Mastering Digital Feedback with Social Media 2013
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Mastering Digital Feedback with Social Media 2013

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TCS Study on Mastering Digital Feedback with Social Media 2013

TCS Study on Mastering Digital Feedback with Social Media 2013

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Mastering Digital Feedback with Social Media 2013 Mastering Digital Feedback with Social Media 2013 Document Transcript

  • Mastering Digital Feedback: How the Best Consumer Companies Use Social Media A TCS 2013 Global Trend Study
  • INTERNET BLOGGING DATA follow SURFING WEB ONLINE CLOUD VIDEO TWEETS COMPUTING FORUMS FOLLOWERS DIGITAL 2 Mastering Digital Feedback
  • Contents 004 Introduction and Key Findings 014 Comparing Results Across Four Regions of the World 061 Results in 11 Global Consumer Industries 088 Findings by Business Function 100 130 Mastering Digital Feedback Learning from the Best Adopters of Social Media: Implications and Recommendations for Consumer Companies Research Approach and Survey Demographics 3
  • Introduction and Key Findings 4 Mastering Digital Feedback
  • Consumer Companies Begin Tapping Into the Social Media Mania If you had asked a chief executive at any global company about social media 10 years ago, you would have likely received puzzled looks. “Social what?” While that may be hard to imagine now, consider that in 2003, Facebook (the current king of public social networking sites in the Western world, with more than 1 billion users today) was a year away from being launched out of Mark Zuckerberg’s Harvard dorm room. LinkedIn (with 225 million members today) had just opened up for business. Twitter (now 550+ million users) wouldn’t appear until 2006, and Google+ (500 million users) did not launch until 2011. Of course, CEOs are no longer in the dark about social media. In fact, about a third of Fortune 500 CEOs today have their own presence on social media platforms – their own Facebook, Twitter, LinkedIn or another account available for the public to view.1 More importantly, social media has become a serious undertaking in many of these firms. In the last three years, the majority of large consumer companies have incorporated social media in their strategies and operations. Since 2010, 64% of the companies we surveyed in June and July 2013 (average revenue of $15.6 billion; a median of $4.9 billion) had assigned at least one full-time equivalent to use public social sites such as Facebook, Twitter and LinkedIn regularly to monitor what consumers say, communicate with them and understand their needs. The companies we surveyed will spend an average of about $19 million on social media activities this year and, on average, employ 56 people to plot their social strategy, listen and respond to consumer comments on public sites, and handle other tasks to stay in tune with social media discussions about their brands, products and practices. That nearly two-thirds of big companies around the world are now fully plugged into social media is no surprise; it has become an important channel to reach consumers. According to researcher eMarketer, the average U.S. adult is now online for an average of more than five hours daily; for the first time, that’s more time than they’ll spend watching TV (about 4½ hours).2 1 2013 CEO.com Social CEO Report, http://www.ceo.com/wp-content/themes/ceo/assets/2013Social-CEO-Report-Final.pdf. The study was conducted by CEO.com and Domo. 2 According to an article by S. Ng and S. Vranica, ’P&G Shifts Marketing Dollars to Online, Mobile’, The Wall Street Journal, Aug. 1, 2013. Mastering Digital Feedback 5
  • If we analyze the way Americans use social media, we find that as of this May, 72% of American adults who use the Internet were members of social networking sites – a huge increase from the 8% in 2005, according to the Pew Research Center.3 (See Exhibit I-1) Given that 85% of U.S. adults use the Internet, the number of social media users is immense: nearly 150 million. Exhibit I-1: Since 2010, American Adults Have Flocked to Social Networking Sites Adult use of social networking sites and Twitter–change over time % of adult internet users who use social networking sites or Twitter, over time Twitter Social networking sites 80% 72% 70% 60% 50% 40% 30% 20% 10% 18% 8% 8% 0% 2005 2006 2008 2009 2010 2011 2012 2013 Source: Pew Research Center’s Internet & American Life Project tracking surveys 2005-2013. Spring Tracking Survey, April 17 – May 19, 2013. N=1,895 adult internet users age 18+. Interviews were conducted in English and Spanish and on landline and cell phones. the margin of error for results based on all internet users is +/2.5 percentage points. Audiences of this size are forcing large consumer product companies to shift their marketing investments and campaigns to social media and other online media. Procter & Gamble Co. (P&G), the world’s biggest advertiser (spending $9.3 billion on it in its fiscal 2012 year), has marketing investments in social media, online ads and other digital media of 25% to 35% of its total marketing spending.4 Of course, many consumer companies don’t limit their marketing to adults; they pitch their products to teens and children too. In the U.S., 81% of the 95% of teenagers who use the Internet also use online social networking sites such as Facebook or MySpace.5And social media is by no means a U.S. phenomenon. In fact, American social media users comprise only 10% of the 1.7 billion total worldwide (which is one-fourth of the world’s population), according to researcher eMarketer. (See Exhibit I-2)Asia-Pacific is predicted to have more than four times as many social media users by the end of this year as North America - some 777 million people.� Up 23% from 2012, the number is predicted to reach 1 billion by 2015. 3 Joanna Brenner and Aaron Smith, ’72% of Online Adults are Social Networking Site Users’. Pew Research Center’s Internet & American Life Project, Aug. 5, 2013, p. 2. http://pewinternet.org/~/ media//Files/Reports/2013/PIP_Social_networking_sites_update.pdf 4 Serena Ng and Suzanne Vranica, ‘P&G Shifts Marketing Dollars to Online, Mobile’, The Wall Street Journal, Aug. 1, 2013. 5 Pew Research Center’s Internet & American Life Project 2011 Teen/Parent Survey, July 26-Sept. 30, 20112. http://www.pewinternet.org/Reports/2013/Teens-Social-Media-And-Privacy/MainReport/Part-1.aspx 6 Mastering Digital Feedback
  • And the trend in Western, Central and Eastern Europe is no different. In Western Europe (a region that we surveyed) eMarketer projects 174 million social media users by the end of 2013. But it also predicts just as many in Central and Eastern Europe. Exhibit I-2: Social Networking is a Global Phenomenon (eMarketer) Social Network Users Worldwide, by Region and Country, 2011-2017 millions 2011 501.6 Asia-Pacific 256.5 —China* 54.8 —India 34.4 —Indonesia 39.9 —Japan —South Korea 30.7 9.3 —Australia 86.0 —Other Latin America 151.6 56.1 —Brazil 24.8 —Mexico 14.1 —Argentina 56.5 —Other Middle East 123.2 & Africa 163.6 North America 147.4 —US 16.1 —Canada Western 142.5 Europe —Germany 25.7 —UK 27.3 —France 20.0 —Italy 15.8 —Spain 15.5 —Netherlands 9.9 —Sweden 4.9 —Norway 2.8 —Denmark 2.6 —Finland 2.5 —Other 15.6 Central & 137.2 Eastern Europe 48.7 —Russia 88.4 —Other Worlwide 1,219.6 2012 632.6 307.5 87.3 52.2 45.0 22.9 10.4 107.3 182.7 66.2 31.8 15.9 68.7 164.3 2013 2014 2015 2016 2017 777.0 906.6 1,018.3 1,129.6 1,231.5 366.2 414.5 451.6 451.6 525.4 127.5 168.7 209.1 209.1 282.9 89.3 109.9 89.3 67.2 79.3 52.7 55.7 52.7 48.2 51.0 27.0 28.6 27.0 24.7 26.0 13.3 15.0 13.3 11.4 12.4 131.8 154.6 175.2 175.2 214.0 216.9 246.6 280.2 280.2 324.4 97.8 110.0 97.8 78.3 88.3 49.9 60.2 49.9 38.4 44.5 21.2 22.9 21.2 17.8 19.5 82.4 94.3 111.3 111.3 131.3 209.8 248.6 287.3 287.3 358.1 174.2 181.2 187.9 193.8 198.8 203.7 157.3 163.5 169.5 174.9 179.4 183.8 16.9 17.7 18.5 18.9 19.4 19.9 159.7 174.2 185.8 194.5 202.3 208.6 39.4 38.1 36.5 34.7 29.2 32.4 36.7 36.0 35.0 33.9 30.2 32.1 27.7 26.9 26.0 25.1 22.0 23.7 24.7 23.7 22.8 21.6 18.2 20.0 24.9 23.9 22.6 21.2 17.5 19.5 13.2 13.0 12.6 12.1 10.8 11.7 6.9 6.7 6.5 6.2 5.4 5.9 3.8 3.7 3.6 3.5 3.0 3.3 3.8 3.7 3.5 3.3 2.9 3.1 3.5 3.4 3.3 3.2 2.7 3.0 24.0 23.2 22.2 21.1 17.8 19.6 154.7 173.6 189.8 202.6 213.4 223.3 54.3 60.5 65.5 69.2 72.4 75.0 100.4 113.2 124.3 133.4 141.0 148.3 1,468.1 1,732.7 1,965.3 2,176.8 2,371.4 2,549.7 Note: Internet users who use a social network site via any device at least once per month; number may not add up to total due to rounding; *excludes Hong Kong Source: eMarketer, April 2013 155358 Mastering Digital Feedback www.eMarketer.com 7
  • The Focus of This Study: How Consumer Companies are Tuning into Consumers Through Social Media In this research, we focused on large consumer companies (as against business-tobusiness firms) and their use of public social networking sites (not their use of social networking tools for internal collaboration). What’s more, we explored how these companies were using social media as far more than a marketing tool. There had already been significant research by other firms about how consumer companies were using social media to market their offerings and improve their brand reputations. But we wanted to go beyond that – to know how many companies were using public social media such as Facebook, Twitter, Instagram, Pinterest, and LinkedIn for such purposes as: n Improving their current products and services n Generating and testing ideas for new products and services n Bolstering customer service n Identifying production and distribution flaws n Making other vital changes to their products and the processes that supported them In other words, we wanted to investigate how large consumer companies were (or were not) using public social media in just about every aspect of their business that affects consumers: marketing, sales, customer service, R&D/product development, production, logistics, finance and more. More specifically, we wanted to understand five core issues: 1. How cross-functional companies’ social media initiatives were: Did each function (or just one function) use social media in isolation, or did multiple functions share social media data and insights about consumers? 2. Who controlled these companies’ social media activities? Was it marketing? Sales? Service? No one function? A social media group? Another entity? 3. What kinds of benefits were companies generating from being able to listen and respond to consumers via social media? How did their initiatives help them market more effectively, sell more, improve current offerings, identify the need for new offerings, and improve processes, policies and practices? 4. What led to larger benefits from social media? Was it the way social media activities were organized (e.g., centralized vs. decentralized)? How much was invested in terms of money and people? Since what year had the company been engaged in social media? What social media platforms did they use (e.g., corporate blogs or pages on public social network sites)? Was their corporate culture different? Did they have backing from the top? Were senior executives using social media themselves? Something else? 5. What were the biggest barriers to gaining benefits from social media? And how did the companies with the biggest benefits overcome them? 8 Mastering Digital Feedback
  • In all, we surveyed 655 respondents from mostly $1 billion+ consumer companies in June and July 2013.The average revenue of our respondents was $15.6 billion (median of $4.9 billion). (See Exhibit I-3) They came from 11 global industries (see Exhibit I-4): n Banking/financial services n Consumer packaged goods (food and beverage, health and beauty, etc.) n Heavy manufacturing (automotive, appliances, etc.) n Retail n High tech (consumer software and hardware) n Media and entertainment companies (including consumer Internet companies) n Insurance (life, health, auto, home) n Hospitality, airlines and other travel services n Telecommunications services (mobile, wireline and devices) n Healthcare products and services n Utilities (gas, electric, water, etc.) Exhibit I-3: Survey Respondents by Average Annual Revenue Q2a (Global): Survey Respondents by Annual Revenue 13% $50 billion or more $20 billion to less than $50 billion 9% $10 billion to less than $20 billion 10% $5 billion to less than $10 billion 17% 32% $1 billion to less than $5 billion 18% $500 million to less than $1 billion $100 million to less than $500 million 2% $50 million to less than $100 million 0% Less than $50 million 0% 0 Mastering Digital Feedback 5 10 15 20 25 30 35 9
  • Exhibit I-4: Percentage of Survey Respondents in 11 Global Consumer Industries Q2 (Global): Survey Respondents Across Regions by Global Industry (Total: 655) Banking/financial services (168) 26% Retail (87) 13% Manufacturing (automotive, heavy equipment, appliances, etc.) (81) 12% High tech (computer hardware, software, communications equipment) (81) 12% Consumer packaged goods (food, beverages and other packaged goods) (54) Health care services and products (medical services, pharmaceuticals, biotechnology, medical productsa and equipment) (49) 8% 8% Travel/hospitality/airlines (39) 6% Telecommunications services and equipment (wireline and/or mobile service providers) (33) 5% Insurance (life, health and property/casualty) (31) 5% Utilities (gas, electric, water) (21) 3% Media and entertainment (13) 2% 0 5 10 15 20 25 30 10 Mastering Digital Feedback
  • We also interviewed executives in 13 companies, whose participation was based on remaining anonymous: n Two large insurance companies n Four major financial services firms n Four large media and entertainment companies n A midsized (less than $1 billion) apparel company n One major consumer electronics company n One large food company Further, we spent significant time finding and reviewing the public speaking presentations and press articles on several dozen other major companies (including 3M, Nestle, and Ford Motor Co.). Their public discussions provide numerous insights into how they view and use social media initiatives. This study explores how 11 global consumer industries and large companies in the world’s four largest economic regions, North America, Europe, Asia Pacific and Latin America, are using social media. This report provides the results of our research. It also compares where large companies are with social media as compared to their adoption of Big Data/analytics and mobile devices. This report is the fourth we’ve published since 2011, the most recent of which was on Big Data. Thus, we can compare the results of this study to those of our other studies. Mastering Digital Feedback 11
  • Our 10 Key Findings Our core finding is that a small minority of consumer companies today - only about 10% - have organized their social media activities in a way that has generated significant improvements in multiple areas of their business: the way they market, sell, provide customer service after the sale, develop new products and services, and identify and make corrections to their current offerings, to name a few. These companies have created one large internal ‘social circle’ for their social media activities. By this, we mean a central group that collects and analyzes social data, and gets managers from marketing, sales, service, product development, production, finance and other functions to jointly make sense of the unprecedented (and ever-growing) amount of daily consumer input that social media now makes available to consumer companies. What’s more, these consumer companies view social media as a game-changer, one that allows them to shift from a world of cursory and episodic consumer feedback, to one of broad, deep and continuous consumer interaction. But they realize that the biggest challenges in capitalizing on social media are as much organizational (structuring the activities) and cultural (being externally and internally transparent about their practices) as they are about mastering social technologies. We discuss these and numerous other findings in this report, beginning with an examination of the data by regions of the world, global industries, and business functions. We then compare the survey results by two groups of respondents: n ‘Leaders’ in social media – Respondents whose answers to a question asking them to evaluate the benefits they’ve achieved in 16 domains (marketing, sales, service, product innovation and others) put them in the top third in terms of total benefits. n ’Followers’ in social media – Respondents whose total benefits in the 16 areas place them in the bottom third of benefits achieved. While this report sheds critical light on a broad number of issues related to social media in consumer companies, we believe the 10 listed below are more important than the rest. 1. Some 38% of consumer companies report a positive return on their social media investments – more than double the number of companies with a negative ROI –­­ but 44% haven’t measured the return: The number of companies with a negative ROI on social media is 18%. Asia-Pacific and Latin American companies are more likely to report positive ROI on social media than companies in North America and Europe. (See Section II) 2. Companies with broader benefits from social media are more likely to have a large internal ‘social circle’ with multiple functions working closely together on social media: Companies that reported much greater benefits from social media in 16 areas of performance (a group we refer to as the ’leaders’) were much more likely to have a large number of functions working together to sort out social media strategy, insights, tactics and responses to consumers. In contrast, companies with with fewer benefits from social media (the ’followers’) were much more likely to have a smaller number of functions collaborating on social media, or functions managing social media independent of one another. (See Section V) 12 Mastering Digital Feedback
  • 3. Industries with greater benefits from social media are more likely to sell products and services that consumers are passionate about: These industries – media, retail, high tech, travel-related and telecom companies – have products and services that are easier to create avid ‘tribes’ of loyalists around. (See Section V) 4. Leaders at social media go far beyond creating company pages on public social networks; a majority of them have blogs, online communities for consumers, mobile apps, and company video channels: Approximately 81% have corporate blogs, 77% have mobile apps for consumers who use social media, and 61% have online video channels. No more than half the followers had blogs, mobile apps or video channels. (See Section V) 5. Leveraging social media requires corporate cultures to be more transparent – both externally (with consumers) and internally (with employees): The majority of the companies with the greatest gains to date from social media have cultures that value consumer opinions and encourage internal transparency and knowledgesharing. Amongst the followers, a minority of companies value consumer opinions and encourage internal sharing of knowledge across functions. (See Section V) 6. The best consumer companies at social media on an average spend double of what the worst companies do; but the leaders are nearly four times more likely to get a positive return on their social media investment: Average spending by leaders - $28 million - is double the average of followers. (Leaders will spend a median of $7 million this year on social media as compared to $1 million for the followers.) But 62% of leaders say their ROI on social media to date is positive, compared with only 17% of followers. (See Section V) 7. Only three business functions are actively involved in monitoring what consumers say about their firm through social media: marketing, customer service and sales: These functions regularly track what consumers are saying on social media in a majority or near majority of consumer companies. (See Section II) 8. Other functions that should be actively listening largely are not: R&D and product management: Only 27% of R&D/product development and 37% of product management departments regularly view social media comments from consumers. (See Section II) 9. Marketing most frequently controls social media, but most companies aren’t satisfied with how these activities are structured: In about one-third of companies, marketing controls social media activities – a much higher percentage than any other function. However, only 42% of respondents view their organizational structure for social media activities as effective or highly effective. (See Section II) 10. Companies are investing fewer resources on social media than they are on Big Data (based on previous TCS studies): Median spending this year on social media is $2.7 million per respondent (average is about $19 million). Based on the median number, these companies will invest about a fourth of what they spent in 2012 on Big Data (median of $10 million), and about 37% less than what they spent last year on responding to consumers who want to do business with them through mobile devices. (See Section II) Section V provides recommendations based on the leader/follower and qualitative data. We offer prescriptions based on how the most advanced companies in our study use social media. Mastering Digital Feedback 13
  • Comparing Results Across Four Regions of the World 14 Mastering Digital Feedback
  • Highlights: n Most consumer companies have become serious about social media in just the last three years n Companies will spend an average of nearly $19 million per company this year on social media, and will increase that to $24 million by 2015 n 56% of respondents have measured the return on social media investments, and most of them say it has been positive n Marketing and customer service are the functions that most regularly view consumers’ comments on social media; R&D, manufacturing and finance do so infrequently n More than two-thirds (68%) of the respondents centralize social media activities at the parent company or in each division; marketing controls social media in 35% of companies surveyed; no other function comes close n minority (42%) believe their company’s organizational structure for social media A activities is effective or highly effective, and 51% say they’ll likely reorganize them by the end of 2014 n three-quarters of companies, three or fewer business functions collaborate In closely on social media; in only a quarter do four or more functions work closely together n The three biggest success factors for using social media effectively are protecting consumer data, having a corporate culture that values consumer opinions, and responding rapidly to consumers who have issues about a company or its products Companies and Social Media: A Relatively New Phenomenon Forget that Facebook is nine years old and that LinkedIn turned 10 this year. And ignore the fact that consumer usage of social media actually dates back to at least the 1980s, when online services such as CompuServe and America Online provided online services for consumers to exchange ideas.7 For nearly two-thirds of companies across all four regions, social media is a relatively new thing – an activity to which 64% have assigned at least one full-time equivalent in the last three years. (See Exhibit II-1) Globally, only 14% of our respondents were regularly using public social networking sites in some fashion before 2007. By 2009, about one-third of the respondents were actively involved in social media. And in 2010 and 2011, social media burst through the mainstream: nearly half (49%) of the respondents whose companies actively use social media today launched their activities in those two years. The University of North Caroline at Pembroke has a short history of social media, which can be viewed here: http://www.uncp.edu/home/acurtis/NewMedia/SocialMedia/SocialMediaHistory.html 7 Mastering Digital Feedback 15
  • Exhibit II-1: Social Media is in its Relative Infancy at Consumer Companies Q7 (Global): When Companies Began Regularly Using Social Media to Track Consumer Comments 1% 2013 2012 14% 23% 2011 2010 26% 13% 2009 2008 5% 2007 5% 10% Between 2000 and 2006 4% Before 2000 0 16 5 10 15 20 25 30 Mastering Digital Feedback
  • The duration of consumer company experience with social media varies by geography. Some 39% of the Latin American respondents said their companies had been using social media prior to 2010. That was slightly higher than North American and Asia-Pacific respondents (38%). And it was 11 percentage points above Europe, where 28% had been regularly using social media before 2010. (See Exhibit II-2) Exhibit II-2: Regional Experience with Social Media Q7 (Regions): When Respondents Began Using Social Media Before 2000 2007 to 2009 2010 2011 2012 2013 North America 3% 13% 22% 25% 21% 14% 2% Europe 2% 5% 21% 30% 28% 14% 0% AsiaPacific 5% 11% 22% 23% 22% 16% 1% Latin America Mastering Digital Feedback 2000 to 2006 7% 3% 29% 26% 24% 9% 2% 17
  • Social Media Spending and Staff Sizes Vary Greatly by Region There’s a huge disparity in spending on social media. We asked respondents to estimate what their companies would spend on social media this year. Across the four regions, 37% of respondents’ companies will spend less than $1 million this year on social media activities: staff, technology, marketing agency fees, consulting services and other expenses. On the other end of the spectrum, 8% of respondents said their firms would spend at least $50 million; half of those will invest more than $100 million. (See Exhibit II-3) Exhibit II-3: What Respondents Across the Four Regions Will Spend This Year on Social Media Q16a: Percentage of Respondents’2013 Spending on Social Media (Staff, Technology, Marketing Agencies, Consulting Services, etc.) $250 million or higher 2% $100 million to $250 million 2% $75 million to $100 million 2% $50 million to $75 million 2% $40 million to $50 million 2% $35 million to $40 million 2% $30 million to $35 million 2% $25 million to $30 million 3% $20 million to $25 million 4% $15 million to $20 million 5% $10 million to $15 million 6% $5 million to $10 million 9% $2.5 million to $5 million 9% 16% $1 million to $2.5 million $500,000 to $1 million 13% $250,000 to $500,000 13% Less than $250,000 11% 0 18 5 10 15 20 Mastering Digital Feedback
  • Average spending per respondent will be nearly $19 million this year, but the median is only $2.7 million, which reflects the wide disparity between the biggest spenders and the smallest. Respondents predicted their spending would only grow by 2015 - by 28% to $24 million (average per respondent), and by 67% to $4.5 million (median). (See Exhibit II-4) Exhibit II-4: Average and Median Spending Per Respondent Company Q16: Spending Per Respondent Company on Social Media in 2013 (in US $millions) $18.8 Average Spending $24.0 Median Spending $2.7 $4.5 $0 2013 Mastering Digital Feedback $5 $10 $15 $20 $25 $30 2015 (Projected) 19
  • Spending by region of the world also varies significantly. (See Exhibit II-5) Exhibit II-5: Regional Spending on Social Media (Per Respondent Company) Q16 (Region): Social Media Spending per Respondent Company (In US$) Total North America Europe Asia-Pacific Latin America Average $18.8 million $21.9 million $15.0 million $17.3 million $12.6 million 2013 Median $2.7 million $2.1 million $2.9 million $4.7 million $1.6 million Average $24.0 million $29.0 million $17.3 million $21.8 million $13.2 million 2015 Median $4.5 million $4.4 million $4.8 million $5.7 million $1.6 million While $19 million per respondent may seem sizable, realize that it is far below the average spending in 2012 on Big Data and Analytics. In the TCS survey on Big Data, average spending per respondent was more than four times as high – $88 million – while median spending ($10 million) was five times the median for social media. (See Exhibit II-6). Still, average spending on social media was above the average spent by more than 600 consumer company respondents who participated in our 2012 survey on how they are managing consumers who want to do business with them through mobile devices. In that study, we found the average company would spend $15 million (and a median of $4.3 million) in 2012 on dealing with such digital mobile consumers. Exhibit II-6: How Social Media Spending Compares to Big Data and Mobility Investments Q16 (Global): What Respondents are Spending on Social Media vs. Spending on Big Data and Mobile Computing in Other TCS Studies (in US $ millions) 15.1 Responding to Digital Mobile Consumer Spending 4.3 88 Big Data Spending 10 18.8 Social Media Spending 2.7 0 10 20 Average 20 30 40 50 60 70 80 90 100 Median Mastering Digital Feedback
  • We also asked companies how big their social media staff was across their entire organizations (not just in their divisions). The average number of social media employees working full-time across respondents’ companies was 56; the median was 19. These figures also demonstrate a big gulf between the respondents with a large social media staff and those with a small one. (See Exhibit II-7) About one-third of respondents totaled up 10 or fewer employees working full-time on social media across their entire company. At the other end were the 17% of respondents with more than 100 full-time social media staff across the organization. Nestle S.A., the $89 billion (revenue) Switzerland-based food and beverage company, shows how many resources some large consumer companies are devoting to social media. In February 2012, the company launched what it calls a ‘Digital Acceleration Team’ at its Vevey headquarters, staffed with about 30 employees in a room that looks like a mission control room. The team monitors and responds when necessary to social media conversations and trends worldwide that involve Nestle, keeping watch for both positive and negative issues.8 The team also sets social media guidelines and policies for marketers at Nestle’s product brands, which collectively have about 150 million Facebook fans on 650 Facebook pages. The company is also active on Twitter, Pinterest and Google+.9 Exhibit II-7: The Size of the Social Media Staff Q13 (Global): Percentage of Respondents by Number of Full-Time Social Media Employees Across the Company More than 200 12% 101 to 200 5% 76 to 100 5% 51 to 75 6% 8% 41 to 50 4% 31 to 40 9% 21 to 30 8% 16 to 20 11 to 15 10% 13% 6 to 10 1 to 5 20% 0 1% 0% 8 5% 10% 15% 20% 25% Emma Thomasson, ’Insight—At Nestle, interacting with the online energy’, Reuters, Oct. 26, 2012. From a July 11, 2013 Holmes Report interview with Nestle’s global head of digital & social media, Pete Blackshaw, which can be found here: http://www.holmesreport.com/people-info/13662/SmartRouter.aspx 9 Mastering Digital Feedback 21
  • Staff sizes are larger in Asia-Pacific and Latin American companies (average of 63-70) as compared to 51-52 in North America and Europe. Exhibit II-8: Regional Differences in the Size of Social Media Staffs Q13 (Region): Social Media Staffs Per Respondent Organization (Full-Time Employees) 2013 Average Median Total North America Europe Asia-Pacific Latin America 56 51 52 70 63 19 16 20 32 16 But some companies had very large staff dedicated to social media. Take Ford Motor Co. The $134 billion (2012 revenue) auto manufacturer has a ‘couple of hundred’ people involved in social media, both inside and outside the company, according to its head of social media.10 A large bank that we spoke with has about 100 people worldwide focused on social media. Case Study: A Major Media Company All global companies are faced with the same conundrum of having to choose between multitudes of emerging technologies and businesses to invest in. Social media is often just one opportunity among many. This problem is especially true for a large cable TV company we interviewed that is only now investing in growth outside of the U.S. Since the company’s business is much more developed in the U.S. – it has stable TV distribution in the U.S. and benefits from a strong economy - it can experiment much more at home with social media than in other regions. The company also has very popular websites for its TV channels, with millions of unique visitors on many social media platforms. This company sees social media as a complement to its core, rather than as a profit center. It views social media as a way to help it get closer to consumers. Although the company invests in social media in regions of the world where audiences are growing, these investments have to be balanced with investments in video on demand and other digital platforms. In addition, it requires a lot of energy in non-English speaking territories to get social media going. The company often uses partners in these areas. Resources are the biggest constraint. The company is playing catch-up in regions outside the U.S. It needs to prioritize where it can make money and can’t justify spending as much outside the U.S. for the return it is getting. From an April 2013 Boston University publication that interviewed Scott Monty, Ford’s global head of social media: http://www.bu.edu/today/2013/how-ford-became-a-leader-in-social-media/ 10 22 Mastering Digital Feedback
  • The Return on Social Media: Elusive and Difficult to Measure In addition to asking respondents to quantify what their companies would spend this year on social media, we asked a related question: Have their investments to date in social media paid off? Did they have a positive or negative return, or did they not know the return? We found that there were more than twice as many respondents with positive returns (38%) as ones with negative returns (18%). Also, 32% hadn’t measured the return but planned to, and another 12% said they had not measured ROI and had no plans to measure it. (See Exhibit II-9) Exhibit II-9: How Many Consumer Companies Have Positive Returns on Social Media Investments? Q24 (Global): Percentage of Companies with Positive or Negative ROI with Social Media – or Haven’t Measured ROI We have measured the value, and it is more than our investment in social media (i.e., our return on investment is positive) 38% We haven't measured the value, but we do plan to measure it 32% We have measured the value, and to date it is less than our investment (i.e., the return on investment is negative) 18% We haven't measured the value, and we do not plan to measure it 12% 0% Mastering Digital Feedback 10% 20% 30% 40% 50% 23
  • By region of the world, the picture of ROI varies markedly. Asia-Pacific respondents lead the pack in the likelihood to report positive ROI: 55% claimed they had gained, whereas there were only 35% of North American and 29% of European respondents with positive ROI. Asia-Pacific respondents were also less likely to have negative returns. (See Exhibit II-10) Exhibit II-10: Asia-Pacific Companies More Likely to Get Positive ROI Q24 (Regions): Percentage of Respondents with Positive or Negative ROI on Social Media North America Europe Asia-Pacific Latin America Those with positive ROI 35% 29% 55% 41% Those with negative ROI 17% 20% 13% 31% Those that haven’t measured ROI 48% 52% 32% 28% Believing we would find many companies that hadn’t been able to measure the returns on social media, we asked another question to assess the value of social media activities. We had respondents rate on a scale of 1-5 (1= not at all, 2= minor, 3= moderate, 4=high, 5=very high) the degree to which their social media activities had improved 15 items in four areas of performance: n Brand and consumer awareness related: Awareness, brand affinity, how consumers view the brand and reduction in consumer attacks on the brand n Improvements in customer-facing processes: Marketing campaigns, customer service and revenue n Innovation (both product and process): The identification of new product/service opportunities and new trends n Cost reduction: In sales, service, marketing and product development (Note: Respondents could choose another category and measure its benefit on the same 1-5 scale.) 24 Mastering Digital Feedback
  • The average rating on these 15 items was between 2.95 (reducing new product development costs) and 3.67 (increasing consumer awareness). (See Exhibit II-11) This shows that across the 15 items, social media had a moderate but less than high impact. It’s important to note here that lower ratings were attached to goals related to reducing costs. Exhibit II-11: The Impact of Social Media on 16 Areas of Performance Q25 (Global): Degree to Which Social Media has Improved Company Performance (~16 Criteria) (Scale of 1-5) Increased consumer awareness --the number of consumers who receive our messages 3.67 Increased brand affinity-the number of consumers who view our brand favorably, and their affinity toward 3.61 Measured how consumers view our brand and products (i.e., consumer sentiment) 3.58 Improved marketing campaigns 3.54 Understood important consumer trends 3.5 Improved after-sale customer service 3.4 Identified new product/new service opportunities 3.32 Improved existing products/services 3.29 Reduced the number and severity of consumer attacks on our brand image 3.25 Increased revenue 3.25 Improved our sales processes 3.24 Reduced marketing costs 3.14 Other 3.13 Reduced customer service costs 3.1 Reduced sales costs 3.04 Reduced new product development costs 2.95 2 2.5 3 3.5 4 4.5 5 These numbers were largely consistent across all four regions. Mastering Digital Feedback 25
  • Functional Participation in and Goals for Social Media Reflect the Heavy Influence of Marketing and Customer Service Across all respondents and the four regions, two functions – marketing and customer service – are the ones that most regularly view consumer comments about their companies in social media. The sales function is close behind. (See Exhibit II-12) Exhibit II-12: Who Plays in Social Media? Usually Marketing and Customer Service Q8 (Global): Which Functions Use Social Media Regularly to View Consumer Comments? 69% Marketing 58% Customer Service Sales 49% Product management (brand managers, product managers, brand strategists, etc.) 37% 33% IT R&D/product development product engineering 27% Manufacturing/operations (including procurement) 21% Human resources 21% Distribution/logistics 15% Legal 13% Risk management 11% Finance/accounting 11% 0% 26 20% 40% 60% 80% Mastering Digital Feedback
  • This pattern repeats itself in all four regions (Exhibits II-13, 14, 15 and 16): Marketing most frequently views consumer comments in social media, followed by customer service, then followed by sales. Only amongst a minority of respondents in all regions (only in the 25% range) do R&D/product development professionals regularly view consumer comments on social media. Exhibit II-13: North American Functions and Their Views of Social Media Comments Q8 (North America): Business Functions Viewing Customer Comments on Social Media Marketing (including product/brandmanagement, social media marketing, market research, public relations, corporate communications, etc.) 76% Customer service (including call centers, social media monitors, etc.) 60% Sales (including headquarters and field sales management) 53% Product management (including product brand managers, brand strategists, etc.) 39% Information technology (IT) 28% R&D/product development (including research, product engineering, product development, etc.) 28% HR 22% Product manufacturing/ service operations/procurement/ purchasing (including factories, service operations, manufacturing engineering, purchasing, supply management, etc.) 21% Distribution/logistics 14% Legal (compliance, etc.) 12% Risk management 8% Finance/accounting 7% 1% Other 0 Mastering Digital Feedback 10 20 30 40 50 60 70 80 27
  • Exhibit II-14: European Functions and Their Views on Social Media Comments Q8 (Europe): Business Functions Using Social Media to View Consumer Comments Marketing (including product/brand management, social media marketing, market research, public relations, corporate communications, etc.) 66% Customer service (including call centers, social media monitors, etc.) 63% Sales (including headquarters and field sales management) 52% Product management (including product brand managers, brand strategists, etc.) 33% Information technology (IT) 29% R&D/product development (including research, product engineering, product development, etc.) 23% HR 22% Product manufacturing/ service operations/ procurement/ purchasing (including factories, service operations, manufacturing engineering, purchasing, supply management, etc.) 16% Distribution/logistics 13% Risk management 11% Legal (compliance, etc.) 10% Finance/accounting 9% Other 1% 0 28 10 20 30 40 50 60 70 Mastering Digital Feedback
  • Exhibit II-15: Asia-Pacific Functions and Their Views of Social Media Comments Q8 (Asia-Pacific): Business Functions Using Social Media to View Consumer Comments Marketing (including product/brand management, social media marketing, market research, public relations, corporate communications, etc.) 65% Customer service (including call centers, social media monitors, etc.) 51% Information technology (IT) 48% Sales (including headquarters and field sales management) 46% Product management (including product brand managers, brand strategists, etc.) 37% Product manufacturing/ service operations procurement/purchasing (including factories, service operations, manufacturing engineering, purchasing, supply management, etc.) 30% R&D/product development (including research, product engineering, product development, etc.) 28% HR 19% Legal (compliance, etc.) 18% Finance/accounting 18% Risk management 16% Distribution/logistics 16% 0 Mastering Digital Feedback 10 20 30 40 50 60 70 29
  • Exhibit II-16: Latin America Functions and Their Views of Social Media Comments Q8 (Latin America): Business Functions Using Social Media to View Consumer Comments Information technology (IT) 43% Customer service (including call centers, social media monitors, etc.) 43% Marketing (including product/brand management, social media marketing, market research, public relations, corporate communications, etc.) 41% Finance/accounting 31% Product management (including product brand managers, brand strategists, etc.) 31% R&D/product development (including research, product engineering, product development, etc.) 26% Sales (including headquarters and field sales management) 26% Distribution/logistics 22% Risk management 19% Product manufacturing/ service operations procurement/purchasing (including factories, service operations, manufacturing engineering, purchasing, supply management, etc.) 17% Legal (compliance, etc.) 14% HR 14% 0 30 10 20 30 40 50 Mastering Digital Feedback
  • Case Studies: Why it is Not Easy for Functions Beyond Marketing and Service to Harness Social Media While interviewing executives at companies across multiple industries, we quickly learned how challenging it was to harness consumer conversation to make change happen beyond pure marketing and customer service – especially in manufacturing, R&D and (in the case of the television industry) programming. One global food company found itself blindsided when a new promotional flavor of a popular product took off unexpectedly through tweets and Facebook posts, all of which was organic. Production was just not prepared to meet demand as their run schedules are planned almost a year in advance and are virtually impossible to modify on quick notice. The executive interviewed was concerned that the company kept increasing manufacturing capacity around the world but hasn’t found inventive ways to add in flexibility to deal with sudden increase in demand, especially for new flavors and products where demand is relatively unknown. Social media will only heighten this disparity. Although somewhat more flexible, the TV broadcasters we interviewed also find it very hard to make changes to a season if consumer conversations on social media highlight problems or lack of interest in a particular show. Most programs have been filmed and edited long before they are broadcast. That said, one executive at a cable company that airs many reality TV shows said that they can often add more screen time for a character during the season and certainly in later seasons if they see he or she is generating lots of social media interest. Some companies are learning how to incorporate feedback into their product design. An executive at a leading consumer electronics company talked about how the company incorporated consumer feedback from social media into the packaging, user information and instructions for a new product before launch. He said social media has become one of many inputs into the product development process. Eight months ago it wasn’t used at all. The influence of marketing and customer service on corporate social media activities also shows up in the goals that respondents rated for their social media activities. By far, the two highest rated goals (scale of 1-5) were brand-related: determining how consumers view the company’s brand and products, and increasing their brand affinity. On a global basis, the goals of using social media to reduce the cost of marketing, service, sales and product development were rated to be of lower importance. Social media allows companies to test marketing campaigns and products under development with large numbers of consumers before big investments are put behind them. However, these goals are rated less than 3.5 on our five-point scale. (See Exhibit II-17) Mastering Digital Feedback 31
  • Exhibit II-17: Brand Affinity Trumps All Other Goals Q10 (Global): Importance of Goals for Social Media (Summary of Means, Scale 1-5) Understanding how consumers view our brand and products (i.e., consumer sentiment) 4.07 Increasing brand affinity - the number of consumers who view our brand favorably, and their affinity toward our brand 4.05 Increasing consumer awareness --the number of consumers who receive our messages 3.99 Understanding consumer trends 3.96 Improving marketing campaigns 3.9 Increasing revenue 3.85 Improving after-sale customer service 3.79 Improving existing products/services 3.76 Identifying new product/new service opportunities 3.7 Improving our sales processes 3.61 Reducing the number and severity of consumer attacks on our brand image 3.61 Reducing marketing costs 3.43 Reducing customer service costs 3.35 Reducing sales costs 3.33 Reducing new product development costs 3.2 Other 2.82 2 32 2.5 3 3.5 4 4.5 Mastering Digital Feedback
  • These trends generally apply across the four regions (Exhibits II-18 through 21), but with some exceptions depending on the goal: n Improving after-sale customer service is rated higher by Latin American (4.09) and Asia-Pacific (4.05) companies than by North American (3.66) and European (3.75) firms. n Asia-Pacific firms were the only region to rate ‘identifying new products/service opportunities’ at least a 4. n Latin American and Asia-Pacific respondents rate improving sales processes a more important goal for their social media activities (3.9) than do North American and European respondents (3.42 and 3.64 respectively). n Asia-Pacific respondents rate using social media to cut new product development costs (3.61), sales costs (3.77), marketing (3.79) and service costs (3.79) generally much higher than the three other regions do. Exhibit II-18: North American Company Goals for Social Media Q10 (North America): Social Media Goals Increasing brand affinity-the number of consumers who view our brand favorably, and their affinity toward our brand 4.09 Understanding how consumers view our brand and products (i.e., consumer sentiment) 4.08 Increasing consumer awareness --the number of consumers who receive our messages 4.02 Understanding consumer trends 3.96 Improving marketing campaigns 3.89 Increasing revenue 3.87 Improving existing products/services 3.66 Improving after-sale customer service 3.66 Identifying new product/new service opportunities 3.63 Reducing the number and severity of consumer attacks on our brand image 3.56 Improving our sales processes 3.42 Reducing marketing costs 3.31 Reducing customer service costs 3.21 Reducing sales costs 3.16 Reducing new product development costs 2.97 2.61 Other 1 Mastering Digital Feedback 2 3 4 5 33
  • Exhibit II-19: European Company Goals for Social Media Q10 (Europe): Social Media Goals Understanding how consumers view our brand/ and products (i.e., consumer sentiment) Increasing brand affinity - the number of consumers who view our brand favorably, and their affinity toward our brand 4.02 3.98 Improving marketing campaigns 3.88 Increasing consumer awareness -the number of consumers who receive our messages 3.87 Understanding consumer trends 3.83 Increasing revenue 3.75 Improving after-sale customer service 3.75 Improving existing products/services 3.73 Improving our sales processes 3.64 Identifying new product/new service opportunities 3.58 Reducing the number and severity of consumer attacks on our brand image 3.5 Reducing new product development costs 3.29 Reducing marketing costs 3.27 Reducing sales costs 3.27 Reducing customer service costs 3.25 3.1 Other 1 34 2 3 4 5 Mastering Digital Feedback
  • Exhibit II-20: Asia-Pacific Company Goals for Social Media Q10 (Asia-Pacific): Social Media Goals Understanding how consumers view our brand and products (i.e., consumer sentiment) 4.15 Understanding consumer trends 4.11 Increasing brand affinity - the number of consumers who view our brand favorably, and their affinity toward our brand 4.1 Increasing consumer awareness - the number of consumers who receive our messages 4.07 Improving marketing campaigns 4.06 Improving after- sale customer service 4.05 Improving existing products/services 4 Identifying new product/new service opportunities 4 Increasing revenue 3.97 Improving our sales processes 3.96 Reducing the number and severity of consumer attacks on our brand image 3.81 Reducing customer service costs 3.79 Reducing marketing costs 3.79 Reducing sales costs 3.77 Reducing new product development costs 3.61 Other 2.92 1 1.5 2 2.5 3 3.5 4 4.5 5 Mastering Digital Feedback 35
  • Exhibit II-21: Latin American Company Goals for Social Media Q10 (Latin America): Social Media Goals Improving after-sale customer service 4.09 Understanding how consumers view our brand and products (i.e., consumer sentiment) 3.95 Understanding consumer trends 3.91 Improving our sales processes 3.9 Increasing consumer awareness --the number of consumers who receive our messages 3.88 Improving existing products/services 3.88 Increasing brand affinity -the number of consumers who view our brand favorably, and their affinity toward our brand 3.86 Identifying new product/new service opportunities 3.78 Increasing revenue 3.76 Reducing the number and severity of consumer attacks on our brand image 3.74 Improving marketing campaigns 3.69 Reducing marketing costs 3.67 Reducing sales costs 3.57 Reducing new product development costs 3.5 Reducing customer service costs 3.45 Other 3.14 1 36 1.5 2 2.5 3 3.5 4 4.5 Mastering Digital Feedback
  • How Social Media is Organized, Who Controls It and How Effective the Structure Is We asked respondents four questions about how they organized their social media activities and the impact of that decision: n Whether they were centralized or decentralized n Which function or individual controlled the activities (if any) n How effective their organizational structure for social media was n Whether they would reorganize these activities by the end of 2014 The responses show big differences across the four regions. But viewed on a global basis, by far the most common approach for organizing social media activities is centralizing them at the parent company (rather than in the divisions). That approach was taken by 47% of the respondents we surveyed. However, North American respondents were much more likely to do this: 54% did, as against only 35% in Latin America, 40% in Europe and 41% in Asia-Pacific. Those regions were more likely than North American respondents to centralize social media in each division, in one group or function per division. And they were more likely to decentralize them by division – but keep them coordinated. In contrast, 11% of North American respondents decentralize social media by function in every division and do not coordinate the activities. That only happens in 6% to 7% of respondents in the three other regions. (See Exhibits II-22 and 23) Exhibit II-22: How Social Media Activities are Organized (Globally) Q11 (Global): How Respondents Have Organized their Social Media Activities They are centralized at our parent company 47% In every division, they are decentralized by business function (e.g., within marketing, sales, and customer service) but are coordinated 22% Every division centralizes its own social media activities in one function/group 21% In every division, they are decentralized by function and are not coordinated 9% Other 1% 0 Mastering Digital Feedback 10 20 30 40 50 37
  • Exhibit II-23: How Social Media Activities are Organized (by Region) Q11 (Region): How Respondents Have Organized Their Social Media Activities North America Europe AsiaPacific Latin America They are centralized at our parent company 54% 40% 41% 35% Every division centralizes its own social media activities in one function/group 13% 29% 30% 31% In every division, they are decentralized by business function (e.g., within marketing, sales, customer service) but are coordinated 20% 23% 23% 28% In every division, they are decentralized by function and are not coordinated 11% 7% 6% 7% Other 1% 2% 0% 0% Having social media centralized at either the parent company or in a division is the most common structure – exhibited by between 66% and 74% of the respondents (depending on the region) and 69% overall. It offers economies that just can’t be gained when functions control their own social media activities. The respondents that centralized social media will spend an average of $16.3 million each on it this year. In contrast, those that decentralized their social media activities will spend about 50% more: $24.5 million. (See Exhibit II-24) Exhibit II-24: How Centralization and Decentralization of Social Media Affects Spending Q11 + Q16 (Global): Average Per Company 2013 Spending on Social Media in Companies That Centralize or Decentralize Social Media Activities (in US $ millions) Average 2013 Social Media Spending per Company in Those that Decentralize Social Media $24.5 Average 2013 Social Media Spending per Company in Those That Centralize Social Media $16.3 $0 38 $5 $10 $15 $20 $25 $30 Mastering Digital Feedback
  • Case Studies: How Two Companies Leverage Small Social Media Staff Social media activities in many large companies start out in silos or decentralized. Once senior management decides to monitor social media activities and formulate the company’s social strategy, they often put together a centralized group composed of the original mavericks and then ‘embed’ social media experts in the businesses and regions that focus on implementation with a thinly staffed central function. In addition to setting strategy, this central team is often called on for best practices, reporting and measurement, formulating guidelines, ensuring compliance, integrating platforms and – last but not least – facilitating collaboration. In the meantime, the embedded employees are called on to implement. Most companies we interviewed keep a tight rein on the core dedicated social media teams while leveraging social media activities across tens of thousands of employees across many regions and business units. These small teams can, in this way, generate maximum impact. A large insurance company developed a next wave knowledge management platform to help employees collaborate with brokers worldwide to value complicated risk. This is managed by the corporate innovation team with just four full-time employees, including a dedicated general counsel. The team is periodically supported by four corporate communications employees. A $2 million budget covers headcount and software. Likewise, a wealth management company has a very small team within its digital strategy group. They work closely with the legal team and other stakeholders, such as IT and risk. The head of the group would love to have more staff but social media is still an unproven entity. Because it is not easy to measure the ROI, getting more employees is difficult. However, the head of the group will probably add more people to the team, especially those with skills in legal and compliance. Mastering Digital Feedback 39
  • The responses to the second question on this issue of organization show how much central control of social media is exercised by the marketing function – especially in North American companies. Around the globe, marketing is more likely to control social media than any other function: 35% of our total respondents said marketing controls it, whereas ‘multiple business functions’ control it in 13% of respondents, and the CIO/CTO had control in 12%. Viewed another way, the customer-facing functions of marketing, sales and customer service controlled social media in 45% of respondents. A function that wasn’t controlled by these three departments (IT, a separate social media group, a chief digital or customer experience officer) controlled social media in 35% of respondents. (See Exhibit II-25) Exhibit II-25: Who Controls Social Media? More Often Than Other Functions, It’s Marketing Q12 (Global): Which Function or Person Controls Social Media? Marketing 35% Multiple business functions 13% CIO/CTO 12% A separate social media group that does not report to marketing, sales, service or other functions 10% A chief digital officer 7% Customer service 7% A chief customer experience officer 6% No one function or person controls these activities 5% 3% Sales Other function or individual (please describe) 2% 0% 40 5% 10% 15% 20% 25% 30% 35% 40% Mastering Digital Feedback
  • At the regional level, a major discrepancy exists between the way North American companies control social media and how the other three regions control it. In 54% of the North American respondents, customer-facing functions control social media. That’s only the case with 40% of European and 38% of Asia-Pacific respondents. And it’s much lower in Latin America, where only about one-quarter of respondents say marketing, sales or service owns social media. (See Exhibit II-26) In fact, in Europe, about as many respondents say that a ‘neutral’ function (one that it isn’t marketing, sales or service) is just as likely to control social media: IT, a social media group, a chief digital officer or a chief customer experience officer. These functions are even more likely to control social media in Asia-Pacific companies (47% of respondents) and Latin America (63%). Exhibit II-26: Who Controls Social Media Depends on the Region Q12 (Regions): Which Function or Person Controls Social Media? North America Europe Asia-Pacific Latin America Marketing Sales 4% 5% 2% 0% Customer Service 5% 6% 14% 3% 54% 40% 38% 24% 6% 7% 15% 45% Separate social media group that does not report to other functions 8% 17% 10% 5% Chief digital officer 6% 9% 8% 10% 4% 6% 14% 3% Subtotal 24% 39% 47% 63% Multiple business functions 14% 11% 14% 10% Other function 2% 3% 0% 3% No one function 6% Mastering Digital Feedback 21% Chief customer experience officer Other 22% CIO/CTO Centralized Function 29% Subtotal CustomerFacing Functions 45% 6% 1% 0% 41
  • All to say that the control of social media as a marketing tool is most pronounced in North American companies – and least pronounced in Latin America and Europe. Domination of the social media discussion by marketing limits social media’s reach (and thus potential), especially when viewed in the context of the 15 possible goals of social media discussed earlier. The answers to our third question about the organizational structure of social media activities reveals that only a minority of companies are satisfied with their current structure. Only 42% of all respondents termed their structure ‘highly effective’ or ‘effective.’ A greater percentage (58%) called it ‘somewhat effective’, ‘slightly’ or ‘not at all effective’. (See Exhibit II-27) Exhibit II-27: Effectiveness of Respondents’ Structure for Social Media Q14 (Global): How Respondents View the Effectiveness of Their Company’s Organizational Structure for Social Media Activities Highly effective 10% 32% Effective 35% Somewhat effective Slightly effective Not at all effective 20% 4% 0% 42 10% 20% 30% 40% Mastering Digital Feedback
  • Some regions were happier than others with their structure: n 55% of Latin American and 58% of Asia-Pacific respondents saw their structure as effective/highly effective n only 38% of European respondents and 35% of North American respondents said But it was effective/highly effective Asked whether they would reorganize their social media activities by the end of 2014, the majority (51%) said that was likely. Only 15% said it wasn’t likely, and 34% weren’t sure. (See Exhibit II-28) Exhibit II-28: Whether Respondents Will Reorganize Social Media Q15 (Global): Whether Respondents’ Companies are Likely to Reorganize Social Media Activities by End of 2014 34% Not Sure Not Likely to Reorganize 15% Likely to Reorganize 51% 0% 10% 20% 30% 40% 50% 60% n North American and European respondents were equally likely to reorganize social media by the end of next year (45% of respondents in both cases). n But curiously, 63% of Asia-Pacific and 72% of Latin American respondents said they would likely reorganize social activities as well – even though a greater percentage of them saw the current structure as effective. Mastering Digital Feedback 43
  • Few Functions Strongly Collaborate on Social Media Related to our questions about how consumer companies had structured their social media activities, we asked respondents to rate the degree to which multiple business functions collaborated on social media strategy and daily activities (such as sharing and making sense of consumer data). Our finding: while social media is largely not a siloed activity, it is not a highly cross-functional activity either. Only about one-quarter (26%) of respondents across all four regions combined have four or more functions working closely together on social media, including sharing the same consumer data. (See Exhibit II-29) Far more often, two to three functions were collaborating on social media (in 45% of respondents). And in 30%, each business function was largely or totally managing its social media activities independent of what other functions were doing. Exhibit II-29: How Many Functions Collaborate on Social Media? Not Many Q18a (Global): Number of Respondents That Have One or More Functions Working Closely Together on Social Media (Including Sharing the Same Consumer Data from Social) 4+ functions work closely together on social media 26% 2-3 functions work closely together on social media 45% Each function manages social media activities totally or largely independently 30% 0% 44 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Mastering Digital Feedback
  • By region, the picture was similar, although North American companies were least likely to have truly cross-functional social media activities. (Only 23% said they had four or more functions collaborating strongly on social media, as against 31% in Europe and AsiaPacific.) Yet North American respondents had the lowest percentage who said functions operated largely autonomously on social media. (See Exhibit II-30) Exhibit II-30: How Strongly Functions Collaborate on Social Media, By Region Q18a (Regions): Number of Respondents That Have One or More Functions Working Closely Together on Social Media Latin North Europe Asia-Pacific America America Each business function manages its social media activities independently 32% 33% 36% 2 to 3 functions work closely together on social media 51% 37% 36% 41% Four or more functions work closely together on social media Mastering Digital Feedback 26% 23% 31% 31% 22% 45
  • When asked more specifically about how business functions work together (or not) on social media, only about half the respondents said ‘most’ or ‘all the time’ to five measures: whether they share social media management practices; how they determine whether to act on consumer data; in generating collective insights from social data; in sharing such data; and in creating and revising a social media strategy. (See Exhibit II-31) Exhibit II-31: How Closely Do Functions Collaborate? In About Half the Respondents, Not Much Q18 (Global): Degree to Which Business Functions Work Together on Social Media Sharing practices on how to manage social media 58% 42% Determining how the company should act on consumer data from social media 52% 48% Generating insights from consumer data that comes from social media 49% 51% Sharing consumer data from social media 48% 52% Creating and revising a social media strategy 54% 0% Not at all / rarely / occasionally 46 20% 46% 40% 60% 80% 100% Most of the time / All of the time Mastering Digital Feedback
  • Who Collaborates – Internally and Externally? We asked the respondents who said at least two functions work closely together on social media to indicate which functions they were. Of these 462 respondents, the function mentioned most frequently by far was marketing (by 73%) – another statistic that shows marketing to be the epicenter of most companies’ social media activities. A distant second was customer service (50%), and a close third was sales (49%). (See Exhibit II-32) Functions that should be collaborating closely on social media but aren’t include product management, IT (often the keepers of other important digital data on consumers), and especially R&D. Only in cases where two or more functions work closely together on social media (around one-fifth of respondents), R&D was mentioned as one of the collaborating functions. The functions collaborating the least (in terms of number of respondents), were distribution, risk management, finance and legal; this suggests that the social media efforts at many companies may be at risk. Exhibit II-32: Functions That Collaborate Strongly on Social Media Q18AA (Global): Which Business Functions Work Closely Together on Social Media Activities? Marketing (including social media marketing, market research, public relations, corporate communications) 73% Customer service (including call centers, social media monitors, etc.) 50% Sales (including headquarters and field sales management) 49% Product management (including product brand managers, brand strategists) 39% Information technology R&D/product development (including research, product engineering, product development) Product manufacturing/ service operations/ procurement/purchasing (including factories, service operations, manufacturing engineering) 33% 20% 19% HR 16% Legal (compliance, etc.) 13% Finance/accounting 12% Risk management 12% Distribution/logistics 10% Other 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% Mastering Digital Feedback 47
  • Marketing was at the top of the list in all regions but Latin America, where customer service was the most frequently mentioned function. (See Exhibit II-33) Exhibit II-33: Who’s on the Cross-Functional Social Media Team (by Region)? Q18AA (Regions): Which Business Functions Work Closely Together on Social Media Activities (% of Respondents That Said At Least 2 Functions Work Closely Together on Social Media) North America Europe Asia-Pacific Latin America Marketing (79%) Marketing (76%) Marketing (67%) Customer service (43%) Sales (53%) Customer service (64%) IT (48%) IT (41%) Customer service (48%) Sales (54%) Sales (44%) Finance/accounting (32%) Product management (44%) IT (37%) Customer service (44%) Marketing (32%) IT (25%) Product management (34%) Product management (35%) Manufacturing/operations (27%) R&D/product development (19%) Manufacturing/operations (29%) Manufacturing/operations (25%) Sales (27%) Manufacturing/operations (13%) R&D/product development (22%) HR (20%) R&D/product development (24%) HR (14%) HR (20%) Risk management (19%) Product management (24%) Legal (13%) Risk management (15%) R&D/product development (18%) Risk management (22%) Finance/accounting (9%) Finance/accounting (11%) Finance/accounting (14%) Legal (19%) Distribution/logistics (8%) Legal (11%) Legal (14%) HR (14%) Risk management (7%) Distribution/logistics (11%) Distribution/logistics (12%) Distribution/logistics (14%) We also wanted to know the degree to which companies are sharing select social media data with channel partners like brokers, retailers, distributors, suppliers and other external companies that supply them or bring products to market. We believed most companies would want to reveal some consumer data (or even insights) with their channel partners to help them see what customers thought about products and services, product and service components, and practices. 48 Mastering Digital Feedback
  • But this wasn’t the case in North America and most of Europe. Only 29% of North American respondents share social media data with channel partners, while 34% of European respondents do so. However, in Asia-Pacific, about half the respondents share social data with external business partners, while 60% of Latin American respondents said they do so (including 95% of the Mexican companies we surveyed). (See Exhibit II-34) Exhibit II-34: How Extensively Respondents Share Social Media Data with Channel Partners (by Region and Country) Q20 (Regions and Countries): Percentage of Respondents That Share Social Media Data with Channel Partners NORTH AMERICA 29% United States 28% Canada 35% EUROPE 34% United Kingdom 26% Germany 44% Netherlands 50% ASIA-PACIFIC 51% Australia 27% 75% India Japan 44% 60% LATIN AMERICA 95% Mexico Brazil 42% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Mastering Digital Feedback 49
  • What Types of Social Media Platforms Do They Use – and Find Most Valuable? Without the public social networks that have attracted flocks of consumers over the last decade, there would be no ‘online playground’ for consumer companies to tap into. Without ‘neutral’ sites (meaning, not owned by consumer product or service companies) such as Facebook, LinkedIn, Twitter and YouTube, it is doubtful that consumers would engage in open discussions on their favorite (or not-so-favorite) companies on social media. We wanted to know several things about how consumer companies are using the largest public social networks (as well as a few things about their own social sites): n Which types of social platforms are they using – company pages on public social networks (such as Facebook), company-sponsored channels on video sites such as YouTube, online social games, corporate blogs (on their own sites), private online communities for consumers, or mobile applications that consumers can download on their smartphones. n Which of those social platforms are most and least important for success with social media? n On which of the public social networks do companies have company pages – Facebook? Twitter? LinkedIn? Google+? Others? On the issue of social media platforms, company pages on public social networking sites were the most popular globally and by region. (See the following five exhibits.) Corporate blogs were second across the regions, followed closely by mobile apps. At the bottom of this list of six platforms were online social games. Exhibit II-35: Which Social Media Platforms are Used the Most (Global) Q22A (Global): Which Social Media Platforms Do Respondents Use? (% of Total Respondents) Company pages on public social networks 88% Corporate blogs 66% Mobile apps for consumers who use social media 65% Private online community for consumers Company sponsored online video channel Online social games/ gamification 51% 47% 26% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 50 Mastering Digital Feedback
  • Exhibit II-36: Which Social Media Platforms are Used the Most in North America Q22A (North America): Which Social Media Platforms Do Respondents Use? Company pages on public social networks (eg. Facebook, LinkedIn, Pinterest, etc) 90% Mobile applications for consumers who use social media 68% Corporate blog(s) 65% Private online community for consumers (that the company hosts and controls) 47% Company-sponsored online video channel 47% Online social games/gamification 22% Other 3% 0% Mastering Digital Feedback 20% 40% 60% 80% 100% 51
  • Exhibit II-37: Which Social Media Platforms are Used the Most in Europe Q22A (Europe): Which Social Media Platforms Do Respondents Use? Company pages on public social networks (e.g. Facebook, LinkedIn, Pinterest, etc.) 87% Corporate blog(s) 67% Mobile applications for consumers who use social media 64% A private online community (that the company hosts and controls) 52% Company-sponsored online video channel Online social games/gamification Other 39% 20% 2% 0% 20% 40% 60% 80% 100% Exhibit II-38: Which Social Media Platforms are Used the Most in Asia-Pacific Q22A (Asia-Pacific): Which Social Media Platforms Do Respondents Use? Company pages on public social networks(e.g., Facebook, LinkedIn, Pinterest, etc.) 90% Corporate blog(s) 70% A private online community (that your company hosts and controls) 58% Mobile applications for consumers who use social media Company-sponsored online video channel Online social games/gamification 57% 54% 37% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 52 Mastering Digital Feedback
  • Exhibit II-39: Which Social Media Platforms are Used the Most in Latin America Q22a (Latin America): Which Social Media Platforms Do Respondents Use? Company pages on public social networks (eg. Facebook, Linkedin, Pinterest, etc) 76% Mobile applications for consumers who use social media 64% A private online community (that your company hosts and controls) 60% Corporate blog(s) 60% Company-sponsored online video channel 50% Online social games/ gamification Other 35% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% Mastering Digital Feedback 53
  • But which of these six platforms are most important for success with social media? (See Exhibit II-40) Surprisingly, the platform used the least (mobile apps) was rated the most important across the regions. It was ranked first for North American and Asia-Pacific respondents. (See Exhibit II-41) Next in rank across all respondents were company pages on public social networks, and close behind were private online communities for consumers where companies have the most control over the conversation (since the companies host and run their communities). Exhibit II-40: Which Social Media Platforms are Most Important to Social Media Success? Q22AA (Global): Importance of Social Media Platforms to Respondents' Success with Social Media (% Saying They are of "High" or "Very High" Importance) Mobile apps for consumers who use social media 3.91 Company pages on public social networks 3.87 Private online community for consumers 3.86 Corporate blogs 3.66 Company-sponsored online video channel 3.66 Online social games/gamification 3.62 3 54 3 3 4 4 4 Mastering Digital Feedback
  • Exhibit II-41: Most Important Social Media Platforms by Region Q22AA (Regions): The Most Important Platforms for Social Media Success (Scale of 1-5) North America Asia-Pacific Mobile apps for consumers who use social media (3.89) Company pages on public social networks (3.78) Company-sponsored online video channel (3.88) Company pages on public social networks (3.80) Private online community (3.8) Mobile apps for consumers who use social media (4.1) Company pages on public social networks (4.07) Company-sponsored online video channel (4.01) Private online community (4.23) Private online community (3.74) Corporate blog (3.48) Mobile apps for consumers who use social media (3.79) Private online community (3.99) Corporate blog (4.03) Company-sponsored online video channel (3.42) Corporate blog (3.68) Corporate blog (3.95) Online social games/ gamification (3.33) Mastering Digital Feedback Europe Latin America Online social games/ gamification (3.56) Online social games/ gamification (3.85) Online social games/ gamification (4.25) Company pages on public social networks (4.09) Mobile apps for consumers who use social media (3.95) Company-sponsored online video channel (3.76) 55
  • Across the four regions, 88% of respondents said their companies have pages on public social networking sites such as Facebook and LinkedIn. ( See Exhibit II-42) Of the 88%, by far the most popular social site on which to have company pages is Facebook (the choice of 88% of these respondents). That was followed by Twitter (63%), LinkedIn (57%) and YouTube, the online video channel (with 45%). A number of sites housed public social pages of no more than a third of the respondents: Google+, Pinterest, Instagram, MySpace, Flickr and Friendster. By region (see Exhibit II-43), Facebook had the highest percentage of respondents’ company pages. Next (in three of the four regions) was Twitter. Google+ was the fifth most popular site for company social media pages – except in Latin America, where it is No. 3. Exhibit II-42: Which Public Social Networking Sites to Companies Have Pages? Q22 (Global): Where Respondents with Company Pages on Public Social Media Sites Have Those Pages 88% Facebook 63% Twitter LinkedIn 57% YouTube 45% Google+ 33% Pinterest 14% Instagram 13% MySpace 11% Flickr 9% Friendster 4% Other 2% 0% 56 20% 40% 60% 80% 100% Mastering Digital Feedback
  • Exhibit II-43: Top Five Public Social Networking Sites for Company Pages (by Region) Q22 (Regions): Top Five Social Media Sites Where Respondents Have Company Pages (Percentage of Respondents) North America Asia-Pacific Latin America Facebook (91%) Facebook (84%) Facebook (88%) Facebook (82%) LinkedIn (65%) Twitter (66%) Twitter (63%) Twitter (66%) Twitter (62%) LinkedIn (50%) YouTube (53%) Google+ (64%) YouTube (45%) YouTube (32%) LinkedIn (48%) YouTube (55%) Google+ (27%) Mastering Digital Feedback Europe Google+ (31%) Google+ (42%) LinkedIn (34%) 57
  • Case Studies: Form Follows Function - How Choice of Social Platform Depends on Firm Strategy A social media strategy (and the platforms used) must reflect a company’s priorities and objectives. For some consumer firms, it is about protecting a corporate brand and subsuming all products under that brand – as is often the case with financial services companies and large banks – while for others it is about promoting and focusing on leading brands within their portfolio. Most of a leading fashion company’s social media activities today are about branding, given that it is the company’s priority. It uses extensive blogger events for new product launches, inviting up to 500 fashion bloggers and influencers on Instagram, Twitter, Google+ and other media sites to participate. Pinterest has also become a prime site because of its popularity among women. Not unexpectedly, the themes are usually around how to dress stylishly. On the other hand, since the music industry is all about their talents’ branding, a leading music company uses Facebook, YouTube, Twitter and any other social media channels to connect with its fan base. Some artists come to the company with strong social media skills; these artists manage their own social media activities. Others request help from the music company’s social media professionals. The same applies to all the TV broadcasters we interviewed. An executive at a major cable network said the more they get their talent tweeting and engaging in other social media activities, the greater the response they get from viewers and advertisers. However, the network competes with its talents’ own websites and businesses, and they have to let them do their own thing. It is a real management challenge. What are the Keys to Gaining Benefits from Social Media? From a list of 29 success factors, we asked respondents to rate each in terms of its importance to being successful with social media, using a scale of 1-5. Across all 655 surveys, these factors fell within a narrow band – between 3.3 and 3.9. In other words, all were deemed to be of at least moderate importance. However, three ranked higher than all the others: n Adhering to privacy regulations on consumer data (and protecting it) n company culture that strongly values consumer opinions about a company’s A products, services and practices n Responding rapidly and clearly through social media to consumers with questions or problems about a company’s products, services or practices. Two issues that finished at the bottom of the list were not deemed to be nearly as important to success: balancing a company’s global and local social media activities, and maintaining archives of social media activity. How did the rankings vary by regions? Not greatly, although there were a few differences in what issues ranked in the top five (see Exhibit II-44). Privacy issues, corporate cultures that welcomed consumer feedback (no matter how bad), and acting promptly on social media comments were rated important to success in all four regions. (See Exhibit II-45) 58 Mastering Digital Feedback
  • Exhibit II-44: Key Success Factors of Social Media Q23A (Global): Key Success Factors With Social Media (Scale 1-5) Adhering to privacy regulations on consumer data/protecting consumer data A company culture that strongly values consumers' opinions about the firm's products, services and practices Responding rapidly and clearly via social media to consumers who have questions or problems with products/services/practices A security plan and measures to protect how consumer information is used Turning social media interactions with consumers into compelling consumer experiences with the company Ensuring the company does not violate other firms' trademarks, copyrights, etc. Clear understanding of consumer sentiments expressed in social media (i.e., sentiment analysis) A culture of openness and communication 3.88 3.83 3.82 3.76 3.74 3.74 3.73 3.73 A sound social strategy 3.73 Making sure that consumers do not post offensive content The ability to get consumers deeply engaged online -to nurture a relationship A company culture that encourages internal transparency and sharing knowledge (i.e., across business functions) Creating compelling online content (e.g., blogs, videos) that is informative and/or entertaining for consumers Clear goals and measures of success Stringent guidelines and policies on who in our company can use social media and how they can use it The ability to identify the key external social media influencers on our products/services Senior executives who understand social media's potential 3.72 3.63 The ability to analyze 'Big Data' from social media 3.63 A full view of all consumer comments on social media (360-degree view) 3.63 3.72 3.71 3.69 3.68 3.66 3.65 A deep understanding of quickly evolving social media technologies A clear owner of social activity who can get functions to take action on consumer insights Internal agreement of how to respond to consumer sentiments from all affected business functions An audit capability to quickly find consumer comments and the responses to them A common social media platform/enterprise information system used across the company A company culture that encourages external transparency and sharing knowledge (i.e., with consumers, channel partners, etc.) Integrating a social media systems with the core information systems Getting consumers to provide online content that other consumers see as compelling Senior executives who use social media themselves (whether to just 'listen' to what others are saying, or post comments them selves, or both) Balancing global vs. local social media activities 3.6 3.6 3.58 3.58 3.55 3.55 3.52 3.51 3.5 3.39 Archives of social media activity 3.34 3 Mastering Digital Feedback 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 4 59
  • Exhibit II-45: Top Five Success Factors of Social Media (by Region) Q23A (Regions): Top Five Success Factors With Social Media (Scale of 1-5) Rank 2 3 4 5 Europe Adhering to privacy regulations on consumer data and protecting it (3.84) Adhering to privacy regulations on consumer data and protecting it (3.89) A company culture that strongly values consumer opinions about the firm’s products, services and practices (3.80) Responding rapidly and clearly via social media to consumers with questions or problems (3.77) Making sure that consumers do not post offensive content (3.77) Turning social media interactions with consumers into compelling experiences (3.71) 1 North America A clear owner of social media activity who can get functions to take action (3.72) Asia-Pacific Latin America Responding rapidly Responding rapidly and and clearly via social clearly via social media media to consumers to consumers with with questions or questions or problems problems (3.98) (3.98) Adhering to privacy A security plan and regulations on measures to protect how consumer data and consumer information is protecting it (3.98) used (3.97) A company culture A culture of openness that strongly values and communication consumer opinions (3.98) about the firm’s products, services and practices (3.76) Ensuring the Clear goals and A security plan and company does measures of success measures to protect not violate other (3.75) how consumer firms’ trademarks, information is used A culture of copyrights, etc. (3.76) (3.96) openness and communication (3.75) A sound social strategy (3.95) Making sure that consumers do not post offensive content (3.95) A company culture that strongly values consumer opinions about the firm’s products, services and practices (3.90) Senior executives who use social media themselves (3.90) Turning social media interactions with consumers into compelling experiences (3.86) A company that encourages internal transparency and knowledge sharing (3.86) A common social media platform (3.86) 60 Mastering Digital Feedback
  • Findings by 11 Global Consumer Industries Mastering Digital Feedback 61
  • Highlights: n media and entertainment industry has the highest percentage of companies The that have been using social media the longest to engage with consumers; most insurance companies are relatively new to social media. n Telecom, insurance, banking and retail companies are the most likely to centralize social media activities; media and entertainment is least likely to centralize them. n Social media is more likely to be a cross-functional activity in travel, high-tech and telecom industries; these industries also have a higher percentage of companies that rate their organizational structure for social media as effective. n Utilities, insurance and retail spend the most on social media (per company); travel and banking/financial services spend the least. How Long Have Industries Been at The Social Media Game, and What Are They Trying to Achieve Our 655 survey respondents work in 11 global industries, from media and entertainment and banking to consumer packaged goods and high tech. Some have been involved in social media for a long time; others are relatively new. Four industries have been using social media the longest (based on the percentage of respondents whose companies regularly began using social media to engage with consumers prior to 2009): media and entertainment, consumer packaged goods, banking/financial services and telecom. (See Exhibit III-1) In each industry, at least 30% of respondents launched their social media activities before that year. (Note: When we say regularly using social media, we mean having at least one full-time employee devoted to it.) In stark contrast, only 3% of insurance respondents launched serious social media efforts before 2009; in fact, 52% of insurers have started their formal social media activities since 2011 (the largest percentage of any of the 11 industries). Only 23% of media and entertainment firms launched their social media activities since 2011. And only 18% of retailers and 19% of manufacturers were at the social media game before 2009. 62 Mastering Digital Feedback
  • Exhibit III-1: How Long Have 11 Consumer Industries Been at the Social Media Game Q7 (Global Industries): When Industries Began Regularly Using Social Media to Engage with Consumers 23% 39% 39% Media and Entertainment 30% 52% Retail 18% High Tech 25% 42% 33% Travel/Hospitality/Airlines 21% 46% 33% Utilities 24% 38% Health Care Services and Products 20% Banking/Financial Services Manufacturing 19% Insurance 45% 18% 47% 35% 21% 30% 3% 39% 27% 37% Telecom Services and Equipment 39% 41% 33% Consumer Packaged Goods 38% 45% 49% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Before 2009 Mastering Digital Feedback 2009-2010 2011-2013 63
  • How long an industry has been using social media appears to influence how serious that industry is in getting results from the activity. We asked respondents whether or not their companies had measurable goals for their social media activities. The industry that has been at social media the longest – media and entertainment – had the highest percentage of respondents with measurable goals (85%). (See Exhibit III-2) The industry that has been at social media for the shortest period of time (insurance) had the lowest percentage. Telecom (82%) and CPG (76%) were near the top on this count. Exhibit III-2: Industries Which Have Social Media Goals Q9 (Global Industries): Percentage of Respondents with Measurable Goals for Social Media Activities 85% Media and Entertainment Telecom Services and Equipment 82% High Tech 81% Consumer Packaged Goods 76% Travel/ Hospitality/ Airlines 74% Manufacturing 72% Utilities 71% Banking/ Financial Services 69% Retail Health Care Services and Products Insurance 66% 63% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100% 64 Mastering Digital Feedback
  • So what are their goals? We asked respondents to rate on a scale of 1-5 (not important to very high importance) a number of goals for social media initiatives (Exhibit III-3 through III-14). (Note: We asked them to rate these whether or not they had measurable goals for them.) The goals ranged from increasing revenue and identifying new product/service opportunities, to reducing customer service, marketing and other costs. Here are the results by industry for each goal. Increasing revenue: Surprisingly, not a high goal in nine of the 11 sectors. The two that rated it at least a ‘4’ on our scale were media and entertainment, and telecom. Health care, insurance and utilities did not rate this as an important goal. Exhibit III-3: Industry Importance of Using Social Media to Increase Revenue Q10 (Global Industries): Importance of Using Social Media to Increase Revenue (Scale of 1-5) Banking/ Financial Services 3.92 Consumer Packaged Goods 3.91 Health Care Services and Products 3.53 High Tech 3.82 3.55 Insurance Manufacturing 3.85 4.15 Media and Entertainment 3.89 Retail Telecom Services and Equipment 4.09 Travel/ Hospitality/ Airlines 3.95 3.67 Utilities 3.2 Mastering Digital Feedback 3.4 3.6 3.8 4 4.2 65
  • Understanding how consumers view the brand and the firm’s products: This was most important to telecom services, CPG and banking/financial services firms. Exhibit III-4: Industry Importance of Using Social Media to Understanding Brand Perception Q10 (Global Industries): Importance of Using Social Media to Understand How Consumers View Our Brand and Products (Scale of 1-5) Banking/ Financial Services 4.12 Consumer Packaged Goods 4.17 Health Care Services and Products 3.92 High Tech 4.03 Insurance 4.06 Manufacturing 4.04 3.85 Media and Entertainment 4.06 Retail Telecom Services and Equipment 4.3 Travel/ Hospitality/ Airlines 4 Utilities 3.95 3.6 66 3.8 4 4.2 4.4 Mastering Digital Feedback
  • Increasing brand affinity: Most important to travel/hospitality/airlines and telecom, but of high importance to all sectors. Exhibit III-5: Industry Importance of Using Social Media to Increase Brand Affinity Q10 (Global Industries): Importance of Using Social Media to Increase Brand Affinity (Scale of 1-5) Banking/ Financial Services 3.93 Consumer Packaged Goods 4.19 Health Care Services and Products 3.94 High Tech 4 Insurance 4.06 Manufacturing 4.04 4 Media and Entertainment 4.13 Retail Telecom Services and Equipment 4.24 Travel/ Hospitality/ Airlines 4.28 4.14 Utilities 3.7 Mastering Digital Feedback 3.8 3.9 4 4.1 4.2 4.3 4.4 67
  • Increasing consumer awareness (the number of consumers who receive a company’s marketing messages): This was of greater importance to retailers and telecom companies; it was of least importance to health care services/products companies (although still important). Exhibit III-6: Industry Importance of Using Social Media to Increase Consumer Awareness Q10 (Global Industries): Importance of Using Social Media to Increase Consumer Awareness (Scale of 1-5) Banking/ Financial Services 3.93 Consumer Packaged Goods 4.07 Health Care Services and Products 3.65 High Tech 3.99 Insurance 4.1 Manufacturing 3.88 4.08 Media and Entertainment 4.22 Retail Telecom Services and Equipment 4.18 Travel/ Hospitality/ Airlines 4 4 Utilities 3.2 68 3.4 3.6 3.8 4 4.2 4.4 Mastering Digital Feedback
  • Curtailing consumer attacks on a company’s brand: Less important than many other goals, but highest in the telecom and travel-related sectors. It was ranked least important by insurance companies. Exhibit III-7: Industry Importance of Using Social Media to Reduce Consumer Attacks on the Brand Q10 (Global Industries): Importance of Using Social Media to Reduce the Number and Severity of Consumer Attacks on our Brand Image (Scale of 1-5) Banking/ Financial Services 3.71 Consumer Packaged Goods 3.48 Health Care Services and Products 3.33 High Tech 3.54 3.13 Insurance Manufacturing 3.75 3.46 Media and Entertainment 3.64 Retail Telecom Services and Equipment 3.88 Travel/ Hospitality/ Airlines 3.82 3.48 Utilities 3 Mastering Digital Feedback 3.2 3.4 3.6 3.8 4 69
  • Understanding consumer trends: Of high importance to most industries, but highest to retailers and telecom companies. Many retailers, of course, compete on the ability to be the first to recognize consumer trends (especially in apparel retailing). This goal was rated lowest by health care services/products companies. Exhibit III-8: Industry Importance of Using Social Media to Spot Consumer Trends Q10 (Global Industries): Importance of Using Social Media to Understand Consumer Trends (Scale of 1-5) Banking/ Financial Services 3.93 Consumer Packaged Goods 4.07 Health Care Services and Products 3.65 High Tech 3.99 4.1 Insurance Manufacturing 3.88 4.08 Media and Entertainment 4.22 Retail Telecom Services and Equipment 4.18 Travel/ Hospitality/ Airlines 4 Utilities 4 3 70 3.4 3.6 3.8 4 4.2 4 Mastering Digital Feedback
  • Identifying new product/service opportunities: This did not reach high importance in any sector. But the highest rankings were given by telecom, utilities and manufacturing. Exhibit III-9: Industry Importance of Using Social Media to Spot New Product Opportunities Q10 (Global Industries): Importance of Using Social Media to Identify New Product/New Service Opportunities (Scale of 1-5) Banking/ Financial Services 3.73 Consumer Packaged Goods 3.78 Health Care Services and Products 3.22 High Tech 3.68 3.42 Insurance Manufacturing 3.89 Media and Entertainment 3.77 Retail 3.75 Telecom Services and Equipment 3.94 Travel/ Hospitality/ Airlines 3.54 3.95 Utilities 3 Mastering Digital Feedback 3.2 3.4 3.6 3.8 4 71
  • Improving existing products or services: This goal was not nearly as important as the awareness-related goals for most industries. Two sectors rated it higher than other sectors: telecom and manufacturing. Exhibit III-10: Industry Importance of Using Social Media to Improve Existing Offerings Q10 (Global Industries): Importance of Using Social Media to Improve Existing Products/Services (Scale of 1-5) Banking/ Financial Services 3.72 Consumer Packaged Goods 3.7 Health Care Services and Products 3.41 High Tech 3.81 3.52 Insurance Manufacturing 3.91 3.69 Media and Entertainment 3.8 Retail Telecom Services and Equipment 4.09 Travel/ Hospitality/ Airlines 3.85 3.67 Utilities 3 72 3.5 4 4.5 Mastering Digital Feedback
  • Improving customer service: Two industries rated this higher than the other sectors: telecom and travel-related. Health care services/products and media and entertainment industries rated it the lowest among the sectors. Exhibit III-11: Industry Importance of Using Social Media to Boost Customer Service Q10 (Global Industries): Importance of Using Social Media to Improve After-Sale Customer Service (Scale of 1-5) Banking/ Financial Services 3.84 Consumer Packaged Goods 3.57 Health Care Services and Products 3.43 High Tech 3.92 3.68 Insurance Manufacturing 3.89 3.54 Media and Entertainment 3.74 Retail Telecom Services and Equipment 4.03 Travel/ Hospitality/ Airlines 4 3.71 Utilities 3 Mastering Digital Feedback 3.5 4 4.5 73
  • Improving marketing campaigns: Rated highest by the retail, telecom, CPG and manufacturing sectors and rated lowest by health care and insurance companies. Exhibit III-12: Industry Importance of Using Social Media to Improve Marketing Campaigns Q10 (Global Industries): Importance of Using Social Media to Improve Marketing Campaigns (Scale of 1-5) Banking/ Financial Services 3.89 Consumer Packaged Goods 4.02 Health Care Services and Products 3.53 High Tech 3.89 3.58 Insurance Manufacturing 4 3.85 Media and Entertainment 4.1 Retail Telecom Services and Equipment 4.03 Travel/ Hospitality/ Airlines 3.85 Utilities 3.86 3.2 74 3.4 3.6 3.8 4 4.2 Mastering Digital Feedback
  • Improving sales processes: Rated less important overall than improving marketing campaigns. No industry rated this ‘4’ or more in importance. But more important to telecommunication companies, retailers and media firms than other sectors. Exhibit III-13: Industry Importance of Using Social Media to Improve Sales Processes Q10 (Global Industries): Importance of Using Social Media to Improve Sales Processes (Scale of 1-5) Banking/ Financial Services 3.68 Consumer Packaged Goods 3.26 Health Care Services and Products 3.33 High Tech 3.49 3.35 Insurance Manufacturing 3.69 Media and Entertainment 3.77 Retail 3.77 Telecom Services and Equipment 3.88 Travel/ Hospitality/ Airlines 3.74 3.57 Utilities 2.5 3 3.5 4 We asked industry respondents to grade on a scale of 1-5 the importance of using social media to reduce costs in four areas: marketing, customer service, sales and new product development. No industry rated the goal of cutting costs in any of these functions as ‘4’ or more. In some cases, they received less than a ‘3’, for example: n Insurance companies gave reducing sales costs a 2.81 n Health care companies gave reducing customer service costs a 2.88 n Insurers gave reducing new product development costs an average rating of 2.42 Clearly, most industries see less value in using social media to cut costs in marketing, sales, service and product development than in using it to make those processes more effective, protect and enhance their brand image, and identify new revenue opportunities. Mastering Digital Feedback 75
  • How Industries Organize Their Social Media Activities Our data in the second section of this report reveal how the organizational structure of consumer companies’ social media activities were in a state of flux. In our industry data, we found that in every industry but one (media) the majority of respondents centralized social media activities either at the parent company or in one group in each division. (See Exhibit III-14) Certain industries were more likely to centralize social media at the parent company (insurance, telecom and retail). We also found an industry in which social media was more likely to be decentralized: 54% of media and entertainment respondents said social media was decentralized within each divisional function. The industries in which social media were most likely to be centralized (either at the parent company or in one group at each division) were telecom (76%), insurance (72%), banking (71%), and retail (71%). Exhibit III-14: Which Industries Centralize or Decentralize Social Media Activities Q11 (Global Industries): How Respondents Organize Their Social Media Activities Decentralized Centralized Centralized in Divisions at Parent in Divisions by Business Company in One Group Functions and Coordinated Banking/ Financial Services Consumer Packaged Goods Health Care Services and Products High Tech Insurance Manufacturing Media and Entertainment Retail Telecom Services and Equipment Travel/ Hospitality/ Airlines Utilities 76 Decentralized in Divisions by Business Function and Not Coordinated Other 48% 23% 18% 10% 1% 46% 20% 17% 13% 4% 37% 18% 33% 10% 2% 48% 65% 20% 7% 21% 26% 46% 20% 25% 9% 3% 9% 1% 0% 1% 15% 31% 46% 8% 0% 51% 20% 20% 10% 0% 52% 24% 18% 6% 0% 41% 28% 21% 10% 0% 48% 19% 33% 0% 0% Mastering Digital Feedback
  • On our question about which function or individual (if any) controls the company’s social media activities, we saw significant differences across sectors. (See Exhibit III-15) For example, marketing controlled social media in most insurance companies – but in none of the media and entertainment firms we surveyed. In addition to insurance companies, marketing more frequently controlled social media in the CPG, retail and travel industries than it did in other sectors. Exhibit III-15: Who Controls Social Media, by Industry Q12 (Global Industries): Percentage of Respondents Where Social Media is Controlled by Marketing Banking/ Financial Services 32% Consumer Packaged Goods 48% Health Care Services and Products 37% High Tech 28% 55% Insurance Manufacturing Media and Entertainment 31% 0% 45% Retail Telecom Services and Equipment 27% Travel/ Hospitality/ Airlines 41% 19% Utilities 0% Mastering Digital Feedback 10% 20% 30% 40% 50% 60% 77
  • Next, we looked at how many business functions work closely together on social media activities, no matter how social media was organized or who controlled it. The answer varies greatly by industry. (See Exhibit III-16) Industries with the most respondents saying that at least four functions were working closely together on social media were travel, high tech and telecom (each with at least 39% of respondents in this category). The industries in which collaboration was least likely to occur were utilities (10%), CPG (13%), insurance (13%), media (15%), and manufacturing (17%). In these sectors, companies were more likely to have their business functions managing social media completely or largely independent of one another. Exhibit III-16: Degree of Cross-Functional Collaboration on Social Media Q18A (Global Industries): Number Business Functions That are Working Closely Together on Social Media Activities Banking/ Financial Services 26% Consumer Packaged Goods 44% 30% 37% Health Care Services and Products 50% 33% High Tech 49% 20% Manufacturing 18% 41% 39% 39% Insurance 13% 48% 32% Media and Entertainment 51% 39% Retail 13% 33% 17% 46% 15% 44% 23% Telecom Services and Equipment 21% 39% 39% Travel/ Hospitality/ Airlines 21% 39% 41% 48% Utilities 43% 30% Total 0 10 20 45% 30 40 50 10% 26% 60 70 80 90 100 Each business function (marketing, sales, service, R&D, etc.) manages its social media activities totally or largely independently of one another Two to three business functions work closely together on social media activities Four or more business functions work closely together on social media activities 78 Mastering Digital Feedback
  • The 11 industries gave widely varying grades to the effectiveness of their organizational structure for social media activities. For example, telecom companies gave themselves the highest mark here; 61% said their structure was effective or highly effective. A majority of travel and high tech companies felt their structure was effective or highly effective. (See Exhibit III-17) We must note that telecom, high tech and travel were the three sectors most likely to have at least four business functions working closely together on social media. Industries that gave themselves the lowest marks for the way they organized their social media activities were insurance, CPG, health care and utilities. We must note that insurance companies were much more likely to centralize social media activities and assign control of them to corporate marketing as compared to any other sector. Exhibit III-17: Effectiveness of Social Media Organizational Structure, by Industry Q14 (Global Industries): Percentage of Respondents Rating the Effectiveness of the Organizational Structure for Social Media Activities as Highly Effective or Effective Telecom Services and Equipment 61% Travel/ Hospitality/ Airlines 51% High Tech 51% Media and Entertainment 46% Banking/ Financial Services 43% Manufacturing 41% Retail 40% 33% Utilities !Health Care Services and Products 31% Consumer Packaged Goods 30% 23% Insurance 10 Mastering Digital Feedback 50 100 79
  • Yet the issue of how best to organize social media activities appears to be a difficult one – even for the industries that are more likely to report that the current structure is effective. The majority of telecom, travel and high tech companies – the ones more likely than other sectors to have effective structures – said they are likely to reorganize their social media activities by the end of 2014. (See Exhibit III-18) Exhibit III-18: Which Sectors Plan to Reorganize Their Social Media Activities? Q15 (Global Industries): Likelihood that Respondents Will Reorganize Social Media Activities by End of 2014 Banking/ Financial Services 57% Consumer Packaged Goods 30% Health Care Services and Products 22% 47% High Tech 10% 36% Manufacturing 30% 23% 42% 15% Media and Entertainment 54% Retail 52% Telecom Services and Equipment 55% 31% 14% 35% 15% 30% 8% 57% 0 37% 15% 67% Utilities 43% 17% 48% Travel/ Hospitality/ Airlines 31% 48% 53% Insurance 29% 50 Yes 80 13% No 26% 14% 100 Not Sure Mastering Digital Feedback
  • Resources That Industries Devote to Social Media (Money and People) The industries also varied significantly by the amount of resources – investments and employees – they devoted to social media. Exhibit III-19 shows two numbers for respondents in each industry: average spending on social media, and the spending in millions of dollars per $1 billion in average revenue for industry respondents. Two industries are spending far more on social media than the other nine: Utilities: Spend about $4 million for every $1 billion in firm revenue, or nearly four times the average across all industries. Media and Entertainment: Spend about $3.5 million for every $1 billion in firm revenue, or about three times the average across industries. Industries spending the least on this measure: Travel-related (about $190,000 per $1 billion in firm revenue) and banking/financial services (about $910,000 per $1 billion in firm revenue). Exhibit III-19: Industries That Spend the Most on Social Media: Media and Utilities (as Percent of Revenue) Q16/Q2 (Global Industries): Average 2013 Spending Per Respondent on Social Media and Spending per $1 Billion in Average Respondent Revenue (in US $Millions) Banking/Financial Services Consumer Packaged Goods Health Care Services and products High Technology Insurance Media and Entertainment Manufacturing Retail 0.91 15.5 1.00 23.0 1.10 19.6 1.88 19.2 1.29 24.2 3.46 21.8 1.39 17.2 1.40 25.3 Telecom Services and Equipment 1.66 Travel/Hospitality/Airlines 0.19 3.3 Utilities Total 20.1 4.09 26.9 1.20 18.8 2013 Social Media Spending ($millions per $1billion revenue) 2013 Social Media Spending Mastering Digital Feedback 81
  • We also asked respondents to estimate their projected spending on social media by the year 2015 (both average and median). (See Exhibit III-20 but note that it shows average and medians – not, as in the chart above, averages and spending per $1 billion in revenue.) Looking at the average spending per respondent, those in the following sectors predicted the greatest increase: n Banking/financial services: From $15.5 million per respondent this year to $21.8 million in 2015 n Consumer packaged goods: From $23 million to $31 million n High tech: From $19 million to $27 million n Telecom: From $20 million to $29 million Exhibit III-20: Projected 2015 Spending on Social Media, by Industry Q16A (Global Industries): Projected Spending on Social Media Per Respondent in 2015 (Mean and Median, in US $millions) 21.8 Banking/Financial Services 5 31.1 Consumer Packaged Goods 4 Health Care Services and products 22.5 2 27.0 High Technology 5 21.9 Insurance 4 Media and Entertainment 21.2 3 29.2 Manufacturing 21 30.6 Retail 5 Telecom Services and Equipment Travel/Hospitality/Airlines Utilities Total 29.4 7 5.5 2 23.7 2 24.0 4 Median $ (million) 82 Mean $ (million) Mastering Digital Feedback
  • The 11 industries showed big differences in the number of employees across the whole company who were working full-time on social media activities (Exhibit III-21). Industries whose respondents had the greatest number of social media staffers were media and entertainment (average of 102; median of 48); telecom (61 average; 20 median); high tech (63 and 24), and health care (61 and 15). Exhibit III-21: Media and High Tech Industries Have the Most Employees Working on Social Media Q13 (Global Industries): Mean and Median Number of Employees Working Full-Time on Social Media Activities Banking/Financial Services 59 21 53 Consumer Packaged Goods 19 Health Care Services and products 61 15 63 High Technology 24 42 Insurance Manufacturing 11 49 18 102 Media and Entertainment Retail Telecom Services and Equipment Travel/Hospitality/Airlines Utilities 48 53 18 61 20 54 17 28 15 Median Employees Mastering Digital Feedback Mean Employees 83
  • Which Industries are Gaining Positive Returns and Other Improvements on Their Social Media Investments? In two industries - media and entertainment, and high tech, the majority of respondents said they’ve generated positive returns on their social media investments to date. Approximately 62% of media and entertainment companies reported a positive ROI (31% had a negative ROI). And 52% of high tech companies had a positive ROI (while 17% of them had a negative ROI). Approximately 49% of retailers had positive ROI. (See Exhibit III-22) Why do these five industries have companies that more frequently achieved positive returns on social media than the other six industries in our survey? Two thoughts: n They are more likely to have consumers who are loyal fans of their offerings: TV shows, computers, stores, mobile devices, and other offerings as against industries that sell necessities but don’t have fans: insurance, medical services; checking accounts or electric service, to name a few. n Perhaps consumers with a passion for a product or service are easier for firms to engage through social media. This suggests that certain industries have a better opportunity to use social media to create consumer ‘tribes’ around their products or services – consumers who are avid fans of the product or service, and the company behind it. Exhibit III-22: Percentage of Respondents with Positive ROI on Social Media, by Industry Q24 (Global): Percentage of Industry Respondents with Positive ROI on Social Media 62% Media and Entertainment High Tech 52% Retail 49% Consumer Packaged Goods 46% Telecom Services and Equipment 42% Travel/Hospitality/Airlines 39% Utilities 33% Manufacturing 32% Banking/Financial Services 31% 29% Health Care Services and Products 19% Insurance 0 84 10 20 30 40 50 60 70 Mastering Digital Feedback
  • The following exhibit shows the percentage of respondents in each global industry with positive and negative ROI, as well as respondents that hadn’t measured their ROI (some of these said they plan to measure ROI, others said they don’t). We see that, in every industry, a higher percentage of respondents report a positive ROI than a negative ROI. (See Exhibit III-23) But in the following industries, the ratio of positive-to-negative ROI respondents is much greater: n Media and Entertainment: about a 2-to-1 ratio n Consumer packaged goods: about 3-to-1 n High tech: about 3-to-1 n Manufacturing: more than 2-to-1 n Telecom: more than 2-to-1 n Travel: more than 2-to-1 Exhibit III-23: Who’s Gaining ROI on Social Media? Q24 (Global Industries): Percentage of Respondents With Positive or Negative ROI With Social Media (or Who Didn't Measure) Banking/ Financial Services 14% 35% 31% 20% Consumer Packaged Goods 11% 28% 46% 15% Health Care Services and Products 10% 35% High Tech 13% Insurance Manufacturing Media and Entertainment 29% 19% 52% 8% 28% 12% 27% Travel/ Hospitality/ Airlines 10% 33% Total 12% 32% 62% Telecom Services and Equipment 14% 19% 41% 14% Utilities 17% 48% 19% Retail 7% 27% 33% 32% 13% 14% 31% 49% 42% 16% 18% 39% 18% 33% 19% 38% 18% We haven't measured the value, and we do not plan to measure it We haven't measured the value, but we do plan to measure it Mastering Digital Feedback We have measured the value, and it is more than our investment in social media (i.e., our return on investment is positive) We have measured the value, and to date it is less than our investment (i.e., the return on investment is negative) 85
  • We believed that a great number of companies would not be able to calculate (or even estimate) their ROI on social media. Hence, we asked all respondents (even those who hadn’t measured ROI) to rate the degree to which their social media activities improved 16 aspects of performance (including one that respondents could ‘fill in the blank’). (We provided a scale of 1-5, where 1= not at all, 3 = moderate degree, 5= very high degree.) These parameters fell into four categories: 1. Brand image and consumer awareness n Increased consumer awareness – the number of consumers who receive our messages n Increased brand affinity - the number of consumers who view our brand favorably, and their affinity toward our brand n How consumers view our brand and products (i.e., consumer sentiment) n Reduced the number and severity of consumer attacks on our brand image 2. Process improvements n Improved marketing campaigns n Improved after-sale customer service n Improved our sales processes 3. Cost reductions n Reduced marketing costs n Reduced sales costs n Reduced customer service costs n Reduced new product development costs 4. Revenue and product innovation and enhancement n Increased revenue n Identified new product/new service opportunities n Improved existing products/services n Understood important consumer trends 86 Mastering Digital Feedback
  • On the 16 parameters each respondent could have received a minimum score of 16 (those that scored themselves a 1 on each of the 16 factors) and a maximum score of 80 (those that scored themselves as 5 on all 16 factors). We then looked at each industry and the percentage of its respondents that scored in three ranges: n Lowest range (16 to 45), which accounted for 29% of all respondents n Middle range (46-60), which was 45% of all respondents n Upper range (61-80), which was 27% of all respondents On 16 qualitative measures, three industries had the highest percentage of respondents in the upper range of scores: n Telecom (39% of respondents) n Media and entertainment (39%) n High tech (38%) Insurance (13%), health care (14%) and CPG (17%) had the smallest percentage of respondents in the upper range. Exhibit III-24 shows each industry on the three ranges of scores. Exhibit III-24: Media, Telecom and High Tech are in the Lead on 16 Qualitative Measures of Social Media Impact Q25 (Global Industries): Degree to Which Social Media Has Improved Company Performance on 16 Parameter (Percentage of Respondents on Three Ranges of Scores) Banking/ Financial Services Consumer Packaged Goods 33% Travel/ Hospitality/ Airlines Health Care Services and Products Total 31% 29% 43% 29% 14% 53% 33% 17% 22% 39% 49% 21% Score 16-45 Mastering Digital Feedback 48% 46% 15% 13% 29% 30% Utilities High Tech 39% 27% 58% Insurance Media and Entertainment 30% 37% 33% Telecom Services and Equipment 17% 43% 41% Retail Manufacturing 27% 52% 21% 29% 38% 46% 45% Score 46-60 27% Score 61-80 87
  • Findings by Business Function 88 Mastering Digital Feedback
  • Highlights: n Marketing uses social media largely to increase the number of consumers viewing its messages and to get consumers to discuss their positive experiences with the firm publicly. n Sales functions use social media mostly to convert prospects to customers, and identify potential customers. n R&D regards social media as a market research tool for getting feedback on new product and service concepts. n Customer service functions see social media’s greatest benefit in that it allows them to respond personally to unhappy customers, and help consumers get guidance from other consumers on how to use the company’s products. n professionals see social media’s value greatly in its potential to highlight early Risk trends in potential risks to the firm’s brand reputation. n Manufacturing and operations respondents value social media most as a tool to detect possible shifts in consumer demand. How Do Business Functions Use Social Media and What Do They Get Out of It? As we’ve shown in previous sections, social media has not received equal attention by all key functions in a company. Section II illustrates that the marketing function view consumer comments in social media far more than any other function. To get a deeper understanding of how a number of business functions (marketing, sales, customer service, R&D, finance, risk management, product management, distribution, and manufacturing and production) were or were not using social media, we asked respondents in each function two questions: n The extent to which they use social media to accomplish key goals for their function (scale of 1-5, from no extent to very high extent). n Their success in using social media to achieve those goals (scale of 1-5, from no benefits to very high benefits achieved). The numbers that follow combine the functional responses on a global basis. We begin with marketing. Mastering Digital Feedback 89
  • Marketing and Product Management: Using Social Media to Increase Reach and Showcase Happy Consumers The marketing function respondents who answered the survey rated two activities as those in which they use social media extensively (on a scale of 1-5): n Increasing the number of consumers who view the company’s marketing messages (or ‘media reach’) n Getting consumers to discuss their positive experiences with the firm’s products or services publicly Ford Motor Company’s social media efforts are a case in point; its social media website, FordSocial, features stories and videos from satisfied consumers who have purchased Ford vehicles. Such testimonials can be persuasive. For example, one Ford owner on the Ford website said: “We purchased our Ford Explorer in 1992 (shows over 300,000 miles, it’s probably more than that now). For over 20 years, this truck has gotten us where we’ve needed to go and with only normal maintenance.” Marketing professionals are less likely to use social media to improve pricing, test marketing messages before they launch a campaign, or answer competitors’ marketing messages more precisely. (See Exhibit IV-1) Exhibit IV-1: How Marketing Uses and Benefits from Social Media Q17A/AA (Global Functions): How Marketing Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) To increase media reach: the number of consumers who view marketing messages 3.79 4.03 To get consumers to publicly discuss their positive experiences with the products 3.64 3.83 To identify patterns in consumer complaints and protect strike off brand reputation 3.6 3.76 To get consumers to provide useful content that promotes the brand 3.59 3.71 To test the effectiveness of marketing campaigns and messages in progress 3.47 3.5 As a market research tool for improving current products/services 3.41 3.43 As a market research tool to get feedback on new product/service concepts designed 3.41 3.4 As a market research tool to identify new product/service opportunities 3.36 3.38 To learn of potential new markets for products/services 3.31 3.38 To collect information about competitors 3.12 3.21 To respond to competitors' marketing messages more precisely 3.14 3.17 To test marketing messages before full-scale campaign launch 3.24 3.02 3.09 2.93 To improve pricing on products or services 2 Degree of Benefits 90 3 4 5 Extent of Social Media Use Mastering Digital Feedback
  • Case Studies: Getting Every Function on the Same (Digital) Page: The Art of Collaboration in Social Media Activities Leading companies recognize that successful collaboration is a combination of organization, culture and dedication to a common goal. For example, the social media team at a large insurance company tries to be as hands-off as possible, putting ’light-weight’ processes in place to ensure some level of consistency. The team meets with a social media governance team on which senior executives of all business units discuss implementation, collaboration, compliance and other issues across the company. Likewise, another large insurance company put a social media council in place as an early first step that identified and trained people in functions outside of marketing communications on best practices. A large cable TV company’s social media team has digital leads embedded in each brand (e.g., by channel) who are responsible for implementing social media activities. They meet once every two weeks to learn from one another and jointly develop best practices. The company’s culture and its desire to demonstrate the value of social media have made the meetings highly effective. One bank executive said the bank has a goal of getting every employee around the world engaged in social media to tap into a much greater level of advocacy. However, the social media team recognizes the challenge of controlling what people say and not running afoul of regulatory requirements. They want to test a small roll-out and begin expanding the program once the bugs have been worked out. Some companies interviewed are so successful with their strategy that collaboration and motivation isn’t even an issue. In fact, a few social media teams interviewed receive so many requests and ideas from functions around the world that they actually spend more time turning down initiatives to maintain a commitment to excellence and ensure compliance with the company’s social media policies and strategy. So how successful are marketers at using social media to accomplish those goals? On our scale of 1-5, the size of benefits follows a similar pattern to usage. We gave the same question to product managers. They said they most used social media to increase media reach and to improve current offerings. They used it least (although still moderately) to improve pricing and collect competitive information. Mastering Digital Feedback 91
  • As a tool for generating benefits, product managers scored social media highest on increasing media reach and identifying potential new markets for the firms’ products/ services. (See Exhibit IV-2) On our scale of 1-5, they said it generated more than moderate benefits (3.42) as a market research tool for getting feedback on new and existing offerings. Exhibit IV-2: How Product Management Uses and Benefits from Social Media Q17I/AI (Global Functions): How Product Management Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) 3.84 3.51 To increase media reach: the number of consumers who view marketing messages 3.62 3.42 As a market research tool to improve current products/services To identify patterns in consumer complaints and protect brand reputation 3.53 3.36 As a market research tool to get feedback on new product/service concepts designed 3.51 3.42 To learn of potential new markets for products/services 3.44 3.49 3.38 3.27 As a market research tool to identify new product/service opportunities 3.27 3.02 To collect information on competitors 3.2 3.16 To improve pricing on products or services 2 2.5 3 Extent of Social Media Use 92 3.5 4 Degree of Benefits Mastering Digital Feedback
  • Sales and Social Media: Identifying Potential Customers and Responding to Those Who Show Interest The two top-rated usages of social media for sales functions were responding to consumers who show interest in the firm’s marketing messages, and identifying new potential customers. On the benefits side, social media was more effective in helping sales respond to consumers with interest in marketing messages than it did in helping sales understand early consumer reactions to new products. (See Exhibit IV-3) Exhibit IV-3: How Sales Uses and Benefits from Social Media Q17B/AB (Global Functions): How Sales Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) To respond to consumers who show interest in marketing messages and convert them to customers 3.61 3.66 3.46 To identify potential customers 3.65 3.34 To understand early consumer reactions to new products 3.58 3.43 3.55 To understand how consumers are reacting to sales approaches 3.39 To understand early consumer reactions to new sales programs 3.54 3.45 3.49 To provide input on new products/services 3.38 3.45 To help existing customers make purchases 3 3.2 Degree of Benefits Mastering Digital Feedback 3.4 3.6 3.8 Extent of Social Media Use 93
  • R&D: Social Media as Market Research Tool We asked R&D and product development professionals to indicate how extensively and successfully they used social media as a market research tool. In terms of usage on four aspects of new products, they indicated more than moderate but less than ‘highly extensive’ use. They rated greatest use of social media to get feedback on new products or services (3.63). (See Exhibit IV-4)They used social media a little less extensively to improve existing offerings (3.55). But they used social media even less to identify new product or service opportunities, and least as a way for consumers to submit ideas for new offerings. In terms of benefits, they gave highest marks to using social media to improve current offerings and getting feedback on new product concepts. They had fewer benefits from using social media to spot new product or service opportunities, and least from getting consumers to submit new product or service ideas. Exhibit IV-4: How R&D Uses and Benefits from Social Media Q17D/AD (Global Functions): How R&D Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) As a market research tool to get feedback on new products/services concepts designed 3.43 3.63 As a market research tool to improve current products/services 3.47 3.55 3.24 3.25 As a market research tool to identify new product/service opportunities As a market research tool so consumers can submit new product/service ideas 2.9 3.14 2 Degree of Benefits 94 2.5 3 3.5 4 Extent of Social Media Use Mastering Digital Feedback
  • Customer Service: Social Media as Tool for Spotting Angry Customers We asked customer service managers about seven usages of social media. The most extensive way they use social media is to reach out to consumers who are unhappy about the company’s offerings. Customer service was least likely to use social media to reduce service costs. (See Exhibit IV-5) Customer service managers said social media was more than moderately beneficial (but not highly) on all seven counts. They said it had greater benefits in helping consumers learn to use the company’s products or services, and in identifying problems with consumer support processes. Exhibit IV-5: How Customer Service Uses and Benefits from Social Media Q17E/AE (Global Functions): How Customer Service Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) To pay personal attention to unhappy consumers of the products/services and address their issues 3.6 3.78 To give consumers guidance from other consumers about how to use the products/services 3.65 3.67 To identify consumers who are at risk of discontinuing the usage or future purchase of the products/services 3.55 3.63 To identify quality problems with consumer support processes 3.7 3.63 3.75 3.6 To guide consumers on how to use the products/services To identify quality problems with the products/services 3.53 3.53 To reduce the cost of call center and other support channels 3.58 3.38 2 2.5 Degree of Benefits Mastering Digital Feedback 3 3.5 4 Extent of Social Media Use 95
  • Risk Management: Using Social Media to Identify Early Trends in Brand Problems and Problematic Consumers The two most extensive uses of social media by risk managers were identifying and reducing early trends in brand reputation problems, and spotting consumers (or consumer groups) that may represent a threat to corporate reputation. Fewer risk managers used social media to identify employees who might present the firm with problems in the future. How successful is social media for risk managers who are on the prowl for reputational and other problems? The risk managers surveyed said social media had more than moderate benefits in identifying early problems in brand reputation (they rated it 3.31 on our scale). They gave ‘moderate’ ratings for using social media to identify potential flaws in products and services, or flawed business processes. (See Exhibit IV-6) Exhibit IV-6: How Risk Management Uses and Benefits from Social Media Q17C/AC (Global Functions): How Risk Management Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) 3.31 3.66 To identify early trends in brand reputation problems and eliminate/reduce those problems To identify specific consumers or consumer groups who may present future problems for the brand reputation 3.21 3.59 3.03 3.34 To identify business processes with potential flaws 3.07 3.24 To identify products with potential flaws 2.72 2.55 To identify employees who might present the organization with future problems 2 2.5 Degree of Benefits 96 3 3.5 4 Extent of Social Media Use Mastering Digital Feedback
  • Manufacturing and Service Operations: Using Social Media to Get Ahead of Consumer Demand We asked survey respondents to score themselves on three uses of social media in manufacturing (or service operations, the service industry equivalent). (See Exhibit IV-7) They said they used social media more extensively to spot early changes in consumer demand that could impact their production schedules. And they used social media to spot problems with suppliers less often (less than ‘moderate’ use). Production managers said they received between moderate and high benefits from using social media to identify changes in consumer demand and quality problems. And they had less than moderate benefits using social media to identify flaws with suppliers’ products and services. Exhibit IV-7: How Manufacturing/Service Operations Uses and Benefits from Social Media Q17F/AF (Global Functions): How Manufacturing/Service Operations Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) 2.92 2.98 To identify problems with suppliers' products/services 3.41 3.39 To identify quality problems with products/services To identify early changes in consumer demand for products/services (and prepare production schedules accordingly) 3.43 3.54 2 Degree of Benefits Mastering Digital Feedback 2.5 3 3.5 4 Extent of Social Media Use 97
  • Distribution: Using Social Media to Find Problematic Distributors Distribution managers are using social media to a moderate extent to find problematic distributors of their products or services and identify other logistical problems. They said the benefits of social media were moderate on these fronts. Exhibit IV-8: How Distribution Uses and Benefits from Social Media Q17G/AG (Global Functions): How Distribution/Logistics Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) To identify problems with the distribution of products/services 3.31 3.19 To identify problematic distributors of products/services 3.38 3.31 3.05 3.1 3.15 3.2 3.25 3.3 3.35 3.4 Degree of Benefits 98 Extent of Social Media Use Mastering Digital Feedback
  • Finance: Getting Unvarnished Opinions of Consumer Perceptions Of the five ways that we asked finance and accounting managers to rate the usage and benefits of social media to them, by far the most frequent usage was getting a firsthand understanding of consumer perceptions about the company. They rated that at a ‘3.93‘ on our scale of 1-5 in terms of usage (high usage). Next was getting a more accurate picture of demand forecasts. In terms of benefits achieved, they gave top marks to using social media as a tool for gaining unvarnished consumer opinions about the company, and lower (although still somewhat high) marks as a way to improve demand forecasting. Exhibit IV-9: How Finance Uses and Benefits from Social Media Q17H/AH (Global Functions): How Finance Uses and Benefits from Social Media (Extent of Usage and Benefits on Scale of 1-5) To get a first-hand understanding of consumer perceptions about products, services, processes and brand 3.93 3.73 To get a more accurate understanding of demand forecasts (e.g., by understanding consumer sentiments about our products/services) 3.65 3.46 3.38 3.25 To monitor marketplace risks 3.02 2.9 To communicate investment information to shareholders 3.01 3.02 To improve the way we bill for products/services 2 2.2 2.4 2.6 2.8 Extent of Social Media Use Mastering Digital Feedback 3 3.2 3.4 3.6 3.8 4 Degree of Benefits 99
  • Learning from the Best Adopters of Social Media: Implications and Recommendations for Consumer Companies 100 Mastering Digital Feedback
  • Highlights: n Companies deriving the greatest value from social media (the social media ‘leaders’) have a much higher regard for social media’s potential. n Leaders make better sense of the mountain of digital consumer data from social media, and act on it faster. n Leaders are much more likely to have highly cross-functional social media initiatives – one big internal ‘social circle,’ rather than many smaller, autonomous social circles. n Leaders structure their social media activities more effectively, combining central and functional ‘listening’ to consumers with local action. n Leaders have a culture of ardent listening and transparency – to consumers and with employees. How We Identified Best Practices in Social Media Comparing how the highest achieving companies differ from the ones that gained the least on a business issue like social media is critical to gain insights into what companies should consider doing. In our first analysis of ‘leaders’ and ‘followers,’ we used ROI– those with a positive return against all others (those with negative and unmeasured returns). But we then realized that the ‘followers’ group would be penalized by the 44% of the survey population that hadn’t measured their return. We thought some of those 44% might actually have positive returns – if they had been able to measure them. Mastering Digital Feedback 101
  • Thus, we turned to the 25th question in the survey, which asked the 655 respondents to assess the extent of benefits they achieved in 15 areas of performance on a scale of 1 to 5 (plus one in which they could fill in the blank with another measure).11 We termed as ‘leaders’ the respondents with individual cumulative scores of between 61 and 80, and ‘followers’ the respondents with scores between 16 and 45 (see Exhibit V-1). We had a similar proportion of leaders (27% of respondents) and followers (29%): Exhibit V-1: Leaders vs. Followers in Benefits of Social Media Q25 (Global): Leaders vs. Followers in Achieving Benefits from Social Media in 16 Areas of Performance LEADERS: Cumulative Score of 61-80 27% 45% Cumulative Score of 46-60 FOLLOWERS: Cumulative Score of 16-45 29% 0 11 5 10 15 20 25 30 35 40 45 50 For details on Q25, see the end of Section III. We found that the leaders were the slightly larger companies, with average revenue of $15.6 billion as against the followers who had average revenue of $13.8 billion. Only 34% of the leaders were based in North America, even though 53% of the total respondents were based there. Some 36% of leaders were Asia-Pacific respondents (which constituted only 19% of the total respondent base). Some 15% were from Latin America. What Leaders Do Better Than Followers After comparing leaders’ and followers’ responses to the other 24 questions in our survey, we found that leaders differed in five primary ways: 1. They have a much greater appreciation of the competitive potential of social media and how they should use it. 2. They are better at making sense of the mountain of digital consumer data – sensing the sentiments and other consumer comments, and then acting upon them quickly. 3. They are much more likely to have a big internal ‘social circle’ – more functions that use social media and jointly decide what to do with it. 4. They structure their social media activities more effectively, combining central and functional listening with local action. 5. They have a culture of ardent listening and transparency – both to consumers and with each other. 102 Mastering Digital Feedback
  • A Greater Appreciation: Leaders Don’t View Social Media as a Fad, They Have Much Bigger Goals and Much Bigger Investments A greater percentage of consumer companies with bigger results from social media have been taking it seriously for far longer than the followers have. Nearly three-quarters of the leaders (69%) have been engaging consumers via social media since before 2011, compared with less than half (49%) of the followers. And before 2009, twice as many leaders (32%, as against 14% of the followers) had at least one full-time equivalent on social media. (See Exhibit V-2.) Leaders appear to be more serious about their consumer social media initiatives. The vast majority (91%) have specific, measurable goals for their social media activities, which was the case with less than half the followers (45%). Exhibit V-2: Leaders Have Been at the Social Media Game Longer Q25 (Leaders vs. Followers): Year in Which They Began Regularly Using Social Media to Engage With Consumers 6% 2% Before 2000 14% 2000-2006 5% 2007 6% 2% 2008 6% 5% 11% 9% 2009 26% 26% 2010 19% 2011 33% 9% 2012 17% 1% 2% 2013 0 5 10 15 Social Media Leaders Mastering Digital Feedback 20 25 30 35 Social Media Followers 103
  • Exhibit V-3: Twice as Many Leaders Than Followers Have Measurable Goals for Social Media Q9 (Leaders vs. Followers): Company Has Measurable Goal Its Social Media Activities 91% Leaders Followers 45% Total 71% 0 20 40 60 80 100 Leaders were also more serious about achieving their goals. We asked respondents to rate the importance of 15 social media goals. On every one of them, leaders placed greater importance on our 1-5 scale than did followers. (See Exhibit V-4) Leaders regarded these social media goals as much more important than followers: n Increasing revenue n Improving products and services n Identifying new product and service opportunities n Improving sales and service processes n Reducing the costs of marketing, sales, service and product development 104 Mastering Digital Feedback
  • In other words, consumer companies that are getting greater value from social media see its value as much more than a marketing tool – a tool for getting more consumers to view a message and buy their products and services. While the leaders do use social media to do that, they are also more likely to use social media to identify customer needs that could turn into whole new offerings, as well as improve current offerings. And leaders believe that social media could do a great deal to help them make marketing, sales, service and R&D more efficient. Exhibit V-4: Leaders Have Much Bigger Plans for Social Media Q25/Q10 (Leaders vs Followers): Rating Goals For Social Media (Scale of 1-5) 3.9 Understanding how consumers view a brand and products (i.e., consumer sentiment) 4.42 3.9 4.28 Increasing brand affinity -the number of consumers who view a brand favorably, and their affinity toward our brand Increasing consumer awareness -the number of consumers who receive messages 3.76 Understanding consumer trends 3.68 Improving marketing campaigns 3.66 4.38 4.34 4.32 Increasing revenue 3.35 Improving aftersale customer service 3.39 Improving existing products/services 3.35 Identifying new product/ new service opportunities 3.28 4.34 4.35 4.28 4.26 3.16 Reducing the number and severity of consumer attacks on brand image 4.15 3.05 Improving sales processes 4.3 2.82 Reducing marketing costs 4.07 Reducing customer service costs 2.72 Reducing sales costs 2.65 4.07 4.05 Reducing new product development costs 2.47 3.99 1 1.5 2 2.5 Followers Mastering Digital Feedback 3 3.5 4 4.5 5 Leaders 105
  • Given that the leaders had much bigger ambitions for their social media activities, it should be no surprise that they also invested more on them. In fact, leaders will spend twice what followers will this year on social media: an average $28 million per respondent, compared to $14 million for followers. (See Exhibit V-5)12 The willingness to spend aggressively is likely to continue through 2015. Asked to estimate their social media spending in 2015, leaders’ investments averaged $32.5 million per respondent as against $18 million for followers, a considerable difference. Exhibit V-5: Leaders Put More Money Into Their Social Media Activities Q25/Q16-16A (Leaders vs. Followers): Average Spending Per Respondent on Social Media Activities in 2013 and 2015 (in US$ Millions) Leaders $27.6 $32.5 45% $13.9 $18.0 Followers $0 $5 $10 $15 $20 $25 $30 $35 2013 Average Spending on Social Media 2015 Average Spending on Social Media (Projected) The median spending numbers show an even bigger difference: leaders are spending a median $5 million in 2013 compared to $1 million for followers, and plan to spend a median of $7 million in 2015 against $1 million for followers. 12 106 Mastering Digital Feedback
  • Perhaps a big reason why leaders will spend twice what followers will on social media this year is that leaders are nearly four times as likely to have generated positive returns on their investments to date. (See Exhibit V-6) Approximately 62% of our leaders reported a positive ROI on social media to date, compared with only 17% of the followers. These numbers show the importance of measuring the ROI on social media: Only about a fifth of the leaders hadn’t measured the return on social media, in contrast to two-thirds (67%) of the followers. With proof of the financial value of social media, perhaps it is far easier for consumer companies that are leaders in social media to ask for greater funding. Exhibit V-6: Compared to Followers Nearly 4x the Number of Leaders Have Positive ROI on Social Media Q25/24 (Leaders vs. Followers): Percentage with Positive, Negative or No Measured ROI 62% % of Leaders % of Followers 17% 17% 19% 47% 14% 5% 20% Positive ROI on Social Media Haven't Measured ROI but Plan to Mastering Digital Feedback Negative ROI on Social Media Haven't Measured ROI and Don't Plan to 107
  • Case Studies: And What If You Can’t Measure ROI? For companies that see value in social media but either can’t or won’t assign a target ROI to the activities, metrics measuring progress and effects are a good proxy. Among the most common metrics used by companies we interviewed were: n Impressions delivered n Click-through rate from social platforms to their sites n Share-ability (how many times their content was shared through social media) n Likes For B2C companies, consumer sentiment is also an important metric. But several executives believe sentiment isn’t particularly “scientific” data and can only be used in a unidirectional manner. One claimed it is generally only about 70% accurate, since so many consumers use jargon, vernacular and sarcasm in social media. That makes it extremely difficult for companies to understand what’s really going on. Companies also measure how many fans are on Facebook and Twitter. One network TV news programs has millions of Twitter followers, and a global cable TV company has tens of millions of Facebook fans. Still others follow their Klout scores religiously. (Klout is a Web service that purports to measure how influential social media users are, whether an individual or company. It bases its scores on eight social networks, including Twitter and Facebook. Klout uses a scale of 1 to 100, with 100 being the highest score one can achieve. At the time of this writing, President Barack Obama’s Klout score was 99. Teen idol Justin Bieber’s Klout score was 92.) A manufacturer of women’s apparel told us they were extremely proud to have increased the firm’s Klout score to 80. It said its blogger events have helped push the score up. A large bank gives senior executives a monthly report that tracks proxy measures of social media, ones that align with the traditional marketing funnel:  n Awareness (paid and earned impressions) n Familiarity (followership, overall interactions, likes, shares, comments, clicks) n Consideration (referrals to the bank’s properties, e-mail captures) n Advocacy (social media shares and external blog mentions).  Additionally, the bank provides updates on the performance of specific campaigns, tactics and tests. 108 Mastering Digital Feedback
  • Looking at the industry data, we found five industries that are more likely than the other six to have leaders in social media: media and entertainment, high tech, telecom, travel and retail. (See Exhibit V-7.) Why these industries? We believe it’s in part because of the nature of the products and services they sell: consumers show a lot more positive passion toward their offerings. The media industry is a great example. In the U.S., TV shows such as ‘Mad Men,’ ‘American Idol,’ and ‘NCIS’ have millions of loyal customers who watch their shows every week. A similar trend exists in telecom: big fans of Apple, Samsung and other smartphones, as well as in travel (particularly resort destinations) and retailing (e.g., U.S. grocery store chains Whole Foods Market and Trader Joe’s). ‘Mad Men’s’ Facebook page has nearly 2.5 million ‘likes.’ In contrast, two industries finished lowest on the benefits of social media: insurance and healthcare products and services. These industries sell necessities, but most consumers don’t get excited about them. While we believe that every consumer company must use social media to plug in continually to its consumer base, we also see certain industries having bigger opportunities to create huge fan bases through social media – those in which it’s easier for consumers to have passion for their products or services. Thus industries such as media, retail, consumer electronics and others should be taking an exceptionally aggressive stand on social media. Yet industries such as insurance and health care have opportunities to create tribes through social media as well. Their challenge is to determine the issues that their products and services address that are passionate issues for consumers. Consider the auto insurance industry. While drivers can’t get excited about auto insurance, parents with teenage drivers are rightfully concerned about teaching their children safe driving habits. (According to State Farm, auto crashes are the main cause of death of U.S. teens who drive.) State Farm Insurance, a major U.S. auto insurer, launched a campaign called ‘Celebrate My Drive’ in April 2012 that leverages Facebook and Twitter to attract teens and their parents (see www.celebratemydrive.com). Mastering Digital Feedback 109
  • Exhibit V-7: Media, Telco, High Tech, Travel and Retail Have the Highest % of Social Media Leaders Q25 (Global Industries): Degree to Which Social Media Has Improved Company Performance on 16 Parameters (Percentage of Respondents on Three Ranges of Scores) Consumer Packaged Goods 21% 52% 41% Retail Banking/ Financial Services Telecom Services and Equipment 43% 33% 33% Insurance Manufacturing Media and Entertainment Travel/ Hospitality/ Airlines Total 27% 15% 31% 53% 43% 29% 22% 39% 33% 17% 13% 48% 49% Score 16-45 110 39% 46% 21% 30% 29% 30% Utilities 17% 37% 58% Health Care Services and Products High Tech 27% 29% 46% 14% 29% 38% 45% Score 46-60 27% Score 61-80 Mastering Digital Feedback
  • Leaders are Better at Making Sense of the Mountain of Digital Consumer Data from Social Media Determining what thousands of consumers are saying about a company on social media – at times, hundreds of thousands or even millions – is a huge challenge. Sentiment analysis, the ability to determine people’s attitudes from the comments they make on social media, depends on technologies such as natural language processing and text analytics. It has become one of the focus areas of Big Data initiatives. But sentiment analysis is not the only important use of social media data. An increasing number of consumer companies are using social media to conduct market research with consumers, as well as to address specific questions about a firm’s products, policies and practices. The leaders in our survey scored far better than the followers on six measures of listening to consumers and taking action on social media (see Exhibit V-8). Exhibit V-8: Leaders Listen and Respond Far Better to Consumers Via Social Media Q25/23B (Leaders vs. Followers): How They Differ on the Ability to Listen and Take Action on Consumer Data Responding rapidly and clearly via social media to consumers who have questions or problems with products/services/practices 2.92 4.28 Internal agreement of how to respond to consumer sentiments from all affected business functions 2.73 A full view of all consumer comments on social media (360-degree view) 2.72 The ability to get consumers deeply engaged - to nurture a relationship 2.74 4.21 4.27 4.17 2.49 The ability to analyze 'Big Data' from social media 4.13 The ability to identify the key external social media influencers on products/services 2.65 4.28 1 1.5 2 2.5 3 Followers Mastering Digital Feedback 3.5 4 4.5 5 Leaders 111
  • Leaders’ Internal Social Circles are Bigger and Fewer We believe the core finding of our study is about how the companies with the greatest benefits to date from social media organize their social media activities. Our survey data shows that leaders are three times more likely than the followers to have four or more business functions working hand in hand on social media, including sharing the same consumer data. Some 39% of leaders have at least four functions collaborating strongly on social media; this was the case in only 13% of the followers. (See Exhibit V-9) A higher percentage of followers (51%) than leaders (33%) had two or three functions working closely together on social media. For the followers, those functions were far more likely to be marketing (the case in 78% of followers), sales (48%) or service (49%). This reveals that getting only two or three functions collaborating closely on social media is not nearly enough. Even though this was the case in more than half the lagging companies, they were in the bottom third tier of generating benefits. The message is clear: Make your internal social circle bigger and more inclusive, with more functions participating. Exhibit V-9: The Case For a Bigger Internal ‘Social Circle’ Q25/18A (Leaders vs. Followers): How Closely Leaders’ and Followers’ Functions Work Together on Social Media All Respondents 30% Followers 36% Leaders 45% 29% 0 10 20 26% 51% 13% 39% 33% 30 40 50 60 70 80 90 100 Each function manages own social media activities totally or Largely independently Two to three business functions work closely together on social media activities, including sharing the same social media consumer data Four or more business functions work closely together on social media activities - includina sharing the same social media consumer data 112 Mastering Digital Feedback
  • Of course, the fact that 61% of the leaders don’t have four or more functions working closely together on social media shows that even the leaders have great opportunities to make their social media activities more cross-functional. What can companies with one big, internal social circle do that those with many smaller social circles can’t? They have a greater chance of excelling at five key aspects of social media. Leaders outscored the followers by at least a full point on our five-point scale (see Exhibit V-10) on these: n Creating and revising the firm’s social media strategy: The more business functions that agree on what their company’s social media activities must accomplish, the more those functions will get the mutual cooperation they need to fulfill their goals. n Sharing consumer data from social media ‘listening’ activities: Every function needs to be able to listen to consumers via social media – not just the function collecting or managing the activity (typically marketing). For example, if customer service or marketing hoards consumer social media data that point to manufacturing problems, the manufacturing function will be less likely to get an early warning about faulty products. n Creating meaning or insights from consumer data: There are lots of ways to interpret social media data, and two functions can interpret the same data differently. n Deciding how to act on social data: The more business functions collaborate on social media, the more likely it is that a company’s response to consumers via social media will be coherent. That is, marketing, sales, service, product development, manufacturing, legal and other functions should agree on a unified approach. Imagine if an automaker’s marketing function decided to answer irate consumers via social media with a recall notice that had not been approved by sales (including car dealers), customer service or the legal department. This, of course, is highly unlikely. But it is possible for one function in a company to be highly responsive to consumers who complain via social media about its products or practices, and not have the buyin of other functions on the way to best answer those consumers. Companies in which one function wants to be highly responsive to consumer complaints on social media, the situation can easily become antagonistic internally if other functions don’t buy into the resolution. n Being fast to share lessons internally about how to manage social media: Because of the recent uptake of social media, its management is much more art than science today; there aren’t decades of best practices to follow. Nonetheless, companies that want to get a leap on competitors – and get ahead of their consumers – need to rapidly share their social media management lessons internally. Consumers are using social media to share their experiences easily with large consumer companies. Managers across a large consumer company need to share their lessons in using social media with one another just as quickly. Mastering Digital Feedback 113
  • Exhibit V-10: How Business Functions Work Together in Leaders of Social Media Q25/18 (Leaders vs. Followers): Degree to Which Functions in Leaders and Followers Work Together on Social Media (Scale of 1-5) 2.77 Sharing practices on how to manage social media 4.03 Creating and revising a social media strategy 2.95 Determining how the company should act on consumer data from social media 2.96 Sharing consumer data from social media 3.04 Generating insights from consumer data that comes from social media 3.04 4.1 4.15 4.1 4.14 1 1.5 2 2.5 3 Followers 3.5 4 4.5 Leaders The experience of 3M Co., a $29 billion (revenue) U.S.-based global manufacturer, speaks volumes about the importance of having a large inner social circle monitoring social media comments. A central social media group (part of a center of excellence team called eTransformation) used social media to detect a design flaw in a new Scotch Brite scrub sponge. The team spotted consumers complaining about a leaky button. Then, working with product design and manufacturing, 3M quickly learned that the problem was with a supplier. Within three months, 3M had the flaw corrected and sent improved products to consumers with the bad experiences. The lesson for 3M, according to its leader of digital analytics and social media, Greg Gerik: “We need to bring consumers in before the launch of a new product … to fail faster. We want to make sure we don’t spend money marketing a product that the consumer doesn’t want.”13 From a July 18, 2012 presentation in Chicago by 3M social media manager Greg Gerik, at SocialMedia.org’s BlogWell conference. You can view the presentation here: http://vimeo. com/48076003 13 114 Mastering Digital Feedback
  • That fact that only 39% of leaders have four or more functions collaborating on social media shows how peripheral this activity is, even in the companies getting the greatest benefits from social media. This is a vestige of a bygone era: when interacting with consumers and getting daily feedback was impossible for a major consumer company. We maintain that before the era of social media, it was feasible for most large consumer companies to interact with their consumers only two to three times over the course of a product’s or service’s lifecycle: during the upfront market research that guided the development of a new offering, and then during sales or customer service. (This is especially the case for consumer companies that sell through third parties: brokers, retailers, dealers, etc.). (See Exhibit V-11) Exhibit V-11: In the Old World of Marketing, Consumer Input Was Expensive and Episodic The traditional approach to generating consumer feedback in the lifecycle of a product The old world of listening to consumers: • R&D Consumer companies largely gathered consumer input at two moments in the product lifecycle Market Research – Before and/or during research & development (e.g., the use of focus groups) Manufacturing Focus groups, surveys, etc. – The moment a consumer complained (to the call center or a retailer/broker) • This was the case for good reasons: – Collecting consumer data was Product Management Marketing expensive – Collecting consumer data was timeconsuming – As a result, listening and responding to consumers was episodic and reactive Customer Service Sales Call center/email interactions Mastering Digital Feedback 115
  • In those days – and we’re talking about just 10 years ago – collecting consumer data was expensive since the cost of market research could be exorbitant and it took a long time to collect consumer input. Moreover, the data that companies collected was not only episodic, it was also narrow. That is, a consumer company could only get feedback on the questions it structured for consumers in market research. In sales and customer service too, the feedback was determined by consumer responses to the products that were pitched to them or used by them (after the sale). We believe that the difficulty for consumer companies in getting daily feedback and interacting with consumers (who may be millions) is a key reason so many consumer companies have struggled in the four domains that determine product success: n Product innovation: The new consumer product failure rate has been cited to be as much as 95% on the 30,000 new consumer items introduced every year.14 n Customer service: In the U.S., the American Customer Satisfaction Index (ACSI) has surveyed thousands of American consumers since 1994. ACSI’s ratings cover products from soft drinks and consumer electronics to cable TV, airlines and telecommunications services. In the last five years, U.S. overall consumer satisfaction rates have only climbed back to the level of 1995.15 n Corporate reputations: Several consumer brand reputation indexes have been launched over the last 10 years covering industries and companies around the world. Brand reputation monitors such as those by Burson-Marsteller have found the reputations of many consumer industries (including banks, apparel, oil and gas) to be lacking in recent years.16 n Marketing costs: Being out of touch with what consumers need and want in products and services – and the way to promote them most effectively – has contributed to the growing cost of marketing in many industries. Consider that P&G worldwide ad spending as a percent of sales has grown from 8.2% in 1987 to 11.2% in 2012.17 And P&G has long been one of the world’s premier consumer marketers; even this company must spend more to increase consumer demand. In industries such as pharmaceuticals, the cost of consumer marketing has exploded. In the U.S., pharmaceutical companies’ direct-to-consumer advertising spending increased six fold between 1991 and 2006.18 14 This number has been cited by Harvard Business School Professor Clayton Christensen and others. See the American Customer Satisfaction Index website here: http://www.theacsi.org/acsi-results/ acsi-results 15 See Burson-Marsteller’s 2012 brand reputation index results here. http://www.burson-marsteller. com/Index/Global%20Corporate%20Reputation%20Index%202012.pdf 16 P&G advertising data is from Advertising Age magazine. See this article from AdAge’s Oct. 29,2012:http://adage.com/article/special-report-pg-at-175/procter-gamble-s-advertisingspending-1987-2012/237974/ 17 In the U.S., the Food and Drug Administration loosened its restrictions on pharma marketing in 1997, and this accounts for some of the increase in marketing spending. 18 116 Mastering Digital Feedback
  • So when social media began taking hold about 10 years ago, it was no surprise that most consumer companies perpetuated the processes they had in place for decades for listening to and interacting with consumers. Marketing and customer service took the lead – and typically worked independently. In other words, it felt foreign to have all business functions working together at all times to interpret consumer conversations and other data. In adopting social media, most consumer companies have used the platform to continue their consumer-listening and engagement strategies and activities of the past. This has led to most consumer companies having just a few (or even more than a few) small internal ‘social circles’, with each function listening and responding to consumers via social media, but doing their own thing. Or, as our survey found, with just two or three functions collaborating on social media. To be sure, this approach has led some consumer companies to enjoy big marketing successes with social media. For example, one often quoted example is Ford’s ‘Fiesta Movement’ in 2010, a social media campaign that enabled the automaker to achieve a 60% awareness level of the Fiesta model in the U.S. before the traditional advertising campaign began. Some 130,000 people registered on a Ford website for information on the vehicle before it arrived at dealers – 83% of whom had never owned a Ford vehicle. “That was a brand new set of customers for us,” Ford’s social media head told one publication.19 But Ford views social media not just as a highly effective marketing tool. Its global head of social media, Scott Monty, says social media gives Ford “the potential of having a 360-degree view of the customer. … I think the great opportunity that lies ahead of us is how we bring social beyond a communications and marketing practice and begin to weave it into all areas of the business.”20 Such a ‘360-degree’ view of consumers gives companies a continuous stream of consumer feedback during the entire lifecycle of their products or services. In turn, that feedback is critical to every business function that contributes to those products and services: market research (understanding what consumers really want in a new product), R&D (developing a superior product), manufacturing (producing a quality product), marketing (getting consumers to buy the product), customer service (resolving customer issues with the product). Enabling this requires putting a social media function in the middle of all these functions – not beholden to any one of them. That’s a destination to which social media leaders want to move their companies. “We need to scale social media across our employees, dealers and customers and know exactly how it is driving our business,” Ford’s Monty told a conference audience in 2012.21 “We also need a unified view of social media to make analysis that comes out of it available to product development, advertising or product marketing.” Corporate Magazine interview with Ford’s Scott Monty: http://www.corpmagazine.com/features/ cover-stories/itemid/9011/pageid/2/driving-fords-social-media-presence 19 20 Social Media Week interview with Ford’s Scott Monty from Feb. 6, 2013. You can read that here:http:// socialmediaweek.org/newyork/2013/02/06/5-minutes-with-fords-scott-monty/#.UhETXVNnBeo Scott Monty’s comments at Salesforce.com’s Sept. 22, 2012 Dreamforce conference, as recounted by blogger Shel Holtz. http://holtz.com/blog/business/fords-vision-one-social/3965/ 21 Mastering Digital Feedback 117
  • They Combine Centralized and Decentralized Listening With Rapid Local Action As we explained previously, leaders are far more likely than followers to have a bigger internal ‘social circle’– numerous business functions that work closely on social media rather than independently. (See Exhibit V-12) Exhibit V-12: Having One Large Social Circle to Exploit Social Media (vs. Many Smaller Ones) R&D R&D Market Research Market Research Product Management “Creating a big internal “social circle” Customer Service Marketing Consumer Dialogue in Social Media Product Management “Having smaller social circles” Customer Service Marketing Sales Sales Having multiple business functions listening into social media chatter and collectively deciding what it means and what to do about it 118 Manufacturing Manufacturing … Rather than one or two functions (or more) listening in and doing their own thing with social chatter Mastering Digital Feedback
  • So what exactly goes on in such a big social circle? Who does what? What makes it possible for business functions to collaborate regularly on social media – on everything from overall strategy to daily responses? From our survey data to best-practice interviews, companies on the vanguard with social media share several characteristics: n They have a central social media group (at the parent company or business units or both) that sets strategy and policies around social media data. (See Exhibit V-13) This group also collects social media data so that it isn’t segregated and guarded by one function. n They have representatives from numerous business functions in the group (or reporting dotted line into the group). That means multiple functions can jointly analyze consumer issues or opportunities. n After they decide cross-functionally how to respond to major consumer issues (or opportunities), they push down action to the local level – regions, functions, and divisions that need to take action. Exhibit V-13: Implementing a Large Internal Social Circle Consumer Dialogue in Social Media Roles in Social Media R&D Market Research Corporate Level Manufacturing Central Social Media Group Product Management Marketing Customer Service Mastering Digital Feedback Sales Collect Analyze Direct (issues to the right functions/level of firm) Analyze further Act (on issues that need immediate response) Weigh and act on issues of larger magnitude – Broad reputational attacks – Major resource investments 119
  • It would be a mistake to call this ‘centralizing’ social media. Collecting and analyzing data is indeed centralized (although functional representatives are helping in that analysis). But action is then distributed to the right divisions and business functions. Also note that ‘distributed’ does not mean that social media strategy, listening and analysis is decentralized. Rather, functions in a business unit carefully consider and agree on how each will respond to consequential social media data. Of course, social media dialogue that represents a threat to a company’s broader reputation must be managed at a corporate level as well. Nestle’s social media group, its Digital Acceleration Team, illustrates this well. The group reports to both, corporate marketing and consumer communications. It brings in digital marketers from the company’s country markets for eight months of training in a consumer engagement center. They are trained on how to interact with consumers through social media.22 But the team is also in the center of discussions that go beyond marketing and consumer communications. “Those of us in digital or social media are unifying a lot of pieces of the enterprise,” said Pete Blackshaw, global head of digital and social media, in a 2012 conference presentation. He said his team also works with Nestle managers in product quality, sales, supply chain, and R&D on the company’s social media interactions with consumers.23 Ultimately, if a company wants to use consumer interactions from social media to change decisions in R&D, manufacturing, marketing, sales, service and other functions, it may be better off not reporting to any customer-facing function – be it marketing, sales or service. Indeed, marketing, sales and service need personnel listening and engaging with social media. However, if the central group is owned by one of these three functions, it makes it harder for the entire company to leverage social media. At a global cable TV broadcaster, when it became clear that social media needed to be more than just PR & marketing, all social media activities were moved from corporate communications and back to a digital group, where the activities had been launched. In a similar way, a major global consumer electronics company increasingly sees the need for a centralized social organization divorced from marketing communications. That will help with all the other areas and make it more than a media channel. That said, centralizing social media has been slow to take hold in this company. Michael Nutley, “The CMO.com Europe Interview: Nestle’s Pete Blackshaw,” CMO.com, May 13, 2013 http://www.cmo.com/articles/2013/5/13/the_cmo_com_europe_i.html 22 From a video of Blackshaw’s speech at the ad:tech New Delhi 2012 conference. The video can be viewed here: http://www.youtube.com/watch?v=nrUq-LCe_1Y 23 120 Mastering Digital Feedback
  • The survey results on leaders and followers about how social media was organized shed further light on these issues. Some 51% of leaders either centralized social media activities in a division, or decentralized in divisions by business function but coordinated the activities. Another 41% centralized social media at the parent company. In contrast, the followers were more likely to centralize social media at the parent company (56% did so). And they were more likely than leaders to have the activities decentralized and not coordinated (the case in 12% of followers against 8% of leaders). (See Exhibit V-14) Exhibit V-14: How Leaders and Followers Organized Social Media Activities Q25/Q11 (Leaders vs. Followers): How They Organize Their Social Media Activities They are centralized at the parent company 56% Every division centralizes its own social media activities in one function/group 16% In every division, they are decentralized by business function (e.g., within marketing, sales, customer service) but are coordinated 41% 15% 23% 28% In every division, they are decentralized by function and are not coordinated 12% 8% Followers Mastering Digital Feedback Leaders 121
  • The survey results on which function or individual controls social media shed more light on these issues. Among leaders, 47% of social media activities were controlled by a ‘neutral’ party –one without a daily customer-facing role. (Marketing, sales and customer service have daily customer-facing roles). These 47% comprised either a chief customer experience officer, a chief digital officer, a separate social media group, or the CIO/CTO. In another 16% of leaders, multiple business functions controlled social media collaboratively. It is important to note that only 22% of leaders gave social media control to marketing. (See Exhibit V-15) In the followers, nearly half (49%) gave control to marketing, and another 8% gave it to customer service. Exhibit V-15: Leaders Keep Social Media Control Out of Marketing’s Hands Q25/Q12 (Leaders vs. Followers): Who Controls Social Media 49% Marketing 22% 8% Customer Service 9% 4% Sales 2% 3% Chief Customer Experience Officer Chief Digital Officer Separate Social Media Group 10% 6% 8% 6% 12% CIO/CTO 5% 17% 11% Multiple Business Functions 16% No One Function or Person 6% 3% Other 3% 1% 0 10 20 30 Followers 122 40 50 60 Leaders Mastering Digital Feedback
  • They have a culture of ardent listening and transparency – both to consumers and to each other One of our survey questions asked respondents the importance of 29 social media challenges and how effectively they addressed them. The leaders and followers gave dramatically different answers. On all the ‘cultural’ issues, leaders felt much more highly about their importance to social media success. For example, on having a culture that values consumer opinions, 89% of leaders said they were highly or very highly effective on this count; only 30% of followers said the same. (See Exhibit V-16) Exhibit V-16: A Culture That Values Consumer Opinions Counts Q25/Q23B (Global): Leaders vs. Followers in Having a Culture That Values Consumers' Opinions % of Followers that Highly or Very Highly Value Consumer Opinions about Their Firm's Products, Services and Practices % of Leaders that Highly or Very Highly Value Consumer Opinions about Their Firm's Products, Services and Practices 30% 89% 0 10 20 30 40 50 60 70 80 90 100 Mastering Digital Feedback 123
  • On having a culture that encourages internal transparency and knowledge sharing, a similar pattern emerged: nearly triple the number of leaders said their culture highly or very highly encouraged this. (Exhibit V-17) Exhibit V-17: A Culture of Internal Transparency Counts as Well Q25/Q23B (Global): Leaders vs. Followers in Having a Culture That Encourages Internal Transparency and Knowledge Sharing % of Followers Whose Cultures Highly or Very Highly Encourage Internal Transparency and Sharing of Knowledge Across Functions 31% % of Leaders Whose Cultures Highly or Very Highly Encourage Internal Transparency and Sharing of Knowledge Across Functions 85% 0 124 10 20 30 40 50 60 70 80 90 Mastering Digital Feedback
  • On 10 of the 29 issues, leaders showed the greatest differences between themselves and followers (on the scale of 1-5). These domains were a mix of cultural, top management, technology and goal-oriented issues. (See Exhibit V-18) Exhibit V-18: 10 Key Differences Between Leaders and Followers on Effectiveness in Meeting Social Media Challenges Q25/Q23B (Leaders vs. Followers): 10 Biggest Differences in How Well Leaders Addressed 29 Social Media Challenges (Scale of 1-5) Integrating social media systems with our core information systems 4.17 2.41 Getting consumers to provide online content that other consumers see as compelling 4.26 2.52 Senior executives who use social media themselves (whether to just 'listen' to what others are saying, or post comments themselves, or both) 4.18 2.48 1.7 The ability to analyze 'Big Data' from social media 4.13 2.49 1.64 The ability to identify the key external social media influencers on our products/services 4.28 2.65 1.63 Senior executives who understand social media's potential 4.26 2.63 1.63 Archives of social media activity 4.12 2.5 A deep understanding of quickly evolving social media technologies 4.26 2.65 A common social media platform/enterprise information system used across the company 4.17 2.61 Clear goals and measures of success 4.25 2.69 Leaders Mastering Digital Feedback Followers 1.76 1.74 1.62 1.61 1.56 1.56 Point Gap 125
  • Two of the biggest differences between leaders and followers were about how social media is viewed and used at the top of the organization. The leaders were far more effective at getting top executives to use social media themselves and to understand its potential. Nestle and Virgin Atlantic epitomize how much some executives at the top of consumer companies recognize the power of social media. (See Exhibit V-19) Peter BrabeckLetmathe, chairman and former CEO of Nestle, has been a regular blogger since August 2012. He writes about global water availability issues. (His blog is called ‘Water Challenge’). Sir Richard Branson, founder of $21 billion Virgin Atlantic (which has businesses in mobile phones, airlines, music and other sectors), has been a prolific blogger since 2008; he had 49 posts in July 2013 alone. Branson draws readers to his blog through Facebook (480,000+ people like his Facebook page), Twitter (3.4 million followers) and Google+ (4.9 million people are in his circle). Exhibit V-19: Bloggers on the Board: The Blogs of Nestle’s Brabeck and Virgin’s Branson 126 Mastering Digital Feedback
  • Approximately 81% of the leaders at social media had corporate blogs, against 50% for the followers (and 66% for all 655 respondents). (See Exhibit V-20) Most leaders also used mobile apps and company-sponsored online video channels, which were used by only a minority of the followers. All of these social media platforms are helping big consumer companies make their values, practices and inner workings more transparent to the people who buy their products and services. These companies recognize that social media can enable them to create a strong personal bond with consumers – one that can’t be created alone through traditional one-way mass-marketing. This is one of the tenets that have driven Ford Motor Company’s extensive social media activities.24 “What social [media] enables us to do is to return to those golden days of yesterday – where it was about the firm handshake, the eye contact, the time when your word was your bond,” said social media head Scott Monty. “Social has the promise to do that if we take the extra steps not to shout at people but show people you think like them.” Exhibit V-20: Leaders Use Social Media More Extensively Q25/22A (Leaders vs. Followers): Percentage Using Various Types of Social Media Platforms 93% 87% 88% Company Pages on Public Social Networks 81% Corporate blog(s) 50% 66% 77% Mobile Apps for Consumers Using Social Media 49% 65% 61% Company-sponsored Online Video Channels Online Social Games/Gamification 34% 47% 37% 10% 26% 0 Leaders 10 Followers 20 30 40 50 Total Respondents From an April 2013 Boston University publication that interviewed Scott Monty, Ford’s global head of social media: http://www.bu.edu/today/2013/how-ford-became-a-leader-in-social-media/ 24 Mastering Digital Feedback 127
  • Going Forward: Consumer Companies are Still in the Very Early Stages of Using Social Media What do leading consumer companies plan to do next with social media? The responses of the companies we studied provide clues. Jon Accarrino, a former NBC digital marketing manager who was a catalyst in getting the network to embrace social media in 2008, expects that social media will eventually become less of a fringe activity and more of a mainstream activity. “I believe it will be taken out of the hands of resident social media gurus and become just one part of the overall marketing mix,” said Accarrino, now vice president of marketing and communications at Red Touch Media. “The workforce coming in needs no social media training. Social media guidebooks will now be part of employee handbooks, not standalone documents.” Similarly, a global cable company executive said that once more cable viewers embrace social media, TV will have to change to accommodate this. More importantly, because digital video costs one-tenth of what traditional TV programming costs to produce, the company is creating more original videos for social media that then get picked up by the broadcast side of the house. YouTube is a very important platform for the firm. The younger audience increasingly defines its own prime time, and that has nurtured platforms like Netflix, digital video recorder, video on demand, and YouTube. Cable companies must have a presence on all of these technologies and make sure they are part of their DNA. According to one executive, music companies are also relying more on video for social media channels, especially ‘B roll’ and outtake videos that are less formal and help fans feel as though they are getting to know the artist personally. A large bank we spoke with is already beginning to think about creating an even bigger core social media circle. It sees consolidating global teams for efficiency and consistency like it did with its Internet and mobile teams previously. That model has been rolled out globally to create one infrastructure to be used in many countries. A women’s fashion company hopes to use social media more and more to educate consumers on its products, especially its use of unusual, more lifestyle-type fabrics. The company is rolling out a new marketing campaign about empowering women. The promotion features influential people and uses social media to showcase their thoughts and experiences in wearing the company’s products. The company has invited rock musicians, entrepreneurs, and other luminaries to participate. 128 Mastering Digital Feedback
  • Several company executives talked about extending their social media activities to suppliers, licensees and distributors. The fashion company wants to involve licensees for products like accessories that have their name on them. Social media might be the ideal way to help the company connect to its channel partners. To be inventive with social media along the lines mentioned above, companies need to do much more experimentation with social media. “There needs to be social media R&D. It’s very important,” said Frank Radice, who as head of the promotion department at NBC News helped increase its social media following in 2007 and 2008.25 “Every company that’s using social media needs to have it as part of its DNA.” In all these companies, social media has not only registered itself as a marketing and customer service must-have, but also as an increasingly critical source for new inputs to new product development, distribution, manufacturing and production and their existing product lines. These companies told us they are just beginning to harness the power of social media – one that delivers what was previously impossible: the ability to get continuous input from thousands (or more) of the buyers of their products or services, and to engage with each and every one of them. With that potential in mind, the consumer companies that capitalize on social media the most will be those that create a big inner social circle – one that can tune in and respond rapidly to a big outer social circle of avid fans of their brands. 25 Mastering Digital Feedback Radice is now managing partner at VIDA F.R. Company. 129
  • Research Approach and Survey Demographics 130 Mastering Digital Feedback
  • Numerous studies have been conducted on social media in the last three years; many more are likely to follow this one in the next few years. This spring, we scanned several dozen social media studies conducted by management consulting and IT service firms, IT research companies and business schools. This report represents our thinking on the critical but underexplored issues for consumer companies on social media. After looking at competing studies to determine what had been covered well, insufficiently or not at all, we decided this research should: n Center on large consumer companies (of more than $1 billion in revenue) in four regions of the world, and nine countries in those regions. (See Exhibits VI-1 and VI-2.) n Explore how social media is being used in marketing and beyond – in sales, service, product development, production, finance, distribution and other areas. Thus we interviewed and surveyed a range of executives in these companies, a quarter of whom were in IT, 30% of whom were in customer-facing functions (sales, marketing and customer service), and 8% of whom were in R&D. (See Exhibit VI-3) n Dive deeply into issues of how social media activities were structured (including their reporting relationships) and the effectiveness of different ways to organize activities, goals for social media and benefits achieved, key social media platforms used, and what ‘leaders’ at social media were doing differently from ‘followers.’ Exhibit VI-1: Survey Respondents by Region of World Q1 (Global): Number of Respondents by Region of World (Total: 655) 346 North America Europe 126 Asia-Pacific 125 Latin America Mastering Digital Feedback 58 131
  • Exhibit VI-2: Survey Respondents by Country Q2 (Global): Number of Respondents by Country 297 United States United Kingdom 70 India 52 Canada 49 Germany 46 Australia 41 Brazil 38 Japan 32 Mexico 20 Netherlands 10 Exhibit VI-3: Respondents by Function Q3 (Global): Respondents by Function Information technology (IT) 25% Risk management 4% 14% Finance Logistics/distribution 2% Product management 7% R&D/product design/product development/product engineering 8% Manufacturing/operations/ procurement/purchasing 9% 6% Customer Service 15% Sales Marketing 9% 0 132 5 10 15 20 25 30 Mastering Digital Feedback
  • To reach our target numbers for companies and managers in the four regions, we drew on an executive panel of Research Now, a global panel research firm. They translated the 26-question survey that we designed into local languages and fielded an online survey in June and July. (The average respondent completed the survey in 13 minutes.) Companies that weren’t using social media were eliminated from the survey. Thus, the data reflects companies with at least a minimum level of social media activities (defined as having a least one full-time equivalent working on social media). We also wanted people with deep knowledge of their company’s social media activities, and thus instructed Research Now to eliminate respondents who were not familiar with those activities. In all, about 3,800 respondents attempted the survey. All but 655 were screened out either because they didn’t qualify, were not in one of our 11 target consumer industries, were more than three levels down in the organization (see Exhibit VI-4), were not familiar with their company’s social media activities, or their companies had no formal social media activities. Exhibit VI-4: Respondents by Organizational Level Q4 (Global): Respondents by Level in Organization Second level: direct report to a first-level executive 40% Third level: two levels down from a functional head 25% First-level: head of business function (e.g., chief marketing officer, chief sales officer, chief information officer) 24% CEO/COO/divisional or business unit head 11% 10 Mastering Digital Feedback 20 30 40 50 133
  • Acknowledgements Our thanks to TCS’ numerous subject experts on social media for their time and insights in shaping the design and analyzing the data of this study. In particular, we want to thank Ananth Krishnan, Vice President and Chief Technology Officer; Satya Ramaswamy, Vice President and Global Head of TCS’ Digital Enterprise Group; Frank Diana, Principal-Digital Enterprise Solutions; and Tonya McKinney, Principal, Digital Strategy Consulting and Solutions. Our thanks also go to John Lenzen, TCS Global Head of Marketing, for his sponsorship and overall guidance of the study, and Serge Perignon, Director and Head - Marketing & Thought Leadership, TCS Global Consulting Practice, for his daily management and oversight. Lastly, we thank Bloom Group LLC, our research partner. 134 Mastering Digital Feedback
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  • About Tata Consultancy Services Ltd (TCS) Tata Consultancy Services is an IT services, consulting and business solutions organization that delivers real results to global business, ensuring a level of certainty no other firm can match. TCS offers a consulting-led, integrated portfolio of IT and IT-enabled infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery ModelTM, recognized as the benchmark of excellence in software development. A part of the Tata Group, India’s largest industrial conglomerate, TCS has a global footprint and is listed on the National Stock Exchange and Bombay Stock Exchange in India. IT Services Business Solutions Consulting All content / information present here is the exclusive property of Tata Consultancy Services Limited (TCS). The content / information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from TCS. Unauthorized use of the content / information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties. Copyright © 2013 Tata Consultancy Services Limited TCS Design Services I P I 09 I 13 For more information, visit us at www.tcs.com/socbizstudy