The Economics of Social Business

I have asked Natalie Petouhoff to join me in writing this week’s blog post. Natalie was a leading CRM analyst at the Forrester Group and I enjoyed meeting and spending time with her at the SCRM conference with the father of SCRM Paul Greenberg in Virginia. Natalie gets it and has teamed up with a colleague to create new models and metrics to measure the economic impact and business value of being social business. As you all know I am always on the bleeding edge of everything in whatever industry I am in and I am excited about participating in Natalie’s research.  I also think that this will be a thought provoking post.  In my section I have identified the economic pillars of social business; Natalie will provide us with some insights on how we might measure the impact of social media on the bottom line, so here goes.

The social media tsunami is disrupting and impacting many aspects of business today including product development, CRM, thought leadership, corporate marketing, sales and lead generation, brand management and influencer relations. Defining and understanding the economic ramifications of its impact is the question of the hour? B2P companies have been quick to adapt to this disruptive change in communications and have already begun to leverage it for competitive advantage, but most B2B companies have been slow to react and engage. What are the parameters that need to be measured and by what metrics?

The Economic Pillars of a Social Business

·         Product Development-Innovation is now outside in.

·         CRM- managing the challenging social customer.

·         Thought leadership-business leaders can engage and drive influence by engaging.

·         Sales and lead generation-is easier than ever in volume.

·         Brand management-you can’t hide.

·         Influencer relations-they now own you and your brand.

 And how is social media impacting business?

• Impacting call centers and what are the added costs or cost savings?
• How are companies recruiting and training social media savvy employees?
• How many companies now have swat teams following Facebook pages and Tweets about their company, products and service?
• How are companies engaging with the new influencers (bloggers) and managing their brand?
• How are companies engaging with the new influencers and managing their influence?
• How are companies creating content pertinent to their industries and establishing thought leadership from within?
• Are Facebook fan pages effective means of advertising and lead generation?
• How are companies and organizations building communities of interest to enhance their brand experience?
• Will advertizing on Twitter pay off?

In Reality

Proctor and Gamble is using social media to drive product development and test pricing, Ford is using it to build communities around car launches, SAP is using it to accelerate innovation, software development and integration in its ecosystem, Indium is leveraging its blogs to establish thought leadership in its industry and engage new customers, and it seems like every winery in California now has a Facebook page.  So how are they measuring the business value of social media and how should we think about it?

Measurement by Natalie

 

The way that I approach measurement is first start with how you are currently measuring success in your business. What are the benefits of what you are doing? When you look at those benefits, what metrics do you use to know if something has improved or gotten better?  And then ask yourself, "What the value of that "something" if it gets better-- i.e., what does it add to the bottom line? 

The tricky part is to then apply social media to your business and know what the affect it’s going to have on it. That means really understanding your current business and the value conversations and also learning something new... i.e., the benefits and value of social media to traditional disciplines like marketing, PR, customer service, product development.

In working on ROI models, what I found was that when a company fully engages in social media, it sort of doesn't matter where they start. If they are really paying attention -- listening and interacting, what they will find is information that is critical to every single department. That kind of listening is new for most companies -- i.e., they are used to pushing content and information out... and not really getting a lot of feedback... In essence, doing social business means change. It means changing how you listen, how you measure, how you respond and howyou run your company. Some companies "get" it and others... they may never understand this new world!