Using Social Media for Business


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Using Social Media for Business

  1. 1. Using Social Media for Business Miriam Verghese 8/2/2010
  2. 2. Executive Summary The need to communicate is one of the fundamental characteristics of the human species. While the desire to reach out and communicate remains largely the same across human beings, the nature of communication has rapidly changed over the course of human evolution. At the forefront of this change is the Internet. The Internet, possibly the biggest technological breakthrough in human history, has dramatically changed the landscape of human communication since its inception in the 1960s. Subsequent to the birth of the Internet, important tools such as email, instant messaging, blogs and social networking websites began proliferating across the ever-expanding World Wide Web, ultimately leading to the current state of globalization. While many argue that Internet-based trends are fickle, one that has rapidly grown and remained fairly consistent is the concept of online social media. Online social media, which primarily consists of social networking websites and blogs, witnessed widespread adoption and popularity among Internet users over the last decade. This paper on “Using Social Media for Business” highlights the importance of using online social media tools in today’s business practices and also identifies the best practices by which organizations can reach out to their target customers via social networking websites, blogs and other social media tools. While the use of these websites holds tremendous potential for business organizations, a single mistake in executing an organization’s digital strategy could result in undesirable and costly, if not disastrous, results. This paper also
  3. 3. discusses the major pitfalls associated with online social media use and the principle fears shared by executives in using this highly valuable tool.
  4. 4. Table of Contents Chapter Page number Introduction ……………………………..……………… 1 Generation Y – Leading Change from the Back ...………. 3 Social Media – Business Uses …..…. …………………. 4 Breaking Through the Obstacles …... …………………. 13 Conclusion ……………………………..………………. 16
  5. 5. Introduction In order for us to fully understand the phenomenon of online social media, we must first define it. Online social media constitute those websites that facilitate interaction and communication between users and are used to refer to blogs and social networking websites. Online social networks can be defined as a group of web-based services through which an individual can create a semi-public or public profile within an enclosed online environment, create a list of online friends with whom he/she can share common interests and view the friend networks of other users within the online environment. A blog (or web log) is an online diary maintained by a user to describe habitual events through written commentary or videos and photos. The blog serves as an online journal documenting the various stages in the user’s life. One of the main reasons behind the popularity of these websites is its ability to offer users a platform to meet and interact with like-minded people while also giving them a public platform to express their views, beliefs and interests. As a result, online social networks along with blogging websites attract two-thirds of the Internet population in countries such as France, Spain, Italy, United States, Germany, Australia, Switzerland, United Kingdom and Brazil with users spending 10% of all Internet time solely on these two segments. The growth in the popularity of online social media websites has also led to the emergence of a number of usage-based trends. Social networking websites and blogs, in addition to being one of the biggest contributors to the increase in time spent by users on the Internet over the last decade, have also changed the way people interact and communicate with one 1 | P a g e
  6. 6. another in their day-to-day lives. The staggering growth of these websites has also forced executives in the corporate world to question the conventional wisdom of business communication. As a result, a large number of organizations are increasingly creating an online presence on these websites in order to reach out and connect with consumers in a way that was previously not considered possible. 2 | P a g e
  7. 7. Generation Y – Leading Change from the Back Generation Y or Gen Y - those born between the years 1980 and 2000 - is considered to be the main catalyst to the growth of the online social media phenomenon over the last decade. Commonly referred to as the generation “born into the digital revolution,” its preference for informal modes of communication such as short messaging service (SMS) and instant messaging (IM) naturally lent this segment of the population to embrace the use of social networking websites and blogs both in their personal and professional lives. Since the inception of social media tools in the 1980s, Gen Ys have gradually incorporated the use of social networking websites such as LinkedIn and Facebook to communicate with colleagues and network with other professionals in a more open and informal manner. According to industry estimates, the Gen Y segment accounts for 64% of social networking website users and its share is predicted to increase in the coming years. While social networking websites are predominantly used by teenagers and young adults, there is a growing population of older adults also using these websites. Baby boomers (born between 1946 and 1964) currently account for only 20% of the total social networking website user base. However, this scenario is swiftly changing. With the Baby Boomer population currently accounting for nearly 50% of the global workforce in organizations across the world, a large portion of a company’s business and marketing decisions are controlled by this segment. Therefore, it has become imperative for the Baby Boomer population to embrace the use of social media websites extensively in order to effectively harness the potential of these websites in an increasingly digital world. 3 | P a g e
  8. 8. Social Media – Business Uses With social networking websites and blogs witnessing widespread adoption by users across the globe, many executives are beginning to realize the potential of online social media tools in communicating with present and future customers. The following section highlights the methods by which organizations can exploit online social media websites to their best advantage and consequently increase revenues and improve the overall brand image of the company. Advertising With the Internet progressively penetrating the various facets of the personal and professional lives of users, traditional advertising practices are giving way to more robust digital advertising strategies. In addition, online advertising is said to facilitate stronger recall rates among viewers when compared to other forms of advertising such as print and television. Social networking websites, in particular, present a lucrative avenue for organizations and advertisers to reach out to present and potential customers. With users spending more time on social networking websites and blogs than any other Internet website, many organizations have begun to use these websites to target customers. According to industry estimates, time spent solely on social networking websites increased by 82% in December 2009 when compared to the same month in 2008. A chart illustrating the global spending (in millions) on advertising through social networking websites during the period from 2008 to 2011 is given below: 4 | P a g e
  9. 9. $2,145 $2,883 $3,559 $4,136 2008 2009 2010 2011 Source: eMarketer Online advertising has proved to be the most effective when displayed in conjunction with the search results of Internet users as this provides advertisers with the ability to tailor an advertisement to fit a user’s search results. This form of advertising is beneficial to both the customer and the advertiser as it allows the former to obtain information about the right products or services and the latter to reach and target the right customers. This form of customizable search-based advertising is increasingly being incorporated into social networking websites due to the high user reach rates of these websites. As a result, many organizations have begun using social networking websites as an advertising medium. By incorporating this form of advertising on social networking websites, advertisers are able to provide customers with high-value and time-sensitive information on a specific product or service. With advertising on social media websites increasing significantly, organizations will look for more ways to derive higher value from advertising on these websites. As a result, 5 | P a g e
  10. 10. experts predict that the time may soon come when users of social networking websites will be able to receive real-time, peer reviewed feedback about a product or service during an online search. For example, while searching for details about a product X on Facebook, a user is likely to receive a message on the search result page saying “20% of the friends on your network used and liked product X.” These types of customized messages will significantly help an advertiser to influence the purchasing decisions of a customer solely based on favorable peer-reviewed feedback. Organizations can also extend their social media marketing strategies to include customers to help boost the company’s brand image. In an era that is heavily dependent on the Internet, adopting a more open and collaborative approach to marketing is becoming an integral part of a company’s business strategy. As a result, many companies have begun to include customers in their advertising campaigns to act as the ambassadors for their product or service. By using this approach, customers are able to identify with a company at a more personal and real level and as a result their perception about the company’s credibility increases substantially. Case study Perceived as outdated and unexciting, Ford sought to reposition its brand as a car maker that manufactured products appealing to the younger masses with the launch of the Fiesta in the US. While the Fiesta witnessed tremendous success in both European and Asian markets in the sub-compact car segment, Ford failed to produce a successful sub-compact car for the US market since the Ford Aspire was discontinued in 1997. However, with the 6 | P a g e
  11. 11. launch of the Fiesta in the US, Ford had managed to change its brand image from that of a boring car manufacturer to one that was astutely in touch with the pulse of the younger generation, more precisely the Gen Y segment. In April 2009, Ford rolled out an ambitious advertising campaign ahead of its US launch of the Ford Fiesta in order to attract the interest of younger customers. By partnering with Undercurrent, a digital strategy company, Ford conceptualized an advertising campaign that would be placed solely in the hands of the customers. The company selected 100 people or agents (as it called them) and gave each of them a Ford Fiesta to use for six months in exchange for them completing six different missions every month. The agents would then share their experiences on those “missions” by posting their video journals on accounts created by Ford on social media websites such as Facebook, Twitter, Flickr and YouTube. The outcome of the advertising campaign was sensational. The video journals posted by the agents garnered 6.5 million hits on YouTube and 50,000 requests came from potential customers for information about the Fiesta. The campaign also resulted in Ford selling 10,000 Fiestas within the first week of launch in the US. On all accounts, the social media advertising campaign was a success. Ford managed to reposition itself as a car manufacturer relatable by the Gen Y segment and also generated a large amount of buzz and excitement around the product among US consumers, all at a fraction of the cost normally spent on pricey television ad campaigns. 7 | P a g e
  12. 12. Marketing with a Personal Touch One of the biggest mistakes made by organizations when using social media tools is regarding the websites as an isolated marketing medium rather than as an interactive platform to reach out to consumers in a meaningful way. Organizations fail to realize that a big contributor to the success of blogs and social networking websites is its informal nature. These websites give users a platform to express their opinions freely about religion, personal interests and even about the products and services of a company with peers. Therefore companies must learn how to leverage the informality of these websites to communicate with customers more effectively in order to gain a significant edge over the competition. While many organizations have begun creating company profiles on popular social media websites such as Facebook, Twitter and MySpace, they do so blindly and without understanding how to harness its true potential. This is mainly due to the lack of expertise in organizations and a shortage of social media talent in the general market as to how these tools can be best utilized. As a result, the profiles or pages created by such organizations serve only as a medium to impart basic information about the company to the customer rather than as a platform to facilitate communication between the two parties. In order to remedy the current situation, organizations should begin empowering those employees who are passionate about improving the operations and services of the company, ultimately acting as the company’s change agents. These change agents, in turn, can actively engage customers through social media websites such as Facebook, Twitter, etc. to connect with them on a more personal level in order to gain useful insights about the true 8 | P a g e
  13. 13. brand image of the company and its products and/or services. The feedback and insights received as a result of these interactions can help an organization modify its corporate strategy to make it more aligned with the pulse of customers. This marketing strategy is already witnessing widespread adoption among organizations especially among those in the service industry. Some organizations have begun proactively connecting with customers who have expressed negative reviews of the company’s product or service on an online consumer forum, social networking website or blog, as well as inviting responses and comments on their experiences in using the product/service. As a result, consumers begin perceiving the company as one that is genuinely interested in what they have to say and this consequently increases the level of positive association between the company and the consumer. Case study Using his personal Twitter account, a customer service manager at Comcast Corporation began helping customers with their various queries on Comcast’s products and services. When the company finally learnt about the initiative and the positive impact it had on the brand image of the company, rather than curbing the customer service manager’s efforts, the management chose to recognize and reward the initiative. While changing a company’s strategy can prove to be an overwhelming task, the leadership is expected to recognize that in cases such as this, revamping a company’s strategy to include a more open and collaborative approach to customer service could go a long way in strengthening the company’s brand image in the minds of customers. Companies must also learn to embrace 9 | P a g e
  14. 14. the mavericks and change agents of their organization, who are focused on delivering products and services that offer more value to the consumer. 10 | P a g e
  15. 15. Breaking through the Obstacles Although social media tools offer organizations a lucrative and cost-effective method to communicate with customers, companies still remain largely apprehensive of their use, due to the risks and lack of privacy associated with social media websites. With the World Wide Web making the world increasingly connected, many worry about the implications of posting personal or business information on online public tools such as blogs and social networking websites. The following section highlights the fears faced by organizations and executives in using social media tools and also discusses the solutions to overcome them. Knowing your Legal Boundaries When implemented properly, the benefits of social media strategies are numerous, however achieving these benefits continue to elude many organizations. While many organizations attribute this elusiveness to the overall ineffectiveness of social media websites as a marketing tool, they fail to realize that the problem lies within the basic structure of the strategy itself. Employees placed in charge of implementing the company’s social media strategy do so with great hesitation as they remain largely ignorant of the kind of information they can share with customers as well as how they should behave when interacting with customers via these websites. 11 | P a g e
  16. 16. In order to overcome this obstacle, companies can institute a set of legal guidelines and policies that give an employee a comprehensive overview of the dos and don’ts of the company’s social media strategy. However it is important to remember that these legal guidelines should not serve as a deterrent to the implementation of the company’s social media strategy, which sadly, is the case for many organizations. Therefore a good way to safeguard the company and ensure that the goals of the social media strategy are fulfilled is by ensuring that there is a high level of transparency and collaboration between the marketing and the legal departments of the company. These efforts can be further strengthened by getting the senior management on board from the start with the necessary approval. With support from the leadership of the company in place, the legal department will find it easier to establish a framework that allows the company’s change agents to more freely implement the social media strategy while also giving them the freedom to take certain liberties within the company’s legal premise. Aversion to Risk Due to the current slump in the global economy, many companies are adopting more protectionist strategies in order to minimize their losses. While this strategy is useful in the short term, it eventually leads to stagnation of a company’s growth. The trend is especially true for large organizations where employees are rewarded for being risk averse and playing by the rules. Although, understandably, the use of social media tools represents a considerable risk for many organizations, these tools when implemented properly bring 12 | P a g e
  17. 17. significant rewards and help companies develop more agility in light of a changing business environment. A good way for companies to manage the risks associated with the use of social media tools is by leading small pilot projects within the organizations to evaluate the outcome. By implementing small initiatives, a company can learn and gather information on what is the best way to implement a social media strategy on a large scale. These initiatives also help a company fine tune any gaps or issues in its social media strategy before launching the project on a larger scale. 13 | P a g e
  18. 18. Conclusion The use of social media tools has witnessed widespread adoption over the last decade, with it now extending into the business arena. While opinions regarding the effectiveness of using these tools in business remain largely mixed, many organizations are beginning to incorporate social media in their overall company strategy. As social media strategies are still in their early stages of development and refinement, organizations meet with a number of roadblocks and visualize potential pitfalls in implementing these strategies. However, many companies are beginning to realize that a well executed digital strategy reaps significant rewards at a fraction of the cost as seen in the Ford Fiesta case study. The Comcast case study, on the other hand, illustrates how engaging customers at a more personal and intimate level produces far better results in brand building when compared to a conventional marketing strategy. These two instances clearly exemplify the need for organizations to become more customer-centric and utilize the social media platform to demonstrate that they regard their customers’ needs as their first priority. While the use of these social networking tools may seem intimidating to many organizations, companies can work towards overcoming apprehensions by clearly defining the policies for social networking use and implementation of digital strategies within their organizations. The execution of pilot initiatives and establishment of a well-rounded legal framework governing the use of these tools in an organization will also go a long way in stymieing the risks faced by the company. While there remain fervent detractors against the 14 | P a g e
  19. 19. use of social media tools in organizations, these tools when properly implemented, could help a company engage and communicate with customers more personally. Although the current level of technological advancement limits a company’s ability to adopt social media tools on a wider scale, many predict that with the growth of the online social media market in the future, a new market mainly focused on providing enterprise social media solutions will emerge. This will consequently allow organizations to customize their social media tools to fit specific needs and allow them to reach out to a wider group of customers more effectively and increase awareness about their brands, create online communities to promote viral discussions about their products and services, increase online traffic to their websites, and keep track of public perception of a competitor’s products or services, amongst others. 15 | P a g e
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