How to Play Social Technologies

How well does your company -- or the companies in which you invest -- benefit from social technologies? A new book explains why you should care.
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Globally, businesses are about to experience the greatest changes since the advent of the Internet. We call it the Groundswell, and in our new book, Groundswell: Winning In a World Transformed by Social Technologies (co-written by Charlene Li), we explain what it is, how businesses can benefit from it and how it will change the world.

The groundswell is what happens when people connect with and draw strength from each other, using social technologies online. It includes not just the social networks like Facebook and MySpace (

News Corp.

(NWS) - Get Report

) that get all the attention, but a whole range of applications that connect people with each other -- blogs, wikis like Wikipedia, user-generated content sites like YouTube (

Google

(GOOG) - Get Report

), discussion forums, ratings and reviews like the ones on

Amazon.com

(AMZN) - Get Report

, and even the endless chatter created by new applications like Twitter.

And while these technologies are evolving at a rapid pace, the trend is constant. People connecting with one another are powerful and that power threatens institutions, such as corporations.

From JetBlue to 'Jericho'

When

JetBlue

(JBLU) - Get Report

stranded thousands of people on planes on Valentine's Day 2007, a blog called jetbluehostage.com energized the protest that led, eventually, to the ouster of JetBlue CEO David Neeleman.

Fans of the cancelled

CBS

(CBS) - Get Report

show

Jericho

, organizing online, sent over 20 tons of peanuts to the office of CBS executive Nina Tassler, persuading her to bring the show back to CBS (where it failed to get the ratings to continue).

This is the full-throated groundswell at work. The balance of power has swung in favor of the customers, and it's not coming back.

P.O.S.T.

Companies can't stop it, but they

can

take advantage of it. That is what

Groundswell

is about. And it's all based on a simple four-step process we describe with the acronym POST.

P stands for people -- analyze your customer base and its social capabilities. If you're selling soft drinks to college students, connect with them on Facebook. If you're selling retirement plans to 55-year-olds, don't waste your money -- they're not big on social applications.

O means objectives. Too many companies start with the technologies -- "let's do a blog" or "let's start a community" -- instead of focusing on what they actually want to accomplish. Pick an objective first -- listening to customers, talking with them, energizing them, supporting them or embracing their ideas -- and then build a strategy.

S refers to that strategy. Consider the long-term impact of these social technologies. A social application -- a community, a blog, a wiki, a Web site with customer ratings on it -- is an asset, not an ad campaign. How are you going to use it?

T is for technology. Once you've got the people, objectives and strategy figured out, decide which tools to use. Do this last, not first.

Companies

are

doing this. Like

Procter & Gamble

(PG) - Get Report

, which learned to market tampons to the most brand-resistant customers in the world -- teenage girls -- using a community called beinggirl.com, and found it four times as cost-effective as advertising. Or Adidas, which generated 4 million impressions out of every $100,000 it invested online by getting people to pass along brand messages on MySpace. Or the customer relationship management application

Salesforce.com

(CRM) - Get Report

, where customers now generate half of the new features in every release on a simple voting site. There are 25 case studies like this in

Groundswell

, every one with proof of business value.

Dell

(DELL) - Get Report

turned around a reputation for poor customer service using the groundswell. It connected with bloggers, created its own blog at direct2dell.com, built an idea community for generating new product ideas and used social technologies to connect its employees. Now Dell even has a blog about its stock at dellshares.dell.com. Its support forum, where at least one in five visitors find their own answers, saves Dell thousands of support calls at around $10 per call. Michael Dell brags that his company will benefit from 100 million customer contacts this year.

Do the companies in which you're investing even know how many customer contacts they have?

I'll leave you with this advice. Pay less attention to the big consumer-facing social applications, like Facebook and YouTube -- they're still trying to find ways to monetize the huge traffic they generate. Instead, look for companies that build corporate social applications. One is Communispace, which builds private research communities and charges its customers over $150,000 a piece -- and has to bat off prospects with a stick. Or Blast Radius, which has been snapped up by mega-agency

WPP Group

(WPPGY)

. It builds social applications for marketers. Or salesforce.com, which has taken its own idea community and begun cloning it for the likes of

Starbucks

(SBUX) - Get Report

(see the results at

mystarbucksidea.com

).

Corporate social applications are going to be big business. The people who build them will be very successful.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com book purchases by customers directed there from TheStreet.com.

Josh Bernoff and Charlene Li are vice presidents and principle analysts at Forrester Research.