Social Media Customer Leaders: Some Early Performance Data

You’re grabbing a coffee in the break room when your boss’s boss walks in. You’re surprised that she seems to recognize you. Did you make an impression in your short presentation last month? You exchange a few snarky water cooler comments about last night’s performances on American Idol, and then she hits you with the zinger: “Times are tough for us right now. What have you been doing lately to boost our performance?” You could say, “Well, I’ve been tweeting a lot,” but would you feel confident saying that? Perhaps you should. We found that tweeting is both common and encouraged among a select group of companies we call Social Media Customer Leaders, or SMC Leaders for short. We identified these companies in our new Babson Executive Education survey of over 900 global executives, managers, and individual contributors. (Special thanks to colleagues Elaine Eisenman and PJ Guinan for their ongoing input to this research.) SMC Leaders are the companies where employees “strongly agree” with the survey statement: “our organization has embraced social media (like Twitter, blogs, and Facebook) to improve its responsiveness to customer needs.” At the other end of the spectrum are SMC Laggards, who strongly disagree with that same statement. Some noteworthy performance results when comparing SMC Leaders to Laggards: Only 21 percent of SMC Leader companies have flat or declining sales over the past year compared to 31 percent of SMC Laggard companies. Many respondents did point out in a comments box section of our survey that social media is not a singular reason for strong performance, but one piece in the tapestry of reasons. “We try different angles of marketing to appeal to a broader range of customers,” said one respondent from an SMC Leader, “and it seems to be working as our sales are improving while those of our competitors languish.” Leaders also say they are putting more sweat equity into retaining customers, and social media is one way to keep in touch with clients: “In these uncertain times our company has invested more in client relationships and building stronger client teams,” noted one respondent. While just five percent of SMC Leader companies had higher than 25 percent growth over the last year, that’s two-and-a-half times more than the 2 percent of SMC Laggards that could say they grew that much. For some SMC Leaders, social media is a core growth strategy, or it is closely tied to new potential sources of revenue. For example, one respondent from an SMC Leader told us that his company is “extremely proactive in [linking] new products to…Twitter and Facebook.” But more often social media is just one of many tactics companies use to grow sales under a broader strategy. For example, several respondents noted that their organizations’ main growth engine is globalization. One firm has decided to shift its client acquisition and retention resources away from the US toward Asia-Pacific and Latin America. These companies are using social media as part of that bigger global strategy. Twitter, Facebook and blogs extend global reach, but also function as a way to carry on conversations with local customers. Summarizing her company’s globalization strategy, a respondent from a SMC Leader says: “Each country’s [marketing group] must be effective in detecting what its customers need.” And the direct contact with customers afforded by social media is a useful tool for this detection. Two-thirds of respondents from SMC Leader companies strongly agree with the statement, “We are more effective meeting customer needs today compared to 18 months ago” when the recession began. That’s three-times the rate of SMC Laggard companies. An obvious reason for this is the communication and dialogue with customers that social media facilitates. Less obvious, perhaps, is the financial benefit: since they’re often cheap to use, social media allow some SMC Leaders to solve the contradictory need to drive down their costs while increasing their interaction with customers. As one respondent states, “We have taken advantage of the recession to focus on lowering costs while keeping our quality high [in customer service]. A lean operating cost structure is a competitive strength.” Inexpensive and efficient, social media can give customers more extensive explanations of their offerings than traditional marketing and advertising can. SMC Leaders that offer complex product lines or pricing models can use social media to clear the fog for customers and can thus speed up purchase and delivery. SMC Laggards obviously lack this channel of communication to provide clarification for their customers. Laggards’ bewildered customers may have to struggle to piece together information like it’s an episode of “Lost.” Even if laggard customers are not more demanding, one respondent admitted, “they are more confused.” Correlation isn’t causality, of course. Aggressive adoption of social media can be a signal that an organization is more dynamic and innovative in the first place. For instance, SMC Leaders are two-and-a-half times more likely to strongly agree with the statement, “My company puts more emphasis on innovation and growth today than before the recession” (43% vs. 17%). As we suggest in the title, we are still in the early stages of looking through our survey data. Of interest next is the performance of the 38 percent of SMC Leaders (compared to 2 percent of Laggards) that also use social media internally for CEO-employee and employee-employee interaction, such as strategy communication and knowledge sharing. Have you ever wondered whether your boss’s boss recognizes you from your company’s internal Facebook account? H. James Wilson is a Senior Researcher and Senior Writer at Babson Executive Education (BEE) in Wellesley, MA. At BEE he is a contributor to an ongoing Social Media research study led by Dr. PJ Guinan. Wilson has written for numerous publications including The Wall Street Journal and Harvard Business Review, and HBR Online where “Innovation Teams Lack Data, Structure” appears.

Social Media Customer Leaders: Some Early Performance Data

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