Implications of the Customer Engagement Maturity Model on Social Media

Originally published December 19, 2012

Online advertising attracted the highest advertising dollars last year, according to the Interactive Advertising Bureau (IAB). On one hand, the leading brands are struggling to show how million dollar investments on brand websites and social presence are influencing brand engagement. And on the other hand, there are those that realize the immense potential in social, but in the absence of a structured framework and benefits focused tools have thus far struggled with defining and presenting a solid business case to their CFO. Coupled with this, the phenomenal growth in consumers’ use of social networks and the creation of user-generated content makes the digital channel the most sought after channel for marketers to tell their brand stories and engage with their customers.

With so much user-generated data available in real time, brands and marketers face a challenge: How do we reliably measure the pulse of our users, become more effective in our outreach, and engage customers to encourage brand advocacy as well as influence conversions/revenues?

One reason why social marketers still find it difficult to measure customer engagement in the new paradigm of everything social is the lack of a solid framework for analyzing new forms of social data in the context of their business objectives. The proposed framework suggested in this article would help marketers leverage social data to derive meaningful insights. The focus of this framework is to assess and define an ecosystem that will expand the boundaries for relationship management beyond the currently ubiquitous brand awareness model.

The Customer Engagement Model on Social Media

At the heart of the model is the Customer Interaction Index – a measure of the industries’ inherent natures and the propensity of customers to have deeper relationships that extend beyond brand awareness into transactional loyalty.

At the broadest level, consumer-oriented industries are classified across a dimension that measures the engagement potential with the brand. The parameters behind this index are influenced by a tangible long-term offering, the importance of the offering, the potential for continuous dialogue, the service paradigm, the synergies between offerings (cross sell) and the maturity of offerings (up sell).

For relationship-intensive businesses such as banking, the index has a higher value than industries where brand awareness and a subsequent emotional purchase is the only outcome. For example, both retail and banking are industries that command a high Customer Interaction Index. On the other hand, the consumer product industries are more oriented towards brand awareness and brand loyalty.



This framework leads to a maturity model for online marketing and business process investments. The maturity model provides a roadmap to:
  1. Maximize the potential where the Customer Interaction Index is high

  2. Enable avenues to improve engagement in industries where the index has a lower value

The Engagement Maturity Model

The maturity model has been outlined based on the following key parameters:
  1. Capabilities – what must be built or developed as we progress up the engagement curve

  2. Benefits – what benefits can be expected with each maturity level

  3. Investments – the levels of necessary investments that must be made in analytics, technology, marketing and process improvements with each maturity level


As is expected, both benefits and investments rise as we move up the curve. However, more interestingly, there are insights into the nature of investments at the various levels. As one rises along the maturity curve, the technology and process/marketing investments maintain a lower level than the intelligence and analytics category. This becomes possible because of the investments made at the structural levels to support the outcomes from advanced business intelligence (BI) and analytics category.

The parameters of the model are explained below.

Levels of Maturity

The top row of the model outlines the various levels of maturity. As one moves across to the right, the level indicates increasingly tighter integration of business offerings, capabilities and social integration. For example, there are Facebook fan pages and Twitter tweets on the left but there also exists a thriving consumer/customer ecosystem.

Benefits & Outcomes

The benefits are in tune with the levels. While the lower levels of maturity primarily focus on brand awareness and getting the message out, the higher levels are responsible for generating higher retention levels, referrals for acquisition and a greater potential for both deeper and wider customer portfolios. These benefits are accrued largely due to the integration of product offerings and their presentment and treatment as per customer needs, not as per organizational convenience of hierarchy. The result from such an ecosystem is the avoidance of incurring a break in customer engagement by reducing the need for external reinforcement of the material offered for consumption.

Business Process & Marketing

The first of the two structural capabilities, the process view of the organization, will undergo significant evolution. As organizations mature, the most significant impact from a change management perspective is the organizational realignment to the needs of an increasingly customer-centric view of the world. Product offerings and cross-industry partnerships have to be reexamined from the perspective of how they work together to provide greater customer value, and how they are conceived, developed, bundled, sold and serviced. Similarly, channels and geographies must come together so the context of operations can drive customer engagement. The leading driver of this change will be the capability for community governance. The capability will simply not work if the business process, marketing and the enabling organizational silos are not realigned correspondingly. Cross-functional programs that bring together different silos and evolve the incentive structures over time are a great example.

Technology Integration

The other half of the structural capabilities, technology, will enable business process changes as well as set the stage for future evolution of business capabilities. Today, technology is leading business innovation. The possibilities offered by technology are generating greater value for business at a much faster pace because we are able to deliver faster and partner with greater authority on the manner in which new capabilities must be delivered. As we evolve, the business process changes. The need for greater harnessing of data is yielding several areas including process automation and integrated functional suites such as for marketing, which will finally stabilize the organization and enable it to launch newer capabilities from the resulting platforms. However, the CIO and CTO offices must step up the monitoring and governance of investments to ensure that the realization of the business benefits is not impeded through vendor lock in, product limitations and, in general, the capability and flexibility to change. As history has shown, no platform can be a gatekeeper to change simply because the future is not fully known. Likely tradeoffs will come from accounting treatments of capital expenditures as well as in-house versus outsourced process capabilities. Important mitigations will come from envisioning resilient enterprise architectures that rely on flexible, service-oriented models rather than monolithic architectures.

Analytics & Business Intelligence

This is most likely the layer that will fuel the change for the future. The capabilities can be segregated into two major categories:
  1. Measurement and continuous improvement – allows for an accountability framework that links maturity levels to benefits to investments and ensures that ROI areas are well highlighted and tracked.

  2. Business capability – allows for both innovation and operational excellence framework by guiding the capture and utilization of data to yield insights that reduce costs and drive business decisions.
This is also the capability in which constant and high investments must be made to ensure that the organization stays at the cutting edge. New interaction patterns between customers, products, partners, channels and content will yield new models of business value which must be distilled quickly for actionable strategies. The two structural capabilities of business process and technology will enable this evolution.

Conclusion

As organizations prepare for this new wave of change, they must also brace themselves for the risks arising from compliance and privacy, organizational realignment, and investing in technology platforms that won’t scale or be easily amenable for change. What is outlined here is a set of targeted maturity levels, backed by business benefits and supported by key capabilities that the organization must develop. By no means is this change the biggest in our history of great evolution, but it is a significant one because, for the first time, the potential is real to commoditize the most sacred of the business offerings. This would not be considered a fight to gain market share or establish a great social presence, but rather it is a journey to keep an organization from being relegated to the ranks of the commoditized, forced to fight on price and discounts instead of value delivered. And the risk of organizational realignment will be the one risk that management must address comprehensively to be able to tide over this change, and be ready to address the business opportunities that wait for the ones most prepared.
 

  • Rathin DasRathin Das
    Rathin, Consultant-Analytics at Mindtree has significant experience in marketing analytics, research and category management driving consumer and shopper insights in CPG, retail, media and travel industries. Rathin has worked in conceptualizing monetizable analytical products leveraging analytical frameworks like trade promotion predictive analytics, customer/ company segmentation, customer profiling and forecasting of sales and baselines. He also specializes in CPG market research studying the consumer data (IRI syndicated data) and delivering consumer insights. He carries extensive experience in category management (retail) working for India’s largest retailer performing demand aggregation and planning, space, range, merchandising and stock planning, coordinating replenishments, promotion planning and vendor management.
  • Manish GroverManish Grover
    Manish is Program Director with MindTree’s Digital Business Solutions Group in New Jersey. He focuses on new digital business and marketing paradigms, leveraging social media, mobile, analytics, functional and process integration to improve customer engagement, profitability and brand positioning.


 

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