Awhile ago I came across a series of blog posts by Olivier Blanchard about something he called FRY metrics, where FRY stands for Frequency, Reach and Yield. In the posts he explained how FRY concepts can help express how Social Media participation can provide positive benefits for companies in terms of increased custom. A worthwhile goal I’m sure you’ll agree.
By way of background, here’s a summary of FRY metrics:
Frequency – the interval between transactions; how often a customer buys.
Reach (breadth) – total customer count.
Reach (depth) – how far customers purchase into and across the product line.
Yield – average per transaction spend per customer.
I have used the following illustration in the past to help clients go back to the offline, everyday world in order to help them understand how Social Media can help increase business as measured in terms of FRY. I thought I might share it with everyone.
Think of “Cheers”. Not the toast but he fictional bar from the TV show of the same name – Where Everybody Knows Your Name. Or, more personally, think of your favourite restaurant.
The first time you went it wasn’t your favourite restaurant. You were just trying it out (how you found out about it is a whole different discussion). But the food was great and the service was friendly and fast. So you made a mental note to come back sometime.
Sometime later you remember that restaurant you went to a few months back. You decide to try it again, and the experience was the same as the first time: great food, service, and atmosphere. So you go back a third time, but sooner this time, and some of the staff recognised you, remembering you from your last visit; maybe you meet the owner and are introduced to some of the wait staff. It is a very pleasant experience.
You go back again, even sooner. This time they remember your name and you remember theirs and they know what sort of things you like to eat and drink so they make good recommendations. And you remember what was happening in their lives so you ask how things are with them. The attention they give you makes you feel important and valued.
Now, how does this apply to the FRY metrics I mentioned above?
By now you’ve built a relationship with the owner and the people who work at what has become your favourite restaurant; they are friends, or at least more than just friendly. Because of this, you eat at the restaurant more and more often (increasing the Frequency of your transactions with them).
You also celebrate big events in your life at the restaurant and bring special friends there for special evenings (increasing your average spend [Yield]). Also, because of your glowing recommendation and the experience they have at the restaurant with you, your friends begin going on their own [the restaurant gains new customers, increasing their Reach/Breadth]).
While dining one time you hear about the great new Ruben sandwich or award-winning eggs Benedict the restaurant has, so you try them out for different meals, having lunch there occasionally, maybe even holding breakfast business meetings (you are now buying different “products” from them, increasing their Reach/Depth).
Because the restaurant took the time to build a relationship with you (and created an experience that was enjoyable, fostering the relationship building), you rewarded them as a customer with continuing and increased custom. You probably also introduced many of your friends and associates to the restaurant, helping expand its customer base. To paraphrase Seth Godin, you have gone from being a customer to a friend to a sales person for the restaurant.
How does this relate to Social Media? Well, Social Media can extend this sort of relationship building and the resulting opportunities outside of the four walls of your business. By building connections and community through Social Media, you can create a following of customer-friends who are loyal to you, who want to spend their money on your products/services, and who want to tell other people about you.
However, don’t forget, if you don’t have a positive atmosphere inside your four walls, if you don’t have a great product or service and fantastic customer service, then you will struggle to create positive, vibrant conversations and communities through SM (or any other means) outside your four walls.
Do you have any examples of businesses, restaurants or otherwise, that have made business gains from their connections in Social Media?
photo by Rob Dunfy
