Sunday, August 30, 2009

Social Capital and Channel Loyalty

An important aspect of strong channel loyalty is social captial. Social capital is existing, defined relationships that make transactions easy to accomplish (see Buchanan, 2002, 201-204). Microsoft, takes care to understand how to market to each information technology segment. The intent of such understanding is to help Microsoft establish more powerful social capital than its competitors.

They especially focus on “Strategic Buyers.” Las Vegas calls them whales. These are customers who follow the 80/20 power rule - the 10% of customers who buy 90% of the goods. Microsoft sales teams visit “strategic buyers” periodically and promptly answer phone calls. Microsoft is very good at relationship marketing. Every sales team has an architectural engineer assigned to it with the mission of understanding the information technology plan of assigned corporations, their enterprise architecture and how to advantageously apply Microsoft technology to affect solutions.

Social Capital is an important advantage for Microsoft when competing with Google or Open Source. It's easier to do business with Microsoft because Microsoft has made an effort to make it so. There is someone a strategic buyer can call at any time. There are agreements and understandings from repeated meetings. Microsoft has researched and understands each customer. They know how to do business with them, they have done business with them, and have set up a repeatable process for doing business.

People may say that IBM had this social capital when Microsoft started out. The difference between Microsoft and Google is that Microsoft partnered with IBM for a decade while it learned the ropes. That's why I think Microsoft will survive Google and Open Source.

Buchanan, Mark (2002). Nexus: Small Worlds and the Groundbreaking Theory of Networks. Norton.

No comments: