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Service Logic and the implications for a new Social Customer Relationships Marketing Logic

By on Nov 25, 2009 Editor's Pick 2 Comments

This post is not about introducing new terminology, as its title might suggest. This post is about exploring thoughts and new directions for a marketers approach in an increasingly competitive world. A world in which the Social Customer seems to be calling the shots. A world that is not yet comfortable about sustainable economic recovery and a business world that is interested but somewhat scared to embark upon new ways to interact and build social relationships with their Customers. Value co-creating relationships that is.

Marketers have been among the first people that seek to understand the implications of social media for their businesses. First and utmost they have been exploring ways to use these new media for their traditional marketing activities. Most will have discovered by now that traditional “push & shout” techniques do not work. But there will be new ones entering the social landscape that will fail too.

Adoption of a new marketing logic

In my humble opinion marketers do not only need to adapt their approaches in engaging with Customers or trying to influence Customers. Marketers need to adopt a new logic. A logic that is not based on Goods Dominant Logic, but on Service Dominant Logic. A goods dominant logic approach is focused mostly on creating momentum for value exchange or “the sale”. A service dominant logic is based upon the understanding that value for the Customer is created in the use of a product or service offered by a Company.

Influence of relationships in Customer networks

At the same time we are just beginning to understand how relationships in networks of Customers influence others. Customer activities in online social networks, which evidently leaves a trail of data, may help us understand this better, but is at the same time also influencing the way this influencing works. We are also seeing that Customers are helping other Customers improve their experience with products and services. As this may sound appealing, because the Customer is doing part of your job, it is also hindering the marketer from contributing to the Customer’s value creation process. In turn this takes away opportunity to increase value for the company. Value which should no longer be solely defined in terms of money, but should also be defined in terms of referral-value and network-value.

What are the implications for marketers job?

How does this all help the marketer? What are the implications of adopting a Service Dominant Logic and understanding that social Customer relationships in Customers’ networks highly influence the value creating capabilities of the marketer. How can your company benefit from these idea’s and what does this mean for the jobs marketers need to do?

Below you will find a presentation in which I present my views on these questions. On the side I have slightly changed my Social CRM Strategy Framework Statement, based on these new insights. And please share your thoughts and ideas in the comments too.

You will find a list of reference articles, that represent and have shaped my views, at the end of the deck.



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2 Responses to Service Logic and the implications for a new Social Customer Relationships Marketing Logic

  1. Francis Buttle November 30, 2009 at 11:31 pm #

    Hi Will

    I like how you acknowledge the importance of social networks to the creation of customer value. Also anyone who has wrestled with SDL deserves credit! Kudos to you!

    I do have one suggestion to make. Marketers for far too long advocated the value-in-exchange model of customer value; then came value-in-use. I don’t think either is sufficient to explain how consumers perceive value.

    I’d like to suggest that marketers think more about value-in-experience. In other words, there may be value perceived in any or all stages of the customer journey, from searching for a solution to a problem, to remembering affectionately a highly enjoyable interaction.

    I’m supervising a doctoral candidate who is investigating this very phenomenon. He is using narrative data (customer stories) to unpack the components of, and timing of, customer value. It’s clear that customers can experience value well before, and well after, a product has been consumed. For example, when research participants are asked to recall ‘my first car’, many have very fond memories of the car, which still gives pleasure many years after it was hauled off to the recycler!

    What do you think about this idea of value-in-experience?

    Thanks.

    Francis Buttle, PhD
    The Customer Champion
    http://www.buttleassociates.com

  2. Wim Rampen December 1, 2009 at 5:38 am #

    Hi Francis,

    Thx for the kudos and contribution. Here’s my take:

    First of all Service Dominant Logic is not a total logic. I do not think value creation is completely limited to “in use”. I do believe that most value for the Customer is created in use.

    Furthermore, to me, SDL does not go against experience. Graham Hill makes a very good remark, in several of his posts here on Customer Think, when he states that we do need to understand that the Customer experience goes well beyond the traditional CRM-channels or interaction touch-points. It is the experiences over a lifetime that matter. Most of that experience is created by using the product or service itself.

    I also believe that most of the experience does not lie in the product or service, it lies in how well the Customer is able to do the job for which he “hired” the product or service.

    Adopting SDL does not mean that we should completely neglect surrounding experiences (such as the “searching” experience, or even the “remembering” experience) that also shape Customer behavior.

    As current marketer are mostly focused though on these surrounding experiences, SDL’s value-in-use focus provides a new logic to shift a marketers focus from dominantly focused on experiences towards exchange to dominantly focused on in-use-experiences. Nike running (or Nike +) is often used as an example of Social Media Marketing. I think it is a great example of “value-in-use-experience” too.

    When focusing on the Customer’s value-in-use-creation process there is also more value for the company to be created. Not just in increased Customer loyalty but also in better understanding the jobs Customers are trying to do. These insights can be used to create new or additional products or services (and experiences!), or better “value propositions” that improve the Customers’ experience or, as I “frame” it in the article: improve the Customer’s ability to (co-)create his value. Think Nike again, and how they, together with Apple, have created a platform and community in which Customer’s can now co-create their value-in-experience, in use, of the combination of products of both companies, together.

    To answer your question in short: I like the idea of value-in-experience and believe that most value co-creating opportunities, for all stakeholders involved, arise when focusing on the value-in-use-experience.

    What do you think?

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