Next-gen consumers: Bringing companies to their knees
A decade or so ago, if you received poor customer service or were dissatisified with a product, you may have phoned the company to complain. Stuck listening to poorly-recorded theme tunes, by the time you were bounced along to the 'right' department -- which no doubt cannot actually help and may try to bump up the month's commission by selling you another version of the item that you rang to complain about -- steaming resentment boils, resulting in a furious tirade and potentially being 'accidentally' cut off.
Furious, you write an angry letter. Perhaps you may also make sure your friends know not to use the company considering your poor experience with it.
Considering our social pools are tiny in the grand scheme of things, such customer disapproval is unlikely to make too much of a dent in a company's profit margins.
Then social media appears.
We may not be able to hashtag our way to ending wars or world hunger, but social media can be a means in which to broadcast our positive opinions, or our displeasure, when it comes to businesses across the world. This phenomenon has already lead to changes in business models and systems, and there are unfortunate examples of businesses losing potentially millions in revenue through angry customers.
Social media is a double-edged sword. It can be a boon to a company's reputation -- for example, Sainsbury's customer service and Tiger Loaf -- to a marketing disaster, such as the Twitter outrage against Tesco's 'slave labour' job advertising.
With the next generation of consumers growing up with such networks, what does this mean for future business models?
One letter has none of the power or influence a pool of discontent, now easily found online, possesses. One Tweet may not have much sway, but the ability to share and link information -- as well as find like-minded individuals -- does.
With a click of a button, users can impart positive or negative reviews of a company or product, and the speed in which this review can go viral and turn general opinion, in worst-case scenarios, can make or damage a company -- remember Go Daddy and SOPA?
Now, not only do businesses have to harness the power of social media within their marketing models, but they must diverge resources for damage control purposes. As the next generation grow with mass opinions shared online a commonplace affair, this kind of risk management will become a hefty investment for corporations in the future.
All the power, however, is not vested within online communities or users of social networks. Companies too can exploit the potential of social networking, and use it not only to give themselves a strong online presence or to advertise, but can hire third-parties to post favourable reviews, collate information for market research, and become an interactive company attractive to the current-day consumer.
This kind of interactivity is now being demanded more and more by tech-savvy, young consumers. No longer satisfied by a 'returned' phone call (which may or may not happen), the next generation want answers, immediately, and expect to be communicated with -- not simply broadcasted at by a corporate image.
Part of damage limitation caused by such an influx of communication and online activity is the potential investment required for 'backpedaling' company changes that are unpopular with consumers. A famous example is that of the Bank of America introducing a monthly $5 debit card fee for every customer. Enraged, a 22 year-old, Molly Katchpole, created an online petition against the charge, which attracted over 300,000 signatures.
It wasn't long before Facebook became involved, with an event called 'Bank Transfer Day' in protest gaining thousands of 'attendees' rapidly. A month after the event, U.S. credit unions cashed in by gaining $4.5 billion in new accounts, no doubt gleefully in consideration of their competition's rather public gaffe.
The fee which caused consumers to flee in their droves equates to a huge amount in potential lost future investment, fees, loans and charges. Even though the charge was dropped, it does not mean the customers returned. This one example alone demonstrates how a single online user who broadcasts anger or an idea (such as the petition) can go viral, to the damage and detriment of the business.
The question businesses must ask themselves is this: as the next generation grow up with this kind of power in their hands, how do they plan to alter their ways of doing business to stave off such potentially ruinous exposure, and use social media to their advantage?
Interested in other examples? Check out the infographic provided by Frugal Dad below:
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