Business Gets Social With Community-Building Strategies

 
 
By Michael S. Kenny and Will Yen  |  Posted 2009-12-08
 
 
 

Social Media has created a customer-interaction paradigm shift from a “one-to-many” broadcast model to a “many-to-many,” necessitating a change in how organizations interact and communicate across their value chain: employees, customers, partners and suppliers. The rapid adoption of social media and social networking—and the increasing demand for more customer interaction—is compelling many organizations to develop a well-thought-out social media strategy and presence that’s consistent with the organization’s strategic objectives, culture and values.

Organizations still need to plan and develop corporate marketing and product strategies, but with the advent of the social media groundswell, they should incorporate a community-building component into these strategies in order to adapt to the change in how customers, partners, suppliers and competitors are interacting.

Even traditional companies like Coca-Cola and Whole Foods can be found on Facebook, MySpace, Twitter or similar social networking sites. Rather than remaining the sole source of information for customers, organizations are now simply part of a broader public customer conversation. However, formulating a strategy and designing a presence to interact with customers and facilitate customer conversations is a challenging task for most organizations, one that involves both business decision-makers and the IT organization.

The Lay of the Land

Today’s social media ecosystem is characterized by multiple niches and players in an open environment—offering organizations a multitude of platform and product choices. In formulating an effective strategy, organizations must consider all media forms and presences, while also defining how they want customer interaction to take place. Starting small, thinking big and scaling quickly are the keys to success for organizations that are beginning to test the social media waters.

In recent client discussions, we found that the majority of business benefits fall into three categories: customer support, sales and marketing, and innovation and collaboration.

Building externally facing online communities has proved successful in decreasing the overall cost of customer support and relationship management. For example, according to “The Linksys ROI Story: Support Community Delivers Significant Savings from Call Deflection,” from Lithium Technologies: “Linksys sees cost savings in the form of call deflections, and was able to increase the number of indirect call deflections to 120,000 cases per month by building out an online community for engaging with customers. This led to an overall decrease in customer support costs. By creating and nurturing an online customer community, Linksys has empowered its customer base to solve product issues within that community.”

It is clear that empowered customers will have superior knowledge of a company’s products or services—a key element of increased customer satisfaction.

Coca-Cola and Zappos.com are also excellent examples of companies that are leveraging the power of social media. On Facebook, Coke fans can create content to profess their love of the iconic soft drink. Coke boasts more than 34 million fans on the social networking site and has launched some popular Facebook applications.

And Zappos CEO Tony Hsieh connects with both employees and customers on Twitter, making it easy to elicit feedback in real time and collect customer profile information. This generates a database of potential customers—thereby driving revenue and increasing market share.

By creating environments in which both internal and external customers, experts and employees can interact, companies are realizing the benefits of collaboration. In some cases, this includes feedback into their product-development life cycles.

Internal collaboration can be facilitated and nurtured within the community, and social media platforms provide some of the key technologies to enable this collaboration in the form of blogs, wikis and chat. According to a case study conducted by Jive Software (“VMware’s VMworld.com: The Global Destination for Virtualization”), after implementation of VMworld.com, a collaborative conference community, VMware was able to “see in real time the hot areas in the virtualization community, the trends and top-of-mind concerns, and leverage these insights in product direction and messaging.”

Social Media Done Right

Some of the top brands in the United States have formulated recipes for success in building meaningful social media platforms. For example, Zappos initiated the use of Twitter to manage the company’s employee churn problem: By using Twitter as an immediate feedback mechanism, the organization was able to address key employee problems in real time. This year, Zappos made Fortune’s list as one of the top 100 best companies to work for in the United States.

CNN launched iReport in early 2008 to open up a channel for “citizen journalism,” which allows the public to try its hand at reporting online. The site, which claims more than 300,000 user reports to date, has become a significant news-gathering tool. In fact, CNN has a dedicated staff of reporters who review user input for integration into its network news coverage.

In order to successfully execute in the social networking arena, an organization must understand its culture and its willingness to undertake this type of initiative. Culture will have a profound impact on overall strategy, and privacy policies and corporate guidelines must be carefully considered. Cultures that safeguard and shroud product development information might find it intimidating to share that information in a social medium.

In order to be successful, an organization’s social strategy and presence must be consistent with its culture and values. Considering all these factors will help management build a realistic strategy that is tailored to its vision.

The Technology of Social Media

Numerous platform and product providers in the social media technology marketplace can provide the back-end capabilities needed to build the foundation for a social media architecture. Industry leaders are emerging, offering comprehensive product features and, in some cases, providing significant understanding of the business requirements that their product is supporting.

Further, technology called “listening platforms” provides analytics from which to mine data and derive insights from a social network. Some are delivered as software that can be integrated into the community’s platform. With these tools, organizations can participate in, but cannot control, the conversation, enabling them to learn from each discussion and interaction in order to help shape and achieve business objectives.

Nurturing, growing and maintaining a community requires close examination. For this is where the “magic” happens—when a company has developed a healthy, thriving community in which all participants, no matter what their role, find value in contributing, communicating and interacting. Measuring the progress of this community’s development is crucial because it allows a firm to make adjustments to its community-building strategy and tailor the community to its customers’ needs.

The social media phenomenon is here to stay, and it will continue to have an impact on business decisions. Customers are demanding interaction. Conversations about your enterprise or its products and services are likely already happening within these networks—even if your organization has not yet joined the dialogue.

The larger the organization or the more complex the business or industry, the greater the need for a thoughtful and measurable strategy that can be executed and maintained by all parties involved. Any organization wishing to engage in the “conversation” must define its social media architecture across the components of business benefits or purpose, culture, policies, platform and presence, listening platforms, metrics and community.

Michael S. Kenny, the managing director of Slalom Consulting, is based in San Francisco. He has more than 18 years of consulting experience across a variety of industries and has led technology engagements for a wide array of Fortune 500 companies.

Will Yen, a senior consultant at Slalom Consulting, is based in San Francisco. He has 8 years of experience delivering business solutions for Fortune 500 companies.