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PART I

Welcome to the Thank You Economy CHAPTER ONE

How Everything Has Changed, Except Human Nature

Think back on the last time someone did something nice for you. I don’t mean just holding the door open; I mean watching your dogs while you were away for the weekend or driving forty minutes to pick you up at the airport. How did you feel afterward? Grateful, maybe even damn lucky to know someone who would go out of his way like that for you. If given the chance, you’d be sure to reciprocate. You might not even wait to be given a chance—you might just do something to make him happy, and show your gratitude, because you could. Most of us recognize that to have someone like that in our life is a gift, one that shouldn’t be taken for granted.

In fact, no relationships should be taken for granted. They are what life is all about, the whole point. How we cultivate our relationships is often the greatest determinant of the type of life we get to live. Business is no different. Real business isn’t done in board meetings; it’s done over a half-eaten plate of buffalo wings at the sports bar, or during the intermission of a Broadway show. It’s done through an enthusiastic greeting, with an unexpected recommendation, or by offering up your cab when it’s raining. It happens in the small, personal interactions that allow us to prove to each other who we are and what we believe in, honest moments that promote good feelings and build trust and loyalty. Now imagine you could take those interactions and scale them to the hundreds, thousands, or even millions of people who make up your customer base, or better yet, your potential customer base. A lot of people would insist that achieving that kind of scale is impossible, and up until about five years ago, they would have been right. Now, though, scaling those interactions is not only possible—provided you use the right tools the right way—it’s necessary. In fact, those companies and brands that refuse to try could jeopardize the potential of their business, and in the long term, even their very existence.

Why? Because when it comes down to it, the only thing that will never change is human nature. When given the choice, people will always spend their time around people they like. When it’s expedient and practical, they’d also rather do business with and buy stuff from people they like. And now, they can. Social media has made it possible for consumers to interact with businesses in a way that is often similar to how they interact with their friends and family. Early tech adopters jumped on the chance to regularly talk to businesses, and as time goes by, more and more people are getting excited by the idea and following their lead. You may not have seen the effects of this movement yet, but I have. I see them every day. Trusting relationships and connections formed via social media are quickly becoming two subtle but rapidly growing forces of our economy. It is imperative that brands and businesses learn how to properly and authentically use social media to develop one-to-one relationships with their customer base—no matter how big—so that they make an impact in their market, now and in the future.

Social Media Is More than Media

For the record, I dislike the term “social media.” It is a misnomer that has caused a boatload of confusion. It has led managers, marketers, CEOs, and CMOs to think they can use social networking sites to spread their message the same way they use traditional media platforms like print, radio, television, or outdoor, and expect similar results and returns. But what we call social media is not media, nor is it even a platform. It is a massive cultural shift that has profoundly affected the way society uses the greatest platform ever invented, the Internet. Unfortunately, when the business world is thinking about marketing via social networking sites like YouTube, Facebook, Twitter, Foursquare, and DailyBooth, it’s thinking about using social media, so that’s the term I’ll use, too.

Great News Is in the Eye of the Beholder

Finally, a way to really connect with our customers, an opportunity to hear what they want, what they think, how things went, how our product worked, or how it didn’t! At last, a chance to create personal and creative campaigns that do more than shove our message down our customers’ collective throats! Don Draper would have dropped his whiskey glass in joyful delirium if you had told him that his agency didn’t have to run focus groups anymore to find out what people wanted. Think of all the money that brand managers could have saved over the decades on test marketing and other classic research techniques which, in all these years, haven’t done much to improve a new product’s risk of failure, estimated at 60 to 90 percent; they’d be looking cross-eyed at today’s social media marketing skeptics for not recognizing great news when they hear it. But, shockingly, a lot of people don’t want to hear it. If it’s true that one-to-one is quickly becoming one of the most important ways to reach customers, then it means a massive number of businesses are eventually going to have to undergo a total cultural transformation to compete. That’s a thought most corporate execs are going to meet with about as much enthusiasm as Dwyane Wade would if he were suddenly faced with undeniable proof that basketball was dead and ice hockey was the only game left.* Yet let’s remember it wasn’t so long ago that the few people who owned home computers used them almost exclusively for word processing and video games. In 1984, you’d get stuffed in your locker for gloating over your new Apple Macintosh; in 2007 you could score a hot date by showing off your new iPhone. Culture changes, and business has to change with it or die.

Why I Speak in Absolutes

Because if I give you an inch, you’ll run a mile with it. When I said in 1998, “You’re dead if you don’t put your business on the Internet and get in on ecommerce,” was that true? No. But boy, can you imagine trying to be in business in 2010 with zero Web presence? I’d rather shock you into paying attention, and admit later that business rarely requires an all-or-nothing approach, than take the chance that you won’t take the situation seriously enough.

Unfortunately, a lot of business leaders and marketing professionals can’t see that change is here. (Not coming. Not around the corner. Here.) They look at the business being done on Twitter, Facebook, myYearbook, and Foursquare, and say with contempt, “Prove it.”

My pleasure. In this book, you’ll read about an array of big and small companies, in a variety of industries, that were proud to share how they successfully improved their bottom line by leveraging and scaling the relationships made possible by social media. When looked at as a whole, these examples offer undeniable evidence that there is financial gain for any size company that is willing to open the lines of communication with its customers and market to them in a personal, caring way that makes them feel valued. There’s no reason why any company couldn’t make these efforts and achieve similar results. Social media makes the Internet an open, level playing field where any limits to how far you want to spread your message and your brand are self-imposed.

The secret to these companies’ success is that at some level, they figured out how to put into practice a number of the ideas I want to explain in this book:

The building blocks necessary to create a powerful, legacy-building company culture How to re-create the perfect date when developing your traditional and social media strategies Using good intent to set everything in motion Delivering shock and awe to your customers without investing a lot of money, just a whole lot of heart

In addition, they weren’t held back by fear or the arguments many leaders use to dismiss the effectiveness of social media. In this book, I’ll tackle the most common of those arguments and explain why they don’t hold water.

Consumer expectations are changing dramatically, and social media has altered everything about how companies must—MUST—relate to their customers. From now on, the relationship between a business and a customer is going to look very different from the way it has looked in the recent past.

The Heart and Soul of the Matter

How do people decide they like each other? They talk. They exchange ideas. They listen to each other. And eventually, a relationship forms. The process is no different for building relationships with customers. If your organization’s intentions transcend the mere act of selling a product or service, and it is brave enough to expose its heart and soul, people will respond. They will connect. They will like you. They will talk. They will buy.

A survey of parents preparing for the fall 2010 back-to-school shopping season found that 30 percent of them expected that social networking would affect their purchases; another survey, conducted in early December 2009, revealed that 28 percent said their buying decisions had been affected by social networking, with 6 percent admitting to being influenced by a friend’s Facebook status about a product and 3 percent being influenced by a friend’s tweet. By the time you’re reading this book, the percentages will be dramatically higher. More and more, people are making business and consumer decisions based on what they see talked about on social media platforms. The thing is, people don’t talk about things they don’t care about. So it’s up to you to make them care, which means you have to care first.

When I first started tweeting, I had no brand recognition; no one knew who I was. To build my brand, I started creating conversations around what I cared passionately about: wine. I used Search.Twitter (called Summize.com back then) to find mentions of Chardonnay. I saw that people had questions, and I answered them. I didn’t post a link to WineLibrary.com and point out that I sold Chardonnay. If people mentioned that they were drinking Merlot, I gave them my Merlot recommendation, but I didn’t mention that they could buy Merlot on my website. I didn’t try to close too early, like a nineteen-year-old guy; I made sure to invest in the relationship first. Eventually, people started to see my comments and think, “Oh, hey, it’s that Vaynerchuk guy; he knows Chardonnay. Oh cool, he does a wine show—let’s take a look. Hey, he’s funny. I like him; I trust him. And check it out: he sells wine, too. Free shipping? Let’s try a bottle of that….” That’s what caring first, not selling first, looks like, and that’s how I built my brand.

That’s what I mean about revealing your company’s heart and soul. There’s only so low you can go on price. There’s only so excellent you can make your product or service. There’s only so far you can stretch your marketing budget. Your heart, though—that’s boundless. Maybe it doesn’t sound realistic to expect anyone to be that emotional in business, but hey, how many people thought they would be tending to a virtual farm three years ago? Meanwhile, at its peak Farmville saw 85 million players.

Now, I realize that your reality isn’t boundless; scaling one-to-one relationships and hiring employees to help you costs money and time. But in this book, I’ll show you that when you spend money on social media, you’re not actually investing in a platform—you’re investing in a culture, and in consumers who can ultimately become your ambassadors. We’ll examine the return on investment and talk about how to make every dollar count. Ideally, though, your goal should be “No Interaction Left Behind,” because what pays off most is your willingness to show people that you care—about them, about their experience with you, about their business.

It’s not as hokey as it sounds. In fact, it is exactly how the business world used to run. I believe that we are living through the early days of a dramatic cultural shift that is bringing us back full circle, and that the world we live and work in now operates in a way that is surprisingly similar to the one our great-grandparents knew. Social media has transformed our world into one great big small town, dominated, as all vibrant towns used to be, by the strength of relationships, the currency of caring, and the power of word of mouth. In order to succeed now and in the future, it’s going to be imperative that we remember what worked in the past.

When Caring Meant Business

If you’re lucky enough to spend any time around any eighty-or ninety-year-olds who still have their wits about them and their memory intact, you’ll inevitably hear them remark how much the world has changed since they were young. Most elderly people can easily identify many ways in which the world has changed for the better, but they often express more than a hint of regret for a time when things moved more slowly, when people knew their neighbors, and when strangers and friends alike were expected to treat each other with courtesy and respect (even if they didn’t feel like it). They’ll also reminisce about how retailers and local businesses made it a point to know your name and make you feel like family when you walked in. As well they should have. Whether you lived in a small town or one of the small-town communities re-created in city neighborhoods, it was entirely possible the business owners/managers had known you your whole life.

Back then, there was no need to encourage people to buy local. Local was, for the most part, all there was. If your mother bought her meat at Butcher Bob’s, it was pretty likely that you shopped at Butcher Bob’s, too. Butcher Bob knew your family, knew your tastes, and knew that during the cold months he should reserve a hambone for you to flavor your weekly batch of split-pea soup. How Butcher Bob treated you when you walked into his store was as crucial as the quality of his ground beef. It wasn’t that you only had to walk three blocks over to see what rival Butcher Bill had to offer in his case. It was that if you weren’t happy with the service you received—if, for example, Butcher Bob refused to reimburse you for the freshly ground chuck that you brought home only to discover it wasn’t so fresh—you’d vent your outrage to the PTA, or a trade union meeting, or the country club. That was Butcher Bob’s worst nightmare, if the PTA, trade unions, or country club members represented a big chunk of his customer base. To lose one disgruntled customer could often mean losing ten of his or her friends and relatives. In the smaller, tight-knit communities of yesteryear, ten people represented a lot of revenue. Businesses lived and died by what was said via word of mouth, and by the influence people had with one another. That meant every person who walked through the door had to feel as though he or she mattered. Unless he was the only game in town, the butcher, the baker, the candlestick maker—heck, everyone who had to deal with customers—had to be as friendly, accommodating, and, when necessary, apologetic as the other guy, if not more so.

This was an era when businesses could stay in family hands for several generations. Often, the business wasn’t just a way to make money; it was something the owners and managers closely identified with and in which they took pride. When the business was relatively new, the people who ran it often cared as though their life depended upon it because, well, it did. The business was their ticket to the American dream. This is what was going to launch their children’s future. They were in it for the long haul; it would be their legacy. And in the end, when they retired, they were probably still going to live among all the people with whom they had done business for many years. Their customers weren’t just walking wallets; they were friends and neighbors, so business owners cared about their customers. A lot.

Word of Mouth Loses Its Voice

That world our grandparents and great-grandparents knew, the one where relationships and word of mouth could have a direct impact on an individual’s personal and professional reputation, and on the success or failure of one’s business, began to disintegrate around the time when ordinary people like Butcher Bob bought their first car, in the years between the mid-to-late 1920s and the post–World War II boom. Around the middle of the last century, a whole lot of social and economic forces converged, and people took advantage of their affordable cars and the new highways built for them to head out to suburbia. As time went on, Americans started fleeing even farther, to exurbia. The countryside was paved with parking lots and lined with strip malls to serve the burgeoning commuter society. For many, the sign that you’d arrived was that you had managed to put as much distance as possible between yourself and everybody else, preferably with a gate.

These decades that brought greater distance between friends, family, and neighbors coincided with the rapid rise of big business. Butcher Bob retired just in time to avoid being crushed by the newly built Safeway supermarket chain, which would eventually include over two thousand stores across the country. If the company that treated Great-Grandma like royalty even when she was only buying a two-dollar hat had grown and prospered, in all probability a corporation gobbled it up. Eventually its reason for being became less about delighting the ladies with the newest fashions, or building a legacy, and more about satisfying quarterly returns and improving stock options. The prioritization of profit over principle quickly took over American corporate culture and is what shaped the perspective of all ranks of many of today’s business leaders. Most have never known anything else. They’re just playing the game as they were taught.

If You Don’t Care, No One Will

What happened next is almost forgivable. Almost. After all, consumers seemed to have rejected old-world values and abandoned small-town or community-oriented businesses. Plus, in the wake of a variety of social and cultural upheavals, manners took a nosedive. It was definitely time to ditch some of the fussy formalities society had long been saddled with, but manners—real manners—indicate that we care about other people’s feelings, and about their experience when they’re around us. It was almost as if big business looked around, took note of the increasingly relaxed social norms, and thought, “Well, shoot, if they don’t care, neither do we.” If people were going to expect very little, little is what they were going to get.

Companies started unloading anything that didn’t immediately and directly track to pumping up their bottom line. It wasn’t just about replacing the hats with cheaper, more modern fashions. Nor did it mean simply phasing out little extras that made a customer feel like royalty. It meant power bombing anything that showed the company cared about the customer experience at all. Supermarkets stopped hiring teenagers to load bags and carry them to the car. Gas station attendants disappeared except in New Jersey and Oregon. And if you wanted to speak to a company about their product or service, you could press 1 to spell your name, press 2 to place an order, press 3 for more options, or press the star key to return to the main menu. As the 1980s rolled into the 1990s and companies relied increasingly on automated call centers, we were ushered into a customer service dark ages.

People griped and moaned, but there was nothing they could do. Some even swallowed the company lie that eliminating the unnecessary, time-consuming, expensive perks that customers used to take for granted—such as the privilege of speaking to a live human being—made it possible to keep prices down. We loved talking to you, but our loss is your gain. Enjoy the savings!

The Internet only made everything worse. For all its globalizing properties, it allowed us to take our isolationism even further. Now we didn’t even have to go to the mall to do our shopping or the megaplex to see a movie. No matter where we lived, in fact, with the click of a mouse we could bring the world—or rather, the world as we wanted to see it, with a selection of entertainment, politics, and media cherry-picked to meet our individual tastes—straight to us without ever having to speak to another live human being. We could order our groceries online. We never had to leave the house. We could conceivably become a community of one.

For business, our Internet love affair was a gift from the gods. Online startups exploded and the target markets for existing companies dramatically expanded. Businesses could now point proudly to their websites and assure their customers that the lines of communication would never close. In theory, the website made them available 24/7. In reality, with a few exceptions, these corporate websites merely made it that much easier to truly pander to the idea of service without actually providing any. In fact, it made it possible for them to virtually avoid dealing with customers altogether. Now people could waste even more time clicking around on websites in a fruitless effort to find a phone number or the name of someone to speak with. When all that was available was an email address, they could send out a question, complaint, or comment into the ether and wait God knows how long until receiving a totally bland, formulaic, and useless reply. In the event they could dig up a phone number, they wasted millions, maybe even billions of hours per year on hold, or being transferred from one helpless or hapless rep to another. As companies outsourced their customer service, customers struggled to make themselves understood by script-reading foreigners. They seethed, but as usual, there was nothing they could do.

Corporations had nothing to fear. Their customer base was no longer in the local zip codes within a five-or even fifteen-mile radius—it was the entire country, and in some cases, the whole world. So what if one person got her panties in a bunch? Or a hundred? How many people, realistically, were going to take the time to find sites like Paypalsucks.com, read them, post on them, and tell their friends? How many friends could they possibly tell, anyway? It just wasn’t worth the time, money, or effort to handle each customer, whether satisfied or disgruntled, with anything other than a token bit of goodwill. The ROI didn’t justify doing things any other way.

Small-Town Living Moves Online

Then, around 2003, in the midst of this high-tech, digital, impersonal world, a new train started bulleting across the online landscape. It was nothing like the trains our great-grandparents might have ridden, but for all its shiny digital modernity, in essence it closed the vast distances created over a near-century of car culture, cheap land, and technology. Many of us still lived far apart from one another, but we were about to be connected in a totally small-town way.

The train was Web 2.0, now known as social media. It rode along the rails of the Web at breathtaking speed, every one of its cars a powerful platform designed with the express purpose of getting people to talk to one another again. The silent, anonymous, private Internet suddenly turned extremely chatty, personal, and revealing. Small-town living moved online as people eagerly sought out each other’s latest news. Our morning social media browse to check in on what everyone has been up to became the equivalent of the old-timers’ early morning stroll to the diner for pancakes and coffee. We check Facebook and comment on a friend’s photo of her new shoes (which we know without asking are Kate Spades and were bought at Nordstrom’s because she said so in her status update) the same way we once would have remarked, “You look lovely in that hat, Margie,” as we passed by our neighbor. We click “like” upon seeing our friend’s status update announcing his kid’s college graduation the same way we’d have nodded approvingly upon seeing that little Timmy had finally gotten the hang of his Radio Flyer scooter. We tweet an article and accompany it with some curses for the city management clowns bungling up yet another public works project with the same energy we’d use to rattle our newspaper and vent our frustration to all the other folks lined up next to us at the diner counter reading their paper, sipping their coffee—plain, black—and chewing on a doughnut.

Social media allowed us to become more aware of the minutiae in each other’s lives, of what was going on, of what people were thinking and doing, than ever before. In the 1940s, we’d have found out about the progress of our neighbor’s new wall-papering project or model ship during run-ins at the bus stop or the Piggly Wiggly. In 1990 we might not have known about these projects at all. And in 2010, we can not only know about them, we can see pictures and video chronicling their progress and get information about the retailers and service providers involved. In the beginning, a lot of people saw the banality of the topics flying around and wondered who could possibly care that Jeff in Boulder had found a half-eaten bag of Snickers in the pantry, or that Liz in Miami was heading out to the beach for a run in her new Pumas. But people did care. Society jumped on the chance to re-create the regular exchanges of personal news and thoughts that used to be a staple of those smaller, relationship-based communities.

A Full-Circle Power Shift

Still, most businesses, save for some ambitious entrepreneurs, didn’t see any upside to jumping on that train. Where could it possibly go that could be of use to them? Many leaders failed to see—some of them still fail to see—that the game they all learned to play has finally started to change. (Those changes are going to be insane in five years!) By allowing dialogues to occur and relationships to grow on a daily basis, for free, between people living as far apart as Des Moines and Osaka who might never actually meet in person, social media represents a gigantic power shift back to the consumer. Consumers have more direct, daily contact with other consumers than has ever been possible in the history of the planet. More contact means more sharing of information, gossiping, exchanging, engaging—in short, more word of mouth. Now, Jeff’s friend on the other side of the country, whom he hasn’t seen in six years and who has fast-forwarded through every television commercial since getting his first DVR in 2003, might see Jeff’s post about the half-eaten Snickers, remember how much he likes that candy bar, and pick one up that afternoon while waiting in the supermarket checkout line. That’s a plausible scenario that Great-Grandma could never have foreseen.

How the New Word of Mouth Is Different

Word of mouth is back. When society cut the close personal and business ties that existed in older, smaller communities, people became like ants scattered around on a picnic table—really busy, really strong, but too far apart from one another to get much accomplished as a unit. Now, the Internet has matured so that the power of social media can allow all the ants to collectively gather under the table, and they’re strong enough to haul it away if they so choose. Any businessperson who can’t see the repercussions of that much potential word of mouth has his or her eyes closed. For example, even if Martha isn’t that interested in agriculture or the subject of genetically modified food, the fact that her friend in Hamburg is might be enough to make her pay attention when spotting a post on a social networking or microblogging site (Twitter, Posterous, Tumblr) about the activities of some company called Monsanto. Maybe she reads the attached link and starts to form an opinion, and then reposts or retweets so that her two hundred friends can see why she feels the way she does. She then enjoys the heated conversation that ensues with the twenty-five people who reply. Of those twenty-five people, eighteen repost and retweet the original article, with a personal message attached, to their respective friends. According to Facebook, as of 2010, the average Facebook user has 130 friends, and the average Twitter account holder has 300 followers, which in total add up to a potential 7,740 people who suddenly have Monsanto’s name flying in front of their eyes. That doesn’t even factor in the 175 people who had access to Martha’s original post but didn’t say anything to Martha about it. Some saw it, some didn’t. But of those who did, who knows how many silently reposted it to people who might then, in turn, have reposted it? Think about how many thousands of people that represents. And, many of them did it immediately from the smartphone that goes everywhere they go. There’s no more lag between the time someone hears, reads, or sees something and the time that person can get back to a computer and shoot out an email to a dozen friends. News and information that had always traveled fast, whether being transmitted in older, tiny communities via front porch or window ledge or in larger ones by balcony, fire escape, phone, or email, is now traveling across the world in real time. A crucial difference between the spread of information and opinion then and now, though, is that the recipients of that information and opinion more often care about the individual sending it to them. Middlemen, pundits, and spokespersons no longer have a near-monopoly on the widespread distribution of a brand or a company’s message.

We talk more passionately about things we care about than about things toward which we are ambivalent. We listen more closely to people we care about than to people we do not know. And now, we are talking and listening in unprecedented numbers, and our opinions and purchasing decisions are being affected and influenced even as we stand in the store aisle and weigh our options.

A few months ago I was at Best Buy, and I watched as a teenager used his Facebook status to request recommendations on a Nintendo Wii game. He got feedback in real time, and used it to decide what to buy. Recommendations and contextual social search are the future. Is it any wonder I’m not bullish on search engine optimization’s (SEO) long-term potential?

Businesses that aren’t able or willing to join the conversation will likely see their balance sheets suffer, and catch hell from Wall Street. That’s the best-case scenario. Worst case, they aren’t going to be in business much longer.

Power to the People

Finally, when faced with bad service or unfair policies or plain old indifference, there is something people can do. Now if customers have a complaint that they can’t get resolved via traditional channels, they can post a frustrated status update or tweet that could get passed along forever. Suddenly, everyone who’s ever had a problem with a company can compare notes, work him-or herself up into a righteous frenzy, and build enough animosity via word of mouth to create a real PR nightmare. AT&T knows something about how this happens. Giorgio Galante, who took AT&T to task on his blog called So Long, and Thanks for All the Fish*, wrote two emails to AT&T CEO Randall Stephenson. The first he wrote after the company’s customer service reps were unable to authorize his request for an early iPhone upgrade; the second was to express his dissatisfaction with AT&T’s data rates. In reply, Galante received a voice mail from someone on the AT&T Executive Response Team threatening legal action should he try to contact the CEO again. He finally received (and accepted) an apology from a senior VP, but by then the damage had been done—the story had spread all over the Internet, and even CNN tried to interview him (a request that he declined). How many of the people following Galante decided right then and there that the second Verizon gets on the iPhone, they’re switching, or that maybe their Droid phone wasn’t so bad after all? Too many for AT&T’s taste, I’m sure.

This example perfectly reflects the magnitude by which word of mouth has exploded. Five years ago, it wouldn’t have mattered that this guy was upset. He would have told four people. So what? Maybe, if he were a heavy hitter, he would have told some fellow board members, one of whom could have mentioned it to a journalist friend, who would have written a story about it and forced the company to take the complaint seriously. But this would have been a rarity. The odds were that maybe one out of every million times someone complained about a company, the newspaper would pick it up. If there was a particularly juicy angle to the story, the chances were ten million to one that Nightline would pick it up, as in the case of Mona Shaw, who became a literal heavy hitter when she stormed her local Comcast office and smashed a customer service representative’s computer and workspace with a hammer. But now? You don’t have to have a juicy angle. You just have to care enough to talk about your experience, and everyone you know is going to rally, just as your friends in the PTA, the trade union, or the country club would have rallied if you’d vented your outrage at Butcher Bob’s cheating ways. The story potentially makes its way onto hundreds of influential blogs, and suddenly AT&T has got a massive headache.

Everything is in reverse. Before, it made some financial sense for big business to simply ignore people they considered whiners and complainers. Now, dissatisfied, disappointed consumers have the power to make companies feel the pinch. What a shame that that’s what it’s going to take to make some executives take social media seriously! It means they’re using it only to react to the potential harm it can do to their business. There’s so much unbelievable good it can do, though, especially when companies use it proactively. Social media is a great tool for putting out fires, but it’s an even better tool for building brand equity and relationships with your customers. Once you stop thinking about it as a tool for shutting customers up, and rather as a tool for encouraging customers to speak up, and for you to speak to them, a whole world of branding and marketing opportunities will unfold.

The Thank You Economy

At its core, social media requires that business leaders start thinking like small-town shop owners. They’re going to have to take the long view and stop using short-term benchmarks to gauge their progress. They’re going to have to allow the personality, heart, and soul of the people who run all levels of the business to show. And they’re going to have to do their damndest to shape the word of mouth that circulates about them by treating each customer as though he or she were the most important customer in the world. In short, they’re going to have to relearn and employ the ethics and skills our great-grandparents’ generation took for granted, and that many of them put into building their own businesses. We’re living in what I like to call the Thank You Economy, because only the companies that can figure out how to mind their manners in a very old-fashioned way—and do it authentically—are going to have a prayer of competing.

Note that I said you have to do it authentically. I am wired like a CEO and care a great deal about the bottom line, but I care about my customers even more than that. That’s always been my competitive advantage. I approach business the same way I approach every talk I present—I bring this attitude whether I have an audience of ten or ten thousand. Everybody counts, and gets the best I have to give. A lot of the time, we call people who do a consistently great job “a professional,” or “a real pro.” I try to be a pro at all times, and I demand that everyone I hire or work with try to be one, too. All my employees have to have as much of that caring in their DNA as I do. How else do you think I outsell Costco locally and Wine.com nationally? It started with hustle, sure. I always say that the real success of Wine Library wasn’t due to the videos I posted, but to the hours I spent talking to people online afterward, making connections and building relationships. Yet I could have hustled my ass off and talked to a million people a day about wine, but if I or any of the people who represent Wine Library had come off as phonies or schmoozers, Wine Library would not be what it is today. You cannot underestimate the sharpness of people’s BS radar—they can spot a soulless, bureaucratic tactic a million miles away. BS is a big reason why so many companies that have dipped a toe in social media waters have failed miserably there.

At Wine Library, we don’t just pull out the charm when a big spender walks in, or when someone is unhappy, and we don’t reply to inquiries with carefully worded legalese. We try not to calculate that one customer is worth more than another, and therefore worth more time and more effort, even as we recognize that a big customer can bring a lot to the table. How can you ever know who is potentially a big customer, anyway? Maybe you’ve got a customer who spends only a few hundred dollars with you a year. What you can’t see is that the customer is spending a few thousand elsewhere, maybe with your competitor. You have no way of knowing that the customer’s best friend is the biggest buyer in the category. Now, what if you were able to build a relationship, make a connection, tilt the person’s emotions toward you, and capture 30, 60, or even 100 percent of what he or she spends? Your small customer would become a lot bigger. That’s why you have to take every customer seriously. This is a basic business principle that has been talked and written about a great deal, and some companies take it seriously. But the playing field is so different now from, say, 1990, that companies can no longer treat it as a nice idea to which they should aspire. Valuing every single customer is mandatory in the Thank You Economy.

If there’s a problem, we at Wine Library never tell ourselves that once we handle this issue, we’ll never have to deal with the person again. We talk to every single person as though we’re going to wind up sitting next to that person at his or her mother’s house that night for dinner. We make it clear that we want to help in whatever way we can, and that everyone’s business matters to us. And we mean it.

Sometimes, no matter how hard we try, we lose because someone else established the relationship first. For the most part, everyone has more than one place to find what it is you’re selling. I’ve had people tell me that though they like what I do and live in my town, they buy from the other guy’s liquor store because he’s been good to them. I say, “I’m cheaper and I have a way better selection and I’ll be good to you, too! Heck, I’ll be better!” but I can’t win, because a relationship has already been formed. I can compete on price, I can compete on convenience, and if they’d give me the chance I’d compete on caring, too. But they’re not going to give me that chance unless the other guy slips up. And even then they’d probably give him a second chance, because forgiveness is the hallmark of a good relationship. If I kept pounding I might be able to win a percentage of my competitor’s business, but the little guy in town will keep his consumer’s market share with real caring and service.

Anyone working for a big company might be skeptical that a large business, or even a strictly online business, can form the same kind of friendly, loyal relationship with customers as a local retailer. I’m saying it’s already been done because I lived it. I built my online company the same way I built the brick-and-mortar store. But it works only if everybody at the company gets on board, which is why unless you are building a new company from the ground up and can install caring as your business’s cornerstone, you have to be willing to embark on a complete cultural overhaul so that, like a local mom-and-pop shop, every employee is comfortable engaging in customer service, and does it authentically. Your engagement has to be heartfelt, or it won’t work.

A Gift to Customers and Companies

People want this level of engagement from the companies with which they do business. They always did, but they lost the power to demand it. Now they have it back, and they’re indulging in that power. Even the best of what formerly passed for good customer service is no longer enough. You have to be no less than a customer concierge, doing everything you can to make every one of your customers feel acknowledged, appreciated, and heard. You have to make them feel special, just like when your great-grandmother walked into Butcher Bob’s shop or bought her new hat, and you need to make people who aren’t your customers wish they were. Social media gives businesses the tools to do that for the first time in a scalable way.

Platforms like Facebook and Twitter give back to businesses, too, in the form of real-time feedback. Companies can see for themselves when their lackluster advertising or weak marketing gets panned or ignored, and how their creative, engaging, authentic campaigns get praised and passed along. Even industries that have long resisted paying too close attention to metrics, such as newspaper editorial departments, are turning to online tracking tools to help them allocate resources and shape online content in blogs and podcasts. There doesn’t need to be any guessing about how positively or negatively the public is responding to a brand when it’s in the news or on TV—the public’s reaction is often right there in black-and-white on Facebook, while the cameras are still rolling. In the Thank You Economy, social media allows us to get fresh, visceral, real-time feedback, not stale focus-group opinions. It blows my mind that so many companies resist social media. The fact that customers are open to speaking with them, not just to complain or to praise them but to initiate dialogue, offer opinions, and provide feedback, is fantastic! They should be on their knees with gratitude for the tremendous opportunity they now have to quickly (and cheaply) adapt and improve their strategies.

Exceed Expectations or Lose

Before, people were satisfied if you sent them an e-newsletter and the occasional 10-percent-off coupon in the mail. That was considered great customer engagement. Anything more was unheard of. Now, the standards have been raised by companies like Zappos, which will spend as much time on the phone with you as you need, and Fresh Direct, a New York online grocer that wraps your produce in bubble wrap and tucks an extra bunch of asparagus in with your order just to thank you for being such a great customer. Some retailers are known for charming their customers with thank you notes, like Hem in Austin, Texas—which also offers you wine or beer to drink while you shop—who sends them out a few days after you make your purchase. But how many online companies do it? Not many, which is why Wufoo, an online HTML form developer, gets so much blog coverage when its customers receive handwritten thank you notes, sometimes crafted out of construction paper and decorated with stickers. What’s extra special about the Wufoo notes is that they don’t appear to be triggered by any particular purchase; they’re sent out randomly to longtime customers, just to say “Thanks for doing business with us.”

Now, it is true that the more you give, the more people want. It breaks my heart that I want to fly first class now. It’s so much nicer, and now that I know what it’s like, I want it all the time. I could travel that way regularly, but I don’t, because I don’t want to be that guy. The real question is, though, why can’t everyone on the plane get first-class treatment, even the passengers who are not paying for bigger seats? I think they eventually will, because they’re going to start demanding it. Not the perks—the warm nuts and Champagne, or even the bigger seats and leg room—but the respect? The kindness? Absolutely. All businesses, not just the airlines, need to start treating their consumers as though they’re big spenders. My own father was worried about creating that kind of expectation at the liquor store, because where would it end? And what would happen if we stopped offering more? I had to work hard to convince him that if we didn’t do it, someone else would. We built the first-class customer philosophy into the business, and people raved about us. They came back, they raved some more, their friends came to check us out, they raved about us, and through great customer service and word of mouth we built a large, loyal fan base. (Oh man, Wine Library would be so much bigger today, though, if the Thank You Economy had been in full force when we got started!) We’ll talk later about what to do when people make unreasonable demands, but for the most part, the kind of service people are learning to expect isn’t that shocking; companies just aren’t used to having to give it.

Now, people expect you to give a damn about them. Not only that, they expect you to prove it. And the only way to prove it is to listen, engage, give them what they want when you can, and, when you can’t, give them an honest answer why. They just want to be heard and taken seriously. That’s all.

Engagement Is Not a Four-Letter Word

Tall order? Yep. A lot of work? Heck, yes. But companies no longer have a choice. I know that for many business leaders, investing in “engagement” is the same as eating a mouthful of cotton candy—it tastes sweet, but leaves you with a whole lot of nothing. However, I’m going to show that there is no more risk in allocating resources to perfecting your social media strategy than there is in screaming “Buy My Stuff!” on television, radio, in print, or on outdoor media. Then we’ll focus on what needs to be in place for any company, whether big or small, B2B or B2C, cool or conventional, to use social media correctly to build one-to-one relationships. If you’ve already experimented with social media and it didn’t work, there are only two possible reasons: your product or service isn’t any good, or you’re doing it wrong. We’re going to assume your problem is the latter.

If there are any shortcomings in your brand or product, they might be starkly revealed once you start implementing social media correctly. Don’t let this possibility stop you. Listen to your customers’ suggestions and complaints (as well as their praise), and take the opportunity to fix the problem; then use social media to show the world how you’ve changed and improved.

I’ll introduce some shining examples of what social media done right looks like, and what it can help companies achieve in an economy where an earnest, well-timed “thank you”—whether it’s in the form of a handshake, a comment, or a sample—is worth as much to a business as a Platinum Amex. I’m going to show you how incredibly far the effects of a sincerely expressed “How may I help you?” or “What can I do for you?” or “You are too kind.” or “I’m so sorry. What can I do to make this right?” or, perhaps most important, “I am so happy to hear from you!” can take your business in a world where word of mouth travels more quickly and holds more power than it ever has before. Succeeding in the Thank You Economy is not about simply being nice and selling in an inoffensive way. Anyone can do that. It’s about taking every opportunity to show that you care about your customers and how they experience your brand in a way that is memorably and uniquely you.

What Caring Looks Like

Imagine you are the CEO of Super Duper Fans, Inc., sitting in your local coffee shop, and you overhear one patron say to another, “You know, you really get what you pay for. I’m trying to go green by not using my A/C so much, so I went out and bought a bunch of fans. I didn’t want to spend a fortune, either, so I bought those Super Duper fans, the ones with that great ad on TV.”

“Ooh, with the monkey? Yeah, I’ve seen them; they’re hilarious!”

“I set them up and two are already broken. Figures, right? Piece of junk.”

Any executive or manager or sales rep who cares about the company and believes in what it does wouldn’t hesitate to approach the table, introduce him-or herself, defend the product, apologize for any inconvenience, and ask for another chance to prove how great the Super Duper fan really is. You might offer to replace the defective models (throwing in free shipping and delivery, of course) and include a 30 percent coupon for any other Super Duper product. You’d do it in a heartbeat, and not out of the goodness of your heart, not because you’re a nice person, but because you care about your company and want everyone who does business with you to have a great experience.

Now explain this to me: if you care enough about your brand to react with this kind of interest and concern were you to overhear this conversation in person, why wouldn’t you respond similarly if you read these same comments online? If there are conversations about your brand or your product or service category happening in coffee shops and beauty parlors and subways, they are most likely also happening on Facebook and Twitter and on all sorts of popular blogs and forums, and you can “hear” them all. These conversations were always happening before the advent of social media, of course, but there was only so far they could go. In addition, all a business could do if it became aware of these conversations was to eavesdrop. Now the talk and word of mouth about your company or brand can go on indefinitely, but you have a tremendous advantage the businesspeople before you didn’t have: you and your entire team can participate in and propagate it. To ignore that option is to become a lonely fly on the wall—witness to everything that is said about you, powerless to do anything about it. All you’re setting yourself up for is a face-to-face with a flyswatter.

Get on Board

If you’re an entrepreneur, you surely already know I’m telling the truth because if you’re having any success, it’s extremely likely you’re already engaging with your customers online and offline with equal intensity and enthusiasm. I hope my ideas and the examples in this book will inspire you to take your business to the next level, and give you ways to help others trying to make it.

If you want to become CEO one day, you absolutely have to get on board this train. Bringing about a massive cultural shift within a company takes a lot of time and finesse if you’re going to do it well. You’ll likely be competing against others who have been incorporating TYE principles into every aspect of how they do business from the day they opened their first Twitter account. The person who gets started the soonest has the advantage, though not because of the number of fans and followers they may have. I’m not sure what those people who promise to donate a thousand bucks to Haiti (if they can get a hundred people to follow them on Twitter) think they’re accomplishing. Just give the thousand bucks to Haiti, you jerks! It’s not the number of followers you have or “likes” you get, it’s the strength of your bond with your followers that indicates how much anyone cares about what you have to say. In this game, the one with the most real relationships wins.

Mid-level managers who love what they do and want their company to compete and thrive and crush it have got to get this book onto their CEO’s desk. Individuals can certainly adapt many of the lessons in this book to buff their own personal brand and even improve the way their department communicates and responds to the people and organizations with which they do business. But for a whole company to successfully enter the Thank You Economy, many small, practical steps and processes must be implemented that ultimately add up and result in a complete cultural transformation. Each baby step is easy to take, but only a total commitment to change over time from the top brass will ensure that the baby steps gain enough strength and speed to lead into a run. Unfortunately, many CEOs are afraid of implementing change, even when it’s for the best long-term good of the company. That sounds harsh, but it’s unfortunately true, and for good reason. I’m convinced that if company leaders didn’t have to worry about stock prices or bonuses or their numbers, every one of them would be investing in social media by now. It just makes sense that the better you know your consumers, the better you can tailor your marketing to them, and the more likely they are to buy from you. But many leaders can’t afford to worry about the long term, because their survival (and their bonus) depends on short-term results.

On a recent flight, I read an article by an editor-at-large for the Harvard Business Review (I know, I know, Mr. “I don’t read anything” reads stuff from the HBR…insert your one-liner about me here) that perfectly crystallized the dilemma faced by even the most well-meaning CEOs: “Wall Street Is No Friend to Radical Innovation.” The article reported the results of a study from the Wharton School that found that even when it was clear that an industry was about to be rocked by massive changes, Wall Street analysts primarily gave a thumbs-up to company strategies that relied on old technology, and seemed to ignore or minimize the validity of more daring attempts to take advantage of new technology. Wall Street puts CEOs in a near impossible situation, as described by Chris Trimble, on the faculty at Tuck School of Business at Dartmouth: “I’ve had CEOs tell me that ignoring Wall Street is the only way to do the right thing for the company’s long-term future. They choose to invest in innovation, take the short-term punishment (in the form of a declining stock price), and hope that the punishment is not so severe that they lose their job.” So what are people trying to convince their CEO that social media matters supposed to do when the metrics that they need to justify social media initiatives just aren’t available yet?

Start. If you already have started, take a second look at what you’re doing. Try on a new pair of glasses and reevaluate. Be prepared. Stay alert to new ideas and innovations. Do whatever you can to bring the Thank You Economy sensibility into your company, so that when you’re finally able to implement initiatives, the foundation will already be set.

Companies can certainly survive without social media. Maybe your competitors can afford to (over)spend on traditional platforms, or have a lot of brand equity built up thanks to amazing content. But if they do nothing with social media, and you do something, you will eventually have the potential to surpass them, not thanks to any one platform—and not overnight; it’s a marathon, not a sprint—but because you acknowledge that culture and consumer expectations can and will change. That in and of itself means that you are more adaptable and flexible, and therefore have a better chance of surviving and flourishing in the Thank You Economy.

One more time: if you succeed with social media, it won’t be because of the platform; it will be because you acknowledge that culture and consumer expectations can change. You are more adaptable and flexible than your competitors. If you apply social media correctly, your customers will buy more, they will be more loyal, they will spread your message, and they will defend you should you ever need them to. All of this adds up to your increased chance of surviving and flourishing in the Thank You Economy.

You know the business world has changed. You can feel it, can’t you? Go to a shopping mall, a movie theater, a stadium, and look at what the masses are doing. For better or for worse, half if not more of the people are walking around with their heads down, their fingers sliding and tapping over their handheld devices.

Though girls ages fourteen to seventeen can still out-text anyone, averaging about a hundred texts per day compared to boys of the same age, who text about thirty times per day, texting isn’t just for kids anymore. As of May 2010, 72 percent of the adult population were texting, at a rate of about ten texts per day. What do you think the number will look like by 2013?

When they’re home, they’ve got those same handheld devices at their side, plus they’re glued to their iPads and computers. Most of them are not just reading AOL’s homepage anymore, I guarantee you. They’re engaging with the content and their friends on Facebook and Twitter and Foursquare, Digg and Reddit, and a slew of websites you’ve probably never heard of. So why are you buying banner ads on AOL.com or Yahoo.com? Many of the brands that were relevant even five years ago no longer command respect or excitement because they’ve lost touch with their customers by continuing to talk to them almost exclusively via traditional marketing platforms. The customers aren’t there in nearly the numbers they once were. They’re on social media; you need to follow them, and talk to them, there. If you wait for your competitors to do this, and they do it right, they will steal any advantage you might have had right from under your nose.

For example, Zagat was the original consumer review destination, the “burgundy bible” for foodies, a twenty-year-old golden brand that never should have had to fight for relevance or survival. Yet because it was so slow to recognize that customer expectations and desires were changing, the company has had to roll up its sleeves and start swinging to defend itself. Zagat’s story is a great example of how resistance to change and poor anticipation skills can hurt a giant in an industry. On the other hand, they’re also an example of how companies can make a comeback once they figure out how to harness the innovation they once fumbled. To get a feel for the battle they’ve been waging, all you have to do is compare their timeline with those of one of their biggest competitors, Yelp.

1979: The Zagats hit upon the idea of collecting opinions from their friends and their friends’ friends of New York City restaurants to create an informal yet reliable restaurant guide. Over the next two decades, The Zagat Review becomes an internationally recognized force in the culinary world, with over 100,000 contributing surveyors and a loyal readership.

1999: Zagat launches its website, but only paid subscribers can read full reviews.

2004: Former PayPal employees Jeremy Stoppelman and Russel Simmons launch Yelp from a San Francisco Mission Street office. The decidedly hip site offers free access to user reviews of restaurants, day spas, and other local businesses.

2007: Yelp reports five million unique visitors.

January 2008: The Zagats try to sell their business for $200 million. There are no takers.

May 2008: Yelp reports ten million unique visitors.

June 2008: The Zagats take the business off the market.

July 2008: Yelp releases the Yelp for iPhone app. The application is free.

November 2008: Zagat releases the Zagat to Go iPhone app. It costs $10.

July 2009: Zagat holds steady as one of the top ten iPhone apps in the travel category.

August 2009: Yelp, which is still free, reports over 25 million unique visitors.

September 2009: Zagat.com, which charges a $25 annual membership fee, gets about 270,000 unique visitors per month, and is “trending downward.”

December 2009: Yelp turns down a $550 million offer from Google, and a $700 million offer from Microsoft. “Yelp has the chance to become one of the great Internet brands,” says Stoppelman. “That for me is the chance of a lifetime.”

January 2010: Modeling Foursquare, Yelp adds a “check in” feature to its app upgrade.

February 2010: Zagat teams up with Foursquare. Foursquare users can earn a “Foodie” badge when they check in to Zagat-rated restaurants, and receive menu recommendations from the Zagat collection of reviews.

August 2010: Zagat is ranked the most-followed brand on Foursquare by Osnapz, with 65,000 followers.

August 2010: Zagat integrates Foodspotting, which allows people to post photos and comment about the foods they love rather than read and write full-blown reviews, into the Zagat To Go app.

If Zagat had kept an eye on the innovation horizon, Yelp never would have been able to cut into their market share in the first place. Yet as you can see, Zagat has swung hard and gotten in a few good hits. It is possible for brands, websites, and new businesses to take market share from sleeping giants, and even become market leaders, but if the sleeping giant awakens and uses the brand equity it has created over the years, it can absolutely get back in the game. This is good news for any larger organization that is only now recognizing that it needs to make social media a priority. Ideally, however, any giants who are awakening will adjust because they understand what is happening around them and want to adjust, not because, like Zagat, they have been backed into a corner and have no other choice.

It’s Not About Social Media

As I said in Crush It!,

Social Media = Business

The thing to keep in mind at all costs, though, is that the Thank You Economy is much, much bigger than social media. Social media’s arrival was simply the catalyst for a revolution that was already brewing in the minds of consumers sick to death of feeling isolated, unappreciated, and ignored. The Thank You Economy explains how businesses must learn to adapt their marketing strategies to take advantage of platforms that have completely transformed consumer culture and society as a whole. If this were 1923, this book would have been called Why Radio Is Going to Change the Game. If it were 1995, it would be Why Amazon Is Going to Take Over the Retailing World. I’m not proposing an all-or-nothing approach—there is still a place for brick-and-mortar businesses in a world where Amazon exists, and traditional media is still relevant and valuable. (Probably didn’t think I’d say that, huh? Wait till you read chapter five.) But there are too many businesses that are still holding back, watching the social media train rush by, convinced that if the destination is so great, another train will come along soon enough. They seem to think that it will be going more slowly, and the ride will be safe and steady, and they’ll be able to catch up with everyone else who jumped on early. They’re wrong, though. The next train, when it shows up, will be going full speed to some other equally exotic and unknown place. Social media is here to stay, but eventually, some technological innovation will be invented that will give intrepid travelers, the ones who understand that these trains of change are the only trains coming, another chance to move way ahead of the risk-averse. (I think anyone paying attention can see that mobile platforms are the next key to picking up market share…please tell me that you have a mobile strategy…) What will not change, however, is the culture—the expectation—of communication, transparency, and connection that social media revived. We live in a world where anyone with a computer can have an online presence and a voice; whatever follows next will simply make the power of word of mouth that much more powerful. The proliferation of blogs, with their invitation to comment, and the transparency of Facebook and Twitter, has marked an economic turning point. People thought they had seen a massive cultural shift when the public adopted the Internet into their daily lives, but the bigger shift occurred when the Internet began to allow for two-way conversation. Learn how to implement a culture of caring and communication into your business, scale your one-to-one relationships, and watch your customers reward your efforts by using their new and massively powerful word of mouth to market your business and your brand for you.