Understanding the Business Impact of the Social Business
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By Kathy Herrmann
Should You Become a Social Business?
If you are in business today you can't help but be inundated by the plethora of information about the social enterprise and Social CRM. Social pundits send the message deploying social is a "must have" for businesses.
The big question for business leaders, though, is whether social media will help them solve their business problems. And if so, then the question becomes one of how to combine traditional business methods with social media to do so.
What is Social Business & Social CRM?
Before social objectives can be defined much less strategies formed, it's important to first understand what social business means, as well as its closely related corollary of Social CRM. From there, you need to understand how these business methods will impact your company.
The social business model centers on engaging, collaborating, and connecting with customers, partners, employees, and other interested parties.
It refers to the holistic corporate adoption of activities that occur both internally and externally to the company and incorporates a company's entire business ecosystem.
Social customer relationship management, also known as Social CRM or just SCRM, narrows the focus to the customer, making them central to the business.
It goes beyond saying your customers are important. Companies with strong SCRM strategies build genuine and authentic relationships with customers by engaging in two-way conversations with them.
Social Business Centers of Focus
The social business model incorporates four centers of focus:
Monitoring social channels and measuring sentiment and activity
Engaging and connecting with interested parties
Shaping and influencing your customers (and partners and employees)—and being influenced by them
Collaborating and creating with your customers, partners and employees, and gaining from their ideation and feedback
By employing social media monitoring and engagement, you can become an active part of the online communities where conversations about your brand, company, products, services, and competitors are taking place. This means your company can also then be a strong influencer on its own behalf with customers and other parties interested in your company and products.
Should your company adopt the model? The short answer is…maybe.
Generally speaking, the social business model can increase shareholder value for the companies that have implemented well-conceived social initiatives. Social companies can gain a variety of results that include:
Increased sales revenues (via social acquisition and retention methods)
Lower marketing costs (via social marketing, better segmentation and more personal messaging)
Improved reputation management (via active and real-time social response techniques)
Improved customer satisfaction through better customer service
Accelerated and better product development (via ideation and more frequent customer feedback)
If implementing social business initiatives can increase your company's shareholder value more effectively than other corporate initiatives, then yes, it's the right business model for your company. This sounds obvious but too many social media pundits shy away from this business reality in the mistaken, if well-intentioned, belief that social business is the end all be all.
However, the rules of business remain in effect even when your company transitions to a social business model. Like any other corporate initiative, social media is no silver bullet and a social business is not an armory. You should expect to demonstrate a compelling business case for your social programs which means defining objectives, strategy, Key Performance Indicators (KPIs), and expected business results (cost savings or revenue generation), including demonstrating a Return on Investment (ROI).
What are the Risks of Avoiding Social Business?
Today's increasingly social customers expect companies to connect with them within their preferred channels -- and not yours. While some customers continue to prefer traditional business channels of phone and email, there is a groundswell demand for social connectivity. Companies that fail to understand this dynamic run the risk of disenfranchising customers, partners, and employees.
The social business model creates a collaborative bridge between a company and its various audiences. It creates opportunities for companies – but you also have to remember creating a social business includes a change management issue that your company will need to hurdle.
In the follow-on article—building the social business case—we share a 6 step approach to creating the business case so you can see if becoming a social business makes sense for your company.