Social media is increasingly being used for promotion, customer research and product development. The question is will this marketing go viral. Greg Becker investigates
Social media has been grabbing headlines lately: the news covered the Arab Spring with many reporters discussing the role played by social media in organising those driving change; the financial pages have been filled with talk of the recent listing of LinkedIn (which has since doubled in value); and the stratospheric valuation estimates for Facebook are getting many of us thinking.
Many readers will be members of Facebook, many will be connected on LinkedIn, and many will have used web-based reviews whether TripAdvisor before going on holiday, or Martin Lewis' Money Saving Expert before buying a financial product.
From a corporate context, many readers will view social media as a brand risk in particular, forums and blogs where aggrieved or grumpy customers vent their views.
Savvy and forward-thinking institutions monitor their online profile and respond to customer complaints rapidly, mitigating the brand damage and hoping to turn vociferous detractors into vociferous advocates where possible.
MiWay, a South African general insurance operation, has embraced this new world order and accepted that people are going to discuss their products and service online.
It has also accepted that this discussion is going to be used by potential customers when making purchasing decisions.
The company strives for high service levels and aggressively responds to all negative reviews.
As a result, they score very highly in customer satisfaction surveys, such as those provided by independent third parties Hellopeter.com, for instance.
MiWay's strategy has been so successful that it has built its entire marketing strategy around ‘satisfaction scores' with a marketing message along the lines of ‘don't trust our advertising, listen to those who use our products and services!'
By looking at the traditional measures of success top-line growth in sales and the company's valuation this strategy is working.
In the Netherlands, another social media approach has been pursued to target the country's 700,000 self- employed.
Achmea decided this niche was calling out for a product response and embarked on a new way to get there.
In partnership with a variety of stakeholders, a forum was created for the self-employed: Myler.nl. The forum has attracted almost 8,000 members so far.
The traffic passing through the forum has been surveyed using Denkmee.nu to increase understanding of their needs, and the problems that this self-employed demographic has with the company's existing product offerings.
Critical illness and life insurance products have been developed that reflect this feedback, and direct sales to portal members have begun using the GoedGenoeg.nl website.
This site also addresses some of the feedback related to the need for customer education, using things such as short video clips from doctors to explain critical illness diseases and policy wording.
While direct sales in the first month have been slow, many distribution channels have come forward and expressed an interest in selling Achmea's products through their distribution channels.
This is all pointing to a situation where social media is very useful, in terms of the marketing mix Ps: in shaping the ‘product', and getting some ‘promotion', but that it was not the optimal ‘place' for distributing the product.
With the new distribution partners that are coming forward, significant sales may still materialise.
If you are reading this online, will you post a comment below, tweet about it or send the link to a colleague?
If you are reading the print version, will you tell friends about this article? We need not forget that while technology potentially increases the footprint of our comments, word-of-mouth communication is nothing new, and the offline heuristic equally applies online: customers who have had a bad experience tell far more people than those who have good experiences.
Social media and Web 2.0 have just increased the stakes, but that means that the winnings can be larger too.
Goed Genoeg translates as ‘Good Enough': if you thought this article was good enough, will you pass it on
Greg Becker is product development actuary at RGA
