I’ve been following a good number of discussions, on blogs and Twitter, about ROI in Social Media. While many of them are debating issues of advertising, public relations and marketing, the most interesting to me are those of Social CRM, or extension of CRM functionality into Social Media.
Within that area, I find the most exciting discussions to be those surrounding Customer Loyalty value, because it is so hard to define and to measure. While some CRM thought leaders, like Esteban Kolsky (@ekolsky) have flat-out declared that Customer Loyalty does not exist, others, like Kevin Stirtz of the AmazingServiceGuy.com attempt to come with methodology to estimate it.
Customer Loyalty Value Calculator does not provide ultimate answer for every business, but it does identify factors and logic that allows to illustrate the impact customer loyalty makes on bottom line.
“For any business, Top line is vanity, Bottom line is sanity, Cash flow is reality”
Product Reputation is another term which is difficult to define, measure and manage. It is often misunderstood as measure of Customer Satisfaction with a product, and both are certainly related, however the methodologies around measuring them are quite different and that makes measure such as CSI (Customer Satisfaction Index) or NPS (Net Promoter Score) results not as actionable, in my opinion, as Product Reputation scores. However all of these do, arguably, influence financial results, and overall brand value of the associated products.
I define a Brand Reputation as an aggregation of Reputations, Products associated with the Brand, enjoy with their Customers. Deterioration of Product Reputation can eventually erode the value of the Brand. We see Product Reputation as the delta between customer expectations and actual experiences, and this delta can be measured using semantic analysis and opinion mining tools.
Inspired by Kevin, I decided to build a similar simple calculator, which I called Product Reputation Impact calculator.
While it is a simplistic and rudimentary model, but it is useful for understanding how even small declines in the Product Reputation can result in sizable financial shortfall. The good news is that it also shows that there are opportunities to defend your Product Reputation, if you know what is (are) the cause(s) of the problem. In the above example the Product Functionality Reputation is under pressure and Customer Feedback verbatim analysis may indicate that modification of the marketing messages, that are creating these inflated expectations, can easily be adjusted to bring the Product Reputation into balance.
I would love to receive your feedback about this approach and if you would like to take a closer look at the Calculator, I will happily send you this spreadsheet.