Every day, hundreds of millions of people log into Facebook, Twitter, LinkedIn and a mind-bending array of other services, posting comments about their lives, their experiences and their interactions with companies. At the same time, businesses have discovered that social media offers a powerful way to connect with customers and strengthen relationships, hopefully benefitting the bottom line.
However, somewhere between opportunity and challenge lies the harsh reality that using these tools well—and deriving maximum business value and ROI—is no small feat. In many instances, social media redefines interactions and relationships in profound ways. For businesses, it’s not enough to simply set up shop on various social media sites and expect success. Converting clicks into bucks means confronting a tangle of strategic and tactical considerations.
“Social networking is about the authentic exchange of valuable content between people,” observes Barry Libert, author of Social Nation: How to Harness the Power of Social Media to Attract Customers, Motivate Employees and Grow Your Business. “It’s about the quality of the community, the authenticity of the content and the depth of the conversations among people.” When it is used effectively, he says, social media “has a transformational impact on marketing, sales, support, collaboration and other facets of the enterprise.”
Unfortunately, there’s no simple way to tap into social media. Some companies have turned to Web 2.0 features on Web pages, allowing customers to submit and discuss ideas, vote on products and services, and rate them online. Others have extended Web functionality, including sales and customer support, to Facebook, or have turned to Twitter to microblog, monitor discussions and address issues promptly.
Some companies rely on social media tools—including blogs, wikis and discussions—to share information and ramp up a knowledge exchange. Still others are adding analytics applications to spot patterns and trends.
To be sure, social media is changing the face of business—and IT. “Social networking channels have matured to the point where they offer compelling business value,” observes Kelly Dempski, director of multichannel interactions at consulting firm Accenture, adding that social media is following the same trajectory as the Web.
“In 1996, companies knew they needed a Web page, but they couldn’t figure out exactly what the value was,” Dempski says. “By 2006, they got it. They weren’t asking the question any longer.” The goal, he added, is for “organizations to blend social media into the mainstream of business.”
Successful marketing and communication has always relied to a certain extent on human interaction and word of mouth. But interacting with customers, partners and employees has taken on a new meaning. eMarketer predicts that 88 percent of businesses with a hundred or more employees will adopt social media for marketing purposes by 2012.
What makes social media so powerful—and scary—is that a hot product or service can go viral within hours. Conversely, a customer revolt or backlash can materialize out of thin air. In the age of the Internet, it’s nearly impossible to sweep an issue under the rug.
“Companies finally have a way to reach out to their audience,” Dempski says. “For ‘followers’ or people who click the ‘Like’ button, communication is not perceived as spam. It’s entirely welcome.”
Using this medium effectively means connecting with the audience through feeds, microblog posts and other tools. It’s also about offering promotions and incentives that bond customers with the brand. Stuart Crawford, senior advisor and partner at consulting firm Ulistic, puts it this way: “Social networking is very much a sales tool. Sales and marketing professionals can engage with their market and become a trusted resource.” However, it’s about soft sell rather than hard sell, he advises.
A prime example of this concept is Adagio Teas, a 12-year-old retailer that sells premium teas online and in Chicago area stores. The Website, which runs on a Linux server and uses Perl and Mason (the company builds all functionality in-house), offers a spate of social media features.
Customers can post product reviews and ratings, read blogs, participate in “Tea Chat” discussion groups, share information about teas with friends by inputting their Gmail address and password (the site automatically promotes “friend” selections and preferences.), and receive tweets for their order and shipment status. “Social media is at the center of the business,” says CTO Ilya Kreymerman.
One thing that makes Adagio unusual is that the company doesn’t filter reviews for the 200 teas and other products it sells. “Everything is displayed in real time,” Kreymerman says. “Once a customer orders from us and has an account, [the customer] can post at the site.”
This approach, which many companies avoid, actually benefits Adagio in a big way. “We’re able to use the data as market research, he says. “We make decisions about which teas to offer and which to kill off based on a combination of sales and customer feedback.”
Adagio has also tied together an array of other capabilities. For example, customers can create custom tea blends—which the site then shares with other customers. When another customer buys a blend, the creator receives points that lead to a gift certificate. This spurs competitions among customers.
Likewise, Adagio offers points and discounts for sending friends a free $5 gift certificate (once it’s redeemed) via e-mail, Facebook and Twitter. Finally, the retailer provides a Facebook “Like” button for all its products, and it uses Twitter to engage customers more fully. “Our goal is to get people passionate enough to visit the Website regularly and talk about us with their friends,” Kreymerman explains.
Learning a New Language
Sales and support are also at the center of Rosetta Stone’s strategy. The provider of technology-based language learning systems has turned heavily to social media to market and sell its products. About two years ago, the company developed a set of goals and a road map for using social media: It established a dedicated social media department and launched a Facebook page during the summer of 2009.
“There is a huge word-of-mouth component to our business,” states Jay Topper, senior vice president of customer success. “Social media is a perfect way to interact with customers and extend the brand.” (See “What’s Next for Customer Service?” on page 8.)
The Facebook page includes general information, embedded videos and demos, discussion and review threads, events and support. The latter feature provides an FAQ, a searchable database and a live chat function. In fact, Rosetta Stone has extended its Website functionality to Facebook through the use of Parature customer service software. “Facebook is simply another channel,” Topper notes. “It’s important to give customers a choice about how they interact.”
Rosetta Stone has also turned to Twitter to address issues, questions and complaints; LinkedIn to facilitate hiring and human resources tasks; and YouTube to provide informational videos. “The idea is to create a more cohesive and recognizable brand,” Topper points out. “With all the different social media components in place and a focus on market and customer research, it’s like running a 24/7 focus group.” In addition, Rosetta Stone culls data and runs it through analytics software to better understand customers, channels and behavior.
When social media is used effectively, “People feel as though they have a personal relationship with a company,” author Libert explains. Through the use of polls, quizzes, games, customer reviews and discussion pages where the public can suggest new and better products, it’s possible for an enterprise to get closer to customers than ever before and tap into “market research opportunities that weren’t possible in the past,” he notes.
In fact, Accenture’s Dempski says that when all this data is plugged into an analytics program, it’s possible to gain insights into the types of marketing initiatives and advertisements that work best. For example, a clothing designer might post photos of a new line of coats in both color and black-and-white. The firm might ask customers which ads are the most appealing and study the results based on the specifics of the photos overlaid with the customer’s gender, age and geographic location. This might lead to different marketing campaigns for different market segments and for people in different geographic regions.
An organization might also examine activity around Facebook posts to understand the impact of a comment or thread. For instance, a post about blue jeans might elicit a large response from young women.
“If you’re looking to launch a new product, you can essentially ask the question: ‘If I want to sell more jeans to women this weekend, what do I need to post, what do I need to say and what is the optimal time to post the comment?’” Dempski says. “Based on past patterns, it’s possible to maximize current results.”
Social networking is also a valuable tool for managing employee communication and ratcheting up knowledge sharing. At Getty Images, a leading creator and distributor of still imagery, video and film footage, and multimedia products, the sharing of ideas and expertise spins a tight orbit around business success.
Getty Images has more than 1,800 employees spread across more than a hundred countries. In the past, it was difficult to share information and expertise across the company. “A lot of communication was driven by e-mail,” notes Jennifer Fox, director of learning and development.
After researching how best-in-class companies are tapping into social networking, the company built a highly interactive environment that allows free-flowing conversations. Employees, through a dashboard called Mixer, view and share resources, including questions, comments, videos and expertise.
The company uses software from Socialtext to tie everything together. Employees, who establish their own profiles, use tagging and signaling (the latter is the equivalent of a tweet on Twitter or a status line update on Facebook) to complement blogs and wikis. “An employee with knowledge about a particular part of the business can tag himself or herself, and others can find this person when they need to tap into the expertise,” Fox points out.
Employees also can post signals when they need assistance to translate a note, find a good hotel in Paris or understand a feature in the company’s sales system. The signal stream creates new connections and a sense of collaboration, Fox says. In addition, employees can fully access Facebook, Twitter, Flickr and other social media services directly within their dashboard.
The business value of social media has transformed Getty Images. “A misconception about social networking is that it’s distracting and takes the focus away from work,” says Fox, “but the reality is that it builds relationships and creates a higher level of efficiency and engagement.”
Author Libert adds: “A lot of organizations fail to understand that a two-way or multi-way conversation is far more powerful than a one-way communication. There’s enormous value in connectedness.”
Constructing a Better Social Net
Another company that has turned to social media to better manage internal relationships is Mota-Engil, a 20,000-employee global engineering and construction firm based in Lisbon, Portugal. The ability to interact and share information across 17 countries and multiple time zones serves as a foundation for the company’s success, “People must be connected and able to exchange ideas and knowledge,” says Innovation Manager António Meireles.
In the past, workers with know-how about construction practices and job sites were largely isolated from one another, so multiple employees and groups sometimes addressed the same problems independently—without knowing that others were involved with the same task.
With upward of 40 major projects in the works at any given moment, “It was necessary to bring all these people together to improve efficiency and innovation,” Meireles says. “The only way this could happen is to have a virtual place for people to meet and interact.”
When the company began exploring social media concepts in 2008, employees made one thing clear: “They didn’t want the interaction to interfere with their ability to do their job, and they wanted the social interaction to be simple and straightforward,” Meireles says. The result? The company developed a sophisticated social networking hub, using software from Telligent and WeListen.
Among other things, the environment provides tools to capture and share knowledge, a recognition system that includes rewards for participation and feedback, and sophisticated project management collaboration features. The centerpiece is a challenge model that lets any employee post a question or problem and lets others throughout the company respond.
Mota-Engil also uses sophisticated analytics and reporting tools that help executives better understand how to spur participation and innovation. The results appear online, and employees can see how various departments contribute to innovation.
Accenture’s Dempski says that it’s frequently difficult to quantify ROI from social media projects, but that doesn’t negate their value. Many organizations undercommit and underinvest in this technology, he adds. “The lack of a Facebook fan page and a Twitter account doesn’t mean that millions of people aren’t talking about the organization,” Dempski points out. “It just means that you can’t monitor the discussion and capitalize on it.”
Likewise, it’s difficult to measure the ROI associated with innovation and knowledge sharing internally—or through connected business partners. Nevertheless, organizations typically find that social media improves both the quality and speed of project management and helps teams develop products and provide services at the speed of digital-age business. Combined with analytics, social media provides clues for how employees work and how knowledge flows through the organization. (See “Making Analytics Work” at left.)
Make no mistake: A well-designed social media strategy can pay enormous dividends. “Organizations that tap into [social media] effectively are able to boost their brand, simplify market research, streamline collaboration and put themselves on the forward edge of innovation,” author Libert says. “Social media is here to stay, and organizations that learn how to tap into its business value have a distinct advantage.”