There is an interesting question. First, you have to put a definition on what social media is.
This might seem like a silly thing to do for some, but I imagine if you ask the CFO of any business (big or small) what their definition of Social Media is, you’ll get a funny look like, “Huh? What? Why are you wasting my time with that kind of question? I have all this red ink and you want to talk about what?”
So here it goes. Social Media, defined in part within Wikipedia:
“Primarily, social media depend on interactions between people as the discussion and integration of words to build shared-meaning, using technology as a conduit.
Social media utilities create opportunities for the use of both inductive and deductive logic by their users. Claims or warrants are quickly transitioned into generalizations due to the manner in which shared statements are posted and viewed by all. The speed of communication, breadth, and depth, and ability to see how the words build a case solicits the use of rhetoric. Induction is frequently used as a means to validate or authenticate different users’ statements and words. Rhetoric is an important part of today’s language in social media.”
Hmmm. Sounds like a text book entry (under GAAP Principals), so let me translate.
“People sharing insight, ideas, know how and content with one another using a variety of content mediums that reside on the Internet.”
There. Social Media in a nutshell.
Why is the reality of social media activity important and why should our fictional CFO care? For that matter, why should anyone else care besides the marketer?
Why? Because social media and the knowledge that can come out of it provides the business a significant strategic advantage. So who else should care and why?
Well, here are a few, other than our CFO and the CMO/marketing team of course.
1. CEO. Social media activity is an accurate barometer of brand equity and corporate reputation. What social media is comprised of (i.e. what’s inside of UGC) is telling as to the company’s current profitability and future performance. How hard does the company need to work to maintain market share? Lots goes into this analysis but social media provides a very real comparable metric to help measure whether the company’s internal metrics are accurate and why. Being able for the CEO to provide real insight at a shareholder meeting or an analyst conference call is important. It’s doubtful the CEO will reference his source as a social media output, but that’s not the point here. Social media’s underlying value is.
2. COO. Why? Social media activity both internally and externally can indicate well the business and its resources are aligned within the marketplace to deliver on projections, plans and results. Social media metrics can be compared with operational plans to see if the plans were realistic in the first place, on target or slightly off. Social media tools and metrics can offer operators ‘real time’ adjustment indices if used properly.
3. EVP of HR. Social media isn’t limited to external venues. How engaged is your brand and your team. How collaborative are they (or are they capable of being based on the infrastructures and culture in which they operate)? There are some big brands that are absolutely committed to this. One old-line brand, a leading insurance provider even makes this a metric that is presented to the board of directors along with things like net profit.
4. EVP of Sales. Sales has a lot it can learn from social media. Value proposition is best delivered from the mouths of customers themselves, as the sales department always has a primary goal-close the transaction.
5. VP of CRM. Once the sale is closed, who owns the customer? Most likely the CRM team does. They get measured on support costs, call duration in-bound requests, churn and a whole lot of other customer-stickiness metrics. Social media helps to deflect a lot of these costs, as well as, understand what’s driving inbound requests and churn. Microsoft gets this.
5. EVP or VP or Product Development. Necessity is the mother of invention. If you want something to work a certain way, you create a work around. Sometimes, understanding what those work arounds are helps teams innovate. Sometimes, it’s just asking for ideas. www.ideastorm.com is the obvious example. There are dozens of others…good and bad (i.e. that work and don’t work). Intuit works. MyStarbucksidea.com doesn’t.
7. Institutional and individual investors. Another part of doing good homework. What are customers saying and how well is the brand listening? There is an old-line manufacturing truism. To understand how well run a manufacturing company is, simply look at it’s loading dock. A neat and orderly loading dock says the business is on top of things. Broken pallets, trash and disarray speaks volumes, You’d be surprised how many savvy investors who bet (or did before the meltdown) on manufacturers did this kind of homework. Social media can provide the same sort of insight if approached correctly.
Here’s a proof point. This factoid was provided by my friend and colleague Barak Libai, professor at Tel Aviv University and Advisor to WOMMA and is taken from a good book by Gupta and Lehmann on “Managing Customers as Investments“ and relates to Cox Communications.
You can see that the defection rate for customers who use the product in a wider way is much lower. Much of this wider use comes from formal and informal social media activities (people helping, showing and spreading the word. This can translate to double the lifetime value!
Double…that’s a lot of coin, my friend.
Can social media rewrite business rules? I am here to tell you that that it already is. So where are you? Ahead of the curve or behind it?
Spike shares some interesting facts that come out of a recent report conducted by Noshir Contractor, Jane S. and William J. White Professor of Behavioral Sciences at the McCormick School of Engineering and Applied Science at Northwestern University.
This group of researchers are studying nearly 60 terabytes (keep in mind 1 terabyte roughly equals 220 million pages of information) of data from EverQuest II (a popular Massive Multiplayer Online Games or MMOG) and interviewed 7,000 players of the game (which makes this one of the largest social science research projects ever performed).
Here’s an excerpt.
“Even though players could play the game with anyone, anywhere, most people played with people in their general geographic area.
“People end up playing with people nearby, often with people they already know,” Contractor said. “It’s not creating new networks. It’s reinforcing existing networks. You can talk to anyone anywhere, and yet individuals 10 kilometers away from each other are five times more likely to be partners than those who are 100 kilometers away from each other.”
This reinforces something that has started to bubble up to the surface and that is: social interaction is social science, not computer science.
Let me say that again. Social interaction is social science, not computer science.
Technology, like the folks at BASF like to say doesn’t make it, it just makes it better; or more far reaching or more efficient. Which ever you’d like.
MMOG’s and even social networks like FaceBook and Linkedin, even specialty ones like MyShutterspace.com, match.com allow users with common interests to interact and organize around those shared interests and points of view.
Many drivers of points of view and even worldviews are fueled by geographic social trends. For instance, if you go to Berkley, you may be a bit more liberal than say someone who attends say Texas Tech. You are attracted to attend Berkley for the same reason; a more liberal thinking environment where you feel more at home to openly share your ideas an experiences without fear of reprisal.
Since 99% of people are social creatures, we crave face to face interaction, as well as the same thing: to be accepted by peers. Therefore, online social networks and interaction is an extension of what we already do…naturally.
I have seen nothing in the research or programs I know of or am involved in that contradict this general human behavior.
Online environments as this study shows are extensions and amplifiers of social networks, not proxies. I am posting a blog on this and will link to your post.
So what’s the aha here? It’s the fact that you should not get caught up in the web 2.0 and social networking hype. Employ the same planning and customer engagement best practices you would in a web 1.0 or a pre-web world.
It’s social science, not computer science!
Remember the New Economy replaced the Old Economy cry? Remember, we were ‘reinventing’ everything. Didn’t turn out that way. It was just the economy (although we may wish we had a new economy.) People work the same way.
I received a comment from Deb Eastman, the CMO of Satmetrix regarding my recent blog post. Her comment is below:
Steve, I want to clarify a miserception in your original post, M&Ms is absolutely NOT faking customer engagement. This site is hosted on the Satmetrix Community platform and MyM&Ms used our technology to collect input from highly engaged fans. However, Emma is an employee of myM&Ms and was responsible for engaging consumers to provide feedback on how to improve their products and overall customer experience. They made several changes to their packaging, allowed consumers to put their faces on M&Ms and improved their customer experience based consumer input. Consumers got the products they wanted and M&Ms increased loyalty in the process. Everyone wins.
It's unfortunate that budgets are currently impacting their level of engagement, but I expect we will continue to see myM&Ms engage with consumers and improve their products & services based on customer feedback.
This brand listened and acted on customer feedback. I think most would classify this as genuine customer engagement.
Deb Eastman, CMO
I would like to thank Deb Eastman for her point of view. Since the M&M site was hosted by Satmetrix, they cannot, like many professional marketing service organizations, ensure that their counsel will be either listened to or acted upon. Like the physician who counsels their patient to stop smoking, they simply can’t make it happen, even if it is the right thing.
Satmatrix is a well respected organization and should be applauded for fine work we see from them across the marketplace.
Deb points out that M&M’s implemented a number of key initiatives that came out of customer feedback. This is great, but is only a start. True engagement and subsequent performance results comes from:
Now, I am NOT saying that M&M has or has not done any of this. Who knows, there may be a lot going on behind the scenes. I’d love to hear from them.
Moreover, I’d love to see this program come back…in full force…bigger and better than it ever was. Since I am a fan of M&M’s, count me in.
Lastly, thanks to Deb at Satmetrix for her comments as well.
Ok, I love M&M’s. Who doesn’t. My two year old daughter really loves M&M’s. To her, it’s a food group. Me, if I was trapped on a desert island and could only take one candy, it would be M&M’s.
I doubt I will ever be put in a position to make this kind of critical decision. Although I sort of wonder what kind of creepy reality would force me to have to do this…but that’s another blog post. Indulge me, it’s Friday.
Being the good student of community, I followed the link to the Mbassador home page. I immediately dove into the comments…before I even read the post.
There were about a half a dozen comments which oozed affinity and brand loyalty. All sorts of love. Several craved more interaction. They essentially said, ‘”Hey M&M, here I am. Involve me! Work with me! Tap me as a resource! I’ll do anything, just don’t shut me out.”
When I Googled M&M Mbassador program, there it was on the top of the list. But there is a problem (can you find Waldo?) .
If you look carefully, I was dropped on VeeDub’s page straight from Google. The page his hosted by SatMetrix. C’mon guys, this sort of thing is bad form!
Here is how I got to it:
I finally went back to read the original post that was prompted by Virginia’s tweet. Here’s how it reads:
I feel for Emma. She sounds pretty down and out. Reading between the lines, I’d bet that you don’t see any form of direct consumer engagement coming back anytime soon. I hope it does. Engaged and excited consumers who love the brand are a great way to extend understanding and product adoption and use. Heck, just look at all of the UGC people have created on their own.
A friend and colleague of mine, Pauline Ores has a great line…”Community is like gravity’. It is the same for everything or everyone.” Or at least it should be. Good community works the same for Apple as it should for M&M. That is to some degree if management gets it or understands its value.
My guess is the folks at M&M are making a short term P&L decision. Understand it. Too bad. If I see more commercials of un-dead, man-sized candies playing good cop/bad cop on TV, I’ll be even more disappointed. That means the brand chose the easy generic impression rather than an integrated customer engagement path.
What a bummer.
Apple has done an amazing job in creating an image and what used to be a customer base of passionate brand advocates. People who were so gung ho on the brand that they would defend everything the company did, no matter what. Today, I think they have morphed more into a company that caters to product advocates…people who love their i-phone, their i-pod, garage band, whatever.
Job’s rock-star style of ‘shock and awe’ product releases has created a double edged sword in the sense that everybody expects Apple to turn out fabulous, sexy and useful stuff. I am going to go on record in saying that Apple’s ID (industrial design) team is legendary. They could make a doormat sexy. However, if it is not useful, or user-friendly the value starts to diminish.
I see a couple cracks in the dam that indicate there is trouble brewing.
1. Apple’s twitter feed has over 24,000 followers. It does NOT allow for @ REPLIES or RT (re-tweets). It simply pushes out branded content with no concern or care to who is listening or why. Marty Collins does a good job breaking this fact down.
2. Genius bar. If you have ever used it, unless you are a power Apple user (i.e. know exactly how to work the computer, the website and the system), in which case you mostly don’t need the genius bar in the first place, this is a horrible experience for the average Mac user. It’s noisy, crowded, difficult to get an appointment and most people end up feeling like idiots and leave disgruntled. Mostly because the 28 year old person on the other side of the counter (which separates you from them) has a t-shirt on that essentially says, ‘hey I am smarter than you.) Apple wants to cultivate this image. They believe it.
But not everybody feels this is a great experience. On more than one occasion, I have been in a store and overheard some poor customer say either to a genius or to anybody in earshot that was listening, “Are you actually trying to make me miserable?” or here was a real gem from the Michigan Avenue (Chicago) store “Do you think that you have me so completely that you can treat me like this and I won’t care? Or that I have no choice?’”
3. Apple’s tools and marketing channels are devoid of any voice of the customer. No UGC, no interactive tools, no learn from people like me, no easy and useful communities of other passionate users that’s integrated with the product. Instead, you find product, marketing content and white space.
In fact, I have to go to France (OK, it’s Sara France) to get to some form of consumer UCG I might find helpful. But again, this is marketing content. Not user content. No way to rate or rank, share, communicate, collaborate, learn or experience.
As marketing to consumers becomes challenging, not to mention an economy that is making virtually every shopper consider what they are buying, why and what is the value, Apple is on the verge of creating a problem for themselves. It won’t manifest quickly I think but will come to a boil over time.
I saw this first hand a long time back when Scully headed Apple. They (and he) knew better. They (and he) never listened. They spoke. The company teetered on the brink because of that.
Don’t get me wrong. I love Apple. I love the history, I love the overcome all odds mentality, I love the fact that they do get the product experience, every element from the packaging to the plug in. I have many friends who are former Apple superstars. Developers and marketers alike.
For Apple to capitalize on their still-strong fame, they need to re-think:
1. Content only being 1 way.
2. User Feedback and aggregation of the consumer’s content being a core strategy.
3. Integration of the user experience into the product (think Yelp, Amazon, etc.)
4. Re-invent the store.
5. Have a couple of marketing messages, not just bashing Microsoft. Spotlight your customer! Geico has a number of methods. Sure, they are cheesy but it’s unsexy car insurance, not sexy devices.
Just a few thoughts.
Recently, I was interviewed by Tom Searcy, the President of Hunt Big Sales. Tom has spent nearly two decades in CRM, having run and sold a large CRM call center and software business.
His recent business, Hunt Big Sales
helps sales forces from Fortune 500 to high growth entrepreneurial businesses maximize sales activities.
Thought you might enjoy. You can download or stream the podcast here.
I decided to do an experiment. I emailed 50 business executives that know and respect. I carefully weighed who to include. The list took two days to assemble.
The question was purposely broad and came with a little descriptive help so as to allow for some creativity but not to entirely stray off the reservation.
Here is the email:
Sent: Friday, February 06, 2009 11:00 AM
To: Undisclosed List
Subject: RE: Economy is melting. What are the TOP FIVE most important metrics for brand health/survival?
Think engagement vs. awareness. What increases loyalty generation? What drives incremental spend? What do I as a marketer that is ammo for the other C-suite members?
I got a 50% response rate. Considering who I pinged, I was happy.
Here’s the breakdown:
Here are the responses, rank ordered: I tried to keep the responses as close to the original verbatims as possible. These are points are reflective of all the responses.
1. Increased direct customer engagement; collaboration with each other and with the brand. Outcome based activity (less promotion, more utility)
2. Brand reputation and relevance/Net Promoter Score/Increased Relevance and direct value to the consumer
3. Reduction of churn/increased focus on ongoing education and peer/customer collaboration/greater focus on UGC/expansion in customer centric/customer focused social media, web 2.0 and community activities
4. Better integrated CRM activities/integrating customer support with sales and marketing/increase in customer voice within brand
5. Better measurement to ROI around: a) Marketshare b) Margin c) Net Sales d) Cost deflection/operating costs e) product usage f) loyalty
Interestingly, I got on average a full page response from each person. Some were short, sure but most were well thought out and provided a fair amount of detail.
I’d love you to weigh in and let me know what you think the top five are!
Here’s the good news. With the explosion of technology, there are more and more annoying ways to pester customers and prospects, as well as, collect more data on their behaviors. The freezing of the economy has, well, freaked most executives out thoroughly.
The customer, who was as of Spring last year, looking like they were on the verge of being totally disenfranchised by most brands (hey, they are a nameless, faceless number that in the end can be replaced. Shut up, we just want your money…right?) Now all of a sudden (and rightly so) has become very, very important.
The customer finally can speak with their voice, not just their wallet…brands are listening. They have no choice. They listen and respond or go out of business.
Sort of like the fat guy who has to have a heart attack before he changes his life style.
In the end, this is going to be a good thing for both brands and customers. They will have a closer relationship. Technology and advertising for the sake of themselves won’t be the end-all-be-all they have been.
The next question is how many brands will survive this. I heard from one senior marketer the other day that in 24 months, there will be 15-20% fewer brands than we had 12 months ago.
What do you think?
I had dinner last night with an economist formerly who is also a friend of mine and with whom I used to race bicycles. Years ago, we were both track racers (riding in a velodrome with a heavily banked track). Our specialty was the 500 meter kilo, a very fast and short race. Later, we graduated to racing criteriums and one day ‘classics’ races. In essence, we had become specialists. Focusing on more dangerous, faster and shorter races. Neither of us had the gas for longer or multi-stage races. We’d been conditioned to perform differently.
My friend and I discussed the stage of the economy, covering four important topics. The stimulus package, the credit lock, the paradox of thrift and wall street’s myopic approach to economic growth. Each of these things alone are important and will have an impact on our economy for the next 20 years. Together, no one knows what will really happen. We have to look to the past for answers.
The net is that a free market economy always rights itself, as long as it is based on a sound structure. Unfortunately, the hunger for profit has caused Wall Street to create new financial instruments that are essentially based on nothing other than risk itself. Derivatives of derivatives. Not a lot different than playing Kino or Baccarat in Vegas. Wall Street bet on black and it came up red.
Now that a big chunk of what fuels our economy (i.e. the financial sector) is no longer truly part of the free economy, what with the financial firms being nationalized and all, we are in new brand new territory.
That said, are we are more likely to be seriously hobbled again in the future by Wall Street itself or instead by the Federal Government’s ownership interests. Truly, these two forces are at odds. So what will happen? Will our growth engine of the future be a Hemi or a Hybrid?
What I mean by this can be found in the outset of this blog post where I discuss cycling and the correlation my friend made.
The macro-economic trends which drive our U.S. economy, as well as, the integrated components of our economy that aren’t U.S. based but global in nature. Not being an economist (like my friend), I don’t want to debate where macro-economics converts to micro and the interdependencies between the two. Instead, here’s the important notion.
As a cyclist, my friend and I focused on short, fast races and were not equipped to race longer races, say like the Tour of California. Our economy is essentially a long race. Wall Street has trained public companies to race short races. Meet the quarterly guidance at all costs. Juice the numbers, move assets, sell at a discount, just meet the numbers so our stock price doesn’t tank and keeps us from borrowing money or selling our bonds. It’s a vicious cycle.
Getting new products to market, capitalizing on market share opportunities. These are sprints. Short races. Running say Citigroup, AIG, Boeing, Microsoft. These are long races. As my friend reminded me, Lance Armstrong won 7 Tours. He didn’t win every stage, or even the majority. He won the overall race.
If we want our economy to right itself, get the speculators and gamblers out of the business decision process. They will always promote a sprint. Let them gamble (they always will, we can’t stop that) but not at the cost of influencing the outcome of the longer race.
Can the Mongols of Wall Street co-exist with their new bed fellows, the shackled and risk-adverse CEO’s, and their new bosses, the beurocrats and politicians of the federal government? Maybe, if each understands their place on the team. Sprinters sprint when appropriate and climbers climb when the need to. My guess is they won’t play nicely.
The fact is that the Feds never, every give up anything. So I am not sure AIG will ever return to its previous form. So, we shall see. It’s gonna be a long and scary ride for sure.
It was 4 degrees at 5:45am this morning. It was also dark. I slid and stumbled down the still snow covered driveway to locate my Wall Street Journal, the old-school paper kind. Finding it I made my way quickly back inside. But as I walked, I noticed one thing. The paper weighed almost nothing.
'”Hmmm, this would explain why I now have to walk all the way to the bottom of the driveway to get it. A year ago, it made it three quarters of the way up. Driver can’t toss it as far.”
When I got inside, I opened it and again noticed something that I had been seeing for days, even weeks but only today saw. In each section, the cover, Marketplace, Money & Investing, even Personal Journal there is only one type of news. Business all over, of every type is bleeding. Some, like GM and Chrysler have throat wounds. Others like Motorola, UPS and Dow Chemical are bleeding and anemic. Yet others like Mattel, Nintendo and even Electronic Arts are showing rumblings of trouble.
President Obama said something that stuck with me a while back. “We don’t have a republican problem, we don’t have a democratic problem, we have an American problem.” True, but we really have a people problem. This issue is global and we are all tied together.
That said, rather than sit here and whine about it, we should all be acting pro-actively and thinking with an innovative mind. Clearly, cost cutting across the board is a requirement in every industry but panic and repetition of traditional marketing, sales gen and CRM efforts will fall on deaf ears. People, consumers are not worried right now, they are scared.
You will fight for every dollar decision. Make it easy for them. Listen to them. Be innovative. Speak plainly. Share the knowledge. Here are some ideas I have had over the last couple of days.
NBA teams: Invite loyal fans to a series of pizza parties held on the hard wood. As THEM to re-invent the stadium experience. Music, activities, prizes, contests, etc. Put management in the stands in sweatshirts that say Team Management: Talk to me. Make them move every 15-20 minutes. Meet after the game, rank order feedback. Post it as a checklist on what’s being done.
Retailers: Recruit customers (real ones) to secret shop and provide them a deep discount on purchases when doing so. Give them a forum to post their findings. Act and report on those findings. Give key customers Pure Digital (www.theflip.com) cameras to record their experiences. Here’s an example, caught on a flip camera. It’s called ‘Why buying a new sled at Walmart is a good idea, it’s called Meredith goes sledding. Give them a forum to share homegrown ideas of stuff to do with their families that don’t cost an arm and a leg.
Airlines: Remember, you have the power to make it better or worse. It can be simple things. Make a joke. Ask a question. Smile. Show sincerity. Look people in the eye. Most of the things you do make you appear to be out of touch and actively working hard to piss us all off.
Restaurant chains: Create mix and match fixed menu options for sharing. Have patrons rank and rate favorites on paper menu options. What sounds good, versus what is a good value versus what was actually tasty. Follow up with repeat patrons to inquire how the take out service was. Ask for 1 way to improve either the experience or the value. Track this, learn from it, act on it, share it. Create podcasts on ways to cook this at home. Have a favorite dish? We’ll show you how to make it. If you are a chain that sells branded in store items, feature these items. Provide in in-restaurant discount to people who have used these products and have a proof of purchase. If you don’t make it, maybe you should. Any contract manufacturer would welcome the chance.
In the end, listen to your customers. Ask them. What you will receive is golden. I’d love to have some more ideas. What is it that businesses should be doing to stay in synch with their customers? Post a category and one or two ideas.