Companies ignore social media and the digital consumer at their peril

LONDON - Companies that fail to adopt social media could find themselves obsolescent, according to a report from Datamonitor, while other new research says digital consumers have stronger relationships with brands.

The firm's new report 'The Rise of Social Networking and Emerging Channels in Customer Service' says that while many companies of all sizes are adopting social media, many are not.

The report goes on to say that those who have failed to act do not understand that social media is here to stay.

Ian Jacobs, senior analyst for customer interaction technologies at Datamonitor and the report's author, said: "Social networks will not be a flash-in-the-pan craze and will not simply disappear or burn themselves out.

"Companies that choose to simply ignore this trend will relegate themselves to the outdated, fuddy-duddy camp -- an important distinction depending on a company's desired demographic -- and more worryingly, maybe even to obsolescence."

The report looks at the growth in social networking and how it has changed the interaction between customer and company as well as the ways in which companies have started using social networking to provide customer service such as social media-driven customer contact centres.

It provides concrete examples of how some companies have been succesful in using social media including @magiccurrykart, @MountainViewPD, @WholeFoods, @VirginAmerica and @Comcastcares.

Jacobs said the advantage for companies in engaging well with social media were obvious.

In addition to contact centres and moves to extend positive chatter about the brand online, he cited areas such as online contests, coupons and discount offers as some of the other ways brands were using social media well.

Jacobs said: "When done properly, social network-based customer service interactions drive increased intimacy between company and customer.

Customers feel that the company listens to, understands and cares about their preferences."
The research from Datamonitor chimes with data released by market research firm Millward Brown, which found that digital consumers have stronger relationships with brands than non-digital consumers.

It analysed WPP's BrandZ database and also discovered that some individual brands are disproportionately more appealing to digital consumers -- highlighting the importance of understanding these differences within categories.

This difference was strongest for airline brand relationships, where digital consumers had nearly twice as strong brand relationships as their offline counterparts.

Other key categories where digital consumers had stronger relationships than non-digital consumers included IT hardware and software (48% stronger), credit cards (33%) and fragrances (29%).

Another key finding in the report acknowledged that digital consumers are more than twice as likely to be what it dubs "transmitters" or knowledgeable category consumers who influence others with their opinions.

These digital consumers are likely to be slightly younger and more affluent, on average, compared to non-digital consumers and to place a higher value on creativity, excitement and having fun.

Peter Walshe, global brand director at Millward Brown, said: "It seems that digital consumers are simply more interested in brands.

"Digital research and purchasing helps develop brand knowledge, which then further reinforces brand interest."

"Brand and marketing managers need to understand the relationship digital consumers have with their brands as well as how it compares against their key competitors before they can effectively plan their digital marketing strategies."