As the power of social media marketing grows, it no longer makes sense to treat it as an experiment. Here's how senior leaders can utilize social media to shape consumer decision making in ways that can
Executives surely know what social media is. After all, if Facebook users were a country, it would be the largest in the third world, after China and India. Executives can even claim to know what makes social media so effective: its ability to strengthen word-of-mouth effects. But most executives don't know how to tap into the power of social media. The company is diligent in building Twitter feeds and branded Facebook pages, but few have a deep understanding of exactly how social media interacts with consumers to expand product and brand recognition, drive sales and profitability, and generate loyalty.
We believe there are two reasons related to why social media remains a puzzle wrapped in a puzzle for many executives, especially nonmarketers. The first is his seemingly vague nature. It's no secret that consumers are increasingly going online to discuss products and brands, seek advice, and offer guidance. But it is often difficult to see where and how to influence this conversation, which takes place on an ever-growing variety of platforms, between diverse and dispersed communities, and can occur either at lightning speed or during months. Second, there is no single measure of the financial impact of social media, and many companies find that it is difficult to justify devoting significant financial or human resources to an activity whose exact effect is still unclear.
What we hope to do here is to uncover social media. We have identified four functions — primarily monitoring, responding, reinforcing, and leading consumer behavior — and connecting them to consumers on a journey when making purchasing decisions. Being able to identify exactly how, when and where social media influences consumers helps executives to craft marketing strategies that utilize the unique abilities of social media to engage with customers. It must also help leaders develop, launch, and demonstrate the financial impact of social media campaigns (for an insight into the world's largest social-media market, see "Understanding social media in China").
In short, the current chief executive can no longer treat social media as a side activity carried out solely by managers in marketing or public relations. This is far more than just another form of paid marketing, and it demands more too: a clear framework to help CEOs and other top executives evaluate their investments, plans to build supporting infrastructure, and management performance systems to help smart leaders scale their presence social. Companies that have three elements in place can create critical new brand assets (such as content from customers or insights from their feedback), open new channels for interaction (Twitter-based customer service, Facebook news feeds), and truly reposition brands through ways its employees interact with customers or other parties.
Social consumer decision travel
The company has quickly learned that social media works: 39 percent of our companies have been surveyed already using social media services as their primary digital tool to reach customers, and the percentage that is expected to increase to 47 percent in the next four years.1 Triggering this growth is a list Growing success stories from major companies:
Creating a buzz: Eighteen months before Ford re-entered the US subcompact car market with the Fiesta Model, she embarked on an extensive marketing campaign called the Fiesta Movement. A key element involved giving 100 European social-media influencers models of cars, after they finished the "mission," and asking them to document their experiences on various social channels. Videos related to the Fiesta campaign generated 6.5 million views on YouTube, and Ford received 50,000 requests for information about vehicles, mainly from non-Ford drivers. When it finally became available to the public, at the end of 2010, around 10,000 cars were sold in the first six days.
Learning from customers: PepsiCo has used social networks to gather customer insights through the promotion of DEWmocracy, which has led to the creation of new varieties of its Mountain Dew brand. Since 2008, the company has sold more than 36 million of their cases.
Targeting customers: Levi Strauss has used social media to offer location-specific offers. In one example, direct interaction with only 400 consumers caused 1,600 people to appear in these social media word-of-mouth effects companies.
But many others have failed to match this success: knowing that something works and understanding how it works is a very different thing. As the number of companies with Facebook pages, Twitter feeds, or online communities continues to grow, we think it's time for leaders to remind themselves how social media connects with broader organizational marketing missions.
The main objective of marketing is to reach consumers at moments, or touch points, that influence their buying behavior. Nearly three years ago, our colleague proposed a framework - "consumer decision travel" - to understand how consumers interact with companies during purchasing decisions.2 Expressing consumer behavior as a winding trip with multiple feedback loops, this new framework differs from traditional behavioral descriptions consumer purchases as linear marches through funnels. Social media is a unique component of a consumer decision journey: it's the only form of marketing that can touch consumers at every stage, from when they reflect on the right brand and product through the period after purchase, such as their experience influencing their preferred brand and potential influence advocacy they are others.
The fact that social media can influence customers at every stage of the trip does not mean that it should. Depending on the company and industry, some of the touch points are more important for competitive advantage than others.3 What's more, our work with dozens of companies adapting to the new marketing environment strongly shows that the most powerful social-media strategy focuses on a number of closely related marketing responses with individual touch points throughout the course of consumer decisions. The ten most important responses, range from providing customer service to fostering an online community (exhibition). One of the top ten monitors what people say about you brand-very important that we see as a core function of social media, which is relevant throughout the course of consumer decisions. The remaining nine responses, organized in three groups at the exhibition, supported efforts to use social media to respond to consumer comments, to reinforce positive sentiments and activities, and lead changes in consumer behavior and mind-sets.
Gatorade, a sports drink produced by PepsiCo, has been diligently working towards its goal of becoming "the largest participatory brand in the world." 4 This has created a Chicago-based "war room" within the marketing department to monitor brands in real time on social media. There are seats where team members can track custom-built visualizations and dashboard data (including terms related to brands, sponsored athletes, and competitors) and run sentiment analysis around product and launch campaigns. Every day, all of this feedback is integrated into products and marketing-for example, by helping to optimize landing pages on the company's website. Since the creation of the war room, the average traffic to Gatorade's online property, the length of visitor interaction, and virus sharing from the campaign have all more than doubled.
brands such as monitoring - only knowing what is said online about products and services - must default to the social-media function, ongoing. Even without involving consumers directly, companies can gather insights from effective monitoring programs that inform everything from product design to marketing and give advance warning of potentially negative publicity. It's also important to communicate feedback as in business quickly: anyone charged with brand monitoring must ensure information reaches relevant functions, such as communication, design, marketing, public relations, or risk.
It's worthwhile though to learn how you do and what to improve, extensive and passive monitoring is just a start. Determining conversations to respond on a personal level is another form of social-media involvement. This type of response can certainly be positive if done to provide customer service or to uncover sales leads. Most often, though, responding is part of crisis management.
Last year, for example, a hoax photo posted online claimed that McDonald's was charging African-American additional service fees. The first hoax appeared on Twitter, where the image quickly went viral before the weekend as it was retweeted with #seriouslymcdonalds hashtag. It turned out to be a working weekend for McDonald's social media team. On Saturday, the director of the social media company released a statement via Twitter stating the photo was a hoax and asking the key influencers "let your followers know." The company continued to reinforce that message throughout the weekend, even responding personally to worry about tweeters. On Sunday, the number of people who believe in authentic images has shrunk, and McDonald's share prices rose 5 percent the following day.
Responding to resisting negative comments and reinforcing positive ones will only increase importance. The responsibility for taking action may fall to functions outside marketing, and the message will differ depending on the situation. No response can be fast enough, and the ability to act quickly requires constant, proactive monitoring from social media — on weekends too. By responding quickly, transparently, and honestly, companies can positively influence consumer sentiment and behavior.
"Amplification" involves designing your marketing activities to have inherently social motivators that spur broader involvement and sharing. This approach means more than just reaching the end of planning a marketing campaign and then thinking that "we must do something social" -say, uploading television advertisements for YouTube. This means that the core concept for a campaign must be to invite customers into experiences that they can choose to extend by joining conversations with brands, products, fellow users, and other fans. This means having an ongoing program that shares new content with customers and provides opportunities to share again. This means offering an experience that customers will feel great about sharing, because they get a badge of honor by publishing content that piques the interests of others.
In the initial phase of the consumer decision journey, when consumers filter brands and products to make the choices they like, direction and recommendations are powerful social media tools. A simple example is the way online deal sites like Groupon and Gilt Groupe provide consumers with credit for every first time their buyer sees. Our research shows that such direct recommendations from peers produce a level of engagement about 30 times higher than traditional online advertising does.
Once consumers have decided which products to buy and make purchases, companies can use social media to strengthen their involvement and foster loyalty. When Starbucks wants to increase brand awareness, for example, it launches a competition that challenges users to be the first to tweet a photo of one of the new advertising posters that the company has placed in six major cities in the United States, providing winners with $ 20 greeting cards. This social-media brand advocacy effort delivered a marketing blow that significantly exceeded the budget. Starbucks said the effort was "the difference between a launch with millions of dollars compared to millions of fans."
Marketers can also grow the community around their brands and products, both to strengthen consumer confidence that they make smart decisions and to provide guidance to get the most from purchases. The software company Intuit, for example, launched a customer service forum for the Quicken and QuickBooks personal finance software so users could help each other with product problems. Results? Users of Intuit employees answer about 80 percent of the questions, and the company has employed user comments to make dozens of significant changes to its software.
Social media can be used most proactively to lead consumers towards long-term behavioral change. In the early stages of a consumer decision journey, this might involve increasing brand awareness by driving web traffic to a table of contents about existing products and services. When the Old Spice grooming product introduced the Old Spice Man character to viewers, during the US National Football League 2010 Super Bowl, for example, the company's ambition was to increase its reach and relevance for men and women. The commercial became a phenomenon: starring former player Isaiah Mustafa, it got more than 19 million hits on all platforms, and year-on-year sales for the company's products jumped 27 percent within six months.
Marketers can also use social media to generate buzz through product launches, just as Ford did in launching Fiesta vehicles in the United States. For example, social media plays an integral role in the success of "Small Business Saturday," US shopping promotions made by American Express for the weekend immediately after Thanksgiving (for American Express CMO perspective John Hayes at the launch, see "How do we see it: Three senior executives in the future of marketing "). In addition, when consumers are ready to buy, companies can promote time-sensitive targeted offers and offer through social media to generate traffic and sales. Online men's clothing company Bonobo, for example, provides incentives for Twitter followers by opening a discount code after messages that are being hated a number of times. As a result of this effort, nearly 100 consumers buy products from the site for the first time. The campaign delivered a 1,200 percent return on investment in just 24 hours.
Finally, social media can solicit consumer input after purchase. The ability to gain insight into product development from customers in a relatively inexpensive way that has emerged as one of the most significant social media advantages. Intuit, for example, has a community forum. Starbucks uses MyStarbucksIdea.com to gather customers' views about improving the company's products and services and then aggregate submitted ideas and prominently display them on a special website. That site groups ideas with products, experiences, and involvement; ranking of user participation; and show ideas actively being considered by companies and people that have been implemented.
Convert knowledge to action
Despite offering many opportunities to influence consumers, social media still accounts for less than 1 percent of the average marketing budget, in our experience. Many chief marketing officers say that they want to increase their share to 5 percent. One problem is that many senior executives know little about social media. But the main obstacle is the perception that the return on investment (ROI) from the initiative is uncertain.
Without a clear sense of the value social media creates, it's perhaps not surprising that so many CEOs and other senior executives don't feel comfortable when their company goes beyond just "experimenting" with social media strategies. But we can measure the impact of social media beyond good volume and consumer sentiment; in fact, we can precisely determine the buzz surrounding a product or brand and then calculate how social media drives buying behavior. To do this — and then to ensure that social media complements the broader marketing strategy — companies clearly have to coordinate data, tools, technology, and talent across several functions. In many cases, senior business leaders must open their agendas and recognize the importance of supporting and even undertaking initiatives that may have traditionally been left to the chief marketing officer. As our colleagues noted last year, "we are all marketers now."
Consider the experience of a telecommunications company that proactively adopts social media but does not know if the effort is working. The company has launched Twitter-based customer service capabilities, several promotional campaigns built around social contests, fan pages with discounts and technology tips, and active response programs to engage with people talking about brands. In terms of social media, investment is relatively large, and senior corporate executives want more than anecdotal evidence that the strategy is paying off. As a starting point, to ensure that companies have designed quality work and carried out social presence, it refers to efforts towards approaches used by other companies that are known to be successful on social media. This then advances the following hypothesis:
If all of these social-media activities increase general service perceptions about the brand, that improvement must be reflected in higher volumes of positive online posts. 7
If social sharing is effective, adding clicks and traffic must result in higher search placements.
If both of these assumptions hold, social-media activities should help drive sales — ideally drive, at a level higher than the company can achieve with an average gross rating point (GRP) from advertising expenditures.
The company then tested the choice. On various occasions, it spends less money on conventional advertising, mainly because social-media activity is ramped up, and it is modeled to increase positive sentiment and higher search positions as it would use traditional metrics. The company concluded that social-media activity not only increased sales but also had a higher ROI than traditional marketing did. So while companies take the risk by shifting their emphasis to social-media efforts before having data that confirms that this is certainly true, the bet is paid off. What's more, the analytic baseline now in place has given the company confidence to continue to explore the growing role for social media.
In other cases, social media may have more specific roles, such as helping to launch new products or to reduce negative words from the mouth. a type of analysis can focus on mixing the effects of buzz, search and traffic; link that with sales or renewals (or whatever the key metrics might be); and then measure the results against total costs. This approach can give executives the confidence and focus they need to invest more money, time and resources in social media.
As these social-media activities gain scale, the central challenge is less around justifying funds and more around organizational issues such as developing appropriate processes and governance structures, identifying roles for all involved in a clear social media strategy, from marketing to customer service to development -and the product strengthens the talent base, and raises performance standards. new abilities abound, and social-media best practices are almost beginning to emerge. We know this: because social media influences every element of the customer's decision journey, communication must take place between as well as in function. Which complicates the reporting path and decision-making authority.
If the insights from social media monitoring are relevant to nonmarketing functions such as product development, for example, how will you identify and disseminate information efficiently and effectively — and then ensure that it will be used? If you see an opportunity to have a meaningful conversation with key influencers, how do you quickly engage the right senior executives to follow up? If you recognize service concerns moving quickly, how will you respond quickly and openly — and when you have to do it outside the traditional service organization? Senior executives at the company must recognize and begin to answer these questions.
Social media is expanding the disruptive impact of the digital age on various functions. Meanwhile, a perceived lack of metrics, fear, and a sense of limitedness might erode. Executives can identify the functions, touch points, and objectives of social-media activities, as well as craft approaches to measure their impact and manage their risks. The time has come for executive-suite discussions about how to lead and learn from people in your company, outside marketers, and, most importantly, your customers.