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Are Enterprises Effectively Tapping the Social?

Social sites

Enterprises have made progress plumbing the benefits of social networks, but they're missing out on truly leveraging the technology, according to a research report released last week.

A Deloitte survey of companies sponsoring online communities confirms that many of them have begun to effectively use social media tools and online communities to engage with customers and employees for brand discussions, idea generation and product discovery.

But Deloitte analysts said there are many more benefits to be realized, and while the results indicate these online initiatives are having a positive impact, enterprises have not yet harnessed the true potential of these communities.

One of the main barriers is that many of these online communities have failed to reach a critical mass of involvement. According to the survey, a majority has fewer than 500 active members, and 50 percent of the respondents replied that the biggest obstacle to making communities work is getting people engaged.

Companies participating in Deloitte's 2008 Tribalization of Business Survey (conducted with help from Beeline Labs and the Society for New Communications Research) did report a significant impact from their communities.

Thirty-five percent said they'd seen an increase in word-of-mouth for their brands, and 28 percent have seen overall brand awareness increase. Online communities are also helping companies increase customer loyalty and bring outside ideas into the organization faster, according to 24 percent of survey respondents.

"If it's hard to get a critical mass of people to sign up, maybe you picked the wrong kind of community," Ed Moran, director of product innovation at Deloitte, told InternetNews.com. Moran also said some companies use a so-called 'walled garden' approach where the company tightly controls content from outside sources or comments critical of its products and services.

"I think the end game is clear if you look at what Google and others are doing with a more open approach," said Moran. "The walled garden approach will fail."

Companies are looking for ways to better manage or respond to the blogosphere and social networks, where a critical comment can ripple through the Web and take on a life of its own as others pile on. Moran said companies would be better served embracing the opportunity than a defensive or reactive strategy.

"We think there's a huge opportunity for enlightened Chief Marketing Officers (CMOs) to be proactive and consider what's coming from the community as an opportunity to improve their products and make more sales," said Moran. "When someone is saying, 'I'd buy more if it was cheaper' or 'I'd like to see you combine this with this', that's information you can bring to departments in the company you may never have connected with before; customer care, tech support and product design."

Moran pointed to Starbucks' My Starbucks Idea and Dell's IdeaStorm as two examples of company sponsored online communities that are effective in getting customers involved and generating new ideas those companies have put into practice.

Starbucks, for example, took its consumer's suggestion that it use real coffee in the cubes it uses for iced coffee. Dell began offering Linux as option with some of its systems based on customer comments.

Companies also have to consider the cost of running a social network and what tools or platforms to use. Moran said it's not necessary to load up on technology.

"Some companies think they need an elaborate technology platform with wikis, blogs, a prediction market and videos and photos of their products," said Moran. "But it can be low tech if customers get something out of it. If you can post something that shows someone having problems with their printer, how to get it to work, that's incredibly valuable."

At the same time, Moran said companies with ample resources often don't fund or staff their social network efforts appropriately.

He said he was "shocked" to discover the number of companies that put a part time marketing person in charge of social network projects. "You can be lucky with a great person who knows the products, but it's still a part time job," said Moran. "It's important to have a well-moderated and run online community and it's critical someone is there to moderate and mediate what happens online."

Moran has suggested some companies create a full-time Chief Community Officer who can manage the social network effort and is well versed in the company's products and services.

Tools of the trade

The market for services and tools designed to help enterprises create their own wikis, blogs and other social network applications appears is ramping up quickly.

A report released last week by ABI Research predicts the market for so-called white label social network solutions will grow to $1.3 billion by 2013. White label refers to technology that can be purchased and re-branded.

ABI notes setting up and running a social network is a specialized and sometimes too costly a task for many companies to give a high priority. ABI notes an emerging class of white label solutions are based on a SaaS (Software as a Service) subscription model some customers may find more economical. "Client companies can add their own branding, look and feel, but have no other responsibilities or burdens," ABI said in a release.