There is no doubt that social media is changing the way we do business. Frustrated customers, sick of dealing with unresponsive customer service desks, are now able to air their concerns over Twitter, Facebook, even YouTube and the like, potentially reaching thousands or even millions of people, and companies are being forced to take note.
There’s another side to this new power though, and that’s the ability consumers now have to reward the companies they like with a positive review. Whether it’s a Google +1, a Facebook like, a positive tweet, or a forum post, it’s easy now to let people know when you’ve had a good experience or like a product. This is not just a nice way of saying thank you – it can actually make the product cheaper!
I think everyone understands that marketing and advertising is a necessary expense for most businesses, and therefore forms a part of the cost of any product. If your positive review is able to help that business acquire customers more cheaply, then you’re reducing their costs. In a competitive market, lower costs will eventually result in lower prices for the customer.
At CurrencyFair we’re sometimes asked how and why we’re able to deliver far better exchange rates than banks and other traditional online brokers, and still remain viable as a business. This is partly due to our sleek operating model – by automating as much of the process as possible we are able to deliver an exchange and transfer at a lower cost than the competition.
But lower operating costs are only part of the story. By offering this new peer-to-peer way to exchange, giving not only better rates but also far more control over the process, we’ve created something that people want to talk about and recommend to others. This not only makes us feel really good, it translates directly into more and more customers signing up to use the service. In fact, most of our new customers now come from personal recommendations and referrals via online forums. All this boils down to lower average marketing costs, meaning less to pass on in fees and thus better value. It also means a busier marketplace, which makes the exchange rates even better for everyone!
I’ve heard it said that people are ten times more likely to post a negative review when they’ve had an unpleasant experience than to post a positive one when they’ve been impressed. I can certainly understand that, but I think it makes sense to bring things back into balance a bit, and make things better for good companies, and better for ourselves, by rewarding the good as much as we punish the bad.