have to sell stuff.

It’s easy to lose sight of this when we worship companies like Zappos, which states that their goal is to “deliver happiness.” They also have deliver a profit, or all that happiness will go away.  In Tony Hsieh’s wonderful book, Delivering Happiness he admitted that the idea of building a business based on a culture of extreme service came while drinking at a bar one day, lamenting that his company was failing.  It was a desperate experiment that worked, not some well-planned strategic vision.

Yes, he delivers happiness. but he also delivers money.  In this era where “the Conversation” is king, too many people get caught up in the fear of being left behind and lose sight that we need to show a measurable return on these social media efforts, too.

I had the great pleasure of getting to know Rick Wion of McDonalds this year. There is no smarter marketing talent out there and no company more committed to connecting with its customers in the social media trenches.  McDonalds has a staff of people Facebooking and tweeting all the time.  But some of their tweeters have become so popular that lonely people look for them to come online and tweet with them to pass the time. This is very nice, but how does this sell hamburgers?  At what point do you say, “enough is enough?” What is the cost of our conversation? Lots of companies are facing these issues right now.

Social media angst

I’ve met many great marketers at large American companies and have had the chance to get an inside peak at their social media angst. Here’s a dirty little secret. Deep down, I think most companies wished the social web would just go away.

The Days of Ether, when we didn’t have to “listen” so much, had its benefits.  We could ignore that 2 percent.  We didn’t need $10,000/month listening platforms, social media war rooms, and a budget for teams of tweeters. Consumer Confusion was profitable.

Now if you’ve read this blog for any period of time, you know I am huge advocate of the social web and its potential to transform businesses.  And the fact that it dis-intermediates the business sloppiness that was allowed to exist in the ether is a good thing in the long term. So I’m not saying that that it is not a historic and important channel. Quite the opposite. I’m just saying that it comes with a lot of unanticipated pain.

That ether — and its response time lapse — gave us time to think and analyze. It provided a buffer to get us through the messy process of re-tooling a strategy … or even a company. Diminishing the ether through increased transparency and light-speed information flow is one of the greatest and least-understood impacts of the social web.  And, as both Jay and Tom have written so brilliantly, it is a one-way ticket.

The cost of conversation.  It’s a discussion we need to be having everywhere, don’t you think?

The Delivering Happiness link is an affiliate link.

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  • Hi Mark,

    As always, brilliant thoughts. The lunatics are definitely running the asylum these days. One of the best examples I can think of off the top of my head is Coca-Cola. They did something very different this year with the Holiday can, and fans went ballistic. In years past, Coke NEVER would have pulled the can. I actually love the white can. It is not Coke’s fault that most folks are too lazy to read the box.

    We have customers complaining about every small issue because we are listening so well on social. We are conditioned to not have anyone angry at us no matter what the cost.

    Years ago, I sold shoes in Nordstrom, a store known not only for its service, but overly generous return policy. I was working the cash desk when a woman came in – I am not making this up – TOOK OFF HER SHOES – and announced – “I want to return these. They didn’t wear well.” She wore them so much she wore a hole in the sole of the shoe! I cannot  imagine what she would be doing if Twitter would have been around then. My boss actually took the shoes back, but only for half price, and the shoes with the paperwork went to Loss Prevention to start a file on this person. That is a crazy extreme, but that is where companies are headed if they don’t start putting the brakes on.

    This is going to sound a bit crazy, but the CUSTOMER IS NOT ALWAYS RIGHT! We must understand that some customers are impossible to please, and we should be focusing our efforts on our ambassadors and not our haters.

  • Social Media is giving the consumer control of the economy and the vendors they choose to work with.  I believe this is the paradigm shift that is occurring.  And, as more consumers globally are able to “broadcast” their positions and feelings on various topics, it will have (is having?) a profound impact on how business is done and countries are run (for now). It’ll be interesting to see what happens when “The Empire(s) Strikes Back” (and they will).
    Specifically regarding the “2%”, companies need to be sure that there is sufficient positive discussion to drown them out.  But, don’t ignore them as they could be your next source of emerging issues/opportunities.
    And yes, businesses have to sell stuff.  I don’t think this is a “radical” statement for most (just not understood by a few).  Businesses must deliver ROI for EVERYTHING they do.  So, regarding the cost of the conversation, I’m going to take my own radical stand on something your comment about MacDonalds triggered …… First of all, how do you know those “lonely people” aren’t huge MacDonalds fans and tweeting from a MacDonalds dining room or soon to visit one, or telling their friends and neighbors…..  It’s about capturing “attention” so that the next time that person is hungry, they think about nothing other than MacDonalds.  Remember, if they can “afford” the infrastructure to be on Twitter or Facebook, they can affort a hamburger with fries and a drink. The key is to ensure they buy  (and tell everyone about it) from MacDonalds.

  • Another excellent post, Mark, and a good ‘outing’ of how businesses could – and in many, many cases really do – wish that the social web would just go away.

    I work in the hospitality industry where the ether was initially transformed by the arrival of Tripadvisor and then by the many other opportunities opened up for clients to comment extremely publicly on their stay at a hotel, meal in a restaurant and much more.  In many ways, the arrival and development of Facebook, Twitter and more simply extended the areas of reputation risk further.

    As hotel and other hospitality companies geared for this change, however, we found that there was another consequence unanticipated by most.  Far fewer hotel guests now come to Reception or ask for the Manager to voice their problem and give the property a chance to fix it.  Instead they log onto Twitter or Facebook from their room and express it there.  The proportion of hotels and hotel companies that are geared to respond in these very public channels in real time and who have the cost of doing so (relating, at last, back to your point) built into their margins are very few and far between.

    How should an industry with traditionally narrow margins evolve to cope with this new challenge ?  Previously, they had a chance to resolve the client’s problem and satisfy them entirely before there was ever a question of the client’s disappointment bing known to their family and closest friends, let alone potentially so many more people.   Now the process is turned on its head and the industry has to face that reality, find a way to cover the cost of real time responses in social media or, ultimately, face their demise.

  • Beautifully said Mark. I can’t imagine that having an entire staff of Facebookers and Tweeters is profitable. It may be a necessary cost at this point, but I’m not even sure about that. 

    At least someone got their dream job: sitting around on Facebook all day. I know plenty of people that do this for free :).

  • Just an extraordinarily wise observation Nancy and a very appropriate tale. The “shoe lady” would be in that 2 percent and probably complaining all over the Nordstrom facebook page if she didn’t get her way. I have a new blog post ready to go called about the customer not always being right, but the customer is always the customer. : )  Thanks for the exceptional contribution!

  • All good points and I appreciate the contrarian view on McDonalds. You may be right. They are very smart people and you know, those conversations probably DO sell hamburgers. : )   Thanks for the great comment Steve!

  • This is simply a superb example Matthew.  What a great story that illustrates ther point of the blog post EXACTLY. The ether is gone, the customer service costs have gone up and profit margins are imperiled. This supports what Tom Webster was saying in his brilliant blog post. For businesses that are segmented at the bottom of the food chain — like Motel 6 here in the U.S. — they simply can’t afford those service levels but are being dragged into it. Which will raise their costs. Which will raise their prices.  Which will change the competitive structure of the industry. Thanks for this great comment!

  • Ha!  I have wondered what the career path of a company Tweeter would be! : )

  • Many thanks, Mark.  Motel 6 is a great example of the type of hospitality business most at risk because there margins are at their narrowest and the effect is, as you say.  Which raises another interesting question – whether clients, in general, are willing to pay the higher rates for rooms that almost inevitably follow from the need to add another layer of staffing into the equation ?

    There is a cost immediately related to dealing with customer service issues in this new way and in real time.  Is the guest, who could have come to Reception to air a concern but prefers now to log onto Twitter to voice it willing to pay more because hotels have to be prepared for the possibility that they might and so that hotels can handle issues that way ?

    Given, as you say, that businesses have to sell and have to make money, are their customers willing to pay more to be disappointed ?

  • An easy answer: Of course they won’t pay more. Ruins the whole business model.  So here is the new challenge — How do you create an effective system to “answer the social media phone” AND maintain or even reduce costs. Simply put, that is what must be done.

  • If 98% are 0.K. and the 2% are the issue here I suggest:

    Create your own ether:
    Separate the buying customer you can satisfy, from the gaming customer you cannot.Reinstitute some form of balance to the time/response frame so that you can highlight the issues without being seen as uncaring.i.e., the ‘shoes lady’ Show the shoes, writ a blog about the way she complained and asked for a refund. Be the mirror to the 2% who game the marketplace. Do something that takes the initiative back from them to complain. Point out the illegitimacy of the complaint.This will cost in the front end, it will save in the back end. Especially if you not going to have a ‘war room’ to fight back!Develop a better conversation: i.e., the boundaries of that conversation.I dont try to talk to everyone online, and it is impossible, even if you track keywords related to you and your company, to listen to everything all the time.Institute the structure, strategy and tactics of the conversation your going to have.Like it or not, create a 2% tax:You have a cost to cover with the 2%. So cover the noise of those who make the most noise. Make it cost the 2% more than it is worth to game you and your business. i.e., Look at the Casino business, they just lock out the people who they feel is cheating. I don’t profess to know how that would work in the arena of social-media; but I am sure this is probably the opporutinity of a life time for someone to fulfill this need.Happy?:If you try to make everyone happy, you end up making no one happy. However, if you strive to be the most likeable business, see Tim Sanders: The Likeability Factory, you have the foundation to defend yourself from this thinning ether. In effect all of the above are the new ether,or at least my thoughts on creating a new one.Note: I deal with the commercial bread making industry and we do ge complaints. We have a large 2% problem. Don’t have time to cover this here, but learning how the 2% complain is key to isolating them and removing them. This strengthens the ether a lot.Billy

  • Perfect, and I think the real opportunity is for companies to step back and look at the entire spectrum. They cannot likely “replace” something with social media, but there certainly is a change in the investment weight in each channel. The key here is for companies to determine how to integrate social media (or any other channel) into the mix, not add it over the top of the existing mix. Those who try to simply add create an unsustainable trendline of increasing marketing expenditures.

  • It goes a bit beyond what is being said here, but I believe it is many of the company’s own faults that this has occurred. I have had problems with which I tried to contact a manger, call customer service, and resolve it-to no avail. People didn’t care, weren’t worried about it. Yet as soon as I took to FB or Twitter to voice my complaint, all of a sudden they were able to publicly showcase themselves as “caring” and “responsive”, but clearly that was only because I took it to the airwaves. If it has been handled appropriately, I would have still been a happy customer and would never have voiced my issues on any social networks. The company’s themselves conditioned me that the only way they will care is if I take it public-more worried about saving face in front of an audience than genuinely pleasing me as a customer.

  • Anonymous

    I wonder if as organizations begin to gather increasingly personal details of their consumers if they will begin to isolate and manage the 2% in a different way. The percentages of people using social media is still low relative to the total population so it’s definitely an emerging issue that will need to be addressed.

    I read somewhere in the past year, so it may not be relevant any longer, that most consumers still use the phone to solve an issue then use social media if their problem was not resolved. So, the 2% may be the frustrating outcome of hanging out on the phone with customer service and then not having the issue fixed.  I’m speculating and can no longer find the article but it would be interesting to find out how many of of the 2% used more traditional channels first.

    Thanks for sharing!

  • I really like your thinking on this, Mark. Your last paragraph really struck me. I think that’s what’s missing in the world of social media – the ability to stop and think. I think that’s where so many businesses run into trouble. In the rush to respond, people offer knee-jerk responses via social channels that later bite them in the butt. And, as you mentioned, it takes a lot of time to respond to all of those complaints.  As someone who’s done her fair share of crisis communication, I know there’s a delicate balance between being quickly responsive and taking the time to be strategic. 
    I think that while social media is a great thing, I think it’s increased the insatiable desire of customers to have their frustrations and problems resolved – FAST. The expectation of speed definitely comes at a cost. I remember seeing a post awhile back about how quickly different large corporations responded to complaints and requests via Twitter. Some responded in less than two minutes. While that’s certainly admirable, I think it sets up an unrealistic expectation for the many smaller businesses that don’t have that kind of staff or budget to handle that kind of immediacy. 

  • Gregbohrer

    Excellent post – and discussion!! – Having a 98% customer satisfaction rating used to be something to crow about… (and should be still) but we do find ourselves running faster and harder after that very vocal 2%

  • Great article, Mark!

    Not only is social media not free – it can be quite costly. I worry about small businesses that jump in for cheap guerrilla marketing and learn this lesson.

    At LEAST once a week you post something that really hits a hot button!

    – Gary

  • Last week I had to deal with four Facebook crises for a client – a school. Attacks on other pupils, attacks on staff, an attack on the FB Page itself and an attack on the brand. All one week after the biggest recruitment fair of the school year and a very successful Open House. 

    Partly this was a young person or two not realising what’s good etiquette online; but it was also a very small minority who were hell bent on causing trouble, posting provocate pics of other students anonymously and generally being a bit unpleasant. 

    Although social media works really well to raise brand awareness for this client, and creates a sense of school community for those both within and outside it, a huge part of the work involved in this campaign is monitoring for mentions and then reacting. Although the school is incredibly successful and has a very engaged staff and study body, there are 2% hell bent on using the Net to complain and cause trouble. And if you’re not aware of something within hours, a firestorm can potentially take place. 

    As a response last week I quickly filmed staff and students talking about Facebook. The overall majority are very positive about what Facebook’s for.

    Now if we could just convince customers to take the same positive approach ! 

  • Scarycath

    Trending? (sorry couldn’t resist)

  • Agree.

  • With unfettered, unlimited free access to complain across mulitple forums, I don’t know how you can feasibly isolate a group of people without making the situation much worse. But I appreciate the view Billy!

  • I think that is a very appropriate point, Samantha. Kind goes with the point I made about companies conditioning people to game the system! Thank you so much for contributing this perspective.

  • Very interesting point. That article seems familiar to me too. I think companies are already using systems to filter people. There was a lot of buzz last week about sales integrating Klout scores into their CRM solution. Using those scores to figure out who to server first. Thanks for the great comment!

  • Interesting point. I saw another article that stated that people think when a company responds TOO fast it comes across as creepy! So … respond fast, but not too fast!! Thanks for making this point Laura.

  • I don’t know what to do about that 2 percent any more. : ) Those were the good old days when we could just wait them out. Ha!

  • Well then, just call me Mr. Hot Button. Wait. No, don’t. : )

    I’m glad you’re enjoying the blog posts Gary. I have fun thinking these things through With the blog community! Best part of m y job.

  • I will look at this video carefully a little later Jon. Thanks for sharing it.

    I had a similar experience at Social Slam last year. We had this magnificent conference through the sacrifice of dozens of volunteers and speakers and two jokers hijacked the hashtag for awhile with inappropriate remarks. They were not even at the conference but there was no way for attendees to know that. I’m embarrassed to say they were people from our own city, too. Such a sad cry for attention. And what can be done about it? Nothing really. Ignore it and move on. But a shame for all the amazing people who worked so hard to create new value.

  • I don’t think to isolate them. I would showcase them. Do the opposite of what we fear will happen if people, or when people, find out about them. Lift them up and point them out. Make them a new sort of ether that people don’t want to be like…
    I know that it seems impossible, but usually going the direct opposite to the general trends in dealing with anything gives you a perspective that the majority will never find.
    Thanks for letting me share this view.

  • The “ether” as you describe could also be referred to as “information float”. Businesses on either side of a B2B financial transaction have historically worked the float (that period of llimbo where the payment is being processed) to the advantage of one side or the other. 

    In many industries, how a business managed the float was another source of available revenue but just as the exchange of information is now more instantaneous, so is the exchange of funds. Little if any float.

    To be viable with either cash or content, you must have ready reserves, access to outside resources, great flow and a plan for making both your money and your information work for you.

    I can’t imagine a business investing aggressively in social media without both cash (it’s far from free) plus content  – and a plan and process for conversion (attracting interest and converting that interest to leads and those leads to sales).

    Provide the right information to an interested prospect or customer at the right time and they will sell themselves. You can be the most friendly and sociable business on the planet but if, at some point, they aren’t buying what you’re selling then something’s missing.

    Businesses, by definition, need customers more than they need friends.

  • The biggest challenge to social media is the ability to filter noise without harming potential. How do we reduce SPAM and still provide everyone a fair stage for communication?

  • Really smart analogy Billy. Really love that last line. Hopefully we can find both? : ) I’m lucky that way. My customers usually become my friends!

  • That is a great question. For some businesses it might be THE question! Thanks.

  • I have to agree, Mark! If there is value in doing this, then the value must be increased occupancy rates.  This alone will cover the additional costs of ensuring the reputation. In fact, the effect may be increased profits, not profit reductions. We as a culture have created “instant gratification” for our users. This is not going to stop, only become more prevalent.  If any company is looking at this as an expense, they need to find new advisors who actually can help them better understand the positive value.

  • I agree! Businesses and the people within them need friends too. Having satisfied customers and a growing business is rewarding but it’s the friendships developed that make it most enjoyable.

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  • Kurt

    Try reading a few books on mass collaboration or Social Organizations. You’ll learn that the 98% together is smart enough to figure out what the final 2% is doing, and then you will learn that it is OK to set boundaries.
    And to Laura’s point below about responding to “all those complaints” I can only say that Social Media is not the problem, it is merely the tool to unveil bigger problems that were hidden from your customers before. Rather then getting scared of social media, dive in, bring those problems to the surface and then go and fix them, one by one.

    Social Media is not a sprint, it’s a marathon. And it is going to shake up each and every organization. The ones that understand it is shaking it up for the better will be the ones that thrive, the others… Well, it was good to know hou.

  • Doug Kessler

    Great post and discussion.

    The cranky, impossible-to-please 2% may have a voice now, but that doesn’t mean as a business you need to kiss their asses. If a company really is pleasing 98% of its customers, everyone will see the 2% in context.

    The undesirable consequences of social media are interesting, but in a way, they’re also irrelevant: it ain’t going away. We can long for the good old days when companies could use information imbalance to their advantage, but the best companies are far better off today, when their advantages can be multiplied, amplified in social media.

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  • I agree that businesses have to adapt and adopt and there is no alternative. However, in the real world, the problems do not always take care of themselves as neatly as you indicate and I’m speaking from experience. I would value your recommendations on specific books to read and appreciate your dissenting view. Thanks!

  • I like the white can; someone asked me the other day about the news stories and if I thought it tasted different and I was like ‘uh, no.’ And your expectations story from Nordstrom, that’s a gem.

  • “Customer always.. the customer.” Making note of that.

  • Hmm.. very interesting. Speed is one thing; we’ve overreacted on that front and are forcing companies and service providers to drop everything and respond NOW to an irate tweet. Transparency, the ether and mysteriousness, is another. Brands and business practices can no longer hide behind the veil, which has up and downsides. 

    I’ve been taught to watch the pendulum, the swing; when things tip too far to one side (terrible service, hidden tactics) the market swings wildly to the other. Hence the rush to put all the eggs in the social media basket. Alas now we’re seeing the need to let the pendulum swing back to the middle, that it can’t overcompensate for other business issues and as you say, the cost of conversation is rising (but where’s the reward/offsets?). FWIW.

  • Blog post forthcoming : )

  • Yes, exactly true. We have to deal with what is, not what we would wish for.

  • Very interesting point. I’m not sure the pendulum will swing back on this one. I think the voice of the customer has just been cranked to an 11 and is staying there! Great comment Davina!

  • IDK Mark, I’m waiting for a business or two to take a stand. Not crappy service just b/c they feel like it, but actually sticking by the value, service of their products/services, not conceding to overblown expectations. “You think my “fish cafe” has too much seafood on the menu, you’re right. Steaks R Us is down the street, there’s the door.” or it could just be me.

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