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Archive for September, 2009

Tools like YouTube, Facebook and Twitter make it a really bad idea to completely ignore customer grievances (especially when they are in the right), because stuff like this gets posted, and is watched by hundreds of thousands of people:

With a simple home video and convincing argument, Ann Minch let the world know of her anger at BofA for hiking her credit card rate to a whopping 30%. After learning of the rate increase, she called the bank to try and negotiate it back down – to no avail. So she took her complaint online and caused BofA a lot of humiliation, which they could have avoided by simply listening to her reasoning and behaving fairly.

As Tom Hollihan, a communications professor at the University of Southern California’s Annenberg School for Journalism stated, “She was able to use it [YouTube] to embarrass the bank…Social networking sites are very useful in a way to get the word out and help drive consumer choices in a way businesses have to take notice.”

BofA sure took notice, and contacted Minch to negotiate and drop her rate. But not after a complete media blitz including newspaper articles, interviews and a TV appearance by Minch. Just this weekend, she posted this video:

Though her own account situation is apparently resolved, Minch is apparently continuing the fight and has started the website www.DebtorsRevoltNow.com (still under construction), which encourages people to conduct their banking at community banks and credit unions and live financially responsible, proactive lifestyles.

Much like the wildly successful YouTube protest song against United Airlines, these viral videos illustrate the harm that comes from being unresponsive and practicing a reactive (instead of proactive) approach to customer complaints. One cardinal rule of word of mouth marketing is to listen to consumers and respond to them as individuals. It’s more important now than ever because of peoples’ ability to easily and quickly share their message. Hopefully Ann Minch’s video will teach BofA this important lesson.

/Maija

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Lending Club is an peer-to-peer lending network that offers borrowers better rates and investors higher returns than they could typically get at a bank. The online financial community has been experiencing strong growth, having added over 11,000 new users this year alone. To keep the momentum going, the company created a special offer, available for only two weeks, where new investors received $50 at sign-up. Lending Club sent out an email to existing investors encouraging them to refer friends to become lenders.

Usually we discourage paid referrals – “Get $$$ for referring a friend” is not true word of mouth marketing, it’s bribery. However, Lending Club’s offer is different. Current members are not being compensated for their referrals, instead, it’s only new investors who benefit. This should hopefully result in higher quality new lenders with more long-term potential. (I should clarified though, that according to Netbanker, “Lending Club does pay $25 to the referral source for new APPROVED borrowers. That’s an affiliate marketing strategy and makes economic sense because it’s only paid for approved loans.”)

Lending Club also made spreading the word easy through an automated wizard, where users could simply upload a list of email addresses and send prospects a personalized note. Facilitating the conversation is just as important as having something worth talking about.

/Maija

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I am a big fan of social media, both personally and for business. I think it offers a lot in both directions, personally it allows me a quick and easy way to stay up to date on friends and give them updates on me. Professionally it allows many companies to market themselves as well as stay up to date on new trends and the things that people are talking about. Overall, I have no real complaints (except that is sucks hours of my life away from laundry and dishes).

However, I am starting to see a shift in that “friends” or “followers” are not just friends or those interested in your brand/company. As is mentioned in this article, companies can now purchase friends and followers to increase their “popularity”…or at least appear more popular. I’m not sure how I feel about this or how well it will actually work. It seems like buying friends is just that – making your total number larger. How that turns into more “actual” fans or sales is something I cannot wrap my head around. It is also just plain disingenuous, and therefore an unethical word of mouth marketing practice.

Of course, it is good for your company to appear popular and show up on peoples profiles as much as possible. So I can see the appeal there…but will it make up for the price spent on adding these friends or followers? I’m sure in a few months we will start to see some metrics on this from USocial, but until then I am skeptical that this is worth the effort and cost. And as a matter of principle, concerned that it’s a dishonest form of marketing.

/Alicia

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