Written by Rick Mans

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Why LEGO is a Social Business

No it is not because LEGO is brilliant on Facebook or that have a very cool retweet action on Twitter. They do one thing really brilliantly: they give kids what they deserve in the way they understand. Let me show you two examples after which I will explain you how much money LEGO is saving by doing this. Yes LEGO is saving money by giving stuff away in an authentic fashion and that is why they are a Social Business. First the examples:

First of all there is Luka who lost his Jay ZX LEGO character and who sent a letter to LEGO asking if he could get a replacement. He did get a replacement, plus he got some valuable advice:

Luka, I told Sensei Wu that losing your Jay minifigure was purely an accident and that you would never ever ever let it happen ever again.

He told me to tell you, “Luka, your father seems like a very wise man. You must always protect your Ninjago minifigures like the dragons protect the Weapons of Spinjitzu!”

Sensei Wu also told me it was okay if I sent you a new Jay and told me it would be okay if I included something extra for you because anyone that saves their Christmas money to buy the Ultrasonic Raider must be a really big Ninjago fan.

So, I hope you enjoy your Jay minifigure with all his weapons. You will actually have the only Jay minifigure that combines 3 different Jays into one! I am also going to send you a bad guy for him to fight!

Just remember, what Sensei Wu said: keep your minifigures protected like the Weapons of Spinjitzu! And of course, always listen to your dad.

This is already a non standard reply from a big company, however the video on top of the page gives even a bigger picture of what the impact is of LEGO on the life of kids (and their parents):

Now how is this a Social Business?

LEGO has the mindset to go beyond just playing a regular game of customer service with its customers, since they see their customers as something they should cherish, or as they put in the letter to James Groccia: Fans like you are why we are so lucky as a company. LEGO doesn’t think profit centric (since having to do customer service for free is a killer for margins), they think client centric since in the end this saves them money and even better: builds a loyal customer base.  That is what a Social Business is all about: solving business issues in a social and sustainable manner. It is not about just being great on Twitter and Facebook.

And how makes this money for LEGO?

First of all, I am writing about this, however some outlets with a bigger reach have also written about this. The YouTube video has over 1.6M views. LEGO is reducing marketing costs, their fans are promoting the brand and their fans are able to promote the brand in a more authentic fashion than LEGO could ever do.

By doing customer service the first time right you not only make sure that you get a lot of publicity as LEGO got, you make sure that your customers are turning into loyal customers. LEGO customers have a very common life cycle, since many of them will grow up and might have kids of their own and thus might buy LEGO for their kids as well. Also the kids will love LEGO for this and it might be known who makes the buying decision for the next toy: the kid, the parents are only spending money on something they kid will appreciate a lot.

Also if you got something for free, whether it is a complete train or just 3 characters, most likely you won’t dare to ask for a second favor. The next time you screw something up, you will pay for it yourself. LEGO has reduced the number of customer interactions via customer service to one. Just one time per customer in their entire life cycle there is some free interaction. By reducing the number of interactions, they increase the margins they can make.

So basically LEGO is doing three things:

  1. Lowering marketing costs
  2. Increase customer loyalty
  3. Reduce customer calls on the call center/ customer interaction center

How can you do the same as LEGO and save and make money?

First all of: have a clear view of your customer. Who is your customer, who is paying for product and what is their life-cycle. Be aware of what the additional benefit is of turning somebody in a loyal customer and what you will lose if you lose a customer. Know what it costs to help your customers and keep the aforementioned in mind. Since if a customer interaction is costing less than the money you could make by turning your customer in a loyal customer, why not add a little more to go beyond customer expectations? However it is not just focusing on a the per customer costs, it is the overall benefit. Since by giving away one train which costs $100 LEGO has not just created one loyal customer, they have created many, even if only 0.1% of the YouTube becomes a loyal customer they have 1,600 new loyal customer (only costing 0.06 dollar per customer!).

View your social behaviour and returns on a business level, not a department level. It is about focusing on business goals and business outcomes and the only sustainable and really social outcomes are those where not the business benefits on the short-term, but where the customer benefits. It is a long-term activity which has to be done across the company, that is the only way to become a really social business.

Otherwise you’ll just be a social department: a nice gimmick, great on Twitter and Facebook, great in doing campaigns. However unsustainable on the long-term, since you are not able to have the long-term view and the complete business view.

It is Social Business, not social department.