Thursday, December 3, 2009

Consumer power shift

In pre-Facebook/Twitter/Blog/Epinions days, the consumer's power pretty much ended when she handed over her money.

Oh sure, she could bitch to her friends about how the product or service failed to live up to its advertising, and maybe write a letter to the manufacturer or the store if she was really steamed. But that was pretty much the extent of it. If she was really noisy, she could perhaps reach 20, or maybe even 30, people.

Today, a whole different deal.

Social media and customer review websites provide her with a megaphone to broadcast far beyond her immediate circle of acquaintances, and a way to check consumer ratings on every category of goods and services.

In a recent study examining the impact of consumer-generated, online reviews, people said the opinions of fellow consumers influenced them more than those of professionals, and that they would pay more for highly rated services. Another says that one negative comment on Twitter, Facebook or Youtube can cost a company 30 customers.

Smart retailers (e.g. Apple) are building the customer review process right into their online stores. Stupid companies are ignoring all this at their peril. At a minimum, they need to monitor customer sentiment and feed it back to decision makers.

If people can't find a way to complain to the company, they will complain to the world, so companies need to provide channels for problem resolution. Sure that costs money, but I'm guessing it's a whole lot less than the business lost as a result of negative word-of-mouth.

There is now a level playing field, not just because the consumer has a new arsenal of online weapons, but also because there has been a general erosion of corporate credibility by countless cases in which short-term gains trumped the best interests of customers.

You are your own consumer advocate.

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