CEO Blog

Does Social Media play any role in customer loyalty?

Written by Ravindra Bhagwanani on . Posted in CEO Blog

Social media

08 December 2015

Listening to certain social media experts, one could get the impression that all sales, marketing and loyalty departments could be shot down as social media is about to take over all these functions. A critical analysis.

No doubt, social media had a very strong influence on many aspects of our lives over the last five years and has transformed certain business practices, often to the better. But as it tends to happen with such rising stars, they are sometimes overrated for what they are and what they do. So in concrete terms, what does social media do to drive loyalty for airlines and hotels?

My short and simple answer would be: nothing.

Let me explain. By definition, social media is something very short-lived. Try to catch up with your Facebook wall if you were not there for a couple of hours. You are sure to miss out on something. Don’t lose your time to watch a snapchat because it might disappear before your next breathe. All this can be fun because it is instant, fast and dynamic.

Loyalty on the opposite is boring. It is a long term game with the ultimate objective of becoming a lifetime elite member after 10 years or so of devoted loyalty. Wow. This has nothing to do with instant distractions as suggested by social media.

So the interesting question is how did anyone in first place have the idea that social media could do something for loyalty…? I admit I have somehow missed that piece in history, but it is one of the rare moments where I wish to be able to beam myself back into the past and do things better next time. Like standing up and screaming NOOOOOOOO – STOP IT. Like in a good movie, I mean.

There is nothing bad about social media, but it is just something which I would even not call a small sister of loyalty. And the other issue with social media is obviously that the big share of social media afecionados is below 30, although this is evolving, of course. But even grandparents having set up their Facebook page (as otherwise they would lose contact with their grandchildren!) do not use this channel in the same manner as the younger generation. And at least when we talk about the airline or hospitality industry, the interesting target group for companies is still the business traveller/executive, who tends to be 40 upwards and is therefore more difficult to be reached through social media campaigns. And given the instant character of social media, it is mandatory to be loud to stand out and become visible. This might be done through gamification elements (for which a normal executive has no time) or price offers, which are contrary to the objective of loyalty programs to make members less price sensitive…

And the argument that social media might be an investment into loyalty of the next generation is, in my humble opinion, a bit questionable as well: If ever those young people manage to become successful in professional life one day at all – given the time they spend on their smartphones -, there is a big chance that nobody talks about Facebook et al. anymore by the time they’ll have reached that stage.

So while I am critical in regards to the loyalty potential of social media, there is evidence that it does a lot of good things at the higher level of customer engagement. This is simply due to the fact that social media makes it so much easier than before to connect with your airline/hotel that this can have a very positive impact on customer perception. And here we are talking about customers of all ages. Just look at the dedicated Twitter account of Etihad for its Etihad Guest top tier members (which are hardly in their 20ies!) and the need for customers of all kinds to be able to connect easily with their favourite brands becomes evident.

Companies are therefore well advised to dedicate the required resources to these tasks – and this not only in terms of manpower, but especially in terms of quality and training. The standard tweet reply “Please call our customer service at 1-800-xxx-xxxx to resolve your issue” is no longer sufficient as customers are looking for a competent and immediate reply on the channel they have chosen and which was actually introduced by the suppliers themselves, at least as long as we talk about Facebook, Twitter etc. and not about powerful third party user forums such as FlyerTalk. And probably 95% of cases could indeed be resolved at such a level with a corresponding organisational structure in place.

So when talking about social media next time, put it in the right context: There are tremendous relationship opportunities, but too many companies are not yet seizing them, but rather get distracted by all the noise being made about these media, which do comparably little to increase loyalty or yields for your company. And since I missed that historic big bang of social media being attributed the vocation to create loyalty (still feeling bad and guilty about that!), I’ve been waiting desperately for a sign that this would change. So far in vain and I remain confident about the future in general, but sceptical for social media really ever playing a stronger role in loyalty.