The influential economist Albert O. Hirschman argues that customers can have a disciplining effect on companies and markets through their exit and voice behaviors. Instead of simply “quitting” a product, Hirschman urged customers to voice their complaints so companies could improve and learn. Hirschman would be a happy camper these days because social media puts a megaphone on the voice of the customer. Results from The CMO Survey® show that companies, in turn, are also starting to see the value of emphasizing voice-based metrics.
The CMO Survey investigated which metrics companies are using to measure the impact of social media investments. In August 2010 and then again in February 2013, top marketers were asked to share which metrics they use to evaluate social media. Looking across the results, we can see which metrics companies most often use. The survey did not, however, ask respondents to rank or rate each metric in terms of importance.
Table: Use of Social Media Metrics 2010-2013
The results offer several interesting insights. The emphasis on pure financial metrics is waning. Sales levels, revenue per customer, profits per customer, and customer retention costs show the steepest drop off in usage with all decreasing by more than 45%. This shift is important because it demonstrates the realization that payoffs from social media are not likely to have a first-order impact on company sales and profits.
Instead, the impact of social media is likely to have first-order effects in non-purchase behaviors, such as people sharing opinions about companies and brands. This sharing, in turn, creates exposure, builds knowledge, generates attitudes, and ultimately prompts purchase. Reflecting awareness of this fact, companies are increasingly using voice metrics—such as referral and buzz indicators—to measure the impact of social media. The number of companies using “net promoter score” increased 30% while the number of companies using the number of followers and friends increased 27%. Buzz indicators increased less dramatically but still grew by 3%.
These voice effects are important to companies in several ways. First, consumers get exposed to and build knowledge about brands and companies without searching on their own. This may be from others who have had company or brand experience and share in forums or blogs as well as those who are just transmitters of “hearsay” chatter, but have no direct experience. Either way, this type of voice can easily get upgraded to the level of “information” that research has shown consumers believe is valuable. Second, companies realize that not all voices are created equal. Although opinion leaders and mavens have been measured for decades, the ability to track who is connected to whom and the movement of information between consumers makes voice metrics even more powerful. The emerging power of “Klout” is a testament to this. Third, companies are beginning to demonstrate that these voice metrics are leading indicators of company growth. This has already been demonstrated for net promoter score. Once that connection is solidified across other voice metrics, the use of these metrics will really take off.
The increased use of text analysis is consistent with the focus on online word-of-mouth that we see in the referral and buzz metrics. While only 8.5% of companies are using such metrics, there was tremendous growth with a 28.8% increase in usage over the last 2.5 years. While tools are still emerging to make the most of text, this trend indicates that companies not only want to know if customers “like” their product or service or if customers are willing to “refer” it to others, but also what customers are actually saying in their own words. This unfettered look at what customers are saying about products or brands can be exceptionally valuable for companies that want to catch early marketplace signals they want to ride, amplify, comment on, or squelch.
Of course, “voice” is always better than “exit.” However, whether voice equates to company learning and company growth hinges on whether companies can capture that voice, effectively filter it, create actionable insights, and drive those insights into strategies.