More than mere communication and content sharing platforms, social networks are a source of relevant information to marketers and CRM professionals.
From the most focused ones to those that cater to as many groups as possible, social networks map out the connections that exist among the millions of members and those of their networks’. As a result, the information that social networkers provide on their profiles allow marketers to generate a database of potential customers as well as provide CRM professionals new ways to handle customer feedback.
The importance of understanding how social networks serve the marketing and CRM needs of a company is described by Foster Provost of NYU’s Stern School and Chris Volinsky of AT&T Labs Research in their paper titled, Network-Based Marketing: Identifying Likely Adopters via Consumer Networks, published in May 2006 in the Journal of Statistical Science.
"Consumers are far more apt to buy a company’s product if they are ‘network neighbors’ with existing customers. Mining data from ‘social networks’—who talks to whom or who emails whom—could allow companies to pinpoint likely customers who otherwise would be overlooked.
"We provide strong evidence that whether and how well a consumer is linked to existing customers is a powerful characteristic on which to base direct marketing decisions. Our results indicate that a firm can benefit from the use of social networks to predict the likelihood of purchasing."
"Network neighbors—those consumers linked to a prior customer—adopt the service at a rate three to five times greater than baseline groups selected by the best practices of the firm’s marketing team," the study finds. "In addition, analyzing the network allows the firm to acquire new customers who otherwise would have fallen through the cracks, because they would not have been identified based on traditional attributes."
So how do companies build their customer database? Here are some ways:
- Follow the recommendations by a member to her network. Any product (CD, book, gadgets, etc.) or service can be recommended on any social network via reviews, discussion boards, and blogs. In the popular book, The Tipping Point, by Malcolm Gladwell, recommendations work best when the person who recommends is a connector—a person who has a vast social connection and thus serves as a hub for interested parties. Taking it a step further, it helps more if the connector is a maven. The maven is the person who is perceived as authoritative and can give qualified opinions about a lot of things. Book reviewers on Amazon.com are among the best mavens online. People who have read a maven’s recommendation are more inclined to purchase. Best of all, if the person is a salesman, a person who can "sell" or influence people to "buy" anything—a product or service, an idea, or even a way of thinking—then the social network as a marketing and connecting venue has very much served its purpose.