3.2.3 Social media options for activity Business model: customer relationships

Learning Goal: Understand customer relationships as a module of a business model and be able to identify the opportunities for social media to support this component of the business model and consider it when developing social media strategy.

Reading time: approx. 18 minutes

Exercises: Exercises are in the PDF of all exercises of this course. Download it from here.

Basics

This section focuses on customer relationships and the requirements from customer relationships for a social media strategy. Here, too, we work with the concept of customer relationships according to Osterwalder & Pigneur.

Definition of customer relationships

Customer relationships are the relationships that a company must maintain with its customers in order for its business model to work. Whether customer relationships actually materialize, however, is not least the customers’ decision. The company makes the offer of a certain type of relationship – the customer decides whether to accept this type of relationship.

Customer relationships are shaped by both economic and personal needs (of customers).

  • The value that can be derived from a service influences the type and intensity of the customer relationship.
  • The type of service impacts the type of customer relationship. For example, for services that can only be provided in person (e.g. haircuts) or that require a great deal of explanation (e.g. complex financial products).

Customer needs from and in the customer relationship

Companies nurture customer needs to retain customers. Consider the customer needs, i.e. the needs that lead to customers being interested in a relationship with the company, and consider how social media can contribute to these customer needs (for the customer relationship) being satisfied better or more comprehensively. If companies succeed in strengthening and activating their own customer relationships, this results in a measurable contribution to the company’s success.

Services of the company for the customer relationship

Companies engage in their customer relationships in the most diverse ways. Notifications, small benefits, active approaches, concrete structures such as customer clubs or communicative structures such as customer magazines have existed for decades. Many companies are investing heavily in CRM systems and some are using these systems for sophisticated profiling to make the customer relationship more successful for both parties.

Work step: examine how social media affects the company’s existing customer relationship services. Can these services be supported by social media, benefit from social media, be supplemented by social media, but also be made obsolete by social media?

It would be ill-advised to underestimate the displacement potential of social media. When communication behavior changes massively, this has an impact on measures that have been considered tried and tested and successful for decades.

Types of customer relationships according to Osterwalder & Pigneur

  • Personal support
  • individual personal support
  • Self-service
  • automated services
  • Communities
  • Co-participation
Personal support

Explanation: The essence of personal assistance lies in the contact of people. This contact can take place in person or via communication media. An example of this is personal consulting for standardized financial transactions in a bank.

Social media impact: the individual and personal contact between the parties involved can be influenced, for example, via the social context and via information.

Individual personal support

Explanation: the essential thing about individual personal support – besides the contact between people – is that it is a fixed contact. The customer is personally attended to by his account manager, salesperson or consultant. In our bank example, the customer has a special consultant assigned to him.

Social media impact: the individual and personal contact between the parties involved can be influenced, for example, via the social context and via information.

Self-service

Explanation: The Company does not have direct relationships with its customers. The customer is on his own, the company only provides the means for the customer to receive his service. Example: think of buying in supermarkets, using bank accounts or buying online.

Social media impact: even if there is no direct relationship between the customer and the company, the customer’s attitudes and evaluations can be influenced via social media through information and social context.

Automated service

Explanation: automated services are based on self-service and on automated processes that are standardized but also enable individual services due to individual characteristics. Typical of this are IT-based processes in which people are recommended services and products by algorithms based on usage behavior or personality traits.

Social media impact: even if there is also no direct relationship between the customer and the company in the case of automated services, the customer’s attitudes and evaluations can be influenced via social media through information and social context.

Communities

Explanation: the use of communities as a form of customer relationship binds the customer within a community and generates a higher level of loyalty through this environment as well as additional knowledge and insights about the individual and the behavior of the group. This not only increases customer loyalty beyond the company’s own capabilities, it also creates valuable insights into customer needs and problems, and additionally enables extended support (customer-to-customer) that would otherwise not be feasible for cost reasons.

Social media impact: In communities, the social context has a particularly intensive effect. In addition, this social context can be shaped – if feasible – through networking. In addition, information is another approach. Participation can also be used, there are meaningful participation opportunities within the community.

Co-participation

Explanation: Customers / users are integrated into company processes, relationships and services. Depending on the degree of participation, these can be successive, spontaneous forms of involvement or more extensive types of participation up to and including co-design. User-generated content or crowd sourcing are typical examples. But also the establishment and operation of support communities on the basis of volunteers belong to this category.

Social media impact: This is where participation has an impact. In addition, social context and information offer themselves as means of influence.

Social media affinity of existing customer relationships

The more pronounced the social media affinity of customer relationships is, the more we have to gear the design of our customer relationship to this affinity and thus to the performance potential of social media. How do we gain the most up-to-date and future-proof picture possible of the social media affinity of our customer relationships? For this purpose, we use the topics and subject areas that are relevant to our customer relationships, e.g., include customer needs in the customer relationship or are based on the services for the customer relationship.

Customer relationship and business model

The nature of a business model’s customer relationships results from the business model. And this was mostly developed and implemented without considering the social media performance potential. So when we determine the nature of the business model’s customer relationship, we better ask ourselves why the customer relationship is the way it is. Otherwise, we run the risk of overlooking a potentially important impact of social media on our customer relationships.

  • If economic reasons – i.e., internal company reasons – have led to this type of customer relationship, we may now be facing changed framework conditions that allow the company to use social media to reshape its own customer relationships – and make them more valuable for both the company and the customer. If we miss this opportunity, we produce a social media strategy without recognizing an important benefit of social media for the company.
  • If the reasons that led to this type of customer relationship lie with the customer, and here in particular with customer behavior, we should also ask ourselves in this case how we can – beyond this situation – make the customer relationship more valuable for the customer through and with social media.

Social media Change potential Customer relationships

If we can use social media to transform the company’s customer relationships, for example through regular communication or building relationships between the company and its customers and between customers, social media acts as a gamechanger for this part of the business model.

In doing so, we should pay attention to whether the use of the corresponding topics (the customer relationship) can also appeal to non-customers. We should also communicate this option accordingly within the company and take into account that this potential can also be used by the competition.

If we have identified a notable potential for change from social media on existing customer relationships, this is not only an issue for social media strategy development but possibly also one for business model adaptation. It is more advisable to make explicit reference to this point in advance rather than simply mentioning it as part of the social media strategy presentation.

We are working out the impact of social media on customer relationships by looking at the individual types of customer relationships. The social media effect stands for the impact on the customer relationship via / through social media and the methods summarized under social media effect .

The application of social media methods in the context of customer relations is particularly obvious. As a reminder and to raise awareness of this topic, below are some notes on the impact / potential applications of social media for customer relationships.

Customer relationships and social media usage formats

Customer relationships can be supported via social media through appropriately suitable social media usage formats, provided that the respective prerequisites are met.

Audiences in customer relations: The use of content in the form of audiences to maintain customer relations has a long tradition that goes back far before the days of the Internet. Social media / Internet reduces an important part of the cost of this type of customer care, making the use of audiences more economical. If there is the possibility to use user generated content in the context of these audiences, this option becomes even more interesting.

Communities in the customer relationship: if the prerequisites are met – see chapter Social media performance potential / Communities – both brand communities and topic communities are generally suitable. If both community formats are viable, the decision is a matter of corporate objectives for growth and competition.

  • Brandcommunity when the focus is on strengthening relationships with existing customers.
  • Topic community when, in addition to strengthening relationships with existing customers, the topic of acquiring new customers and building competitive advantage is relevant.
Customer relationships and user benefits

The UserBenefit of the customer relationship is the benefit we provide to a customer to maintain the customer relationship on social media. The status of the customer results from the use of a company service. The company’s performance in itself can generate sufficient benefits to permanently maintain a customer relationship. However, this relates exclusively to the customer relationship itself. The fact that this customer relationship also exists and is active in social media requires a corresponding benefit for the user. Advantages for the company to establish customer relationship in social media can be for example

  • in the communicative advantages of social media,
  • in cost advantages,
  • in the use of the interaction possibilities
  • in the use of social media resources for maintaining customer relationships
  • in the use of the recommendation effect of customer relationships via social media

lie So customer relationships in social media should be useful.

We need customer attention and possibly engagement to build and maintain customer relationships on social media. In order to generate this attention, we need a correspondingly attractive user benefit. What this user benefit consists of depends not least on the type of customer relationship that we want to establish and maintain, as well as the competitive situation in the corresponding subject areas of the customer relationship, the needs of the customers, and our corporate services / value propositions.

We have seen how individual customer relationships can be supported by social media in the types of customer relationships according to Osterwalder & Pigneur. Take this also as a hint where a user benefit could be located.

For practice

  • UserBenefits of customer relationship and UserBenefits of your social media strategy can be identical, but they don’t have to be. We provide social media users with value from our social media strategy to generate their attention and, at best, engagement in a way that is useful to us. And we provide value to our customers in social media to make the customer relationship in social media useful for them. It can make sense to work with two different user benefits here, especially if our strategy in social media is not only aimed at existing customers.
  • We should never confuse the user benefits of our social media strategy and the user benefits of our customer relationships with the benefits we create with our corporate services. If we equate the benefit of our corporate performance with the user benefit of our social media strategy or the benefit of our customer relationship, there is no reason for users / customers to pay attention to us in social media or to maintain a customer relationship in social media.
  • Make sure that the topics that create or point to the UserBenefit itself are communicated clearly. Nothing is more regrettable than an ingenious user benefit that remains hidden from users.
Customer relationship and participation

We can cultivate customer relationships in social media in a variety of ways. One of these ways is to integrate social media users and customers into communities, and another is to have social media users serve customers. Both opportunities can improve our competitiveness via stronger customer relationships and greater profitability in securing our customer relationships. The prerequisite is the participation of social media users. This requires – in addition to attractive user benefits – the right topics and the necessary social media usage formats.

Customer relationship and motivation

The motivation to enter into a customer relationship in social media is generally based on

  • satisfaction with the company’s performance. Social media is no good as a substitute for adequate corporate performance.
  • an attractive user benefit from the customer relationship in social media.

A motivation that goes beyond this can arise, for example, if the customer status visible in social media contains an additional benefit for the user – for his or her ego, self-presentation, or other values.

If we combine this motivation with appropriate structures that create social relevance, we can support the effect of user benefits and participation.

Application

The processes

We elaborate the social media action options for the customer relationships of a business model in the following steps:

  1. we define the existing customer relationships of the business model.
  2. we define the topics of the existing customer relationships.
  3. we define the potential of social media for existing customer relationships based on the social media affinity of the topics.
  4. we define options for the use of social media based on the suitability of usage formats, possible user benefits, participation offerings, and motivational methods and structures.

The result of the processes are options for action for the use of social media for existing customer relationships.

We work out the competitive situation in the topics of customer relations for all components of the business model.

In the section on fundamentals, I referred to possible social media effects for the individual types of customer relationships according to Osterwalder & Pigneur in very basic terms. In the application, apply this approach to their specific situation via the questions below:

  • Is social media suitable as an additional channel for the existing customer relationship and how can I make the customer relationship more valuable for the customer in and via this additional channel?
  • What are the constraints on our customer relationship and can social media reduce or remove these constraints?
  • What valuable benefit for the user can I add to the existing customer relationship through social media?
  • What concrete benefits can the company derive from a more intensive customer relationship – for example, through exchanges with customers, feedback, support or participation?

Work step: determine the type of customer relationship and contrast the customer relationship with the performance potential of social media by noting how the existing customer relationship can be supported by social media and how this customer relationship can be changed by social media.

Definition of existing customer relationships

If the existing customer relationships of the business model are already defined accordingly, we naturally fall back on them. Otherwise, we define customer relations according to Osterwalder & Pigneur as the first step.

  • Task: we define the existing customer relationships of the business model and define the priority of the customer relationship for the company.
  • Stakeholders: Responsible for customer relations, social media management, possibly management.
  • Procedure: Derivation of the customer relationships of the business model according to Osterwalder & Pigneur.
  • Result: Company customer relationships, by type and priority.
  • Example of a work template: Overview of customer relationships

Customer relations topics

It is easier to recognize and use the potential of social media for customer relations via the topics of customer relations. In the first step, we do this via the individual customer relationship, its benefits for the company and the user, and the issues based on this. When deriving the topics, we are guided by the needs of the users in the customer relationship and the services of the company (which are provided or should be provided for the needs of the users in the customer relationship).

  • Task: Definition of the customer relationship, its benefits and issues.
  • Involved: Person responsible for customer relations, social media management
  • Approach: we derive the benefits from the individual customer relationship – current and potential – and list the topics that describe, explain or create these benefits.
  • Result: individual customer relationship and its issues.
  • Example of a work template: description of the customer relationship

Social media affinity of the topics of the customer relationship

Based on the social media affinity of the topics of the customer relationship, we can see how far social media can have an impact on the customer relationship – via its topics. We check how much these topics are present in social media. If topics are actively used in social media, the need to use them for one’s own customer relationship becomes – hopefully – clearer. If possible, before the competition uses or even secures this opportunity as an entry point into customer relationships.

  • Task: we determine the social media affinity of the topics of the customer relationship
  • Involved: Social Media Management
  • Approach: we check how active the customer relationship topics are present in social media.
  • Result: Overview of the topics of one / all customer relationship(s) and their social media affinity.
  • Example of a work template: Customer Relationship – Topics

Further steps

We let the topics of the customer relationship flow into the topics from business model and markets. There they form the basis for the analysis of the competitive situation in the topics and the formation of topic areas.

Change potential of social media

Due to the change potential of social media for customer relationships, it is advisable to carry out the following work steps carefully.

Customer relationships and user benefits

We have defined via the individual customer relationships what benefits users can derive from this customer relationship.

Now let’s summarize the potential user benefits from and through social media for all customer relationships. If we recognize user benefits that are newly created or can be enabled by social media and are relevant for our customer relationship, we have identified a potential for change of social media for our customer relationships. Depending on the quality of this user benefit for the customer relationship, it can be a gamechanger that takes the customer relationship to a new level.

This gives us an overview of the potential user benefits for our customer relationships.

  • Task: Derive the possible user benefits from the benefits of the individual customer relationships. We note what benefits we can offer users from the customer relationship in and through social media, so that it becomes interesting for this user to maintain the customer relationship in social media.
  • Involved: Responsible customer relationship and social media
  • Approach: we examine which activities and benefits from the customer relationship can be used in social media and which additional benefits for the customer relationship are possible through social media.
  • Result: Overview of the potential user benefits of social media for the customer relationships of our business model.
  • Example of a work template: Customer Relationships: UserBenefits for Customer Relationships

Customer relationships and usage formats

We consider how social media usage formats can impact customer relationships. To do this, we pragmatically place existing customer relationships in the context of the individual social media usage formats. So we ask ourselves whether and how the existing customer relationship can benefit from a community, audience or social networks.

  • Task: Testing the effect of social media usage formats on existing customer relationships.
  • Involved: Responsible for customer relations and social media
  • Approach: Analysis of the benefits, the individual usage formats of social media for existing customer relationships based on the topics that define these customer relationships. We therefore examine the (individual type of) customer relationships according to how far the individual usage formats are suitable for creating additional user benefits or increasing the existing user benefits (from the company’s performance).
  • Result: Social media potential for customer relationships from social media usage formats.
  • Example of a working template for the analysis on the topics of the individual customer relationship.

To check the suitability of the usage formats for increasing the user value from the business performance, we adapt the work template accordingly.

Customer relationship and participation

We check whether and, if so, which user participation options are meaningful and useful for the company’s customer relations. The use of users and their experiences and recommendations is a more familiar example of the use of participation structures. Here, we are guided by participation opportunities for social media users in the context of benefits from corporate performance and benefits from social media performance.

  • Participation Customer Relationship / Company Performance: the social media users contribute to support the benefit from the company performance. This can be, for example, experience and assistance in the use of company services.
  • Participation customer relationship / social media performance: the social media users contribute to an additional benefit through social media for the customer relationship. These can be, for example, exchanges and community around the customer relationship.
  • Task: Identify / define participation opportunities for social media users as part of the customer relationship.
  • Involved: Responsible customer relations and social media
  • Procedure: Analysis of possible participation approaches of social media users in the context of customer relationships on the level of corporate performance (e.g., experience sharing) and on the level of social media (e.g., community).
  • Result: Participation opportunities for social media users in the context of customer relations.
  • Examples work templates: customer relations: Suitability Participation Company Performance

For the identification of participation opportunities at the social media level, we adapt the working template accordingly.

Customer relationship and motivation

Motivation can come from individual user activities or from data-driven automations. We can motivate intrinsically or extrinsically.

  • Task: We examine whether and how we can use social media to strengthen customer relationships through appropriate motivational methods and structures.
  • Involved: Responsible for customer relations and social media
  • Approach: we check which motivational methods and structures are recommended for the different topics of our customer relations. To do this, we are guided by the effect of the method and the possible motivational structures. Where we are committed to specific social media channels, we take into account their limitations.
  • Result: Overview of the possible motivation approaches (methods and structures) in the topics of our customer loyalty
  • Example of a work template: customer relations: Suitability Motivation

Overview of social media options for action Customer relations

  • Task: We summarize the social media courses of action for customer relations. To do this, we focus on the possible usage formats, user benefits, motivations and participation opportunities for the topics of our customer relationships.
  • Involved: Person responsible for social media
  • Approach: we summarize the options for usage formats, userbenefits, motivation and participation within the individual themes of our customer relationships.
  • Result: Overview of possible social media options for usage formats, user benefits, motivation and participation.
  • Example of a work template: customer relations: Options for action

Further procedure

The social media courses of action for customer relationships feed into the social media courses of action for the overall business model.

The competitive situation in the respective topics and subject areas of the social media options for action is examined. The possible courses of action and the competitive situation in the topics result in the requirements that we must meet in our social media strategy in order to be competitive in the respective topic / topic area.

This insight is a central basis for defining the content of our social media strategy.

Exercises

The individual exercises for these topics can be found under “Tasks” linked between the heading of this section and the table of contents.

Procedure: The exercises are primarily for self-monitoring. I.e. you perform the described exercise and thereby recognize to what extent you can apply the learned contents yourself and where you may need to reread and rework. You solve open questions

  • in which you review the material of the section (basics, applications).
  • check the FAQ for answers,
  • use the forum for open questions.
  • if the previous sources do not contain an answer – ask the lecturer (eMail)
  • use the Individual Lecturer Consultation (only participants with coaching package).

Participants without coaching package: Participants without coaching package do not upload any exercises and accordingly do not receive any feedback.

Participants with coaching package: The coaching package includes written feedback on submitted exercises. Participants submit their exercises as a 1 pdf document using the upload function at the bottom of the web page and receive my feedback via eMail.

Industry suggestions for further exercises

  • Media: apply the exercise to Gruner + Jahr’s CouchStyle project ( https://www.couchstyle.de) or ZEIT (zeit.de).
  • FMCG – Brand companies: Nike, Barilla, Paulaner
  • Retailers / chain stores: Douglas Cosmetic, dm-markt or Lidl
  • b2b: Würth, Liebherr (cranes)

The individual exercises for these topics can be found under “Tasks” linked between the heading of this section and the table of contents.


Exercise customer relationships own company

  • Define the existing customer relationships of your company's business model.
  • Define the key customer relationship themes for social media.
  • Define the social media affinity of these topics.
  • Define the priorities of each topic.
  • Define which usage formats are appropriate for these topics.
  • Define what user benefits are possible and meaningful for these topics - and the customer relationship - in social media.
  • Describe the change potential of social media on these customer relationships.