We believe the core finding of our study is about how the companies with the greatest benefits to date from social media organize their social media activities. Our survey data shows that leaders are three times more likely than the followers to have four or more business functions working hand in hand on social media, including sharing the same consumer data in their social circles. Some 39% of leaders have at least four functions collaborating strongly on social media; this was the case in only 13% of the followers. (See Exhibit V-9).
A higher percentage of followers (51%) than leaders (33%) had two or three functions working closely together on social media. For the followers, those functions were far more likely to be marketing (the case in 78% of followers), sales (48%) or service (49%). This reveals that getting only two or three functions collaborating closely on social media is not nearly enough. Even though this was the case in more than half the lagging companies, they were in the bottom third tier of generating benefits. The message is clear: Make your internal social circles bigger and more inclusive, with more functions participating.
Exhibit V-9: The Case For a Bigger Internal ‘Social Circle’
Of course, the fact that 61% of the leaders don’t have four or more functions working closely together on social media shows that even the leaders have great opportunities to make their social media activities more cross-functional.
What can companies with one big, internal social circle do that those with many smaller social circles can’t? They have a greater chance of excelling at five key aspects of social media. Leaders outscored the followers by at least a full point on our five-point scale (see Exhibit V-10) on these:
- Creating and revising the firm’s social media strategy: The more business functions that agree on what their company’s social media activities must accomplish, the more those functions will get the mutual cooperation they need to fulfill their goals.
- Sharing consumer data from social media ‘listening’ activities: Every function needs to be able to listen to consumers via social media – not just the function collecting or managing the activity (typically marketing). For example, if customer service or marketing hoards consumer social media data that point to manufacturing problems, the manufacturing function will be less likely to get an early warning about faulty products.
- Creating meaning or insights from consumer data: There are lots of ways to interpret social media data, and two functions can interpret the same data differently.
- Deciding how to act on social data: The more business functions collaborate on social media, the more likely it is that a company’s response to consumers via social media will be coherent. That is, marketing, sales, service, product development, manufacturing, legal and other functions should agree on a unified approach. Imagine if an automaker’s marketing function decided to answer irate consumers via social media with a recall notice that had not been approved by sales (including car dealers), customer service or the legal department. This, of course, is highly unlikely. But it is possible for one function in a company to be highly responsive to consumers who complain via social media about its products or practices, and not have the buyin of other functions on the way to best answer those consumers. Companies in which one function wants to be highly responsive to consumer complaints on social media, the situation can easily become antagonistic internally if other functions don’t buy into the resolution.
- Being fast to share lessons internally about how to manage social media: Because of the recent uptake of social media, its management is much more art than science today; there aren’t decades of best practices to follow. Nonetheless, companies that want to get a leap on competitors – and get ahead of their consumers – need to rapidly share their social media management lessons internally. Consumers are using social media to share their experiences easily with large consumer companies. Managers across a large consumer company need to share their lessons in using social media with one another just as quickly.
Exhibit V-10: How Business Functions Work Together in Leaders of Social Media
The experience of 3M Co., a $29 billion (revenue) U.S.-based global manufacturer, speaks volumes about the importance of having a large inner social circle monitoring social media comments. A central social media group (part of a center of excellence team called eTransformation) used social media to detect a design flaw in a new Scotch Brite scrub sponge. The team spotted consumers complaining about a leaky button. Then, working with product design and manufacturing, 3M quickly learned that the problem was with a supplier. Within three months, 3M had the flaw corrected and sent improved products to consumers with the bad experiences. The lesson for 3M, according to its leader of digital analytics and social media, Greg Gerik: “We need to bring consumers in before the launch of a new product … to fail faster. We want to make sure we don’t spend money marketing a product that the consumer doesn’t want.”1
That fact that only 39% of leaders have four or more functions collaborating on social media shows how peripheral this activity is, even in the companies getting the greatest benefits from social media. This is a vestige of a bygone era: when interacting with consumers and getting daily feedback was impossible for a major consumer company. We maintain that before the era of social media, it was feasible for most large consumer companies to interact with their consumers only two to three times over the course of a product’s or service’s lifecycle: during the upfront market research that guided the development of a new offering, and then during sales or customer service. This is especially the case for consumer companies that sell through third parties: brokers, retailers, dealers, etc.). (See Exhibit V-11)
Exhibit V-11: In the Old World of Marketing, Consumer Input Was Expensive and Episodic
The old world of listening to consumers:
- Consumer companies largely gathered consumer input at two moments in the product lifecycle
- Before and/or during research & development (e.g., the use of focus groups)
- The moment a consumer complained (to the call center or a retailer/broker)
- This was the case for good reasons:
- Collecting consumer data was expensive
- Collecting consumer data was time-consuming
- As a result, listening and responding to consumers was episodic and reactive
In those days – and we’re talking about just 10 years ago – collecting consumer data was expensive since the cost of market research could be exorbitant and it took a long time to collect consumer input. Moreover, the data that companies collected was not only episodic, it was also narrow. That is, a consumer company could only get feedback on the questions it structured for consumers in market research. In sales and customer service too, the feedback was determined by consumer responses to the products that were pitched to them or used by them (after the sale).
We believe that the difficulty for consumer companies in getting daily feedback and interacting with consumers (who may be millions) is a key reason so many consumer companies have struggled in the four domains that determine product success:
- Product innovation: The new consumer product failure rate has been cited to be as much as 95% on the 30,000 new consumer items introduced every year2
- Customer service: In the U.S., the American Customer Satisfaction Index (ACSI) has surveyed thousands of American consumers since 1994. ACSI’s ratings cover products from soft drinks and consumer electronics to cable TV, airlines and telecommunications services. In the last five years, U.S. overall consumer satisfaction rates have only climbed back to the level of 1995.3
- Corporate reputations: Several consumer brand reputation indexes have been launched over the last 10 years covering industries and companies around the world. Brand reputation monitors such as those by Burson-Marsteller have found the reputations of many consumer industries (including banks, apparel, oil and gas) to be lacking in recent years.4
- Marketing costs: Being out of touch with what consumers need and want in products and services – and the way to promote them most effectively – has contributed to the growing cost of marketing in many industries. Consider that P&G worldwide ad spending as a percent of sales has grown from 8.2% in 1987 to 11.2% in 20125. And P&G has long been one of the world’s premier consumer marketers; even this company must spend more to increase consumer demand. In industries such as pharmaceuticals, the cost of consumer marketing has exploded. In the U.S., pharmaceutical companies’ direct-to-consumer advertising spending increased six fold between 1991 and 2006.6
So when social media began taking hold about 10 years ago, it was no surprise that most consumer companies perpetuated the processes they had in place for decades for listening to and interacting with consumers. Marketing and customer service took the lead – and typically worked independently. In other words, it felt foreign to have all business functions working together at all times to interpret consumer conversations and other data. In adopting social media, most consumer companies have used the platform to continue their consumer-listening and engagement strategies and activities of the past.
This has led to most consumer companies having just a few (or even more than a few)small internal ‘social circles’, with each function listening and responding to consumers via social media, but doing their own thing. Or, as our survey found, with just two or three functions collaborating on social media.
To be sure, this approach has led some consumer companies to enjoy big marketing successes with social media. For example, one often quoted example is Ford’s ‘Fiesta Movement’ in 2010, a social media campaign that enabled the automaker to achieve a 60% awareness level of the Fiesta model in the U.S. before the traditional advertising campaign began. Some 130,000 people registered on a Ford website for information on the vehicle before it arrived at dealers – 83% of whom had never owned a Ford vehicle. “That was a brand new set of customers for us,” Ford’s social media head told one publication.7
But Ford views social media not just as a highly effective marketing tool. Its global head of social media, Scott Monty, says social media gives Ford “the potential of having a 360-degree view of the customer. … I think the great opportunity that lies ahead of us is how we bring social beyond a communications and marketing practice and begin to weave it into all areas of the business.”8
Such a ‘360-degree’ view of consumers gives companies a continuous stream of consumer feedback during the entire lifecycle of their products or services. In turn, that feedback is critical to every business function that contributes to those products and services: market research (understanding what consumers really want in a new product), R&D (developing a superior product), manufacturing producing a quality product), marketing (getting consumers to buy the product), customer service (resolving customer issues with the product). Enabling this requires putting a social media function in the middle of all these functions – not beholden to any one of them.
That’s a destination to which social media leaders want to move their companies. “We need to scale social media across our employees, dealers and customers and know exactly how it is driving our business,” Ford’s Monty told a conference audience in 20129. “We also need a unified view of social media to make analysis that comes out of it available to product development, advertising or product marketing.”
- From a July 18, 2012 presentation in Chicago by 3M social media manager Greg Gerik, at SocialMedia.org’s BlogWell conference. [↩]
- This number has been cited by Harvard Business School Professor Clayton Christensen and others. [↩]
- See the American Customer Satisfaction Index website [↩]
- See Burson-Marsteller’s 2012 brand reputation index results here [↩]
- P&G advertising data is from Advertising Age magazine. See this article from AdAge’s Oct. 29, 2012 [↩]
- In the U.S., the Food and Drug Administration loosened its restrictions on pharma marketing in 1997, and this accounts for some of the increase in marketing spending [↩]
- Corporate Magazine interview with Ford’s Scott Monty [↩]
- Social Media Week interview with Ford’s Scott Monty from Feb. 6, 2013. [↩]
- Scott Monty’s comments at Salesforce.com’s Sept. 22, 2012 Dreamforce conference, as recounted by blogger Shel Holtz. [↩]