Co-creating value using social media marketing sounds like a very complex task, but it’s a very simple concept. It’s the implementation of service-dominant logic that makes co-creating value challenging.
So, now that the first paragraph had totally confused you, let me break this down into common language.
Originally, Vargo and Lusch coined the phrase service-dominant logic to reflect the notion that all businesses, even ones who made things, rely heavily on service aspects to please customers. An example Bob Lusch uses in his YouTube video is that people buy cars primarily for transportation — a service.
Service-dominant logic is an unfortunate term that also means that service is a major component in all products, even ones manufactured in a factory. Going back to the car example, while you’re buying something you can touch and feel, you’re also buying a lot of things you can’t such as the reputation of the manufacturer, the quality of the service you’ll get, etc. And car companies realize these things have a big impact on the brand you choose. That’s why you’ll hear dealers advertising about their “free service for life” or “free oil changes for life”. They know these service elements provide competitive advantage that helps them make the sale.
The notion of co-creating value means that firms succeed (gain value) when they provide value to their customers. Although this makes intuitive sense, many firms fail to understand their role in creating value for customers or the notion of customer value gets lost in corporate rhetoric around profits — especially in manufacturing firms where there’s a big distance between the firm and customers in both physical distance and time (since customers won’t buy products manufactured today for weeks or months).
So, how do firms co-create value with customers and how does using social media fit into this broader notion of co-creating value? I’m glad you asked.
Social media is a perfect tool for co-creating value because it increases communication between the company and the customer. In manufacturing, these communications were never there before unless the firm spent a lot of money doing focus groups or collecting survey data. Using social media, firms get unbiased opinions from real customers and prospects at a fraction of the cost.
- Collaborative innovation – maybe the most important way using social media contributes to co-creating value is through collaborative new products. If you think about it, firms need new products consumers want to buy and consumers need new products to solve problems they face. What better way for firms to know what customers need than from the customers themselves. Using social media as a conduit for customer insights is probably the most value aspect for many businesses because they learn customer pain points, discover what customers don’t like about their own brands as well as those from competitors, and may even get suggestions from customers on how to improve their brands. For instance, I was working on some software a client purchased. It wasn’t working too well, so a colleague and I discussed features we felt were missing by sharing comments as Facebook status updates.
- Customer complaints – Twitter has replaced the corporate suggestion box as the preferred vehicle for sharing complaints about failed products. Using social media to hear and respond to these complaints goes a long way toward reducing the damage from these failures.
- Share brand messages – firms benefit greatly when customers share favorable brand messages using social media because it amplifies message reach and because consumers believe what they friends tell them much more than messages they get from the firm. But, how does this create value for consumers? Consumers benefit from the micro celebrity they get from being the go-to person for information. Firms can increase the value received by folks who share your brand messages using social media by recognizing them, thanking them, highlighting their comments, and other tactics that play into their micro celebrity status. Firms can even reward folks who share brand messages with discounts, free product, or other tangible benefits. For example, Red Robin offers discounts through Facebook updates and users share these updates with friends to claim the discount.
- User-generated content — user-generated content creates significant value for both firms and users. When users create a YouTube video or song parody about your brand and it goes viral, you both get a boost. Firms can encourage user-generated content using social media through contests or special offers for folks creating content. Sometimes the simple act of providing space for users to upload content is all it takes to get a lot of content. For instance, NASA maintains a site dedicated to user-generated content where anyone can upload posts, images, etc.
See, that wasn’t too hard. And now you have some new tools you can use or new ideas for using these tools more effectively to co-create value for your firm and its customers. If you need help understanding how using social media in co-creating value can benefit your firm, we’re happy to help.