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Business Rx: Social media provide valuable way to get customer feedback

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By Special to Capital Business
Monday, September 20, 2010

How many Facebook fans do you have? How about Twitter followers? Should you even be worried about these tools to grow and sustain your business? All types and sizes of organizations are jumping to make sure they have a social media presence, but there is a method to how business owners should be using these outlets to their advantage.

A lot of companies are struggling to figure out what they want to do with social media. Many are using social media as an advertising tool to push messages to their target audiences. At the Center for Excellence in Service at the University of Maryland's Robert H. Smith School of Business, we recently released results of a survey with Network Solutions showing that 62 percent of small-business owners are using social media to stay in touch with their customers, compared with to only 46 percent six months ago.

In addition to using social media as an advertising channel, companies are also increasingly using social media as a listening tool to "hear" what customers are saying about them.

You're listening, but are you really hearing your customers?

Social media has generated an unprecedented volume of word-of-mouth chatter surrounding brands and products. The water-cooler conversations and backyard barbecue banter has made its way online with people turning to online ratings and reviews, blogs, discussion groups, Twitter feeds and Facebook posts.

As a business owner or an entrepreneur just starting up, social media can provide valuable customer feedback by allowing you to eavesdrop on the virtual conversations and online interactions happening between your customers on social networks.

For example, say you own a bake shop in Georgetown. You can't control what people post about your business on the review site Yelp, but you can pay attention to it. If everyone's talking about your chocolate frosting, that's great feedback to slather it on more cakes, or think about tweaking your recipe -- depending on what they are saying.

Use what people are saying online about your business to your advantage:

-- Don't forget about the silent majority. Many forums are dominated by a small group of individuals who may not be representative of the broader customer base that has chosen to remain silent. Studies have shown that 99 percent of social media users are actually quite passive -- they are using the sites to read what others are saying. It's that vocal 1 percent making all the noise. Think about this before you react to a negative string of posts.

-- Social dynamics in the forum can influence who posts and who remains silent. In the face of conflicting opinions, less involved and more positive customers increasingly remain silent, letting the more critical customers steer the ratings environment. In my own research, I've found that consumers' decision to contribute a product rating is linked to the variety of opinions that had been posted previously. When there is already a consensus of opinion on a forum, more positive and less involved customers are more likely to add their own positive post. But when there was disagreement, the posting participants tend to share negative opinions. My study also shows customers are more likely to provide online ratings for products they feel strongly about -- whether positive or negative.

-- Don't overreact to negative feedback. They say negativity breeds negativity, but negative reviews don't necessarily mean that your brand or product is uniformly disliked. More favorable customers may have chosen to remain silent. Trying to appease your dissatisfied customers may be quite costly -- and not necessarily worth it. Instead, encourage the less involved to post. Less-involved customers tend to be more favorable, while more involved customers tend to be more critical. If you're trying to foster a positive tone, provide incentives for posting reviews to those who don't normally post. Offer coupons or discounts. Use Twitter to offer a special deal just for followers and encourage them to re-Tweet it.

-- Don't be afraid of disagreements. While disagreement among opinions tends to attract more negative posters, it also fosters more discussion. This insulates product sales from a few uncharacteristically negative opinions. At the end of the day, the question is: Do these dynamics affect product sales? An online opinion forum tends to take on a life of its own. While the temptation is high to strategically manipulate the opinions expressed, the benefits in terms of product sales are limited -- not to mention the steep downsides associated with the legal ramifications and the potential for negative publicity.

Wendy Moe is an associate professor of marketing at the Robert H. Smith School of Business. Her current research focuses on technology-enabled measures of early product success and examines online product reviews and search engine activity as predictors of future sales. Moe is organizing an Oct. 1 Social Media Forum conference at the Smith School in which business practitioners will discuss social media strategy. More information and registration is available at http://www.rhsmith.umd.edu/smf/.


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