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

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 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
and Dell’s
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

“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.

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