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Why social media matters

Rachel Sullivan | May 6, 2013
The news that music retailer HMV was going into administration was broken to the world by one disgruntled ex-employee who hijacked the company's Twitter account and tweeted "There are over 60 of us being fired at once!" among other pithy comments that concluded with a final update reading: "Just overheard our marketing director (he's staying, folks) ask 'How do I shut down Twitter?'"

"Just as social media has the power to support and drive an employee value proposition, badly handled it can completely undermine those efforts. And worse, the evidence remains online indefinitely."

Mittelmark agrees. "A negative potshot can be pretty damning," he says. "Consider the backlash against retailer Target created by a Port Macquarie mother's concerns over the revealing nature of preteen girlswear last year. And famously in 2009 in the US a man whose guitar was destroyed by United wrote a song called United Guitars that went viral and brought down the company's stock price.

"This demonstrates that, in the right circumstances, social media allow an individual an equal voice to the brand itself." And it is here that companies have a real opportunity to engage with their customers, he says, because the majority of interactions on social channels are complaints.

"Brands have a very shallow taxonomy and managing them is very important," he says. "Companies tend to have siloed IT, business development, marketing and brand management, but in order to take advantage of the opportunity social media bring they must act laterally."

He argues that the way companies currently use social media to respond to customer complaints is in a fledgling state. "By using social media mostly as a PR response to manage a company's reputation, as in the case of companies like Telstra, this ignores an opportunity for customer acquisition and retention.

"The usual Twitter response misses the point," he continues. "If someone tweets something derogatory about Telstra, they want to be asked what the problem is, not fed a PR message.

"If we look at banks, telcos and insurance companies, there is low differentiation in the services provided and a disgruntled customer whose concerns aren't addressed has a higher propensity to change providers than normal.

"Even so, if the problem is not resolved in an expedient manner it doesn't help with retention."

Facebook and Twitter may be the best known, but there are literally thousands of social media websites and applications. Many are specific about individual services and products, where "the conversations might be smaller but they are more detailed", says Mittelmark, adding that in terms of customer acquisition, social media's role is very important and has the potential to significantly grow in value.

"For example, a new computer may be analysed on review sites or discussed on sites like Whirlpool, where conversations are very articulate and technical.

"Even if comments are taken with a grain of salt, they can be enough to push a customer over the line in terms of switching to a new brand or staying with what you know. The feedback given in the chats and whether people love it or hate it is more important because of the expertise of the people writing the reviews."


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