Companies able to grasp social media’s potential to transform the way organisations function will secure a significant competitive advantage over their rivals, according to a new report from the Economist Intelligence Unit.
The dynamic, user-generated information exchanges that are social networks can provide companies an extraordinary opportunity to understand and work with their customers in beneficial ways. To benefit most, companies should use new forms of valuation to shape their customer engagement strategies, according to the report, Re-envisioning customer value, which was sponsored by SAS.
Applying conventional valuation methods, which identify companies’ most valuable clients by their transaction activity, can wastefully misdirect a firm’s interaction with its customers.
New approaches are necessary to avoid mistaking customers’ monetary value with the value of their influence. Harnessing the value of social media provides business with deeper insight into customer preferences and captures product feedback while identifying influencers and their networks.
Furthermore, updating metrics of customer value in order to improve a firm’s customer engagement can boost the company’s market capitalisation by more than 30%, according to academic research and data across two different industries. Drawing on this untapped wealth of customer information can open the floodgates of new potential value, driving growth and shareholder value.
The research explores the changing face of customer valuation. Read other findings from the report here.