Every year at South by Southwest, we land an interview with The Pete Cashmore of Mashable. And each year he gives us a great interview. This year was no exception. I found his comments around the impact of social and how his company is investing in studying and reporting its impacts to be fascinating.
I love social media. It gives customers a voice and platforms for the world to see. Social Media can also provide lots of business and life lessons.
Let’s take Sears for example. Long story short, I’m having problems with a recent purchase. I purchased online and chose to pick up in store (BOPUS is the industry term). What was promised in 3 days, took 9 days for me to receive. The item weighs 150 lbs and requires keys. Upon picking up the item, bringing it home and opening it, I discovered there were no keys and no instruction manual. So, it’s a defective product. That happens.
So I call the 1-800 number provided on the packing slip / receipt. When I choose operator, the automated system disconnects me. I try a second time with the same results. My next step is to go online (www.sears.com) and search for another customer service number. I dial it. The representative does not understand BOPUS and insists that UPS must have damaged the product. She says she will send UPS out to pick up the item, but that could take a week. Then she puts me on hold.
After 5 minutes of hold time, I put my phone on speaker mode while I listen to some incredibly obnoxious muzac and I begin tweet to @Sears. My goal was 1 tweet for every minute on hold. After 30 minutes, I gave up and hung up. In the meantime, people from companies such as 7-11, US Airways, Dell, and Zappos chimed in on the conversation as well as an up-and-coming musician with a large social media presence. It was nice to engage with people during the process. I felt it was a sign of solidarity as I was getting bashed by a giant corporation.
After a 20 minute break, I call back a second time and spend another 30 minutes on the phone with a much nicer representative who was very sympathetic. Kudos to her. However, the issue was not resolved. Her first solution? I will call the warehouse and have them ship you the keys. Really? How many different types of keys does Honeywell (the manufacture of the product) make for this product? Even if you found the keys, how long would it take and can you ensure that they are the right keys? The answer of course is “I don’t know and no.” This go around I post on Facebook as well.
This morning I get a response on Facebook long before i get a response on Twitter. (I have attached that message.) My interpretation = please stop posting and no focus on resolving the issue. Other friends start joining the conversation on Facebook as well. As for Twitter, it took Sears over 13 hours to respond and it came from a terrible Twitter handle: @Searscare, which I don’t think was branded properly as it looks like @SearS-C-A-R-E-S to me.
Nonetheless, the problem isn’t resolved, but I’m having fun in the social media spaces at Sears’ expense. The problem still isn’t resolved, but Sears has finally given me a Case Number. However, the caveat in their communications with me is that 1) Case Managers are super busy, 2) they will prioritize responses, and 3) I should expect a response (not a resolution) within 24 hours. Wow! Is there a better way to tell a customer he or she is not valued or appreciated? 🙂 Probably not.
So here’s a very polite response on the Sears Facebook wall, where I was asked not to post again. Enjoy!
Here’s some free #socialmedia and #customerservice advice:
1. Please do not ask me to stop posting until AFTER you have resolve the issue or gotten it start. Please do not begin the conversation with “Stop Posting”
2. Do not ignore #Twitter. If YOUR customers are using a social media channel, then YOU should be engaging on that channel too. 13+ hours AFTER I began reaching out to you for help is when I finally received a response. And that response, was “Stop Posting here and go to FB.” Yet on FB you also told me to stop posting? Why? You have a customer in distress and you’re telling me to go away.
3. You should consider changing your Twitter handle. @Sears is okay, but @Searscare looks like @SearSCARES. Not well branded.
4. If my friends and other social media influencers are commenting on my posts, do not try to intimidate them. This is an #opportunity for YOU to #engage them. Trenton Laird provided you with an excellent case study and coaching. Heather Vanderwaal also reached out to you. Show some warmth. Show some compassion. It’s #customerservice 101 – the basics. And be careful how you address people. There are lots of influencers in the social spaces and you do not know their reach. Perhaps looking at people’s #Klout scores ahead of time will tell you how to prioritize.
5. Research / Read / Share social media case studies among your staff. Continual #training is what will make you better. #Dell / @Dell is a great example. I know you have reached out to them in the past, but chose not to leverage their free social media command center tours. It would be eye-opening for you. #Starwood Hotels Starwood Preferred Guest® (SPG) (@spg) is also a great example. They have always provide fantastic customer media support and resolved any issues I’ve had immediately — making me a much for loyal customer. Loyal customers = more money for you.
[also attached is a copy of the Sears Motto]
One of my colleagues today asked me how asked me social media is changing corporations. Of course, I’m fascinated with this subject and see radical changes on the horizon. So I did a little digging today and found a few things I thought were worth sharing.
First: Harvard Business Review – says that traditionally up to 90% of budgets are spent on promotions and advertising. However, advertising does little to influence people’s purchased decision. People’s recommendations matter most. Case in point: eBag and Yelp! Two great case studies!
Second: Forrester – says that 500 BILLION impressions regarding products and services are shared online, with 60% being share on Facebook. And 16% of users generate 80% of mess ages.
After discovering these two nuggets, I kept digging and came across “The Rise of the Networked Enterprise” from the McKinsey Quarterly (www.mckinseyquarterly.com). Here’s that article. Enjoy!
McKinsey’s new survey research finds that companies using the Web intensively gain greater market share and higher margins.
December 2010 • Jacques Bughin and Michael Chui
Source: McKinsey Global Institute
Every new technology has its skeptics. In the 1980s, many observers doubted that the broad use of information technologies such as enterprise resource planning (ERP) to remake processes would pay off in productivity improvements—indeed, the economist Robert Solow famously remarked, “You can see the computer age everywhere but in the productivity statistics.”1 Today, that sentiment has gravitated to Web 2.0 technologies. Management is trying to understand if they are a passing fad or an enduring trend that will underwrite a new era of better corporate performance.
New McKinsey research shows that a payday could be arriving faster than expected. A new class of company is emerging—one that uses collaborative Web 2.0 technologies intensively to connect the internal efforts of employees and to extend the organization’s reach to customers, partners, and suppliers. We call this new kind of company the networked enterprise. Results from our analysis of proprietary survey data show that the Web 2.0 use of these companies is significantly improving their reported performance. In fact, our data show that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways.
Over the past four years, McKinsey has studied how enterprises use these social technologies,2 which first took hold in business-to-consumer models that gave rise to Web companies such as YouTube and Facebook. Recently, the technologies have been migrating into the enterprise, with the promise of creating new gains to augment those generated by the earlier wave of IT adoptions.3 The patterns of adoption and diffusion for the social Web’s enterprise applications appear to resemble those of earlier eras: a classic S curve, in which early adopters learn to use a new technology, and adoption then picks up rapidly as others begin to recognize its value. The implications are far reaching: in many industries, new competitive battle lines may form between companies that use the Web in sophisticated ways and companies that feel uncomfortable with new Web-inspired management styles or simply can’t execute at a sufficiently high level (see sidebar, “Managing the Web-based organization”).
1 Robert M. Solow, “We’d better watch out,” New York Times, July 12, 1987.
2 See “How businesses are using Web 2.0: A McKinsey Global Survey,” mckinseyquarterly.com, March 2007; “Building the Web 2.0 Enterprise: McKinsey Global Survey Results,” mckinseyquarterly.com, July 2008; “How companies are benefiting from Web 2.0: McKinsey Global Survey Results,” mckinseyquarterly.com, September 2009; and Michael Chui, Andy Miller, and Roger P. Roberts, “Six ways to make Web 2.0 work,” mckinseyquarterly.com, February 2009.
3 Andrew McAfee, Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges, Boston, MA: Harvard Business School Press, 2009.
Our annual surveys of Web 2.0 use in the enterprise provided the basis for the findings in this article. The present survey, our fourth, garnered responses from 3,249 executives across a range of regions, industries, and functional areas. Two-thirds of the respondents reported using Web 2.0 in their organizations. As in past surveys, we asked respondents about their patterns of Web 2.0 use, the measurable business benefits they derived from it, and the organizational impact of Web technologies. We also inquired about the market position of the respondents’ companies, whether their market share had changed, and how their operating margins compared with those of competitors in the same industries.
Web 2.0 technologies are now more widely used
The share of companies where respondents report using Web 2.0 technologies continues to grow. Our research, for instance, shows significant increases in the percentage of companies using social networking (40 percent) and blogs (38 percent). Furthermore, our surveys show that the number of employees using the dozen Web 2.0 technologies continues to increase.4 Respondents at nearly half of the companies that use social networking say, for example, that at least 51 percent of their employees use it. And in 2010, nearly two-thirds of respondents at companies using Web 2.0 say they will increase future investments in these technologies, compared with just over half in 2009. The healthy spending plans during both of these difficult years underscore the value companies expect to gain.
Among respondents at companies using Web 2.0, a large majority continue to report that they are receiving measurable business benefits—with nearly nine out of ten reporting at least one. These benefits ranged from more effective marketing to faster access to knowledge (Exhibit 1).
Toward the networked enterprise
We analyzed the shared characteristics of groups of organizations in our survey and clustered them according to the magnitude of the business benefits respondents reported from the use of Web 2.0 tools and technologies. Our analysis revealed striking differences.
Among respondents who say their companies are using Web 2.0, most (79 percent) achieved a mean improvement of 5 percent or less across a range of business benefit metrics (Exhibit 2). Respondents at the companies in this group report the lowest percentages of usage among their employees, customers, and business partners; say that Web 2.0 is less integrated into their employees’ day-to-day work than respondents at other companies do; and are least likely to report high levels of collaboration or information sharing across the organization. We call these companies, still learning the ropes of Web 2.0, the “developing” group.
Internally networked organizations. Some companies are achieving benefits from using Web 2.0 primarily within their own corporate walls. The survey results indicate that companies in this group—13 percent of those using Web 2.0—derive substantial benefits from deploying these technologies in employee interactions. Respondents at such organizations report a higher percentage of employees using Web 2.0 than respondents at developing organizations do. Respondents at half of the internally networked organizations reported that Web 2.0 is integrated tightly into their work flows, for example, compared with only 21 percent of respondents at developing organizations. Web 2.0 also seems to promote significantly more flexible processes at internally networked organizations: respondents say that information is shared more readily and less hierarchically, collaboration across organizational silos is more common, and tasks are more often tackled in a project-based fashion.
Externally networked organizations. Other companies (5 percent of those deploying Web 2.0) achieved substantial benefits from interactions that spread beyond corporate borders by using Web 2.0 technologies to interact with customers and business partners, according to survey results. Executives at these organizations reported larger percentages of their employees, customers, and partners using Web 2.0 than respondents at internally networked organizations did. But the responses suggest that the internal organizational processes of externally networked organizations are less fluid than those of internally networked ones.
Fully networked enterprises. Finally, some companies use Web 2.0 in revolutionary ways. This elite group of organizations—3 percent of those in our survey—derives very high levels of benefits from Web 2.0’s widespread use, involving employees, customers, and business partners, according to the survey. Respondents at these organizations reported higher levels of employee benefits than internally networked organizations did and higher levels of customer and partner benefits than did externally networked organizations. In applying Web 2.0 technologies, fully networked enterprises seem to have moved much further along the learning curve than other organizations have. The integration of Web 2.0 into day-to-day activities is high, executives say, and they report that these technologies are promoting higher levels of collaboration by helping to break down organizational barriers that impede information flows.
Capturing competitive advantage
Executives at the more highly networked companies in our survey reported that they captured a broad set of benefits from their Web investments. A key question remained, however: do these benefits translate into fundamental performance improvements, measured by self-reported market share gains and higher profits?
We performed a series of statistical analyses to better understand the relationship between our categories of networked organizations and three core self-reported performance metrics: market share gains, operating profits, and market leadership. Exhibit 3 shows the results.
Market share gains reported by respondents were significantly correlated with fully networked and externally networked organizations. This, we believe, is statistically significant evidence that technology-enabled collaboration with external stakeholders helps organizations gain market share from the competition. They do this, in our experience, by forging closer marketing relationships with customers and by involving them in customer support and product-development efforts. Respondents at companies that used Web 2.0 to collaborate across organizational silos and to share information more broadly also reported improved market shares.
The attainment of higher operating margins (again, self-reported) than competitors correlated with a different set of factors: the ability to make decisions lower in the corporate hierarchy and a willingness to allow the formation of working teams comprising both in-house employees and individuals outside the organization. These findings suggest that Web technologies can underwrite a more agile organization where frontline staff members make local decisions and companies are better at leveraging outside resources to raise productivity and to create more valuable products and services. The result, the survey suggests, is higher profits.
Market leadership, which we ascribed to those organizations where respondents reported a top ranking in industry market share, correlated positively with internally networked organizations that have high levels of organizational collaboration. Self-reported market leadership also, however, correlated negatively with externally networked organizations. We believe it is unlikely that better interactions with external stakeholders lead to a decline in market position. A more likely explanation for the data is that market leaders use Web 2.0 to strengthen internal collaboration, seeking to enhance the organizational resiliency required to maintain their leadership positions. Market challengers, by contrast, may be more focused on external uses of Web 2.0 to win customers from industry leaders.
Overall, we found that respondents at 27 percent of the companies in our survey reported having both market share gains against their competitors and higher profit margins. That kind of performance clearly makes these companies profit consolidators in their industries, with earnings growing faster than the rest. Highly networked enterprises were 50 percent more likely to fall in this high-performance group than other organizations were. This finding suggests that the fully networked enterprise could become the benchmark for more vigorous competition in many industries.
Moreover, the benefits from the use of collaborative technologies at fully networked organizations appear to be multiplicative in nature: these enterprises seem to be “learning organizations” in which lessons from interacting with one set of stakeholders in turn improve the ability to realize value in interactions with others. If this hypothesis is correct, competitive advantage at these companies will accelerate as network effects kick in, network connections become richer, and learning cycles speed up.
The imperative for business leaders is clear: falling behind in creating internal and external networks could be a critical mistake. Executives need to push their organizations toward becoming fully networked enterprises. Our research suggests some specific steps:
- Integrate the use of Web 2.0 into employees’ day-to-day work activities. This practice is the key success factor in all of our analyses, as well as other research we have done. What’s in the work flow is what gets used by employees and what leads to benefits.
- Continue to drive adoption and usage. Benefits appear to be limited without a base level of adoption and usage. Respondents who reported the lowest levels of both also reported the lowest levels of benefits.
- Break down the barriers to organizational change. Fully networked organizations appear to have more fluid information flows, deploy talent more flexibly to deal with problems, and allow employees lower in the corporate hierarchy to make decisions. Organizational collaboration is correlated with self-reported market share gains; distributed decision making and work, with increased self-reported profitability.
- Apply Web 2.0 technologies to interactions with customers, business partners, and employees. External interactions are correlated with self-reported market share gains. So are internal organizational collaboration and flexibility, and the benefits appear to be multiplicative. Fully networked organizations can achieve the highest levels of self-reported benefits in all types of interactions.
About the Authors
Jacques Bughin is a director in McKinsey’s Brussels office; Michael Chui, based in the San Francisco office, is a senior fellow of the McKinsey Global Institute.
The authors would like to acknowledge the important contributions of Angela Hung Byers and Martin Rouse.
Super Bowl Ads have Changed
adapted from Huddle Productions post by Chris Yates on February 9, 2010 www.huddleproductions.com
Aside from being a great game, this year’s Super Bowl (Super Bowl XLIV) set a record for number of viewers (see www.usatoday.com/sports/football/nfl/2010-02-08-super-bowl-viewership_N.htm “Super Bowl XLIV draws most viewers in TV history”). But do TV ratings still matter to marketers? After all, the market has changed dramatically in the last few years. For example, statistics show that 90% (or more) of viewers with TIVO or a DVR device, skip over commercials altogether. That means that TV viewers are no longer pay attention to your commercials.
But how does this affect marketers? Pepsi, for one, completely changed its approach (see http://www.usatoday.com/money/advertising/2009-12-17-pepsi-superbowl-ads_N.htm “Pepsi won’t advertise in upcoming Super Bowl”) and chose not to advertise in this year’s Super Bowl, ending a 23-year run. Instead, Pepsi decided to focus on social media, perhaps understanding that viewers no longer pay attention to messaging because they are no longer willing to accept just anything you throw at them.
The distribution channels for TV programming, entertainment, and communication, have also changed dramatically over the last few years. Viewers used to have NO choice but to listen at the messaging on TV. Now we TIVO, text, YouTube, IM, Facebook, and Tweet. The Viewer is now in CONTROL because it’s OUR CHOICE to what we want to listen to. That’s the biggest difference.
If you’re a company trying to reach your customer don’t just throw a message out there and hope that the $3 million you spent on a :30 second spot hits the right receiver. Instead try something new…..be part of the conversation as you will stand a better chance to connect with them.
Licensed under a creative commons share-alike. Use freely and link to www.huddleproductions.com
I have recently plowed through several books relating to Social Media and need your recommendations for my next round of books. I’ve read Groundswell, Tribes, Clue Train Manifesto, and 4-Hour Work Week. So what’s next? Here are some that I’ve looked at on Amazon:
- Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business – Jeff Howe
- The New Rules of Marketing and PR: How to Use News Releases, Blogs, Podcasting, Viral Marketing and Online Media to Reach Buyers Directly – David Meerman Scott
- The Social Network Business Plan: 18 Strategies That Will Create Great Wealth – David Silver
- Web 2.0: A Strategy Guide: Business thinking and strategies behind successful Web 2.0 implementations. – Amy Shuen
- The Digital Handshake: Seven Proven Strategies to Grow Your Business Using Social Media – Paul Chaney
- Marketing 2.0: Bridging the Gap between Seller and Buyer through Social Media Marketing – Bernie Borges
- Inbound Marketing: Get Found Using Google, Social Media, and Blogs (The New Rules of Social Media) – Brian Halligan
- Crush It!: Why NOW Is the Time to Cash In on Your Passion – Gary Vaynerchuk
- Trust Agents: Using the Web to Build Influence, Improve Reputation, and Earn Trust – Chris Brogan
- The Social Media Marketing Book – Dan Zarrella
- The New Community Rules: Marketing on the Social Web – Tamar Weinberg
- Socialnomics: How social media transforms the way we live and do business – Erik Qualman
- Secrets of Social Media Marketing: How to Use Online Conversations and Customer Communities to Turbo-Charge Your Business! – Paul Gillin
- The Social Media Bible: Tactics, Tools, and Strategies for Business Success – Lon Safko
- Wikinomics: How Mass Collaboration Changes Everything – Don Tapscott
- The Wealth of Networks: How Social Production Transforms Markets and Freedom – Yochai Benkler
- Here Comes Everybody: The Power of Organizing Without Organizations – Clay Shirky
Looking forward to your recommendations!
Is social media just another fly-by-night fad or is it a revolution in the way we live?
I am utterly amazed by that fact that so many people do not yet understand the incredible shift that is taking place in the world today. Time and time I again I hear that social media is just another fly by night fad. Well, I disagree. It’s not a fad; it’s a REVOLUTION. Here are some facts that prove my point.
Let’s start with a comparison. How many years did it take to reach 50 million users?
- Radio –> 38 years
- Television –> 13 years
- Internet –> 4 years
- Facebook –> 100 million users in 9 months
If Facebook were a country, it would be the 4th largest.
Let’s start with another fact. Today, baby boomers are the largest generation. Did you know…?
- In 2010 they will be surpassed by generation Y
Let’s shift gears and talk about television for a moment.
- Only 14% of consumers trust advertisements
- While 78% of consumers trust peer recommendations
- Only 18% of traditional TV campaigns generate positive ROI
- 90% of people with a DVR or TiVO fast forward through tv-ads
Word of Mouth is still the most effective sales tool. It’s changing the way we connect, the way we share, the way we work.
Update regarding sources:
2. YouTube Video: Social Media Revolution
3. Groundswell by Charlene Li
5. Many others….
Social media is all about creating, maintaining, and engaging in conversations. For the most part, these conversations are on an indvidual basis. This is in stark contrast to the world of mass media. After all, if we look back (and it wasn’t that long ago), we can easily see that mass media revolved (and for the most part still revolves) around mass marketing: where one size generally fit all; where push marketing was the way to control messages and influence the masses.
Times have now changed — more so than ever because of social media (and networks). In this era, your voice — the voice of the individual — is completely unmanaged. You have the power to create a global voice (social communities, blogs, twitter, etc.). You also have the power to choose. You chose who you listen to, what you read about, and when you want that information. This power has shifted the market place from push marketing (the one of mass media) to one of pull marketing (the one that empowers you!). Enjoy your friendom and power!