How Social Media Investments Can Increase Purchase Intentions among Consumers – A Four Step Approach Addressed Brand Managers in the Fashion Industry Part 1

October 9, 2014

Written by  Masters Student at Lund University

PART I

THE NEW ERA

The many and comprehensive developments within the technology sector are something that has had a tremendous effect on how individuals and firms live and work today (Wind, 2008). We have been able to see a new marketing era and it has become a rule rather than an exception for fashion brands to invest and focus in social media activities (Winer, 2009) where established accounts on Twitter, Facebook, Instagram, Youtube and blogs are the new common used communication tools (Phan, 2011). Even if theorists seem to advocate social media investments as a recipe for success, I know of companies operating in the fashion industry who do not know how to succeed with their social media activities. Scandinavia’s largest fashion PR agency is a good example of this, where I as an intern, early noticed the bureau manager’s lack of knowledge concerning how to manage their social media investments in order to increase purchase intentions among consumers.

This paper is therefore devoted to answer this question. By presenting relevant theory which subsequently will result in my own analytical recommendations, fashion managers will be inspired about how they can progress with their social media investments.

BRANDS, INTEGRATION AND COMMINICATION IN THE SOCIAL MEDIA

The Brand

It has been investigated among theorists that social media investments generate increased purchase intentions with consumers (Kim & Ko, 2012; Themba & Mulala, 2013; Wang et al. 2012). Even though, the customer’s intention to buy increases only if the brand achieves to deliver an added value to the customer, and even more so if the brand in question have transparent and strong values from the beginning- namely through value equity and brand equity (Kim & Ko, 2012).  Even if the fashion brand is highly present in the social media world and constantly updating and communicating in new creative ways, about 35 % of the respondents still perceive the brand as old- fashioned (Phan, 2011, example Burberry). This really demonstrates the strong correlation between a liking of a certain brand and the purchase intention. Therefore, there is no impact of social media investments on the purchase intentions if the customer does not like the brand from the beginning (Phan, 2011). Additionally, the perception a customer gets from different buzzes in the social media, is based on already existing thoughts and perceptions of the brand (Powers et al., 2012).

Recommendation #1:  Examine your brand

It is important to remember that an investment in social media activities will not increase purchase intentions if a consumer do not like the brand from the beginning, and that new information received will be based on already existing thoughts of the brand (Kim & Ko, 2012; Phan, 2011). It is therefore crucial that the brand image is the same perceived in the consumers’ eyes and in the brand manager’s. If the manager believes that the brand stands for good products and values but the reality occurs to be the reverse, the social media investments will be vain. I therefore have faith in building a clear image where the brand strives to be in the future and compare it, with the help of customer surveys, how they are perceived today. By doing this, the managers know in what areas they have to improve and where the major gaps are between the customer’s and manager’s brand perceptions. Managers must know what they have to work with and what negative rumors they might have to counter in order to be successful in their social media activities. It is essential to build a good image from scratch.

Interaction and e-WOM

The interaction and communication between consumers in the social media is something that has been investigated deeply and broadly (Wang et al, 2012). The research have contributed to the insight that  the way consumers interact with each other in Social Media forums, affect the way the consumers think in their purchase decision (Wang et al. 2012). The social media forums works as a kind of market place where the communication between individuals helps people correspond and argue with each other which further often leads to changed attitudes of brands and products (Wang et al, 2012).

A developed and established concept in the area of online communication is “e-WOM”, electronic word of mouth (Henning et al. 2004). It is a good idea for fashion retailers to invest in social integrated activities since it could be an easy way to create positive e-WOM traffic (Henning et al., 2004). Since e-WOM has been found to be a trustworthy source for information-seeking consumers, it is important that businesses in the fashion industry realize the importance of it (Themba & Mulala, 2013). Noteworthy is also that when a fashion retailer wants to intensify the spread of positive e-WOM, they must reflect upon the commitment of the customer in relation to the brand as well as the consumer’s commitment to fashion overall. If a customer is highly committed to a certain fashion brand, then his or hers engagement in social media activities in relation to that brand will increase (Wolny & Mueller, 2013). Furthermore, customers who have a high need of social interaction in general, are those consumers who are more collaborative in the social media than others (Wolny & Mueller, 2013). The more a brand manages to create a positive and comprehensive e-WOM related to the brand or to the product, the more the purchase intention from that consumer will increase (Themba & Mulala, 2013).

Communication Through Customer Reviews

Customer reviews are a part of the interaction era we experience today and are often to be found in different social media forums, in one way or another. It is important to not underestimate the impact of the reviews, since a positive customer review in some social media can affect the purchase intention among other consumers (Park et al., 2007). The reviews have a function of being both informative and recommendatory and are therefore playing an important role in the customer purchase decision process. The more and the better the reviews are, the more they have an impact on others (Park et al., 2007). One exception is consumers who are highly involved with a brand and its products. Those customers only learn and take note from it when he or she perceives the quality of the review to be rewarding (Park et al., 2007).

One could find it hard to understand that individuals, who are reading reviews online, are so credulous. It has therefore been discussed and investigated if it is good or not to reveal the demographical characteristics of social media engaged customers (Naylor et al. 2012). Does the disclosure have an impact on the purchase intentions and brand opinions of future potential customers or not? The results reveal that even if the presence of those social media involved individuals is virtual and sometimes not very active, their demographical characteristics do have an impact on another customer’s purchase intention and brand evaluation (Naylor et al., 2012). This could be an interesting angel for managers to discover in the quest to reach out to their target markets as well as in business comparisons with competitors (Naylor et al., 2012).

Recommendation #2: Create the right image

Since e-WOM is to be considered to be a trustworthy source when it comes to the consumer’s purchase decision process (Themba & Mulala, 2013), it is important for fashion managers to try to control and make sure that positive buzzes and perceptions about the brand are created and spread from the start. To spread a good brand image and to get new customers, I suggest that fashion managers should turn to their already existing customers, who are highly active in Social Medias, but also who have a strong predilection for that particular brand. In this way, the spread will be broad and the message will be positive. I also think it will be a good idea if managers additionally choose to reveal the promoting customer’s demographics, since the whole investment and activity will be even more trustworthy (Naylor et al., 2012). I believe that consumers, who experience detection and identification, are more likely to trust the reviews and also spread the buzz further. By doing this, it will attract like-minded audience and it gets easier for the fashion brand to reach out new target customers and to increase purchase intentions

END PART I

Which social media forums will be chosen and why? How can managers know if the investment has been profitable? For answers to those questions, look in part two where I also present the central conclusion. 

How has social media influenced consumers? Part 2

September 11, 2014

 Written by Peiw en Jiang

The practical example of Levi’s

In this section, the author will introduce the case of Levi’s in order to explain how the company within fashion industry makes use of social media to influence its consumers. Levi’s was founded in 1853 and has developed into one of the most renowned clothing companies in the world for its welcomed jeans (Levi’s, 2014). With more than 150 years’ business operation, Levi’s has successfully shaped the brand image to encourage people to hold a pioneering and energetic spirit regardless of their age, gender and occupation (Levi’s, 2014). Levi’s also attempts to deliver the information to its consumers that they should pursue freedom and express self even when they are confronted with difficulties and challenges (Levi’s, 2014). It should be pointed out that social media plays a pivotal role in helping Levi’s achieve current success.

It is necessary for the company to launch different social media platforms before performing social media marketing campaign. Apart from the blog on Levi’s official website, it has effectively organized its social media accounts including Facebook, Twitter, YouTube, Pinterest and Instagram. Specifically, Levi’s utilizes Twitter to spread creative promotion information and offer customer services while YouTube allows its consumers to appreciate a wide range of videos (Zog Digital, 2013). At the same time, Facebook, Pinterest and Instagram make Levi’s attract more consumers to engage its social media marketing activities (Zog Digital, 2013). Millions of followers and likes on the social media web pages are sufficient to prove that Levi’s has successfully fallen into the social media. In fact, these social media channels not only provide Levi’s with platforms to deliver information and convey brand culture but also create opportunities for consumers to socialize around purchase.

Levi’s can be perceived a business example for utilizing social media to conduct a series of compelling marketing campaigns which succeed to attract its consumers to engage in the activities and improve its sales performance. When making the plan to perform social media marketing campaigns, it is significant for Levi’s to deeply understand its consumers. Only by knowing them can Levi’s reach them. Levi’s focuses its target market on the consumers of upper middle class especially those young people between 13 and 24 years old (Li, 2012). Levis has a wide product range and it sometimes designs, produces, and sells jeans for upper class consumers who are more than 30 years old and have strong purchasing power (Li, 2012).

The most attractive marketing campaign of Levi’s is called “Go Forth”. It is for the first time that Levi’s launches such a global marketing campaign in 24 countries and in 19 languages (Li, 2012). Levi’s attempts to present the brand in a new and stimulating manner and improve its sales performance by attracting more loyalty, current and potential consumers for engagement (Mentz, 2012). In terms of the target consumers, it should be explained that not only young people but also old consumers who grow up with Levis are focused by Levis (Miller, 2011). Advertising is generally perceived as one of the most important factors in the marketing campaign. Levi’s designs a global advertisement with the theme of “Legacy” and this is presented in the print and video forms. Even though the “Go Forth” campaign is conducted with the help of traditional media such as magazines and television, Levi’s puts more emphasis on the social media platforms such as Facebook, Twitter and YouTube (Mentz, 2012). Specifically, within one month after the advertisement is launched, the number of fans on Facebook and the video viewers on Youtube has dramatically grown. Since young people usually linger on social media platforms, they have a number of opportunities to interact and communicate with peer consumers about their feelings, opinions and perspectives especially about the content of hopes, desires and actions that the advertisement delivers to the audience. With the showing of the advertisement on social media sites, an increasing number of people begin to know Levi’s and purchase its products, which makes Levi’s maintain its top position in the jeans industry (Miller, 2011).

When mentioning the use of social media in the Levi’s marketing campaign, the author has to emphasis the importance of Facebook. Levi’s not only attracts millions of people “like” its page but also maintains high engagement. Zog Digital (2013) points out that customization is the key factor for Levi’s to achieve success on social media platforms. For instance, Levi’s general puts forward open questions to its consumers like “what is your interpretation”, which can encourage consumers to share their feelings and opinions toward the design (Zog Digital, 2013). This will create an intimate feeling to the brand in the consumers’ minds. It should also be appreciated that Levi’s fills its Facebook page with different contents such as company news, promotion and sales information, and fashion tendency prediction.

Apart from utilizing social media to conduct marketing campaigns, Levi’s also launches “Social Plugins” tool which is a social media shopping tool partnered with Facebook (Dilworth, 2010). This online tool allows Levi’s to create product pages on Facebook, which can make consumers “like” items and shop jeans on the social media platform as well. Consumers are able to recommend jean products they like to their Facebook friends by using a widget, which can be perceived as a kind of eWOM. This method allows Levi’s consumers to express their loved feelings to the jeans in front of their friends, which can indirectly influence their friends’ attitudes toward Levi’s. Dilworth (2010) provides an example in his research that if one consumer’s birthday is coming, his or her friends can choose Levi’s jeans that he or she like on Facebook as a secret gift. This kind of social media marketing is totally different from the fan page for the fundamental reason that this allows the consumers to experience shopping at social media platform.

Conclusion

Overall, social media has made great influences upon consumers especially with the involvement of marketers in the company. The company usually utilizes a series of social media platforms to conduct social media marketing campaigns by which it can not only deliver information and convey brand values to its consumers but also stimulate them to purchase its products and services. Another function of social media is to encourage consumers to share opinions, attitudes and feelings regarding the company and its products with their peers on social media platforms.

References

AKAR, E. and TOPSU, B. (2013) An Examination of Factors Influencing Consumers’ Choice of Social Media Marketing. Journal of Internet Commerce. 10 (1). p.35-67.

ALJUKHADAR, M. and SENECAL, S. (2011) Segmenting the Online Consumer Market. Marketing Intelligence & Planning. 29 (4). P.421-435.

BLACKSHAW, P. and NAZZARO, M. (2006) Consumer-generated Media (CGM) 101 - Word-of-Mouth in the Age of Web-fortified Consumer. 2nd Ed. New York: BuzzMetrics.

DILWOETH, D. (2010) Levi’s Launches Social Media Shopping Tool on Facebook. [Online] Available from: http://www.dmnews.com/levis-launches-social-media-shopping-tool-on-facebook/article/168813/ [Accessed: 5th February 2014].

DI PETRO, R.B., CREWS, T.B., GUSTAFSON, C. and STICK, S. (2013) The Use of Social Networking Sites in the Restaurant Industry: Best Practices. Journal of Foodservice Business Research. 15 (3). p.265-284.

EISENBEISS, M., BLECHSCHMIDT, B., BACKHAUS, K. and FREUND, P.A. (2012) The (Real) World is not Enough: Motivational Drivers and User Behavior in Virtual Worlds. Journal of Interactive Marketing. 26. p.4-20.

HANNA, R., ROHM, A. and CRITTENDEN, V. (2011) We’re All Connected: the Power of the Social Media Ecosystem. Business Horizons. 54. p.265-273.

HOFFMAN, D.L. and NOVAK, T.P. (2012) Toward a Deeper Understanding of Social Media. Journal of Interactive Marketing. 26. p.69-70.

KAPLAN, A.M. and HAENLEIN, M. (2009) Users of the World, Unite! The Challenges and Opportunities of Social Media. Business Horizons. 53. p.59-68.

LEVI’S. (2014) Who We are? [Online] Available from: http://www.levistrauss.com/who-we-are/#brands [Accessed: 5th February 2014].

LI, G.Y. (2012) The Analysis of Levi’s Print Advertisement. [Online] Available from: http://ad2010123.blog.163.com/blog/static/2035012012012314112355116/ [Accessed: 5th February 2014].

MENTZ, M. (2012) Levi’s Go Forth Campaign Launches on Facebook and Hits 7.2 Million Fans. [Online] Available from: http://miikomentz.tumblr.com/post/9524273961/levis-go-forth-campaign-launches-on-facebook-and [Accessed: 5th February 2014].

MILLER, M.J. (2011) Levi’s Takes Go Forth Campaign Global. [Online] Available from: http://www.brandchannel.com/home/post/2011/08/09/Levis-Go-Forth-Global-Campaign.aspx  [Accessed: 5th February 2014].

PAPASOLOMOU, I. and MELANTHIOU, Y. (2013) Social Media: Marketing Public Relations “New Best Friend”. Journal of Promotion Management. 18 (3). p.319-328.

ROBERTS, R.R. and KRAYNAK, J. (2008) Walk Like a Giant, Sell Like a Madman. 2nd Ed. Hoboken: Wiley.

SANDES, F.S. and URDAN, A.T. (2013) Electronic Word-of-Mouth Impacts on Consumer Behavior: Exploratory and Experimental Studies. Journal of International Consumer Marketing. 25 (3). p.181-197.

ZOG DIGITAL. (2013) Why Levi’s Classical Style is a Perfect Fit for Social Media. [Online] Available from: http://blog.zogdigital.com/2013/07/17/why-levis-classic-style-is-a-perfect-fit-for-social-media/ [Accessed: 5th February 2014]. 

How has social media influenced consumers? Part 1

September 8, 2014

 Written by Peiw en Jiang

Abstract

With the popularization of the Internet, social media has been accepted by more and more online users. People are able to utilize social media to share their opinions, attitudes, and feelings over the Internet. Meanwhile, marketers are also attracted by social media platforms and begin to utilize them to reach its target consumers. In this article, the author will not analyze the nature and essence of social media and the function and importance of social media marketing conducted by marketers from the academic perspective. The author will also introduce a successful business example of Levi’s to discover how the fashion company has influenced its consumers with the help of social media platforms.

Key words

Social media, social media platforms, social media marketing, eWOM, Levi’s.

Introduction

According to the statistics (Sandes and Urdan, 2013), the Internet was accessible to 2.3 billion people in 2011, which indicates the popularization of the Internet technology in the globe. The Internet has also greatly influenced how people live, work and communicate since it has created an online social environment (Akar and Topsu, 2013). Papasolomou and Melanthiou (2013) even point out that social media has developed beyond traditional media to become an important part of online users’ lives.

With social media on a rise, more and more researchers attempt to understand the use of social media especially when marketers make practical strategies in the marketplace. In this article, the authors will study how social media has influenced consumers from academic and practical perspectives. Specifically, the author will explain the essence and nature of social media and the function and importance of social media marketing. The author will also combine the case of Levi’s to discuss how the fashion company has influenced its consumers by using social media.

The essence of social media

Social media, as the extension in the communications world (Papasolomou and Melanthiou, 2013), can be defined as the online applications with which consumers are able to share information, knowledge, experiences, opinions and perspectives in the virtual world (Di Petro, Crews, Gustafson and Stick, 2013). This means that social media establishes the bridge for consumers to interact with each other and this is the fundamental reason why social media is so popular.

According to Kaplan and Haenlein (2009), there are a number of forms of social media including social networking sites and blogs such as Facebook and Twitter which attract 845 and 100 million active users respectively every day (Hoffman and Novak, 2012), content communities like YouTube which drives 800 million unique users for engagement every month (Hoffman and Novak, 2012), and collaborative projects like Wikipedia which allows anyone to edit the articles. However, in spite of the forms of social media, each platform can exert influences upon consumers and marketing performance (Akar and Topsu, 2013). Therefore, marketers generally conduct marketing strategies and campaigns on several platforms to reach their consumers (Hanna, Rohm and Crittenden, 2011).

Since social media provides consumers with opportunities to engage in expressing views and editing and sharing information, consumers can be perceived as marketers and advertisers as well. In fact, consumers can search for information regarding the company and its products from different channels. Akar and Topsu (2013) point out that the information is acquired by consumers primarily through reviewing online comments and consulting other consumers on social networking sites especially when they plan to make a purchase. The reason is that consumers tend to regard peer opinions as more objective and reliable compared with the information provided by the company (Blackshaw and Nazzaro, 2006). This is consistent with the data provided by Akar and Topsu (2013) that approximate 80% of consumers hold a positive attitude toward the information that they gain from social media platforms.

However, the function of social media cannot be restricted by searching information. The platforms also allow the company to interact with its consumers and even invite them to collaborate such as co-designing products and promotional content (Hanna, Rohm and Crittenden, 2011). It should also be pointed out that consumers will generate positive or negative attitudes toward the company, its products and services, which is determined by the satisfaction degree that the company presents itself on social media platforms (Roberts and Kraynak, 2008).

The function of social media marketing

In terms of social media marketing, Akar and Topsu (2013) define it as an interactive and engaging process during which the company is able to present itself, its products, and services to its target consumers by means of online social platforms. Social media marketing becomes increasingly popular since it can exert influences on the company to make marketing strategies. In fact, social media marketing can not only increase the company’s visibility but also help the company build long-term relationships with its consumers (Papasolomou and Melanthiou, 2013). Besides, social media marketing not only allows the company to interact with its consumers but also enables consumers to communicate with each other over the Internet (Akar and Topsu, 2013). This means that consumers’ participation is one of the most important factors of social media marketing. Besides, the majority of the online content is created by the consumers rather than the company itself in the social media marketing (Akar and Topsu, 2013), which means that the company takes the role to stimulate its target consumers to talk.

To conduct social media marketing successfully, it is necessary for the company to utilize two techniques including targeting and eWOM. On the one hand, Aljukhadar and Senecal (2011) divide online users into three segments according to their motivations, including online communicators, lurking shoppers and social consumers. However, there is no need for the company to reach all the user segments. It is significant for the company to reach their target segments, which depends on its own marketing objective (Eisenbeiss, Blechschmidt, Backhaus and Freund, 2012). Social media provides the company with the opportunity to gather and disseminate market information over the Internet (Eisenbeiss, Blechschmidt, Backhaus and Freund, 2012) and this need the participation of target segments. For instance, social consumers can be encouraged to assist the company to spread information.

On the other hand, eWOM, which is the abbreviation of electronic word-of-mouth, is also universally used in the social media marketing. According to Sandes and Urdan (2013), eWOM can be interpreted as the phases or comments about the company or its products that are left on the online platforms by former, current and potential consumers. Akar and Topsu (2013) point out that eWOM has become the most significant online channel to influence consumers’ willingness for purchasing, which will further influence the company’s sales performance (Sandes and Urdan, 2013). Specifically, consumers can easily access the positive or negative online comments which are generally regarded as the references. This means that online consumer reviews can be perceived as an important form of eWOM. Besides, the research demonstrates that even though consumers prefer to disseminate satisfaction comments to others, they will also utilize online platforms to express their dissatisfaction and complaints (Sandes and Urdan, 2013).

You can read the detailed analysis combined with the case of Levi’s in the next post.

CRM in the era of web 2.0: Consumer empowerment through E-WOM and CGC

September 4, 2014

 Written by Masters Student at Lund University

Abstract

Consumers are no longer passive receivers of mass-communicated messages. The web 2.0 is the host for many-to-many interactions and co-creation of content, which has empowered the consumers and reduced the control of the marketer. The social media challenge the traditional customer relationship management (CRM) approach, which this paper aims to uncover by looking into the phenomenon of ‘’social CRM’’. Furthermore, the empowerment of consumers is considered in relation to electronic word-of-mouth and collaborative consumer generated content.

Key words: Web 2.0, Electronic word-of-mouth (E-WOM), Consumer generated content (CGC), Social media, Relationship management (CRM), Consumer empowerment

Introduction

The interactive web 2.0 has provided a digital media platform, which enable consumers to co-create and interact with the company, the media and each other (Hanna, Rohm & Crittenden 2011). The internet has become a host for many-to-many communications and has thereby empowered the consumers (Chrisodoulides 2009). Deighton & Kornfeld (2009) supports this argument by stating that the internet has empowered the consumers and reduced the control of the marketer. According to Chrisodoulides (2009) the empowerment of consumers engaging in the social media is so strong that it is possible to interfere with the brand’s value.

The empowerment of consumers through the interactive web 2.0 seems to have changed the relationship between consumers and companies. Consumers are no longer passive receivers of distributed messages. According to Malthouse et al. (2013) the rise of social media has changed the way companies should address customer relationship management (CRM). Furthermore, Wind (2008) argues that the high failure rate of CRM indicates that the game of CRM has changed. Companies must focus on offering a platform where consumers can co-create the solution (Wind 2008). The paper aims to undercover the challenges of CRM in the era of web 2.0.

 

From CRM to Social CRM

CRM in its traditional form is about companies managing relationships with customers to maximize customer lifetime value (CLV), but social media has changed the name of the game (Malthouse et al. 2013). According to Wind (2008) it is of great importance to measure the ‘’right’’ aspects for a successful CRM strategy. CLV and share of wallet provide insights about customer profitability and might provide the company with insights about how growth can be obtained by reallocating resources. CLV is not limited to purchase value, but includes the value of customer influence, referrals and knowledge (Kumar et al. 2010; Weinberg & Berger 2011 in Malthouse et al. 2013).

The ease of finding information about competitors and distributing opinions to a large audience has made it harder for companies to manage the output of messages. Customers have become active participants in the relationship with a company. In short, social media has enabled consumers to create and share consumer generated content (CGC). Companies are challenged in managing the messages received by the consumer about products and services (Malthouse et al. 2013). According to Malthouse et al. (2013) ‘’CRM must evolve if it is to survive in this marketplace, by producing contact points that engage the consumer and provide value to both the company and consumer’’ (p. 278). According to Wind (2008) companies need to move from CRM to CMR by creating platforms that offers customers to manage their relationship with companies. Furthermore, Malthouse et al. (2013) points out that ‘’a company should determine its CRM strategy according to the level of engagement that customers are likely to show and the CRM objectives that the company would like to achieve’’ (p.272). The adaption of CRM in social media is referred to as ‘’social CRM’’. From the social CRM perspective engagement can be either high or low which determines how a company should deal with acquisition, retention and termination (Malthouse et al. 2013).

In social CRM a low engaged consumer passively consumes content or engage in very basic forms of feedback e.g. ‘’likes’’ on Facebook. Companies can obtain acquisition of new consumers with low engagement by creating awareness and change attitudes by creating promotions on YouTube, Facebook, Wikipedia etc. (Malthouse et al. 2013). These basic activities are quite similar to planning traditional marketing activities, which reduces the risk for the company. Furthermore, it provides the company with the opportunity to improve targeting. To retain customer with low engagement in social CRM it is suggested that the company can influence attitudes through the use of Facebook brand pages and similar actions. In situations where the consumer chooses to terminate the relationship companies can use information form the social media to identify the customers that are likely to leave and thereby attempt to prevent it (Malthouse et al. 2013).

In social CRM high engagement would require that the consumer is active in co-creation of content related to a brand e.g. writing reviews. The main challenge for a company is the reduced control over the messages consumers and customers receive, whereby acquisition activities cannot be separated from retention activities in social CRM. Electronic word-of-mouth (E-WOM) and consumer generated content (CGC) is indeed a tool marketers need to consider in developing profitable relationships with consumer and customers. Negative word-of-mouth is at stake if the company choose to terminate a relationship with a high engaged customer (Malthouse et al. 2013).

The empowerment of consumers – E-WOM and CGC

Social media has enabled consumers to become marketers and advertisers. Web 2.0 has made it easier to share opinions, information and thoughts. These circumstances have influenced buying behaviour as E-WOM is now a dominating channel (Akar & Topsu 2013). The phenomenon of brand related messages created by consumer’s informal opinions spreading through the web is often referred to as E-WOM (Sandes & Urdan 2013). E-WOM is of great importance from the social CRM perspective. Companies have realized that E-WOM is stronger than traditional WOM, but it should be an interactive and engaging process to improve relationships (Papasolomou & Melanthiou 2013).

Henning-Thurau and colleagues (2004 in Sandes & Urdan 2013) suggest four main reasons for consumers to engage in E-WOM: ‘’(1) Seeking self-help, for economic reasons or own gain; (2) Concern about others  and searching for social promotion; (3) Altruism, seeking only to help others and companies; (4) multiple reasons relating to self-expression.’’ (p. 184). The motives for engaging in E-WOM can be useful to companies wishing to facilitate positive messages as a promotion initiative on the web e.g. through review sites.

Having considered the power of E-WOM and the motives for engaging in it in the era of social CRM, it is interesting to consider the effects of E-WOM. According to Sandes & Urdan (2013) positive messages about brands created by consumers improves the perception of image, but it does not increase purchase intensions. The importance of mastering social CRM is severely evident as a message can spread with high speed, which can become even more damaging if the content is negative (Barwise & Meehan 2010). According to Sanders & Urdan (2013) negative content has a stronger effect than positive content. The study shows that exposure to negative messages about brands created by consumers can damage the image and reduce purchase intentions.

E-WOM is often perceived to have higher credibility and trustworthiness than traditional media, but it is still influenced by traditional marketers and marketing activities e.g. CRM (Akar & Topsu 2013). ‘’According to Red Bridge Marketing (2008), regarding products and services, 78 percent of global consumers believe and trust suggestions of other people over any other data’’ (in Akar & Topsu 2013, p. 42). On the basis of this it could be argued that companies are dependent on the ability to collaborate with consumers in co-creating content to be successful in social CRM in the era of web 2.0.

Fournier and Avery (2011) refers to the web as ‘’the peoples web’’ indicating that marketers are less wanted in the social media sphere and thereby making social CRM a collaborative activity. Furthermore, consumer generated content (CGC) is more easily shared via the web (Akar & Topsu 2013).  One strategy that companies can apply, fitting well with the social CRM perspective, is to encourage the creation and sharing of CGC and thereby collaborate with consumers (Chrisodoulides 2009). According to Hanna, Rohm &Crittenden (2011) consumers are becoming increasingly interested in co-creating content for companies. On the other hand are very few companies taking a proactive approach in collaborative CGC in their long-term strategy (Muniz & Schau 2011). Companies are assumed to hold back due to the loss of control over the brand messages and brand meanings, but involvement from a skillful marketer increase the likelihood of a favourable outcome. Muniz and Schau (2011) suggest a 13 step checklist (p. 211, Figure 1):

‘’guideline collaborative consumer generated content ’’

These 13 guidelines could provide the companies with the courage needed to engage in collaborative CGC. According to Chrisodoulides (2009) CGC is expected to nurture stronger and deeper relationships between companies and consumers, which make it important for companies to master.   

Insights about consumers are out there

The social CRM landscape does offer positive aspects for the companies in managing relationships. One opportunity is to create advocates for their products by listening and engaging with their customers (Malthouse 2013). Companies can also benefit from using social media by acquiring insights about the consumer and possibly preventing termination of a desirable relationship (Barwise & Meehan 2010 and Malthouse et al. 2013).

Example – Telmore

Telmore is a Danish telecommunication company that promotes services and products mainly online. They were founded in 2000 and were the first telecommunication company to exist exclusively online (Politiken 2013). Telmore was early adopters of the interactive platform that web 2.0 has provided and is a great example of a company that successfully manage relationships online. Relationships are build online through a range of touch points e.g. Website-chat and review sites (Telmore 2014a and Trustpilot 2014). Six years in a row they have obtained records for satisfied customers in the telecommunication industry (Telmore 2014b). The company has made a great effort in engaging customers in creating content on review sites and interacting with customers surviving negative content in the transparent web 2.0.

Conclusion

In the era of web 2.0 customer relationship management (CRM) in its traditional form has changed due to the possibilities of interaction, reach and co-creation empowering the consumers. Initially companies need to consider more nuanced measures for CLV like the value of customer influence, referrals and knowledge. Producing contact points that engage the consumer and provide value to both company and consumer are necessary actions in the social CRM perspective. Furthermore, companies must consider different strategies for acquisition, retention and termination dependent on the level of consumer engagement.

The bad news for companies is that studies have shown that negative content has a stronger effect than positive content. Negative content is unavoidable, but to improve relationships and benefit from the use of E-WOM it should be an interactive and engaging process. Obtaining positive E-WOM has potential for companies as it is often perceived to have higher credibility and trustworthiness than traditional media. Furthermore, consumers are becoming increasingly interested in co-creating content for companies. Companies hold back due to the loss of control over brand messages and meanings, but it is suggested that involvement from a skilful marketer increases the likelihood of a favourable outcome. Companies can benefit from engaging in collaborative CGC and CGC is expected to nurture stronger relationships between companies and consumers.

Opposed to the empowered consumers, the web 2.0 has also provided companies with insights about consumers creating possibilities to identify advocates and prevent termination of a desirable relationship.

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