On his Influential Marketing blog Rohit Bhargava caught my attention this morning with a great title for his entry — Customer Satisfaction Doesn’t Matter.  Rohit makes the point that particularly in commodity markets, companies would do well in their efforts to compete for business by cultivating satisfied customers, building loyalty, and then developing advocates who will refer them to their network.  In this regard, he says, Social Media and Word of Mouth marketing have a place.  On the other hand (I infer), companies with a tacit focus on customer service (particularly those with products where switching costs are minimal) will be pressed to succeed.  Traditional “customer satisfaction” efforts and metrics will not be enough.

Rohit is right that social media plays a part here, but it’s a complex mix right now.  Customer service communities (e.g., Helpstream), marketing communities (e.g., HiveLive), and word of mouth marketing (e.g., Zuberance) all play a part.  At this point, it’s anybody’s guess which approach (or combination of technologies) will rule the day and what the optimal mix of people, process and technology will be for different kinds of businesses.

I do think it is safe to say that at least in North America most companies will find some element of social media to be critical in their service, marketing and sales programs.  The practitioner leaders are and will continue to pave the path, and some will gain significant competitive advantages by being first to endear their brand with customers by closely aligning their products and services with the distinct preferences of their customer base.  The reason — customer advocacy morphs the relationship dynamic from company / customer to peer / peer, and it’s much more difficult to displace the latter than the former. 

Those companies who lag too far behind in this regard and who remain too comfortable with traditional product, service and marketing constructs may very soon find themselves hopelessly minimized in their target market(s) by more innovative companies.  Their prom dates will have already left the ball with somebody else.

The difference in this wave of innovation is the speed of change and the amount of wiggle room for error.  Unlike many previous innovations, this wave doesn’t require a huge technology investment, so anybody can play – there are plenty of relatively affordable social media toolsets available.  The obstacle this time is more cognitive, and those who make the mental shift can quickly break away from the pack.  In this regard, since smaller companies tend to be more organizationally agile, you might say the playing field might even be tilted to the benefit of small and medium sized business (SMB) than it has been in recent past.

Here is what I mean.  Sincerity is a requirement for any interaction – personal or professional.  Would you really want to be in a relationship with anybody who isn’t sincere?  I think for almost everyone, the answer to this is a resounding “no.”  Social media is no different, and if companies are not dedicated to sincerity with their customers, they will likely find social media to be a train wreck in slow motion.  But, before we agree on the need to be sincere, let’s agree on what this means.

Sincerity means engaging customers as equals and having the willingness to proactively adjust strategies, organizations and product offerings.  Moving forward, many companies might find sincerity requires the need to displace or reduce sales and marketing organizations with larger product and service teams and better customer-facing technology infrastructure.  (After all, if true customer advocates are going to be doing the selling for you, why would you need to pay sales people high commissions or marketing people to generate “leads?”) These will be difficult decisions, and this is just one example. Sincerity implies the willingness of c-level players to make some very basic structural decisions about how company resources will be allocated to address the changing needs of their customers and target markets.  This is much easier said than done.

My guess is that companies will find that social media exposes areas of weaknesses – product shortcomings, organizational dysfunctions, unserved needs, and competitive threats.  It gives voice to customers, and by virtue of the democratic nature of the Web it happens whether companies participate or not. 

Companies can choose to ignore it and even attempt to shout over the conversation with traditional advertising and PR strategies, but in the long run this won’t work. Social marketing and sales initiatives will need to be built on sincere relationships so to be successful, companies will need to consider how prominent of a component sincerity will be to their brand. 

If you have a category killer product with great features and break away technology you’ve either found yourself to be extremely lucky or your product teams have engaged customers and understand their needs already.  Why not formally extend that “discovery” practice to the after sale relationship with customer community and word of mouth programs?

On the other hand, if you have an average product, maybe investment in R&D should come first. If you find yourself anywhere in between, using service as a differentiator and leveraging word of mouth marketing to build customer advocacy is something you probably should not put off for too long.