Engaging customers and prospects on social networking sites is not new, but it is evolving to involve customer service and expanding to formal contact centres.

Jacobs says social network-based customer service can increase intimacy between a company and its customers.

Hong says the benefits of customer service through social networking go beyond easy interaction with customers.

No longer can a company afford to ignore one unhappy customer.

His grouses might be heard by thousands within moments, and this can spell disaster for the company.

On the other hand, a happy customer can tell his experience to thousands within minutes, shining some light on the company’s existence and services.

This is the power of online social networking sites such as Facebook, MySpace and Twitter, and companies of all types have started to see the possibilities to better market themselves to potential customers through these services.

The pace at which information is shared and the wide reach made possible on social networks has forced companies to think about how to reach and service customers and prospects in these channels, says Ian Jacobs, senior analyst for customer interaction technologies at Datamonitor.

Whether it is through online contests, coupons and discount offers or just an extended presence to shine positive light on brands, social networking has become a darling of the marketing world, he says.

While much of that activity has been pure marketing, some leadingedge companies have started to offer customer service and support through social networking. The trend is most prevalent currently in the North American region, followed by Western Europe.

Jacobs says customer service through social networking is an outcome of increased corporate presence on these networks, which also leads to service interactions between company and customer.

Once companies begin to build some brand presence on online social networks, customers begin to interact with them. Some of the interactions focused on customer service and support issues. And when companies respond to the requests through the same channel, hence a new concept of customer service through social networking.

“Some of these interactions result from a direct contact between a customer and a company. But with new social media monitoring tools, companies have also begun to inject themselves into customer conversations.

“If, for example, a customer complains to the world about poor service, the company reaches out to the customer and tries to solve the issue. When done properly, social network-based customer service interactions increase intimacy between a company and its customers. Customers will feel that the company listens to their complaints and cares about their preferences,” says Jacobs, who authored the report The Rise of Social Networking and Emerging Channels in Customer Service.

The report looks into the potential market for customer service provided by online social networks and how that customer service might be expanded to formal contact centres. It examines the trends driving customer service on social networking sites. Because formal contact centres are carrying out little social network-based customer support today, the Datamonitor report provides a look at what the competitive environment might look like.

Essentially all of the customer service and support being performed today on online social networks come from social media specialists within companies. These specialists are able to understand the written and unwritten rules of social networking and can imbue the service interactions with some personality. Social network specialists can direct customers to call a contact centre or have the contact centre place a call to the customer.

Datamonitor’s lead analyst, customer interaction technologies Daniel Hong says this model cannot scale to meet the exponential growth which online social networking services are experiencing.

“This is the chance for customer interaction technology providers to create solutions that provide scalability for these operations, primarily by allowing formal contact centre environments to handle some or all of these interactions.

“There are numerous technological, business process and cultural hurdles to overcome before this model can gain a strong foothold in the enterprise market.” He says many enterprises look at the explosive growth in social networks and feel that they need to “do something” without having a clear idea of what the benefits are.

“Clearly, the growing proliferation of online social networks means that they provide a path to reach a large number of customers or prospects. But that benefit provides more excitement to a vice president of marketing than it does to a vice president of customer service.

“Because social networking inverts the usual model of customer support – the enterprise goes to its customers rather than the other way around – there has been a great deal of focus on how this new model might increasingly just become the cost of doing business.” Beyond easy interaction with customers, Hong points out, there are other potential benefits to customer service through social networking that are less often discussed. He says although marketing through social networking sites is new enough that no definitive research has been conducted on return on investment, the widespread assumption is that the investment required is so low that there must be a reasonable return.

“Social networks are an evolutionary step in the use of computing. It is still unclear whether customer service will thrive via social networks. But it doesn’t require much investment and it won’t hurt for companies to test the waters of using social networks for customer service.” Hong believes that over the next two years, companies that use social networks effectively and creatively for customer service, will start separating themselves from the pack.