Trouble Justifying the Social Business Impact to Organization

October 4th, 2010 by Matthew Rosenhaft Leave a reply »

If you are like most business executives, you are struggling to justify the value of all this social business stuff in your heads let alone across the table from the rest of the management team. Don’t get me wrong, there are folks getting some good wins from the social media marketing on Facebook, LinkedIn, etc.; but we all know that mainstream business isn’t buying the “build it and they will come” in a recessionary economy. Most senior executives bought the farm on the “web” and realize that much of the hype needs to settle before setting sail on the good ship “social business”.

All true… however, justification is the least of your problems. See, the customer isn’t waiting for your organization to figure it out. The problem for your organization is that the customers are still figuring out what the social business impact is on their buying process and how that will translate to their customer experience and perceived value. The savvy ones are already leveraging the social technologies to become “smarter” and to club the crap out of brands that provide crappy service. But, this is still in the realm of anecdotal. When buyers punish a major brand with rapid market share loss, then we will all wake up to real value of social business. The problem is that it may take your organization a while to do something about it.

I don’t think behavior changes well based upon fear. I believe that change comes from real desire of the perceived benefits. Let me share the opportunity side of this equation. Social business, if done right, has the potential to bring large numbers of customer opportunities at a fraction of the cost of traditional customer acquisition. You have the ability to significantly lower costs throughout the customer delivery process, and drive a huge impact to the bottom line in terms of organizational productivity. The web gave a huge boost to organizations. Remember how many administrative assistants used to run around organizations?

Here are some of the areas of impact as examples:

  • Customer Acquisition - if your cost of customer acquisition via traditional marketing run in the $XXX per customer, we can assume that number is based upon a large number of false leads along with a large number of abandoned ones along with the fact your staff can only handle Y amount of leads comfortably. The challenge is that you cannot figure out who is a shopper who will lead to a buyer versus a browser who will lead to nowhere fast. The problem is we can’t tell which is which. We also assume that we can’t, but what if we could? What if they were encouraged to self-identify? What if we spent very little money until they did? Would your marketing and customer acquisition costs become much more streamlined?
  • Distribution Channels- there are only a few real reasons to partner with a distribution channel; 1. cost of acquisition can be much lower because they already have a relationship and 2. see #1. So, the problem most organizations have with channels is that they are inefficient and not aligned with our mission. They carry multiple products (many of their own) and don’t have the same level of training and expertise as our own. For many channel organizations, the partners still bring more sales and better market positioning. Many organizations are struggling on how to drive more leads through channels, convert at a higher rate, and train their people to do better. A little fix could go a long way to producing better channels. Social has the opportunity to build better channels if done correctly; better, faster, cheaper, and easier.
  • Customer Experience – Conventional wisdom is that it is less expensive to maintain customers than to acquire new ones. Unfortunately, for many organizations they do such a mediocre job of managing the customer experience, you have to wonder. I suspect that 20% of calls into a call center account for 50% of the costs. When a customer gets off the script, there isn’t a computer system smart enough in the world to solve that problem. However, what if you could go to a semi-automated system that could cost 20% of your costs? What if you could improve the customer experience at the same time? What if you didn’t require them to log into your website or sit on hold for 20 minutes? I know the customers are saying “bring it on.”
  • Organizational Collaboration- a lot of organizations are trying to make themselves more productive – say just 5% savings in resources has a huge boost to profits and market value. Unfortunately, many organizations are trying to work harder by doing what they are doing a little more efficiently. But, the fix isn’t do what we are doing better, but rather starting with “why are we doing it?” Many of our current business systems are designed to make the organization scalable, but not necessarily make the customer experience better for the users or the customers. If your systems are 5-10 years old, much of the latest generation of business systems are rethinking the idea of collaboration. Many of the latest business systems have moved to reuse-able, re-purpose-able components that enable users to assemble solutions in real-time based upon their needs. Social business systems; social networks and online community applications have the ability to allow organizations to bring the right information to people based upon their needs, not a generic web template. How much time is spent looking for information or the right people who know an answer? How many business processes have been broken by a frustrated customer? How many exceptions do you have to allow?
  • Hiring and Maintaining the Right People -Anyone who has gone through a hiring process lately knows that the recruiting process is broken; job boards, applicant tracking systems, deluge of resume cramming recruiters, managed service providers, resume services, etc. all are seeing the commoditization of the hiring process. When did hiring the right people become a commodity? When we move away from getting our people to find and connect with the right employees to protecting their time from the volume of crappy candidates; you know that the systems are broken. Used to be that hiring was a competitive advantage and that hiring the right people was seen as a “must do”, now seen as a luxury. What if we could screen out the masses and allow our people time with the right potential hires? What if we could empower our employees to bring in other people who share their values and work ethic? What if we got the organizations to support employees the right way by empowering them as individuals and not “risks” and “costs.”

Social business isn’t about social media. Just like the web wasn’t really about HTML. The real value is in the humanization of business. Social is about swinging the pendulum back towards the center. We automated our businesses for growth and efficiency, but we gutted the hearts right out of them. Nothing I described above is new in business, but is impossible in large businesses today. Or at least not consistently and beyond the exceptional; ie the employee who goes out of his/her way to satisfy a customer, a colleague who stays late to help you find the right information, the hiring manager who connects with a seemingly unqualified candidate, but who has the intangibles they need.

I am not into squishy business feel-goods, but I do believe that the social technologies will humanize business and I do believe that the organizations that can leverage these technologies to improve the customer, partner, and employee experiences effectively on an efficient basis will receive tremendous market opportunities.

We saw that 62 of the top 100 businesses get caught and passed from behind in a 10 year span from 1989 to 1999 in large part due to the web’s disruptive impact in distributing information more efficiently. I believe that we are in the current 10 year cycle that will see similar impact with the ability for the web to deliver better collaboration experiences at a fundamentally lower cost of delivery than traditional means. Those who can leverage these technologies to lower the costs of transactions and relationships will receive higher market share and valuations.

Call it “feel-good with an edge.”

Matthew Rosenhaft

Matthew is a Social Marketing Executive and is co-founder of Social Gastronomy, LLC and the Social Executive Council. Prior to founding Social Gastronomy, Matthew has over 18 years’ experience as an executive in marketing, product management, and sales. Matthew has an extensive background in the SaaS Software, Social Media, Mobile, IT Services, and Telecom industries. He has prior entrepreneurial experience as a founder and executive in several early-stage venture-backed technology companies, as well as, holds several US patents for a mobile marketing technology. Matthew is a prominent blogger and regular industry speaker on social marketing and strategy topics. Matthew’s blog can be found at www.socialgastronomy.com/blog. For more information on Matthew, you can check out his LinkedIn profile at www.linkedin.com/in/rosenhaft or contact him directly at mrosenhaft@socialgastronomy.com.

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