Customer Portfolio and Strategic Account Management, Essay Example

Introduction

Business-to-business (B2B) marketing strategies are common to social media websites, who rely on their business with other organizations to turn a significant level of profit. Overall, large media companies like Facebook, Twitter, and LinkedIn rely upon paid advertisements for their continuing existence. These companies do not attempt to sell their products to customers to any significant extent because their marketing features have a larger extent of profit drive. In order for the social media industry to remain profitable, these social media giants must gain an understanding of what their business partners require to get their name into the public domain. As such, each company offers a variety of options to their business partners to help them get started.

Facebook offers a multitude of options to small and large businesses who are looking to publicize their company on a local, national, or worldwide level. A majority of these options will provide Facebook users with the ability to have posts show up in the homepages of their users, which will increase the likelihood that a potential consumer will visit their website, like their Facebook page, or engage in their profile content. The advertising options offered by Twitter is similar. Large companies can provide the website with a certain amount of funding that will ensure that their brand trends, again allowing a greater percentage of people to access the company’s marketable content. Pinterest acts by providing advertisements that will appear either on the sites main page or on the profiles of users.

The social media business is a highly profitable B2B model because it allows smaller businesses to take advantage of the large percentage of traffic that social media sites attract. In order to refine these business practices, it is essential for these companies to gain a more comprehensive appreciation of who their consumers are and how this information could be utilized to generate a greater degree of revenue. In the B2B setting, gaining an understanding of the customer is slightly complex because the customer can represent an individual, group, or entity that represents the whole of the organization.

Customer Portfolio

When people interact with social media platforms, they often consider themselves to be customers of their favourite application. However, this is not the case. Social media organizations profit based on the number of profiles they are able to convince users to create. Companies then pay these social media outlets for access to their information or to advertise their company. As a consequence, it could be said that social media websites are able to benefit greatly from their B2B relationships. Furthermore, it becomes apparent that the customers that these social media sites should be concerned with consist of the small businesses that rely upon it for customer traffic.

A majority of the customers that pursue Facebook and other social media sites to attract traffic are those that can be found online. It is possible for these organizations to also have a physical store front with which they can greet customers, but businesses tend to do the best if they are able to advertise a website using these social media platforms. A majority of social media sites will provide business partners with a link to their home page and encourage visitors to click and visit. Therefore, 86% of businesses have websites to represent their products or services and 49% of these companies buy into social media websites for promotional purposes (CMO Council, 2015). It is therefore important to consider that slightly less than half of large businesses have pursued some form of online marketing campaign and that a majority of these individuals have a website. Based on this knowledge, it is recommended that social media companies create their own advertising campaign to actively pursue large companies that have websites but have not yet launched their own social media campaign. It is likely that most of these companies are unaware of the benefits that social media advertisements have to offer. Therefore, reaching out to these companies and utilizing information from their website to compile ideas for advertisements would likely increase the business seen by these social media companies to a large extent. While many social media companies do not feel that they need to actively pursue their customers due to their widespread popularity, this represents an effective way to remain competitive in an unpredictable market.

Many marketing specialists argue that it is necessary for all businesses to invest in, at minimum, a social media profile (Neti, 2011). It is necessary for these organizations to become searchable on the internet, and completing social media profiles on all relevant sites allows this to become more reasonable. Therefore, to an extent, the customer profile of social media organizations consist of every type of business in terms of business category, location, and other demographic features. Companies are aware that social media is an integral component of remaining competitive. Therefore, many organizations are on-board with the policies and structures that these groups have put in place. Furthermore, social media platforms are attractive because they provide organizations with the ability to allow businesses to conduct research on their competitors. Thus, any company would benefit from registering on social media, which in turn allows these social media companies to profit.

Since the emphasis on social media marketing is often the companies that invest in these organizations, it is simple to overlook the importance of the “product” being offered, otherwise known as the individuals that create profiles on these sites. However, it is important to consider that since these organizations do not often report full customer portfolios to the public, it is reasonable to predict what these demographics would look like based on the types of people that tend to join social media websites. Therefore, it is reasonable to conclude that the type of people that join social media websites for free and the businesses that attempt to market to these individuals are proportional in nature. In addition, generated revenue based on user geography will help the marketing team gain a greater understanding of which users in which areas should be targeted.

According to the information presented in figure 1, the United States and Canada consistently contribute the most revenue to Facebook for advertising purposes. However, the amount that individuals were willing to spend on online marketing campaigns nearly doubled between the first quarter in 2012 and the first quarter in 2014. It is expected that this trend will continue to increase. As a whole, the spending incurred by European businesses and Asian businesses have increased as well. Therefore, a majority of Facebook’s customers are North American users, although there are also a small percentage of European and Asian users, in addition to users from other parts of the world. This information could be applied to a demographic understanding of the customer basis as a whole, as organizations from the United States and Canada tend to rely most on the marketing platforms that social media companies present to them.

In order to generate a meaningful understanding of the customer portfolio, it is also necessary to determine which individuals are most likely to use social media. Since social media groups have access to demographic information, this data could be easily used to sort and identify users that have organizations that would be interested in conducting business with the social media website. According to figure 2, a majority of Facebook users are female, but only by approximately 10%. Therefore, due to a margin of error and variance according to the use of other social media websites, it appears that gender is a negligible component of the social media customer portfolio. In addition, a majority of individuals that use the site are between the ages of 18 and 29. However, most business owners are likely to be in the next two age brackets, 30 to 49 and 50 to 64. Therefore, social media websites should focus on individuals that are members of these age groups for their targeted marketing. Lastly, these social media websites will most want to target customers that are able to pay for advertisements on the site. (Rust et al., 1993). Thus, they will want to target individuals that are in the upper income bracket of $75,000+ per year. These three factors adequately reflect the customer portfolio of social media users and are therefore demographics that the company would wish to target for marketing purposes.

Consumer Portfolio Matrix

It is essential for social media companies to continue to produce a marketable product so they are able to remain competitive and relevant (Armstrong & Brodie, 1994). Early social media companies like MySpace are currently unable to compete in the current market and are therefore unlikely to grow. This company was unable to fully develop the concept of businesses rather than the user acting as the customer. As a consequence, the business was somewhat profitable but its success is negligible compared to the profits of modern social media organizations.

It is also important to consider organizations like Instagram that are subsidiaries of larger social media organizations. Although this application is highly popular, it is limited with regards to the type of information that could be shared on it. It is essentially limited to the sharing of photos and messages on these photos. Therefore, this type of marketing would only be relevant for a small number of businesses. As such, it currently has a low market share but potential for high market growth due to the number of businesses that are likely to adapt its practices to suit this application.

Companies like Twitter have an extremely high user base that continues to grow. Individuals of all ages use this application to send short messages to followers and this application has become more relevant for news and entertainment channels. Because of its many uses and the diverse amount of users it attracts, it is likely that Twitter will continue to grow and continue to hold a large share of the market.

Last, Facebook currently has a high market share but a low market growth. The website has already attracted millions of users around the world, which makes it unlikely that it will be able to grow to a greater extent. Because the organization is already successful, it is unlikely that it will grow, but it will continue to profit.

Overall, this demonstrates that different social media organizations are exposed to unique challenges. While they are all able to work with the same businesses to promote their content, different businesses will be attracted to different websites based on the user base and the popularity of the site. In this industry, consumers are primarily concerned with the number of people that they will be able to access. Therefore, Twitter and Facebook are often considered to be the preferred applications for this marketing business. Other social media platforms however, such as Myspace, are willing to market businesses for a lower cost, so some businesses prefer to purchase marketing space from these organizations instead. Thus, cost is a major aspect that could differentiate business and contribute to the growth of a particular social media platform in spite of its current level of popularity.

Strategic Account Management

For social media companies to effectively market their advertising abilities, it is first essential for them to attract a useful customer base or “product”. The more profiles that a social media company has, the more attractive they will appear to potential organizations for marketing opportunities. Therefore, one way to compete is by providing individuals with a higher quality product. In the social media industry, this pertains most directly to the software programmers and coders that are responsible for making the website usable. This will then in turn attract users that will join the application based on the features that it offers. Another important consideration in the world of social media is that each social networking platform distinguishes itself by offering different capabilities and a different user base. Therefore, it is reasonable for users to create accounts with each organization. However, the offerings of each website will depend on whether or not the user will continue using the application in a manner that will be profitable for the company.

In addition to setting up the social media website to be user-friendly, social media organizations also need to be concerned with how they will market their product to businesses. To ensure that this is possible, these websites often have a separate page dedicated to explaining the advantages of marketing with the company in addition to any restrictions that may be in place for doing so (Tzempelikos, 2013). In some instances, social media companies will require their representatives to communicate with businesses that may wish to invest in advertising services to ensure that the deal is maximally profitable. In other cases, the two businesses will reach a meaningful deal outside the context of the website to provide exclusive advertising websites. However, it is important to consider that despite the exact marketing process a company uses, this is the most essential aspect of their business. An ability to make contact with businesses for advertising purposes has a direct impact on the profitability of the social media network. Therefore, there is great incentive to maximize these practices.

Many social media companies attempt to build and maintain relationships with their customers by providing them with an easy-to-use interface. Companies such as Facebook allow customers to click on various aspects of their profile for promotion, which is accompanied by a prompt that asks them to select which customer demographic they would like to target, and how long the campaign should run for. Because the consumer is able to link his or her account to a credit or debit card, this transaction can occur almost instantly. Consumer support is provided in the form of a statistics panel that allows the user to know the amount of people that visited their Facebook page, website, or shared their posts as a consequence of participating in the campaign.  This is important because it creates positive customer relations and demonstrates that the marketing is effective. This will convince many consumers to relaunch their advertising campaign after it expires.

It is also important for these companies to consider that pricing is an important component of their ability to do business. As a consequence, one of the most popular marketing options is the pay-per-click advertisement. This way, the social media company is ensuring that the client will not pay unless they were able to attract some form of traffic to their profile or business website. This is an important practice because it demonstrates that the marketing services provided are worth the money spent and it shows that these companies are truly invested in the interests of their customers.

Another component of pricing that is essential to business is that this is the one variable that allows social media companies to differentiate from one another. Since these companies do not typically advertise their advertising services on websites, it is challenging for them to compete in this manner. Instead, they must offer affordable marketing services that prove to be effective and are therefore promoted by word-of-mouth in addition to their own websites (Zeithaml, 1998). Companies such as MySpace that do not hold a large portion of the market share are able to offer less expensive prices than Facebook, where many individuals compete to have these marketing spots. Therefore, it is important for these companies to carefully consider how to balance its affordability with the services that they are willing to provide for the cost in order to remain on the top.

Conclusion

Overall, it is important for social media companies to consider that they are able to target their customers based on the information that they themselves collect from their users. The customer profile of business owners on these websites are most likely to make more than $75,000 per year, live in the United States and Canada, and are between 30 and 64 years of age. In addition, it is important for social media organizations to remain competitive with one another in terms of price to be able to attract new customers. Since social media users can sign up for as many sites as they please, social media companies must improve their free services to improve the quality of the “product” they offer to businesses. It is important to gain an understanding of social media marketing because it is one of the more abstract B2B businesses in existence. However, if these business practices are done properly, social media organizations are capable of attracting significant amounts of profit.

References

Armstrong, J.S., Brodie, R.J. (1994). Effects of portfolio planning methods on decision making: experimental results. International Journal of Research in Marketing (Science Direct), 11 (1): 73–84.

CMO Council. (2015). Internet Marketing. Retrieved from https://www.cmocouncil.org/facts-stats-categories.php?view=all&category=internet-marketing

McDuling, J. (2014). Facebook’s mobile user base has crossed the 1 billion threshold. Quartz. Retrieved from http://qz.com/202349/facebook-mobile-user-base-has-crossed-the-1- billion-threshhold/

Neti, S. (2011). Social Media and Its Role in Marketing. National Journal of Enterprise Computing and B International Journal of Enterprise Computing and Business Systems, 1(2): 1-15.

Rust, R.T., & Zahorick, A.J. (1993). Customer satisfaction, customer retention and market share. Journal of Retailing, 69: 193-215.

Tzempelikos, N. (2013). Assessing Customer Value in Key Account Management Relationships. ARU Institute for International Management Practice Working Paper Series, 6.

Zeithaml, V.A. (1988). Consumer perceptions of price, quality and value: a means-end model and synthesis of evidence. Journal of Marketing, 52: 2-22.