Service Logic and the implications for a new Social Customer Relationships Marketing Logic

This post is not about introducing new terminology, as its title might suggest. This post is about exploring thoughts and new directions for a marketers approach in an increasingly competitive world. A world in which the Social Customer seems to be calling the shots. A world that is not yet comfortable about sustainable economic recovery and a business world that is interested but somewhat scared to embark upon new ways to interact and build social relationships with their Customers. Value co-creating relationships that is.

Marketers have been among the first people that seek to understand the implications of social media for their businesses. First and utmost they have been exploring ways to use these new media for their traditional marketing activities. Most will have discovered by now that traditional “push & shout” techniques do not work. But there will be new ones entering the social landscape that will fail too.

Adoption of a new marketing logic

In my humble opinion marketers do not only need to adapt their approaches in engaging with Customers or trying to influence Customers. Marketers need to adopt a new logic. A logic that is not based on Goods Dominant Logic, but on Service Dominant Logic. A goods dominant logic approach is focused mostly on creating momentum for value exchange or “the sale”. A service dominant logic is based upon the understanding that value for the Customer is created in the use of a product or service offered by a Company.

Influence of relationships in Customer networks

At the same time we are just beginning to understand how relationships in networks of Customers influence others. Customer activities in online social networks, which evidently leaves a trail of data, may help us understand this better, but is at the same time also influencing the way this influencing works. We are also seeing that Customers are helping other Customers improve their experience with products and services. As this may sound appealing, because the Customer is doing part of your job, it is also hindering the marketer from contributing to the Customer’s value creation process. In turn this takes away opportunity to increase value for the company. Value which should no longer be solely defined in terms of money, but should also be defined in terms of referral-value and network-value.

What are the implications for marketers job?

How does this all help the marketer? What are the implications of adopting a Service Dominant Logic and understanding that social Customer relationships  in Customers’ networks highly influence the value creating capabilities of the marketer. How can your company benefit from these idea’s and what does this mean for the jobs marketers need to do?

Below you will find a presentation in which I present my views on these questions. On the side I have slightly changed my Social CRM Strategy Framework Statement, based on these new insights. And please share your thoughts and ideas in the comments too.

You will find a list of reference articles, that represent and have shaped my views,  at the end of the deck.



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7 thoughts on “Service Logic and the implications for a new Social Customer Relationships Marketing Logic

  1. Pingback: Marketing is toe aan wat Service..

  2. Hi Wim, excellent post. I totally agree with this “new” vision of marketing (or better business) job in order to match customer desired outcomes through a service dominant logic. My only contribution to the discussion is that maybe could be interesting to consider not only customer “in use” experience but also other moments like awareness and consideration (I mean every step before the transaction moment). I see these phases particularly important especially because:

    1) they belong to the end-to-end customer experience
    2) they are fully influenced by the value offered by the network (think about the information gathered through the networks in order to define a correct understanding of desired-expected outcome match) like the “in use” experience step

    So, developing and strenghtening Feedback Management policies, supported by an experience-driven business model mindset, will allow to reach value co-creation scenario.

    What do you think?

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  3. Hi Wim, Hi Paul

    I agree entirely that co-creation is most effective when companies orchestrate networks of fellow providers to help customers get important jobs done well. And over all of the touchpoints in the end-to-end customer experience too, not just the traditional CRM touchpoints of marketing, sales and service.

    But I don’t think SD-Logic compromises these aspirations at all. If you look at Vargo & Lusch’s original SD-Logic propositions, No9 says that both companies and customers are ‘resource integrators’. In other words, they bring together ‘networks of networks’ to help customers get jobs done better. And proposition No7 says that companies do not offer value, but instead, offer ‘value propositions’. In other words, companies’ products should be created so that they enable customers using them to create more value during their use.

    Both of these are significant departures from most companies current product-driven business models. As I have pointed out elewhere, making the switch starts with developing a thorough understanding of what jobs customers are trying to do, what outcomes they want from doing them and what products they hire to help them.

    It’s time to get back to basics.

    Graham Hill
    @grahamhill

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  5. Hi Wim,
    I think that you (and Graham) have hit it on the head using SDL. Service Dominant Logic for marketing recognizes the customer as a partner – a participant in the experience thats provided by the company. My take on it rests in the idea of the collaborative value chain (If you want another name or acronym – we can say CVC). The enterprise value chain networks with the customer’s personal value chain to achieve that desired outcome. However, its only a part of the customer’s personal value chain. Where SDL and CVC have a difficult time is in understanding that the customer’s personal value chain in its entirety is affecting the customer’s relationship to the company – and to their own network – yet the company can only satisfy a portion of the customer’s personal value chain i.e. achieve a desired outcome for that customer in some effective way. One of the best ways to deal with that is not only create the products and services, but develop the tools and the consumable experiences that the customer needs to satisfy their outcome. That way its highly personalized and done when and how the customer wants it done, thus minimizing any bad effect of the PVC as a whole (not the piping, the personal value chain. :-)) That said, SDL begins to solve this for marketers in particular but for all companies in general. Good job, dude. Real good job.

    Paul

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  7. Excellent point Wim,

    I particularly like the slide 7 that states “Value is co-created when customer desired outcomes are met”. One of my favorite quotes is “Happiness is Expectations management”. Sometimes marketers create false expectations because they don’t understand how and why their customers use the products they market. However more often marketers do not think that “learning” is in their job description, that it is a role of the market researchers. These two disciplines were separated by “Chinese Wall” for a long time due to legislative and ethical concerns. These concerns are valid, but they produced unintended consequences of Customer Experience alienation. The Social Customers publicizing their experiences can help to fix this problem.

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