In my last couple of posts around ‘Preferences’ and ‘OAuth’, I have tried to explain how businesses can attempt a social media strategy for increased monetization using technology integration. As a prelude to this, I want to discuss the some fundamental tenets that need to be understood before developing an effective strategy for monetizing Social Media and all the Big Data that is created by it – Preferences, Participation, Personalisation and Prediction
4Ps of monetizing Social Media
Each of these involve a textbook worth of understanding and explanation in themselves but here I try to present their correlation with each other and how they need to work in tandem with each other for the most effective social media strategy for businesses.
Preferences
Based on research, there seem to be 4 types of customer preferences – declared preferences, observed preferences, inferred preferences and actual preferences – with potential overlap across each category. Let me explain with an example. My wife says she loves reading (Declared Preference = Reading). She goes online and mostly searches for articles on fashion trends in English (Observed Preference = Reading about fashion in English). Subsequently, she downloads magazines on her iPad like Vogue, Cosmopolitan, etc. (Inferred Preference = Reading about fashion in English Magazines). But I can tell you that she actually prefers ‘fashion’ (Actual Preference = Fashion) more than reading. She is just as likely to see fashion videos on YouTube or attend fashion events watching ramp models or tune in to FTV. The trick is to be able to understand actual preferences, through declared, observed and inferred preferences.
Participation
This is where I believe most companies fall short. Most businesses try to achieve business to customer and customer to business communications using Social Media. There’s even a term called Social Media Marketing. A quick look at some of the successful social media campaigns of 2012s makes it quite obvious that the successful ones invariably seek significant participation from their customers. However, they seem to spend a lot of marketing dollars to be able to do that. In my personal opinion a lot of this can be achieved at far lesser costs. And it is because social media is not about marketing but about participation. Just look at the meteoric rises of TripAdvisor, Wikipedia, YouTube, WordPress, Pinterest, Instagram, etc and the mammoth increase in user-generated content over the years. People want to participate especially in areas of social collaboration and crowdsourcing. Businesses have to find creative reasons for customers to be able to participate. There are few key drivers of participation in the social community – removing fear of public speaking and ability of asynchronous passive communication are the primary two in my opinion. One of the benefits of social media participation is that one can speak his/her mind without the fear of being rebuked or looking silly and it gives one sufficient time to frame their thoughts before posting their messages. These are also the reasons for rise of apps like Whatsapp, Line, WeChat, etc. which are seeing increased participation from a lot of customers.
Personalisation
There’s a lot of discussion around personalisation being the next big step in creating revenue channels especially for their premium customers. But real personalisation is only possible after understanding the customer effectively. In order for this understanding, businesses first need to learn the preferences of their customers, then invite their participation and based on a deep, rich understanding of the individual, try and develop personalisation of their products for each of their customers, especially their premium/loyal customers. Undoubtedly, the future of customer loyalty is personalisation.
Prediction
The final step to developing an effective social media strategy is that of Prediction and the recommendation systems. With rich and in-depth understanding of the customer achieved through personalisation and participation along with an understanding of their declared, observed, inferred and actual preferences, reasonable prediction and recommendation abilities can be developed in the IT systems of businesses for them to be able to offer products and services to their customers on a proactive basis.
Conclusion
There is no formula for developing the ideal social media strategy for a business. There are different methods, methodologies and principles which a company can use for guiding their own development. But eventually every business has to develop its own based on the competitor differentiation that it wants to achieve. Preferences, Participation, Personalisation and Prediction are just one way to achieve that goal. Personalisation and Predictive recommendations are going to drive the future of businesses and each organisation should start building its strategy fairly quickly to meet the challenges of the current generation which is “Always Connected! Always ON!”
