CEO’s Point of View: Thriving in a Social Media World of Continuous Consumer Input
By N Chandrasekaran,
CEO and Managing Director, Tata Consultancy Services
We are well on our way toward being in an “always on” world. This has a direct impact on how companies and customers interact. Social networking sites are driving this change. A TCS study of more than 650 consumer company executives worldwide shows that these firms are using social media to enhance brand salience and has become a key driver of marketing.
Consumer companies that realized maximum gains from social media viewed it more than just a marketing channel. These companies use social media to hold meaningful conversations with their loyalists, evangelize their products to those who aren’t and listen to the voices of the discontented customers.
Only a few companies have grasped the potential of social media. From our research on major consumer companies (average size: $15.6 billion in revenue) in North America, Europe, Asia-Pacific and Latin America, we estimate only about one in 10 consumer companies has recognized this opportunity and has organized its social media activities to act upon it. More than half said the impact of their social media activities was positive.
Our survey also found that almost 90% of consumer companies have largely limited social media engagement to the marketing and customer service departments. But they need to involve the R&D and Product Management teams. The survey shows that these critical departments are under-represented on companies’ social media plan. It is only when the customer insight filters to the R&D and product management that a company create a delightful products or services.
We believe that leading users of social media are those who are leveraging it across the enterprise. Given that the leaders had much bigger ambitions for their social media activities, it should be no surprise that they also invested more on in them. In fact, leaders will spend twice what followers will this year on social media: an average $28 million per respondent vs. $14 million for followers.
That willingness to spend aggressively likely will continue through 2015. Asked to estimate their social media spending in 2015, leaders’ investments averaged $32.5 million per respondent vs. $18 million for followers, a considerable difference.
A Europe-based consumer goods company is a great example of a company that uses a multi-layered approach to leverage social media across the enterprise. Its Digital Acceleration Team connects many departments and joins the dots.
To be sure, the investments in social media aren’t as big as those in big data but that’s probably because social media use has picked up only during the last three years.
But social media spend will only increase in the future. So what does this increased investment in social media mean for CEOs, division heads, business function leaders and CIOs at the world’s biggest consumer companies? They need to organize their social media activities far differently than most have (having a central group that isn’t confined to marketing, sales or customer service – as well as resources in those functions).
What Leads to Benefits?
Here are some of the things that led to benefits from social media.
- Social media “leaders” had a much greater appreciation at the top of their organizations of the competitive potential and how to use it – as more than just a marketing and customer service tool
- Leaders were far better at making sense of mountains of digital consumer dialogue, and then acting on it
- Leaders were much more likely to have numerous departments working closely together on social media – at least four (typically marketing, service, sales and R&D).
- Leaders had cultures of ardent listening and transparency – both to consumers and employees. Leaders were nearly three times as likely to have cultures that value consumer opinions and share knowledge internally.
For the majority of consumer companies, the good news from the study is that only about 10% of companies surveyed were leaders in benefits as we defined them, and had big internal “social circles” — four or more functions collaborating closely on social media. Thus, there’s plenty of room for all to advance.
How much time there is to advance is another matter. We don’t see any consumer company ultimately escaping social media’s fundamental impact: making a firm’s products, services and practices far more visible to consumers.
Our research shows that consumer companies which take social media seriously from top to bottom and use it inventively are gaining competitive advantage. Yes, they have far many more Facebook fans, Twitter followers, YouTube subscribers and other social media fans than their competitors. But the more important benefit is this: They are creating very strong bonds with consumers that can’t easily be broken.