Last month I started exploring Social Media Strategy with you via a discussion (or lecture, depending on your point of view) about life beyond predictive analytics & traditional business intelligence. For those of you who were sitting in the back row, don’t worry; there’s no quiz. But let’s take a moment to review so we are all up to date.
Our meta-level look at Social Media Strategy led to the realization that everything we do online is being watched and analyzed. Marketers search feeds for buzzwords, trend the data historically and in real-time, look at the most active conversations and specifically target you with their messages based on your seemingly private communication patterns.
I could, for example, turn on my iPhone’s “Tweetie” application, click ‘nearby’ and watch the online conversations that people in my geographical area are having. Methods of commoditizing that information are just around the corner.
Yep, it’s happening. Check out brightkite.com to learn more. And I suppose it’s kind of scary if you’re not a marketing guy. Since I do happen to be a marketing guy though, it’s kind of thrilling (like the Superman roller coaster at Six Flags but without the motion sickness). And there is an upside, even for those who are concerned about privacy issues: smart companies really want to know what you want from them. Your voice matters now more than ever.
The bottom line is that online networking is empowering connections that are completely re-inventing the way relationships are formed and business is done. This is about differentiation in the new economy, and the entrepreneur in me loves it!
Now let’s take this whole thing a couple of steps further, from macro to micro level analysis. Instead of considering how Technorati (technorati.com), Social Radar (infegy.com) and the back office folks at Facebook can see the whole world in real time we are going to examine Social Media from a much more personal perspective; how do you fit in to it?
First things first, a refresher: what is social media anyway?
I was at a TiE-Boston conference at MIT last night, listening to a well-informed panel answer this question, each member defining the phenomena in his own terms. The answers included the following elements. Social Media:
• “Utilizes 2-way communication (think ‘sites that talk back to me’) including user-generated work.”
• “Uses technology to create value.”
• “Is the new telephone; it is a communication tool.”
• “Is 2-way, many to many.”
From my perspective, good Social Media is about thought leadership. Earlier this week Facebook announced that it has reached 200 million users, up from 100 million in August 2008 and 150 million in December 2008. This thing is on fire and it’s nowhere near burning out.
Overall I agree with each of the panelists: social media has now reached utility status and is already an indispensable part of our lives, allowing us to increase productivity via unlimited, real-time, simultaneous collaboration, improving the sharing of information and opening the door to a revolutionary business model based on low cost, user-generated work.
Let’s take a closer look at that last term, specifically.
What’s in it for you?
“The Contribution Revolution: Letting Volunteers Build Your Business” was recently published in the Harvard Business Review by Scott Cook, Co-Founder & Chair of the Executive Committee at Intuit. In a podcast interview, Scott explains that:
“A user contribution system is where the company creates & controls a system that converts contributions made by others into what is useful and valued by customers or sales prospects or employees. And that conversion happens reasonably automatically without employees having to do incremental labor.”
Umm. Come again?
Perhaps an example would help. You have heard of Amazon.com, right? Well, it turns out that Amazon’s customers prefer user-generated reviews 95% to 5% over expert reviews. Meanwhile, Amazon’s cost of producing the user-based reviews is near $0, while sales and brand loyalty generated from this relational system are off the charts.
Then there’s that other little user-generated website, Wikipedia, which is two hundred fifty times more popular than encyclopedia Britannica. And maybe you’ve heard of something called YouTube?
Why are Amazon, Wikipedia and YouTube so much more popular than their closest rivals? Because they are driven by customer interaction. Hear this again: when users actively contribute to product, service and even organizational design, we feel like we are part of something. It becomes ‘ours’ and our investment in the outcome creates a sense of personalization. This is a win-win for company and customer.
Cook explains that Proctor & Gamble has been extremely effective at building this value chain via their “Being Girl” website. Targeted at young women who are just getting their periods, “Being Girl” is a user-driven community where girls share real information and perspectives that they might not feel comfortable discussing in other groups. It’s an empowering tool for this demographic, and not surprisingly P&G has discovered that dollar for dollar, this portal generates four times more return on investment than traditional forms of advertising.
How else is Social Media changing business?
Let’s hear from our expert again. Scott Cook knows that “user contribution systems… challenge some of the basic tenants and beliefs about the role of managers, role of experts, role of quality control.” He goes on to explain that the technology and its applications are so early stage that companies have to approach utilization from an experimental perspective, expecting failure and discovery before they discover the winning formula.
To do so, it is essential that businesses create environments where internal innovators are protected from the company’s traditional control instincts. Even blogging, which is now widespread in its acceptance, poses some difficult choices for employers. How do they ‘control’ what their employees are messaging about both personally and professionally? What is the company line on transparency versus privacy?
As organizations wrestle with policy and technology, at least two things are already clear:
1. Compelling content is the key to effective optimization of social media opportunities. The bells and whistles of your web site mean very little if your viewers are not engaged by your message.
2. Social Media, compelling as it is becoming, is still just a tool that can be used to convey your value proposition to a wider audience.
That said, I really like the perspective of Brian Halligan, Co-Founder and CEO of HubSpot.com. Brian believes that “the age of traditional marketing is over.” To support his theory he underscores two points.
First, the Internet in general is a great equalizer. Even things like SEO (search engine optimization) have provided relatively low-cost ways for small businesses to position themselves globally, generate awareness and demand cost-effectively, and compete with market leaders. This is an age where nimble, adaptive companies can make great strides at a rapid pace…if they know which buttons to push. This leads to Brian’s second observation: historically 4% of Fortune 500 companies drop out of the ranking each year. Since 2000 the average has been 9%. His bottom line: things are changing and Social Media is here to stay so get on with it!
Stating it even more matter-of-factly, Scott Cook declared, “User contributions (or voluntary contributions from employees, customers, other interested parties) are a critical element to the future success of organizations.” He goes on to cite an example from Best Buy, where an internal competition designed to generate participation in the company’s 401k plan prompted employees to submit their own creative video documentaries. The resulting buzz proved to be much more effective at increasing enrollment than traditional Human Resources methods had been.
I ask you then, where do you see this “Contribution Revolution” going? How else can user activity be productively harnessed? Can you imagine ways for your company or industry to leverage the community’s willingness to share ideas?
Social Media is all the rage right now, but we’re really just beginning to explore its possibilities. In the long run, how do you think it is going to influence your life and shape your world?
