The Business Value of Social Networking

By Chris Wain

Unless you’ve been in a cave on a remote island this year, you’ve heard about social networking (aka Web 2.0). Yes, it’s big and at an inflection point. The statistics are familiar – and exciting or alarming, depending on your perspective: 70 million blogs worldwide, with 120,000 new ones springing up every day.

But can businesses actually harness this phenomenon? And if so, how? The key is to understand the transformation in marketing that’s underway: tightly controlled messaging is being supplanted by an open conversation. Businesses can choose to participate in the conversation or not, but they can’t make it go away. “If you’re not there, your audience will find other ways to interact with your brand,” said Rob Howard, CEO of Telligent, speaking at the Software Association’s Edge Forum in September 2007.

Leveling the playing field
The conversations give individuals a greater voice in influencing business decisions. For example, a Microsoft employee who didn’t like some things he was seeing started an anonymous blog called Mini-Microsoft. Microsoft management started listening, and now human resources uses Mini-Microsoft as a litmus test of employee morale.

Influencing the conversation
Companies who aren’t involved in social media may be held back by reluctant executives. After all, customers can – and do – use blogs, forums, YouTube and other media to discuss things they don’t like about companies and their products. Businesses, however, are coming to the realization that although they can’t control this dialog, they can influence it.

For example, Dell created Direct2Dell to allow the company to participate in conversations about its products and services. By having engineers post to the site frequently, the conversations between Dell and its customers became more personal. “It’s easier to beat up on a nameless, faceless organization,” Howard said, “than to beat up on an individual.”

Engaging best customers, making better products
Companies can use the social media to engage their most active customer. In the typical online community, only 12-13% of the members interact. The others lurk. However, those active members can help make a company’s products better. “Your customers often know your product better than you do,” said Howard.

Lucky, a fashion magazine, started Lucky.mavens to engage its 100-200 most active print subscribers. The magazine uses the site to better understand and predict fashion trends – and guide the editorial content of its print magazine.

What is success (measuring ROI)?
Even acknowledging the potential benefits of social media, companies still, of course, need to evaluate the business case. To set measurable business objectives, first understand your goal. Measurable objectives follow from the goal: for example, talk to 15 new customers per month, generate a target level of readership of your blog. Also, when engaging with customers online, track how their feedback is being used – and then close the loop by telling tell your readers what their impact was.

Getting started
For companies considering a plunge into the social media, among the pieces of advice for getting started: read what others are saying before starting your own company blog. Also, make it clear and concise: “People have a short attention span,” Howard said.

Finally, there’s the challenge of influencing reluctant executives who may be concerned about the exposure. “It’s a fear I hear every day,” Howard said. Whoever is advocating the use of social media for their company needs to show management how the conversation is already taking place, and tell them: “We can shape it.”

For more information
You can view the presentation that Rob Howard delivered at the September 5, 2007 Edge forum. You can also listen to an audio presentation on Rob’s blog.

About the speaker
Rob Howard is the CEO of Telligent Systems, Inc , the company behind Community Server, a social networking/community platform now being used by organizations such as Microsoft, MySpace, NFL, Electronic Arts, and NASDAQ. Previously, he worked at Microsoft, where he contributed to ASP.NET. Rob has a BBA from Baylor University.

About the author
Chris Wain, a local marketing consultant and writer, is a 10-year veteran of eBusiness and Internet marketing. His eBusiness and Internet experience encompasses web site management, communications, training, managing a user experience team, and transition and change management. He can be reached at chris.wain@comcast.net .