Editable Google Slide (CC-BY-4.0)
For any brand, Fans are different from Customers. Fans love and express their love publicly, while Customers – buy. Two groups intersect, but not fully: not all your customers are your fans and not all your fans are your customers.
It’s important to understand that there is long-term strategic value for any company in both Customers and Fans: Customers bring money in and secure the company’s income today, Fans grow brand equity (which in turn brings and keeps more Customers) and thus secure the company’s future.
If Fans do provide strategic value to companies, then companies need to have a strategic way of thinking about their Fanbase: What value does it bring? Who brings more vs. less? How to get more people to bring more value?
For thinking about customers in this way, there is an established concept – CRM (Customer Relationship Management) – and an established industry, associated with it. At its basic level, the focus of CRM is maximizing Total Lifetime Customer Value (the total value that all customers bring to your company over their lifetime). In order to do this, companies that are taking CRM seriously have to do a lot of different things, from analyzing their transactional data and creating various segments, to recruiting new members to setting up recurring communication channels, rules and triggers.
There is a relatively recent movement in the marketing world to try to merge customer’s transactional data with their personal and social data, resulting in something known as Social CRM (sCRM). Understanding customers better can provide crucial insights into how to make them buy more and in this sense sCRM is a very valid extension of CRM. On the other hand though, sCRM concept may be misleading because by its very name it still implies focus on maximizing the customer value (by knowing more about customers through their social data), not about maximizing the value of Fans (in their own right).
Since we believe that Fans bear strategic value to companies as fans, not only as customers, the current CRM / sCRM view at social seems out of balance to us.
We think that companies may benefit from thinking about their fans in a similar way to how they think about their customers. This is why we are proposing a new term that can help conceptualize and streamline this thinking.
FRM (Fan Relationship Management)
FRM is focused on maximizing Total Lifetime Fan Value and it’s about asking the following questions:
- Who are our Fans? Why?
- In what way do they add value to our business? How do we measure it?
- How do we turn more people into Fans?
- Who are our Most Valuable Fans (MVF)? What are the special traits, the special behaviors that make them more valuable than others?
- How do we turn more of our fans into MVFs?
Social Media can be a prime (but not the only) tool for FRM.
For some businesses, Social Media can be used for CRM, as well as for FRM. This is especially true for businesses that sell online.
If big brands start to thinking about Social Media in the bigger context of FRM a lot of confusion in the boardrooms can be eliminated, because the ultimate question (“Why are we spending money on this Facebook thing?”) will be answered in a fundamental and potentially numerical way.
But this requires companies to first answer the really tough question, which is:
What is the value of a Fan?
(not a Facebook fan or a twitter follower, but a true real fan of your company or your brand – the one that loves your brand and is vocal about it)