Customer 2.0: The Business Implications of Social Media

Customer 2.0
The Business Implications of Social Media

June 2008

Customer 2.0
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Executive Summary
As the popularity of social media sites continues to change the way online Research Benchmark
customers interact with their peers, top companies are leveraging external- Aberdeen’s Research
facing Web 2.0 technologies as a means of providing additional touch points Benchmarks provide an in-
for customer interaction. In March through May 2008, Aberdeen surveyed depth and comprehensive look
over 360 companies to identify the challenges, tactics, and strategies into process, procedure,
companies face when implementing customer-facing Web 2.0 applications. methodologies, and
The research reveals that top performing organizations are not only technologies with best practice
positively affecting their performance in key metrics, such as customer identification and actionable
satisfaction, through a combination of organizational processes and recommendations
technology implementation, but they are also fueling product development
and marketing decisions with consumer-generated insights.

Best-in-Class Performance
Aberdeen used three key performance criteria to distinguish Best-in-Class
companies. Best-in-Class demonstrated the following performance:
“We want customers to have
• 100% improved year-over-year performance in Return on Marketing more contact with store
Investment (ROMI). On average, Best-in-Class companies increased managers, sales people, and the
ROMI by 11%. service team. Making ourselves
more available is a better
• 82% improved year-over-year performance in customer retention. option than the alternative.”
On average, Best-in-Class companies increased customer retention
~ Rich Moffat, All Seasons Spas
rates by 9%.
• 81% improved year-over-year performance in new product
development. On average, Best-in-Class companies increased new
product development by 7%.

Competitive Maturity Assessment
Quick Definition
In addition to high levels of planned adoption, survey results show that the
firms enjoying Best-in-Class performance currently share several common For the purposes of this study,
characteristics: “Web 2.0” refers to
technologies that promote the
• Senior management fully supports external-facing Web 2.0 exchange of user-generated
programs (57%) content in a manner that
simultaneously begets
• Dedicated personnel devoted to the enterprise-wide use of Web collaboration and individuality.
2.0 applications (39%) This includes, but is not limited
• Defined metrics for measuring the impact of external-facing Web to:
2.0 applications (32%) √ Blogs
√ Wikis
Required Actions √ Social networking sites
In addition to the specific recommendations in Chapter Three of this √ Online communities
report, to achieve Best-in-Class performance, companies must:
√ Collaborative tagging

© 2008 Aberdeen Group. Telephone: 617 723 7890
www.aberdeen.com Fax: 617 723 7897

Customer 2.0
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• Be pragmatic about Web 2.0 adoption. The use of external-
facing Web 2.0 applications can positively impact ROMI, customer
retention, and new product development. However, companies
cannot realistically expect to implement a technology and see
immediate results. There must be organizational processes and
metrics in place to ensure the success of technology adoption.
Companies would be wise to start small to establish a comfort level
before exploring other Web 2.0 avenues.
• Evaluate vendors with strong professional service
capabilities. Eighty-one percent (81%) of companies currently
using, or planning to use, external-facing social media applications
believe that Web 2.0 is a valuable avenue for the organization. As
such, it is crucial that companies planning to engage customers
through social media evaluate vendors with strong professional
service capabilities. While companies will rely on their customers to
provide the bulk of the web content, vendor support will be
necessary to get businesses up and running.


Customer 2.0
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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance..................................................................................... 2
Competitive Maturity Assessment....................................................................... 2
Required Actions...................................................................................................... 2
Chapter One: Benchmarking the Best-in-Class ..................................................... 6
The Emergence of Customers 2.0 ....................................................................... 6
What Does Web 2.0 Encompass?........................................................................ 6
The Maturity Class Framework............................................................................ 9
The Best-in-Class PACE Model ............................................................................ 9
Best-in-Class Strategies.........................................................................................10
Chapter Two: Benchmarking Requirements for Success ..................................12
Competitive Assessment......................................................................................13
Capabilities and Enablers......................................................................................13
Best-in-Class Use Web 2.0 to Improve Business...........................................17
Chapter Three: Required Actions .........................................................................20
Laggard Steps to Success......................................................................................20
Industry Average Steps to Success ....................................................................21
Best-in-Class Steps to Success ............................................................................22
Appendix A: Research Methodology.....................................................................23
Appendix B: Common Web 2.0 Technologies ...................................................25
Appendix C: Related Aberdeen Research ...........................................................27

Figures
Figure 1: What is Associated with the Phrase “Web 2.0?”................................. 7
Figure 2: Top Pressures for Web 2.0 Adoption .................................................... 8
Figure 3: Top Strategic Actions to Maximize Web 2.0 Adoption ...................10
Figure 4: Internal Groups Utilizing Web 2.0 Technologies...............................11
Figure 5: Active Engagement with Online Customers Improves Key Metrics
.........................................................................................................................................15
Figure 6: Top Performers Improve Yearly Growth............................................18
Figure 7: Content Management Solutions .............................................................19

Tables
Table 1: Top Performers Earn Best-in-Class Status.............................................. 9
Table 2: The Best-in-Class PACE Framework .....................................................10
Table 3: Competitive Framework (Process) ........................................................14
Table 4: Competitive Framework (Organization)...............................................14
Table 5: Competitive Framework (Knowledge Management) .........................15
Table 6: Competitive Framework (Technology) .................................................16
Table 7: Competitive Framework (Performance Measurement) ....................17
Table 8: The PACE Framework Key ......................................................................24

Customer 2.0
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Table 9: The Competitive Framework Key ..........................................................24
Table 10: The Relationship Between PACE and the Competitive Framework
.........................................................................................................................................24


Customer 2.0
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Chapter One:
Benchmarking the Best-in-Class
The Emergence of Customers 2.0
Fast Facts
The popularity of online social media forums has not only changed the way
peers interact with each other, it has also succeeded in creating a new √ 70% of all companies
breed of online customers. These customers have come to expect a certain surveyed plan to increase
level of accessibility and interaction with businesses, as well as the ability to the budget allocated for
engage with other consumers who share similar wants and needs. In order Web 2.0 technologies in
2008
to meet the expectations of their online clientele, top companies are
leveraging an assortment of Web 2.0 technologies to allow for increased √ Best-in-Class companies are
interaction between the business and its customers. twice as likely as Laggards to
have a dedicated staff
The phrase “Web 2.0” has permeated conversations concerning the responsible for Web 2.0 in
Internet for the past several years; however, the use of social media the enterprise, 28% versus
applications as an additional touch point for company and customer 14% respectively
interaction is a relatively new concept. While the debate concerning what
technologies are encompassed by the phrase “Web 2.0” continues, there is
little debate among top companies about its business value. An Aberdeen
survey of over 360 companies revealed that 77% of Best-in-Class companies
believe that Web 2.0 will be a lasting channel for years to come, and over
half (58%) of Best-in-Class companies believe that social networking sites
have a tremendous amount of influence over consumers. The emphasis on
the potential of social media and collaboration tools, such as blogs and wikis,
is causing organizations to incorporate external-facing Web 2.0 applications
into the business plan.

What Does Web 2.0 Encompass?
The proliferation of consumer-generated content and knowledge sharing on
the web has muddied the waters a bit when it comes to a clear
understanding of what businesses associate with the term “Web 2.0;”
however, Aberdeen research reveals that the vast majority of survey
respondents have some idea of how to define Web 2.0 technologies. Only
7% of respondents indicated that they were “not sure how to classify Web
2.0 technologies.” The responses from those survey takers who had an idea
of what Web 2.0 encompasses revealed the unifying themes of collaboration
and the sharing of consumer-generated information (Figure 1).


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Figure 1: What is Associated with the Phrase “Web 2.0?”

Social Networking
Sites 90%

Blogs 84%

Wikis 77%

RSS Feeds 72%

Collaborative Tagging 66%

"Mash-Ups" 64%

Podcasts 64%

0% 20% 40% 60% 80% 100%

All Respondents Source: Aberdeen Group, June 2008

The top technologies selected by survey respondents as being associated
with the phrase “Web 2.0” have one key thing in common: they all promote
the exchange of user-generated content and information in a manner that
simultaneously begets collaboration and individuality (Appendix B). As a
result, top companies plan to increase the adoption of social media
applications as a way of creating online communities for their customers
around their brand. By providing a forum for customers to engage with one
another and provide candid feedback concerning certain brands and
services, businesses are improving the “stickiness” of their websites by
providing a dynamic reason for customers to keep coming back. The
increased traffic and engagement of online customers results in a web
community that contains the perspective of diverse customers, not just the
company hosting the site.


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Figure 2: Top Pressures for Web 2.0 Adoption

Increase market 61%
awareness 49%
44%

Need to develop new 39%
products and services 25%
21%

Need to improve 27%
customer satisfaction 38%
43%

Need better consumer 25%
insights 17%
30%
Best-in-Class
Improve online 23% Industry Average
experience 43%
40% Laggards

0% 10% 20% 30% 40% 50% 60% 70%

Source: Aberdeen Group, June 2008

Top Pressures for Web 2.0 Adoption
While the need to increase market awareness was identified by the Best-in-
Class, Industry Average, and Laggards as the top pressure causing the “Web 2.0 incorporates a newer
organization to focus resources on external-facing Web 2.0 technologies, a genre of developing sites.
significant discrepancy exists in regards to some of the other motivating People are building websites
that are so readily available to
factors (Figure 2). Thirty-nine percent (39%) of Best-in-Class companies,
interact with. And from an ROI
compared to 25% of the Industry Average and 21% of Laggards, cited the perspective, it means less
need to develop new products and services as a top driver causing the expenditure from my side.”
organization to utilize customer-facing Web 2.0 applications.
~ Michael Mainiero
This key difference between Best-in-Class and all other companies speaks to Director of Web & Digital
the business value inherent to Web 2.0 adoption. While the Industry Media Services
Average and Laggards are seemingly more concerned with improving the NYU Langone Medical Center
online experience for their customers in hopes of increasing customer
satisfaction, Best-in-Class companies are compelled to leverage Web 2.0
technologies as a way to harvest consumer insights concerning their brand
and marketing decisions. These collected insights can in turn be used to fuel
new product development initiatives. Best-in-Class companies realize that
metrics such as customer satisfaction cannot easily be increased simply by
providing Web 2.0 portals on the company website; there must be an
internal process where the insights exchanged in these forums are used to
grow the business. Ultimately, top companies will increase customer
satisfaction through the development of new products and services geared
towards the customer-base that helped create them.
Thirty-five percent (35%) of Best-in-Class companies surveyed indicated that
the business use of Web 2.0 applications is a “top two” priority for the

Customer 2.0
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organization in 2008, compared to 13% of the Industry Average and 13% of
Laggards. Furthermore, 28% of Best-in-Class companies currently leveraging
external-facing Web 2.0 applications indicated that they have a dedicated
staff of full-time employees devoted solely to this responsibility, compared
to 19% of the Industry Average and 14% of Laggards.

The Maturity Class Framework
Aberdeen used year-over-year improvement in three key performance
criteria to distinguish the Best-in-Class from Industry Average and Laggard
organizations:
• Return on Marketing Investment (ROMI)
• Annual customer retention
• New product development

Table 1: Top Performers Earn Best-in-Class Status
Definition of
Mean Class Performance
Maturity Class
100% improved ROMI, average 11% increase
Best-in-Class:
82% improved customer retention, average 9% increase
Top 20% of aggregate
performance scorers 81% experienced year-over-year improvement in new product development. On average,
Best-in-Class experience a 7% improvement in new product development
Industry Average: 19% improved ROMI, average 2% increase
Middle 50%
31% improved customer retention, average 2% increase
of aggregate
performance scorers 31% improved new product development, average 3% improvement

Laggard: 1% improved ROMI; however, Laggards decreased 7% on average
Bottom 30%
7% improved customer retention; however Laggards decreased 4% on average
of aggregate
performance scorers 5% improved new product development; however, Laggards decreased 6% on average


The Best-in-Class PACE Model
Leveraging external-facing Web 2.0 technologies to achieve corporate goals
requires a combination of strategic actions, organizational capabilities, and
enabling technologies that can be summarized as follows:
• Supplement marketing campaign effectiveness with consumer-
generated insights through a process designed to feed business
decisions across multiple units
• Improve the ability to respond to customer wants and needs
through the dedicated personnel and resource commitments
necessary to maximize Web 2.0 technology investments


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Table 2: The Best-in-Class PACE Framework
Pressures Actions Capabilities Enablers
Increase market Supplement Senior management fully supports external- Company hosted blogs
awareness marketing campaign facing Web 2.0 programs Campaign management
effectiveness with Dedicated personnel devoted to enterprise tools
consumer- use of Web 2.0 applications RSS Feeds
generated insights Consumer-generated insights feed decisions Wikis
Improve ability to across multiple business units Content Management
respond to Cross-functional resource commitment from solutions
customer wants and different departments within the organization
needs Social networking sites
(i.e., marketing, product development, sales)
Best-in-Class Strategies
The top strategic action for Best-in-Class companies is to supplement
marketing campaign effectiveness with consumer-generated insights, thereby
creating a closed-loop process where the forums consumers use to discuss
issues surrounding a particular brand become a breeding ground for future
marketing ideas. Similar to the Best-in-Class focus on developing new
products and services, the ability to harvest the consumer-generated
insights found in online wikis and community forums allows businesses to
refine marketing messages for the benefit of their customer base.

Figure 3: Top Strategic Actions to Maximize Web 2.0 Adoption

Supplement marketing 59%
campaign
effectiveness with 51%
consumer-generated
insights 44%
Best-in-Class
Industry Average
Laggards

48%
Improve ability to
respond to customer 53%
wants and needs
58%

0% 10% 20% 30% 40% 50% 60% 70%


Industry Average (53%) and Laggards (58%) believe that improving their
ability to respond to customer wants and needs is the top strategic action
for maximizing the effectiveness of Web 2.0 touch points online. While this
strategy is a fundamental of good business execution, Best-in-Class
companies are more inclined to “kill two birds with one stone.” By
supplementing marketing campaigns with consumer-generated insights, Best-

Customer 2.0
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in-Class companies are able to refine outbound messages strictly based on
the “wants and needs” expressed by customers in social media settings.
Therefore, Best-in-Class companies experience year-over-year growth in
ROMI due to a closed-loop process that uses customer wants and needs as
the foundation of marketing messages.

Aberdeen Insights — Strategy “Wikis have had a positive
impact on our organization
While Best-in-Class companies are concerned with improving the online because of how easy it is to
customer experience and improving customer satisfaction rates, the post and access information.”
largest emphasis is placed on using consumer-generated insights to spur
product development opportunities and refine marketing campaigns. As ~ Product Specialist, Food
Service Industry
such, multiple groups and departments within Best-in-Class companies
leverage external-facing Web 2.0 technologies.

Figure 4: Internal Groups Utilizing Web 2.0 Technologies
100%
93% Best-in-Class Industry Average Laggards
90% 86%
77%
80%

70% 67% 65%

60%
58% 60% 59% 58% 58%
48%
50% 46% 47% 49%
43% 42%
40% 35%
31%
30%

20%

10%

0%
Marketing Product Sales Market Product Customer
Marketing Research Development Service

Marketing and product marketing departments are the most likely to
engage with online customers in Web 2.0 forums, such as blogs and wikis.
The customer service department, however, is the least likely group to
use Web 2.0 technologies among Best-in-Class and Laggard organizations.
As the business use of social media matures and organizations realize the
benefits of increased interaction between consumers and the business,
the customer service department will likely become a frequent
contributor to company-hosted online communities. As businesses strive
to improve the online customer experience and respond to customer
wants and needs, the customer service department is best equipped to
satisfy these ends.

In the next chapter, we will see what the top performers are doing to
increase ROMI and customer retention.

Customer 2.0
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Chapter Two:
Benchmarking Requirements for Success
As is the case with any technology adoption, companies must ensure that Fast Facts
the proper organizational foundation is in place to maximize √ Best-in-Class companies are
implementation. This is particularly true when it comes to the adoption of over 17-times more likely to
social media, as the user-generated content posted online will often serve as improve customer
a barometer for how well a company understands their customers. Top satisfaction than Laggards,
companies currently implement, or plan to implement, organizational 89% versus 5% respectively.
capabilities to collect and disseminate consumer-generated insights √ Nearly three-quarters (73%)
throughout the organization. of Best-in-Class companies
improved the accuracy of
Case Study — Sportbikes.com marketing decisions through
the use of external-facing
Founded in 1996 by Mike DiSabatino, an avid fan and club-level racer of Web 2.0 applications.
sportbike motorcycles, sportbikes.com has become the premier destination
on the web for motorcycle enthusiasts looking to share their expertise and
passion for performance motorcycles. However, according to DiSabatino,
this was not always the case. “For years we rustled around with basic HTML
sites before we grew into discussion forums,” begins DiSabatino. “However,
we quickly realized that discussion forums and online engagement were
more than just ways to make our advertisers happy; we found that a social
environment was driving more traffic to us overall.”
While the impact of a social community was evident, DiSabatino wasn’t
convinced that sportbikes.com was making as large an impact as it was
capable of. “That’s when I threw my hands up and said ‘we’re going to do
it and do it big.’” DiSabatino implemented a web content management
solution that would wrap around social media to create the largest
sportbike community on the web.
As a way of driving engagement with its members, sportbikes.com posted
specific questions to its audience and allowed them to submit their own
inquiries to be answered by professional racers. The peer-to-peer
exchanges in the site’s wikis and forums ultimately decided the content of
the site. A good example is the discussion forum devoted solely to female
riders. “Young male riders dominate the sportbike demographics,”
explain DiSabatino. “Now, we are seeing a saturation rate of around 20%
among female riders, up from 1% several years ago. The online
conversations in the community revealed a need for a moderated area
for female riders. This forum has since become very popular. It’s a pretty
successful way for us to grow our community.”
Although sportbikes.com was purchased last year by an online sporting
conglomerate that owns more than 150 sporting sites, DiSabatino is
excited about where the site, and Web 2.0 in general, is heading. The
team is already working on a new Web 2.0 based venture. “It’s only going
to continue to get more fluid for the end-user,” concludes DiSabatino.
“Web 2.0 has legs. It’s going to continue and expand its presence.”


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Competitive Assessment
Aberdeen Group analyzed the aggregated metrics of surveyed companies to
determine whether their performance ranked as Best-in-Class, Industry
Average, or Laggard. In addition to having common performance levels, each
class also shared characteristics in five key categories: (1) process (the
approaches they take to execute their daily operations); (2) organization
(corporate focus and collaboration among stakeholders); (3) knowledge
management (contextualizing data and exposing it to key stakeholders);
(4) technology (the selection of appropriate tools and effective
deployment of those tools); and (5) performance management (the
ability of the organization to measure their results to improve their
business). These characteristics (identified in Table 3) serve as a guideline
for best practices, and correlate directly with Best-in-Class performance
across the key metrics.
Capabilities and Enablers
Based on the findings of the Competitive Framework and interviews with
end users, Aberdeen’s analysis of the Best-in-Class demonstrates best “It’s only going to continue to
get more fluid for the end-user.
practices for adopting or implementing Web 2.0 applications.
Web 2.0 has legs. It’s going to
Process continue and expand its
presence.”
Since top companies believe there is tangible value to be realized from Web
2.0 technologies in the company’s bottom line, it is imperative that any ~ Mike DiSabatino
technology adoption be combined with specific processes designed to CPA, Founder of
maximize its potential. The “perfect storm” of organizational capabilities and Sportbikes.com
technology enablers results in happier customers and, in the end, top-line
revenue growth. Currently, over a third (37%) of Best-in-Class companies
have a defined process in place for managing Web 2.0 content, compared to
24% of the Industry Average and 12% of Laggards.
Furthermore, 39% of Best-in-Class companies, versus 14% of the Industry
Average and 12% of Laggards, have a process in place for feeding consumer-
generated insights across multiple business units. While the current
adoption of these key processes is relatively low, the planned adoption
speaks to the importance of Web 2.0 to organizations. Fifty-four percent
(54%) of Best-in-Class companies plan to implement a defined process for
managing Web 2.0 content, thereby increasing the overall adoption rate to
91%. Furthermore, 85% of Best-in-Class companies will eventually use
consumer generated insights to feed decisions across multiple business
units, compared to 69% of the Industry Average and 63% of Laggards.
Businesses realize that it is not enough to simply establish external-facing
Web 2.0 channels to interact with consumers; care must be taken to ensure
that there are processes in place to disseminate the insight throughout the
organization and maximize the investment made at an organizational level.


Customer 2.0
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Table 3: Competitive Framework (Process)
Best-in-Class Average Laggards
Defined process for managing Web 2.0 content
37% 24% 13%
Process Consumer-generated insights feed decisions across
multiple business units
39% 14% 12%

Organization
Best-in-Class companies are more likely to receive the support of senior
management when it comes to the business use of Web 2.0 applications,
57% versus 36% of Laggards. As such, Best-in-Class companies are nearly
twice as likely as the Industry Average (and nearly three-times more likely
than Laggards) to have dedicated personnel devoted to the enterprise-wide
use of Web 2.0 applications. It is imperative for companies to support Web
2.0 implementation at the budget-holder level. This new channel to reach
customers requires constant engagement and analysis of information;
therefore, companies cannot hope to achieve success unless the
organization, including management, is prepared to devote the resources
necessary.
Table 4: Competitive Framework (Organization)
Senior management fully supports external-facing Web 2.0
programs
57% 51% 36%
Dedicated personnel devoted to enterprise use of Web
2.0 applications
39% 22% 14%
Organization Cross-functional resource commitment from different
departments within the organization (i.e., marketing,
product development, sales, etc.)
37% 30% 27%
Committed to promoting, maintaining and utilizing
consumer-generated content
27% 23% 13%
Knowledge Management
The essence of Web 2.0 applications is collaborative in nature. Therefore,
the business treatment of the applications should be the same. It is beneficial
for companies to present themselves as a collection of individuals working
towards a common goal, not just a corporate voice. To achieve this end,
Best-in-Class companies currently leverage, and plan to leverage,
mechanisms for users to provide feedback and rate the usefulness of


Customer 2.0
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website content. As a result, product marketing directors, for instance, can
gauge the reaction to a particular offering and respond to customer’s
praises or concerns.

Table 5: Competitive Framework (Knowledge Management)
Plan to implement feedback mechanisms
60% 51% 52%
Knowledge
Management Plan to enable customer review profiles and rating scores
of products / services
46% 39% 47%


This collaborative use of external-facing applications allows the different
channels in an organization to post content relevant to their department.
Companies must not lose sight of why customers enjoy social media sites
and applications: they allow for many different voices in the conversation.
Recent research conducted for the February 2008 Aberdeen benchmark
report, Social Media Monitoring and Analysis: Generating Consumer Insights from
Online Conversations, reveals that the more actively a company engages with
customers, the more likely they are to experience year-over-year
improvements in key metrics (Figure 5).

Figure 5: Active Engagement with Online Customers Improves
Key Metrics

Rarely Post Occasional Posts Regular Posts Frequent Posts

76%
Customer Satisfaction 62%
57%
50%

Actionable Insights 75%
Derived from Social 62%
Media Monitoring and 57%
Analysis 30%

62%
Customer Retention 57%
56%
50%

60%
Ability to Identify and 44%
Reduce Risk 44%
30%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Note: Percentages represent companies experiencing year-over-year improvement in metrics
Source: Aberdeen Group, February 2008

Customer 2.0
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While these increases cannot be attributed solely to the number of times an
organization engages with consumers online per se, the correlation between
the number of posts a company makes and their performance in key social
media metrics suggests that companies are able to recapture some of the
control that had been passed on to consumers by engaging online users in
conversation concerning their brand and services, rather than simply
observing the "soapbox" from afar. The companies planning to provide
feedback mechanisms should consider building customer and brand loyalty
by engaging with online customers around certain topics or concerns.

Table 6: Competitive Framework (Technology)
Web 2.0 technologies currently in use:
57% company 43% company 32% company
hosted blogs hosted blogs hosted blogs
43% wikis 31% wikis 30% wikis
37% customer 21% customer 13% customer
rating / feedback rating / feedback rating / feedback
solution solution solution
25% social media 21% social media 17% social media
monitoring and monitoring and monitoring and
analysis tools analysis tools analysis tools
Technology
Planned adoption of Web 2.0 technology solutions:
32% company 45% company 52% company
hosted blogs hosted blogs hosted blogs
30% wikis 45% wikis 31% wikis
55% customer 54% customer 53% customer
rating / feedback rating / feedback rating / feedback
solution solution solution
47% social media 44% social media 35% social media
monitoring and monitoring and monitoring and
analysis tools analysis tools analysis tools
Technology
Currently, 57% of Best-in-Class companies use company-hosted blogs to
interact with customers online, compared to 43% of the Industry Average
and 32% of Laggards. An additional 32% of Best-in-Class companies plan to
implement company-hosted blogs in the future. Blogs offer companies the
ability to reach current and perspective clients quickly, efficiently, and,
perhaps most importantly, inexpensively. When combined with other
technology tools, like social media monitoring and analysis solutions for
example, blogs afford companies to respond directly to budding criticism
concerning their product or services. Those companies who utilize social
media monitoring and analysis tools to harvest consumer insights may also
use company-hosted blogs to address sparks of criticism before they
become full-fledged wildfires.


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Performance Measurement
While the adoption of Web 2.0 technologies is still relatively low, even
among Best-in-Class companies, nearly a third (32%) of Best-in-Class
companies that currently use such applications have defined metrics in place
to measure their impact. One must remember that the use of Web 2.0
applications in business is designed to bridge the gaps between companies
and the consumers that have valuable insights about their products or
services. Therefore, it is necessary to measure the ROI companies achieve
through the use of such tools.

Table 7: Competitive Framework (Performance Measurement)
Defined metrics for measuring impact of external-facing
Web 2.0 applications
Performance 32% 16% 10%
Measurement Plan to implement defined metrics for measuring impact of
external-facing Web 2.0 applications
55% 58% 57%

Best-in-Class Use Web 2.0 to Improve Business
The needs to increase the online customer experience and customer
satisfaction are legitimate and pressing business concerns; however, Best-in-
Class companies do not view Web 2.0 adoption strictly within this context.
Best-in-Class companies are able to grow the business by creating a closed-
loop marketing system of sorts. By cultivating an online community of
customers and prospects, Best-in-Class companies are not just improving
the traffic to their website and the “stickiness” of the engagement; they are
truly succeeding at gleaning the consumer-generated insights inherent to
collaboration to drive product development and supplement marketing
campaigns. As Figure 6 indicates, Best-in-Class organizations are
outperforming the Industry Average and Laggards when it comes to year-
over-year growth in key metrics.


Customer 2.0
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Figure 6: Top Performers Improve Yearly Growth

89%
Customer satisfaction 42%
5%

Timeliness of 77%
marketing decisions 25%
8%

Accuracy of marketing 73%
decisions
21%
9%

Best-in-Class
Ability to address 63%
27% Industry Average
product issues
8% Laggards

0% 20% 40% 60% 80% 100%

Note: Percentages represent companies reporting year-over-year improvements

Aberdeen Insights — Technology

The need to improve the online experience was identified by 38% of all
respondents as a top two pressure causing organizations to focus
resources on external-facing Web 2.0 applications. In order to satisfy
this need, top companies are using, or planning to use, content
management solutions to provide current and accurate data for their
websites, thereby creating websites that attract visitors and, more
importantly, engages them. Businesses are increasing the “stickiness” of
their websites by providing multiple outlets for customers to engage
with one another and develop a sense of community.
continued


Customer 2.0
Page 19

Aberdeen Insights — Technology

Figure 7: Content Management Solutions
60%
Currently Use Plan to Use No Plans to Use

49%
50%
43% 42% 43%
40%
40%

30%
30% 27%

20% 18%

10% 8%

0%
Best-in-Class Industry Average Laggards


Forty-three percent (43%) of Best-in-Class companies currently use a
content management solution; while an additional 49% plan to use one in
the future. By integrating Web 2.0 functionality with a core content
management solution, particularly a web content management solution,
Best-in-Class companies are hoping to build and manage web sites that
incorporate all the necessary information and collaboration tools to
improve the customer’s online experience. According to Aberdeen
research, 58% of respondents believe that social networking sites have a
tremendous amount of influence over consumers; therefore, some
solution providers offer the ability for companies to push their content to
established Web 2.0 channels, such as these social networking sites, to
reach customers. Others, however, pull content from customers by
providing the forum and content to get the conversation started.


Customer 2.0
Page 20

Chapter Three:
Required Actions
Whether a company is trying to move its performance in ROMI, customer Fast Facts
retention, or new product development from Laggard to Industry Average, √ Best-in-Class companies are
or Industry Average to Best-in-Class, the following actions will help spur the 8-times more likely than
necessary performance improvements: Laggards to be satisfied with
their ROMI performance
Laggard Steps to Success √ 57% of Best-in-Class
• Formalize a process for managing Web 2.0 content. companies are satisfied with
Currently, only 13% of Laggards indicated they have a defined their current ability to
process in place at an organizational level for managing Web 2.0 incorporate consumer
insights into future
content, compared to 37% of Best-in-Class and 24% of Industry
marketing campaigns and
Average companies. Despite the fact that nearly two-thirds (65%) of promotions, compared to
Laggards consider the business use of Web 2.0 applications a “top 33% of the Industry Average
two” or “high priority” for the organization, the proper support is and 28% of Laggards
not in place to maximize the time and investments spent on
external-facing Web 2.0 technologies. The lack of a formalized √ 70% of survey respondents
process results in only 12% of Laggards using consumer-generated plan to increase the budget
for Web 2.0 technologies in
insights to feed decisions across multiple business units, compared
2008
to 39% of the Best-in-Class. In order to maximize the insights
collected through external-facing Web 2.0 applications, Laggards √ 28% of Best-in-Class
must implement a process for managing the content collected and companies have a dedicated
disseminating the information to the relevant business units within staff responsible for Web 2.0
the organization. technology implementation
and monitoring, compared
• Solicit the full support of senior management. Thirty-six to 19% of the Industry
percent (36%) of Laggards currently have the full support of senior Average and 14% of Laggards
management in regards to external-facing Web 2.0 programs. This
percentage, which is well below the 57% of Best-in-Class and 51% of
Industry Average, indicates that Laggards are not realizing the
benefits of Web 2.0 applications at the management level. Forty-six
percent (46%) of Laggards responded that they currently devote a
couple hours a week, if anything at all, to Web 2.0 technology
implementation and monitoring. While 66% of Laggards plan to
increase the budget devoted to the business use of Web 2.0
applications in 2008, it is crucial for senior management to realize
the marketing benefits of these tools so that the appropriate
organizational support structure can be created to supplement
technology adoption.
• Define metrics to measure Web 2.0 success. Currently, only
10% of Laggards have defined metrics in place for measuring the
impact of external-facing Web 2.0 applications. Thirty-three percent
(33%) of Laggards revealed that they have no plans to implement
such metrics. It is difficult for a company to judge whether or not a
particular technology solution is providing tangible value to the
bottom line without measures designed to reveal its effects on key


Customer 2.0
Page 21

metrics. Eighty-seven percent (87%) of Best-in-Class companies
either currently have, or plan to have, such metrics in place for
measuring the impact of Web 2.0 on the enterprise. In order to
increase the effectiveness of marketing campaigns and improve key
metrics, Laggard organizations must develop metrics to measures
their success or failures.

Industry Average Steps to Success
• Use consumer generated insights to feed business decisions “Organizations that need to
across multiple business units. Best-in-Class companies are create a dialogue with their
experiencing year-over-year improvements in key marketing metrics customers are implementing
due to the ability to analyze consumer-generated insights and Web 2.0 capabilities. Currently,
disseminate them across multiple business units; however, only 14% they are cobbling them
of the Industry Average, compared to 39% of the Best-in-Class, have together with 3rd party
this capability in place. Since there are a number of different groups products. Creating a dialogue
and nurturing those
within an organization that leverage Web 2.0 applications, such as
relationships is first and
marketing (83%), product marketing (63%), and sales (54%), it is foremost. Second, creating a
necessary to have a process in place to share the insights generated platform for experts, wherever
across multiple business units. they may be, to collaborate and
• Provide an outlet for engaging with customers. Company- communicate is important as
well. Finally, corporations that
hosted blogs are an effective way to keep the lines of dialogue open
need to communicate
between a company and its customers. These blogs entries, which specifically with customers and
customers can directly respond to, allow an organization to respond get them specific information
to criticism and publicize new product or service roll-outs. Despite quickly can do so with social
blogs being identified by all respondents as a top two feature media.”
associated with Web 2.0 technology, along with social networking
~ Advertising Executive, Film
sites, less than half (43%) of the Industry Average connect with
Industry
customers in this manner. The additional 45% of Industry Average
that plan to leverage company-hosted blogs must move quickly to
provide an outlet for customer interaction.
• Enable public customer review profiles and rating scores of
products or services. Companies often face the same dilemma
when it comes to connecting with customers in online forums: what
if what they say isn’t what I want to hear? While it’s true that
enabling consumers to review profiles and rate products will
occasionally result in negative feedback, these instances should be
viewed as an opportunity for growth and not necessarily as a
detriment to the marketing message. Currently, 15% of the Industry
Average, compared to 27% of the Best-in-Class, enable public
customer reviews and rating scores in company hosted blogs and
wikis. The fact that Best-in-Class are more inclined to allow this
capability aligns with their need to grow market awareness and
utilize consumer feedback in the development of new products and
services. Industry Average companies must begin to view consumer-
generated content as an opportunity to learn and grow.


Customer 2.0
Page 22

Best-in-Class Steps to Success
• Develop an enterprise-wide commitment to promoting,
maintaining, and utilizing consumer-generated content.
Twenty-seven percent (27%) of Best-in-Class companies indicated
that they are currently committed to promoting, maintaining, and
utilizing consumer generated-content. While an additional 57% plan
to instill this commitment at an organizational level in the future, it
is important for companies to promote content posting amongst
their consumer base now. Over three-fourths (77%) of companies
surveyed agree that Web 2.0 will be a lasting channel for years to
come; therefore, it is crucial for Best-in-Class companies to
promote their entrance into this space and utilize the insights they
receive.
• Embrace social media monitoring and analysis. According to
a recent Aberdeen survey conducted for the Social Media Monitoring
and Analysis: Generating Consumer Insights from Online Conversations
Benchmark Report, 75% of Best-in-Class companies improved their
ability to predict customer behavior after implementing a social
media monitoring and analysis solution, compared to 11% of
Laggards. While Best-in-Class companies are more likely than all
others to utilize external-facing Web 2.0 applications to harvest
consumer insights, they must remember that the internet is a
sprawling landscape of information. There are numerous blogs,
wikis, and online forums where consumers can post feedback on a
particular company’s products or services; therefore, it is necessary
for companies to monitor this activity as a way of supplementing the
consumer insights they generated through their own efforts.
Aberdeen Insights — Summary

The internet has done more than simply change the way people access
and share information. It has succeeded in developing a new breed of
customers. These customers expect to interact with peers and
businesses when they want, how they want, and in the channel of their
choosing. Rather than turn a blind eye to the emergence of a new
consumer base, savvy companies are providing an assortment of Web 2.0
touch points for consumers to provide feedback. While the current
adoption of customer-facing Web 2.0 applications is low, even among
Best-in-Class companies, the substantial planned adoption rate suggests
that businesses understand the value of providing more than just a
website to consumers, but an experience. As solutions like blogs, wikis,
and social networking become commonplace online, businesses will
succeed in creating a closed-loop process with their customers. One
where the insights gleaned from consumer-generated conversations drive
product development and marketing decisions.


Customer 2.0
Page 23

Appendix A:
Research Methodology
Between March and May 2008, Aberdeen examined the use, the Study Focus
experiences, and the intentions of more than 360 enterprises using, or
planning to use, Web 2.0 technologies in a diverse set of enterprises. Survey respondents completed
an online survey that included
Aberdeen supplemented this online survey effort with interviews with select questions designed to
survey respondents, gathering additional information on social media determine the following:
strategies, experiences, and results. √ The degree to which Web
Responding enterprises included the following: 2.0 technologies are
currently deployed and the
• Job title / function: The research sample included respondents with financial implications of
the following job titles: senior management [CEO, COO, President] leveraging customer-facing
(26%); director (23%); manager (20%); vice president (12%); other social media applications.
(19%). √ The level of priority
• Industry: The research sample included respondents from the companies place on Web 2.0
following industries: high technology / software (33%), publishing / in 2008 and beyond.
media (11%), finance/banking (7%), education (6%), retail (4%), other √ The groups within the
(39%). organization that harvest and
use consumer-generated
• Geography: The majority of respondents (66%) were from North insights.
America. Remaining respondents were from Europe (18%), the
Asia-Pacific region (11%), Middle East / Africa (3%), and South / √ The organizational processes
Central America (2%). and metrics in place to
support Web 2.0 technology
• Company size: Fifteen percent (15%) of respondents were from large implementation.
enterprises (annual revenues above US $1 billion); 22% were from
midsize enterprises (annual revenues between $50 million and $1 The study aimed to identify
emerging best practices for
billion); and 63% of respondents were from small businesses (annual
Web 2.0 usage in a variety of
revenues of $50 million or less). industries, and to provide a
• Headcount: Fifty-seven percent (57%) of respondents were from roadmap by which readers
small enterprises (headcount between 1 and 99 employees); 20% could assess their own
were from midsize enterprises (headcount between 100 and 999 capabilities.
employees); and 23% of respondents were from large businesses
(headcount greater than 1,000 employees).
Solution providers recognized as sponsors were solicited after the fact and
had no substantive influence on the direction of this report. Their
sponsorship has made it possible for Aberdeen Group to make these
findings available to readers at no charge.


Customer 2.0
Page 24

Table 8: The PACE Framework Key
Overview
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities,
and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as
follows:
Pressures — external forces that impact an organization’s market position, competitiveness, or business
operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions — the strategic approaches that an organization takes in response to industry pressures (e.g., align the
corporate business model to leverage industry opportunities, such as product / service strategy, target markets,
financial strategy, go-to-market, and sales strategy)
Capabilities — the business process competencies required to execute corporate strategy (e.g., skilled people,
brand, market positioning, viable products / services, ecosystem partners, financing)
Enablers — the key functionality of technology solutions required to support the organization’s enabling business
practices (e.g., development platform, applications, network connectivity, user interface, training and support,
partner interfaces, data cleansing, and management)

Table 9: The Competitive Framework Key
Overview

The Aberdeen Competitive Framework defines enterprises In the following categories:
as falling into one of the following three levels of practices Process — What is the scope of process
and performance: standardization? What is the efficiency and
Best-in-Class (20%) — Practices that are the best effectiveness of this process?
currently being employed and are significantly superior to Organization — How is your company currently
the Industry Average, and result in the top industry organized to manage and optimize this particular
performance. process?
Industry Average (50%) — Practices that represent the Knowledge — What visibility do you have into key
average or norm, and result in average industry data and intelligence required to manage this process?
performance. Technology — What level of automation have you
Laggards (30%) — Practices that are significantly behind used to support this process? How is this automation
the average of the industry, and result in below average integrated and aligned?
performance. Performance — What do you measure? How
frequently? What’s your actual performance?


Table 10: The Relationship Between PACE and the Competitive Framework
PACE and the Competitive Framework – How They Interact
Aberdeen research indicates that companies that identify the most influential pressures and take the most
transformational and effective actions are most likely to achieve superior performance. The level of competitive
performance that a company achieves is strongly determined by the PACE choices that they make and how well they
execute those decisions.


Customer 2.0
Page 25

Appendix B:
Common Web 2.0 Technologies
For the purposes of this benchmark report, the term “Web 2.0” is used
to refer to a set of technologies that promote the exchange of user-
generated content and information in a manner that simultaneously
begets collaboration and individuality. Common Web 2.0 technologies
include:
• Blogs. Short for “web log,” a blog is an online journal of sorts.
Blogs are typically used by individuals to share information and
insights with both acquaintances and strangers alike. Blog entries
are often kept in chronological order of when they were
posted; furthermore, a majority of blogs allow readers to post
feedback or comments regarding the content of the entry.
Nowadays, company executives use blogs as a way announce a
new product release, respond to an industry issue, or simply
share some insights with their customer base.
• Wikis. Wikis, which share their name with the Hawaiian word
for “fast,” are web pages that allow anyone who visits it to
modify or contribute content. The overall purpose of a wiki site
is to create a shared online community around a particular topic
area. As more companies have become comfortable
incorporating Web 2.0 technologies into the enterprise, wikis
have been utilized to facilitate knowledge sharing within the
organization. Common examples include a dynamic glossary of
company-specific terminology, company-wide memos and
notices, and a repository of information used for onboarding
and training purposes. While security and credibility may be an
issue for companies looking to create an online wiki around
their brand, general security measures, such as mandatory
logins, exist to curtail someone from editing another’s entry.
• Social networking sites. Social networking sites have become
a popular place for people to interact with others who share
similar lifestyles. By creating an online profile, users can search
for people they know personally or who they may share
common interests with. In addition to unique user profiles,
social networking sites often share other common features,
such as: messaging, blogs, photo and video sharing, searchable
fields, and, in some cases, add-on applications. The large number
of users on popular social networking sites has caused some
organizations to reach their audience in these social forums
through marketing campaigns or specific add-on applications.
• RSS feeds. The growing number of online customers turning
using the web as their primary source of news and information
has resulted in the need for a streaming feed of “fresh” news
information. RSS feeds automate the traditional process people


Customer 2.0
Page 26

relied on for receiving updated content, namely daily checks of
particular sites. By aggregating the content from several
different web sources, such as online journals, blogs, and
newspapers, RSS feeds allow people to customize what
information is fed through to them and the mode by which they
receive it.
• Mashup. The term “mashup” typically refers to a web
application that integrates data from various third-party sources.
Furthermore, inherent to the phrase “mashup” is the ability for
the end-user to configure the look and feel of the web tool in
which they receive their information. For example, a consumer
may use a “mashup” to feed his or her RSS feeds, local weather
reports, sports scores, and top headlines of interest directly
into a particular homepage. Ultimately, “mashups” are designed
to collect and present various forms of data in a format that the
user dictates and customizes.


Customer 2.0
Page 27

Appendix C:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report includes:
• Protecting the Brand by Using Social Media Monitoring As an
Early Warning System (March 2008)
• Social Media Monitoring Proves Its Worth to the Product
Development Department (March 2008)
• CRM Shakeup: Oracle and SAP Break New 2.0 Ground (March
2008)
• Active Engagement with Online Consumers Maximizes Returns
from Social Media Monitoring Solutions (February 2008)
• The Rise of Social Media Integration: Monster and Wal-Mart
Lead the Way (February 2008)
• Social Media Monitoring and Analysis: Generating Consumer
Insights from Online Conversation (January 2008)
• Social Media Becomes a Key Factor in the Quest for Return on
Marketing Investment (December 2007)
Information on these and any other Aberdeen publications can be found at
www.aberdeen.com.

Author: Alex Jefferies, Senior Research Associate, Customer Management,
alex.jefferies@aberdeen.com
Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having
benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide
organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why
our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of
the Technology 500.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted
marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-
Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the
strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen http://www.aberdeen.com
or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc.


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