The following is an article from the current issue of CRMGuru, where I was asked for my thoughts on a trend that CxO’s should be thinking about in 2007. Would love your thoughts.
Why You Shouldn’t Ignore Social Networks
By Christopher Carfi, Cerado Inc.
Social networking was big in 2006. Really big. Really, really big. MySpace has more than 50 million members. Google bought YouTube, a video-sharing site with a heavy social component, for $1.65 billion. Facebook, a social networking site for college students, is rumored to be courting buyers with a price tag in the billions as well. However, most of the social networking action in 2006 was in the consumer space. I predict 2007 will be the year when social network becomes a critical part of the business landscape. Customer-facing executives—and CSOs and CMOs in particular—need to be aware of this fundamental shift that is on the horizon if they want their companies to succeed in the wake of this transition.
Deceptively simple, online social networks contain great power. They change the online space from one of static web pages and stale marketing messages to a live, vibrant network of connected individuals who share their abilities, expertise and interests.
In both professional and personal life, human beings naturally form groups based on affinities and expertise. We gravitate to others with whom we share interests. These real-world networks form organically, and consist of our family, friends, colleagues, mentors and advisors. These networks have always formed in the "real world" and, not surprisingly, rapidly migrated to the online world.
Customers have lost trust in traditional sales, marketing and service (the three areas commonly referred to encompassed by CRM. According to the 2006 Edelman Trust Barometer, a survey of 2,000 opinion leaders in 11 countries, "the most credible source of information about a company is now ‘a person like me,’ which has risen dramatically to surpass doctors and academic experts for the first time." The survey relates that in the United States, trust in "a person like me" increased from 20 percent in 2003 to 68 percent today.
The connections enabled by social networks are the glue that put the humanity back into business to solve the trust problem. In other words, the organizations that will win are the ones that most easily enable individuals to build relationships and communities with people they trust.
Not just kids
And don’t discount social networks as something just for young people. Although social networks such as MySpace (known for being an online hangout for the high schoolers) and FaceBook (which targets the college crowd) have garnered much press in the social networking space in 2006, other professionally-focused online networks are being used in many ways in the business and association realms, and social networking is poised for growth in 2007 in a number of areas. A few of these areas are:
- Customer and member relationship development. Customer satisfaction is at an all-time low, perhaps as a result of reduced business focus on actual relationships and an increased business focus on CRM systems that emphasize the management of data, rather than personal connections. Online social networks allow a prospective customer or prospective member to easily facilitate a real, human-level connection with individuals within an organization. This enables genuine business relationships to form and puts an authentic human face on the interaction, changing the external perception of an organization from a sterile, faceless behemoth into a collection of individuals who are ready to help.
- The use of the network to find experts or locate knowledge to better support customers. Only a fraction of an organization’s "knowledge" exists in databases. Another fraction exists in the form of explicit documents and reports that may be found on an organizational intranet. The vast majority of organizational knowledge, however, exists only in the heads of its members. Inside an organization, online networks with even basic profiles of its individuals’ experience, location and interests can greatly reduce the time required for organizational problem-solving, through enabling faster connection between a questioner and the person who has solved similar problems in the past.
- Better service by providing customers with the "whole product." It is rare that a single organization can provide all the pieces needed to meet and create an entire solution. For example, even though a real estate agent aids in the process of buying a home, the customer must have an entire network of other service providers, such as title company, bank, insurance agents and contractors to complete the purchase. By creating a strong network of complementary providers with similar philosophies and business practices, a single service provider can provide a much greater proposition to a prospective customer than an individual working without the benefit of the network.
- Creation of "all-star" teams that are right for each customer. Especially in service organizations, creating both the right set of skills and the right culture are key to creating a connection with a prospective customer. An internal social networking system enables the individuals responsible to creating relationships with prospects to pull together the "right" team to meet the prospective customer’s needs and, at the same time, pull together the unique group of individuals who will resonate with the prospect at a personal level.
As technology has progressed at an ever-increasing rate, the things that are actually beginning to bring customers closer to an organization are not technical at all. It’s an interesting bit of irony. And it’s inevitable.