Big business: Social media grows up

Call it social maturity or social CRM, social media is no longer the new kid in marketing but has become a core part of corporate business strategy. Conversations around social media have shifted. Once the domain of the pimply kid wedged in the corner between marketing and IT, it now has a seat at the directors’ table and a space on the CIO or CTO’s agenda.

Factors driving this conversation centre around the shifting power balance between companies and their consumers, agree both Forrester and IBM. By ingraining social media into CRM management, companies are better able to navigate this chance, says IBM’s regional executive, Lotus collaboration portofolio for Southeast Asia, Christopher Blake.

“Social CRM enables brands to navigate this shift by recognising that instead of managing customers, the role of the business is to facilitate collaborative experiences and conversations that their customers value,” he notes.

One brand attempting to closely integrate its social media marketing department with its social media services is Lenovo. “While we are integrating, these still form two growing components of the company,” says Roderick Strother, director, digital and social centre of excellence, Lenovo (Singapore).

“There is a desire in the company for us to work in tandem, and it makes sense — we’re both listening to the voice of the customer. My team, for example, have people responsible for platforms, from Facebook to Pinterest — but you can’t go out on these platforms without expecting to get customer complaints and we can’t ignore that,” he explains.

But while Strother’s team sits next to the social media services team, it still isn’t an easy task, limited mostly by a lack of resources and an existing system for collaboration. “We both have access to the same accounts, we alert each other, we discuss and collaborate — but I wouldn’t say there’s a formal or automated system for how we do that and that’s what we’re trying to build towards.”

Lenovo isn’t alone. Globally, companies have known for years that there was more to social media than just chatting about the brand and the weather.

“Today, business is social,” says Ken Mandel, managing director for Salesforce Marketing Cloud Asia, pointing to numerous reports proving his statement. “IDC reports that spending on social networking is up 47 per cent, the highest growth in spending for any technology category. And a 2012 IBM CEO study reveals that social will become one of the top two ways companies can engage customers at the expense of traditional methods,” he says.

Social is big business

Mandel also cites a 2012 McKinsey Global Institute study report that found that 70 per cent of companies have adopted social technology, and that these social technologies have the opportunity to unlock US$1.3 trillion in business value.

Gartner has estimated that worldwide, big data IT spending will grow from US$27 billion in 2012 to US$55 billion in 2016. Big data, is big business.

Companies, consultancies and agencies have all been jockeying for a piece of this new growth area with the focus around data management and organisational structure. Besides internal policies, companies are increasingly in demand for platforms and systems which combine web analytics, social media insight and CRM data all on a single dashboard.

Over the past year, CRM giants Salesforce and Oracle have been making aggressive acquisitions in the space of social media management and analytics. In the past year, Oracle has picked up Inquira (social media management), RightNow (social media experience), and Vitrue (social relationship management).

Salesforce, on the other hand, has acquired social management company Buddy Media and social analytics company Radian6 which it has fused into a unified offering, Salesforce Marketing Cloud. It has even gone one step further by partnering with 20 social analytics vendors, including Klout, Soshio and Clarabridge, offering their services on its Facebook-like Marketing Cloud platform.

“The aim is to turn insights into action,” Charlie Wood, area vice-president for Asia-Pacific, Japan and India at Salesforce Marketing Cloud. “To integrate social into the rest of the business, rather than have it exist in isolation.”

Salesforce’s forceful acquisition and integration strategy seems to be paying off. According to Mandel, 55 per cent of Fortune 100 brands are using Marketing Cloud.

Even social media giant Facebook, which has traditionally been standoffish about allowing brands to track their customers too closely on the social networking service, has been encouraging businesses to fold CRM into social with new initiatives. In September, the social networking giant launched Custom Audience Ads which allows brands to plug customer loyalty databases into its advertising platform and target advertising at customers. It has even partnered with in-store purchase tracker, Datalogix, to track customer behaviour from ad exposure on the platform to offline purchases in-store.

Google, meanwhile, has been adding social and CRM capabilities to its web analytics platform, picking up social media marketing firm Wildfire. Google also has the advantage of having its own social media platform, Google+ where it currently allows brands to determine their most influential followers via Ripples and to loosely segment their customers via Circles.

Tech giant IBM too has thrown its gauntlet into the ring, adding web and social media analytics capabilities to its Big Data platform with the launch of its Digital Analytics Accelerator on 22 October.

The agencies also have not been slow to respond to demand. Media agency Mediabrands merged its digital analytics brands Cadreon, repriseMedia, ansible and SpringCreek under the Mediabrands Audience Platform (MAP) to provide its clients with ad targeting analytics, performance metrics, mobile tracking and social media insights on a single platform. It has even launched Global Technology Services, based in Malaysia, to maintain MAP and provide tech services for IPG agencies and clients.

OgilvyOne has launched a business practice division focused on helping its clients make the transition from social media as marketing to social CRM, and PR agency Weber Shadwick is having similar conversations with its clients.

Agencies are facing competition in this arena from a new sector, both Deloitte and Accenture have launched digital consultancy divisions that not only guide clients on risk, governance, infrastructure and corporate structure — but even on social and digital ad campaigns.

Deloitte Australia has had a digital consultancy arm for the past 10 years after acquiring an agency named Eclipse in 2002. “That was at the end of the dot com crash, but even then the firm knew that the internet wasn’t going to go away and clients would have demands,” says Frank Farrall, a lead partner at Deloite Digital in Australia.

“It’s since become obvious that digital is a core area for our clients and has in turn become a core aspect in our firm. Deloitte Digital has been growing at a double-digit rate since 2010 and there are plans to expand into Europe and Asia in the next year,” he adds.

Clients have been opting for consultancies, says Farrell, because social media and mobile have grown too central to business that businesses feel at risk in a multi-vendor environment.

New era of marketing

“We’re at the cusp of the consumer digital era after having been, for several years, in the mass digital era,” says Jerry Smith, president of OgilvyOne Asia.

For the past decade, digital marketing has been focused on paid and owned media and, by and large, digital was being used as a broadcast tool, says Smith. “This was largely because even work on social media was largely done manually, involving a certain amount of guesswork. Now with management tools, it is easier to handle segmentation and creates the ability to correlate what people are saying and doing with what they’re planning to do.”

Most significantly perhaps, social CRM brings social media squarely out of the intangible realm of relationship building and ties it to corporate business strategy.

“It adds a degree of business strategy, which I think social media lacks,” comments Tony Poon, McCann Asia-Pacific’s regional director for performance. “Social media’s approach has been largely tactical, with a long-range view. However, it could potentially be a very strong marketing force.”

Social CRM is more than social media

A social media channel can be used for marketing, brand building, customer service and even R&D. The difference however, as Poon points out, is the inclusion of business strategy into the equation to integrate the whole and point it at the purpose of increasing the corporate bottom line.

For example, while a company’s social media strategy may involve marketing establishing a Facebook presence, customer service responding on forums and Twitter, and employees blogging, unless they fall into an “integrated, overarching strategic approach for engaging customers, regardless of where they are in the value chain”, it all falls short of social CRM, says Christopher Blake, IBM’s regional executive, Lotus collaboration portfolio for Asean.

“Additionally, if a Social CRM strategy does not include a plan for governance, guidelines and shared insights, it will be extremely difficult to understand the holistic customer impact or fully optimise benefits to the business,” adds Blake.

The onus, therefore, is with the brand. “It needs to be pushed through from the CEO down,” says Jye Smith, digital strategist for Weber Shandwick. Without the internal processes and regulations, it would be a challenge to take things from “hey, we got data” to “this is what it means, and here’s how we need to change”, he adds. “Brands also need to invest in talent, because understanding data and interpreting data is a discipline — this can’t be done without top management support.”

“The C-suite absolutely must be involved and engaged,” agrees Farrall. “The CEO doesn’t have to be tweeting all the time, but social media has to be respected and taken seriously. It’s not just some freaky little channel, it’s how many people communicate.”

Deloitte Australia itself has a social media committee comprising its CMO, Farrall, the head of innovation and the head of strategy, and chaired by the chief legal counsel to ensure that every risk was accounted for. “Because of this committee, we didn’t need a new policy in place to govern social media. All that was required was three slides, a set of bullet points reminding people who were actively managing social tools, what they can and can’t do, and who to consult in the event of a crisis.”

Why should brands care?

If used properly, social can be a way for companies to not only build CRM, but to aid in research & development (R&D) and even to bolster human resources and talent management.

Speaking at Social Media Matters in Hong Kong on September 28, Sandy Carter, vice-president of social business evangelism at IBM shared how the Hilton in the US found a new way to connect with its loyal customers. “The hotel created a network community for its guests who are looking to join groups for meals or dinner, and they’ve seen a 15 per cent increase in customer satisfaction in hotels with that network,” she said.

It can also be effectively used to offset the cost of customer care. Speaking at the same event, Sabrina Lin, Cisco’s vice-president of marketing for Asia-Pacific, shared how Cisco managed to save money and increase customer satisfaction by supporting a community of volunteer experts who help address issues faced by customers on Cisco’s help forums. “Now, only 20 per cent of problems on this community are addressed by our own people, the rest are by our volunteer support.”

However, few brands are actively listening to and addressing customer complaints on social media, observes Rajeev Bala, managing director, Asia-Pacific for Ecselis. “According to Salesforce Insight 2011, only 15 per cent of social media users were contacted by a brand regarding their negative feedback in social media. This is a wasted opportunity because complainants tend to be highly receptive to quick redressal, and can be turned into a brand advocate when properly and swiftly managed.”

Social communities who are particularly attached to a brand can also function as a highly effective focus group. Inspired by its social media followers, Starbucks reportedly launched about 90 new recipes last year and Cadbury UK has used Google+ Circles to taste test new chocolate bars, resulting in the Nuts for Gold bar.

Premium brands aren’t left out either. In 2009 Godiva Chocolatier sales were soft in the wake of the global economic crisis, so it created a private, invitation-only community called Chocolate Talk. Insights from this community led Godiva to create an affordable product line of individually wrapped chocolates, called Gems, and sell them via grocery and drug stores. The product turned into Godiva’s biggest launch ever, generating US$35 million and accounting for nearly 10 per cent of the company’s worldwide sales in its first year.

In the “old days” of CRM a brand only had the customers they already had. “Now they can connect with groups of customers and their spheres of influence,” comments OgilvyOne’s Smith.

The addition of social currency into the CRM weighting of a customer’s value is a game changer, continues Smith. “Someone who is a medium-value customer by the old measurements may have 15,000 fans who listen to his or her blog, and then go out and buy — new tools let us see that amplification.”

The value of “social currency” or earned media to brands is that companies are effectively gaining an “unpaid marketing department”, says Smith. “In a study Ogilvy conducted with Millward Brown, we found that on average, loyalty is 42 per cent higher in those who recommend a brand and are socially engaged, compared to those who are not socially engaged but prepared to recommend.”

In this respect, content that resonates becomes even more crucial to brand communications. Fortunately, social CRM now allows brands to not only classify individuals by demographics but also by the types of social connections they have and interests they follow, notes Cairo Marsh, managing director, DDB Group Japan. “It’s possible to gauge which content resonates for which network, enhancing the value of communication, allowing you to connect with the consumer and the community in which that consumer resides.”

Nestlé Thailand is in the process of transitioning its 20-year old CRM programme to incorporate social media. Engaging OgilvyOne, the brand recently launched a social relationship marketing platform named GoodFoodGoodLife as a network for Thai women to share and gain advice from experts and communities. The platform allows members to customise content based on interests by opting in to specific communities with like-minded interests.

An active community will likely pay off for Nestlé as, according to the study by Millward Brown, customers who are active in a brand’s social community have a 49 per cent higher purchase intent than customers who aren’t active.

What sets the platform apart is that it rewards members with points every time they like, share, discuss, or invite friends to collaborate. “This will help Nestlé identify easily who are our truly loyal advocates through the social values scores of each member. In turn, we are able to easily understand the real value of each member by allowing us to segment them according to a new type of value — her network value,” said the statement. Initial results for this whole platform have been encouraging commented Ogilvy’s Smith.

Ultimately, though, it boils down to the cost of inaction, says Deloitte’s Farrall. “If you’re not on these channels you’re invisible — how do you quantify that?”