Menu
Menu
Why social media matters

Why social media matters

Social media is a ubiquitous part of everyday communication but how can companies get maximum value from its use?

The news that music retailer HMV was going into administration was broken to the world by one disgruntled ex-employee who hijacked the company’s Twitter account and tweeted “There are over 60 of us being fired at once!" among other pithy comments that concluded with a final update reading: "Just overheard our marketing director (he's staying, folks) ask 'How do I shut down Twitter?'”

“We cringe when we see someone else make a mistake and think how could you be so foolish,” says Anthony Mittelmark, an enterprise-grade digital expert and director at PwC Australia, “but the reality is that most companies are only one tweet away from a similar situation.

“Companies think that Twitter is important, but not a lot of thought has been put into the governance of the channel.”

In just a few years, Facebook, Twitter and other social media have changed the way we communicate about everything from the brands we like (or dislike) to the way we shop and how we manage projects. With the technology still maturing – along with some of its more colourful users – social media is a powerful tool for connecting with customers because the cost of reach is low and the number of people it reaches is potentially very high.

“Currently, social media tools like Facebook and Twitter are primarily a PR tool, and are prone to comments and trends. And things that are trending carry more weight in the media than in reality, so companies tend to give them a lot of credence,” Mittelmark says.

While social media may help raise a company’s profile, a recent survey of US executives published in Hays Journal found that social media ranked among the top five sources of risk to a business.

Potential problems the research identified included the need to monitor comments by employees and others post on social networking sites, the importance of protecting the employer’s brand and the constant investment needed to keep up with evolving technology.

“Employers need a clear strategy on how they address social media and present their brand. It has to be part of an overall brand strategy and not a free-for-all,” says Nick Deligiannis, managing director of recruiting firm Hays in Australia.

“This means the investment needed to implement an effective and safe social media strategy can be substantial. Content must be consistent, high quality and channel-specific to add value and reflect well on a firm’s brand.”

An ongoing resource that is either internal or external to post and monitor content, and interact with a company’s followers is also needed, Delgiannis adds.

“Managing resources in-house presents its own hazards, since content is often provided by more than one person and by different departments. So, heads need to be allocated to manage this process across all channels to ensure content and messaging is aligned to company positioning and to respond consistently to any negative comments.

“Just as social media has the power to support and drive an employee value proposition, badly handled it can completely undermine those efforts. And worse, the evidence remains online indefinitely.”

Mittelmark agrees. “A negative potshot can be pretty damning,” he says. “Consider the backlash against retailer Target created by a Port Macquarie mother’s concerns over the revealing nature of preteen girlswear last year. And famously in 2009 in the US a man whose guitar was destroyed by United wrote a song called United Guitars that went viral and brought down the company’s stock price.

“This demonstrates that, in the right circumstances, social media allow an individual an equal voice to the brand itself.” And it is here that companies have a real opportunity to engage with their customers, he says, because the majority of interactions on social channels are complaints.

“Brands have a very shallow taxonomy and managing them is very important,” he says. “Companies tend to have siloed IT, business development, marketing and brand management, but in order to take advantage of the opportunity social media bring they must act laterally.”

He argues that the way companies currently use social media to respond to customer complaints is in a fledgling state. “By using social media mostly as a PR response to manage a company’s reputation, as in the case of companies like Telstra, this ignores an opportunity for customer acquisition and retention.

“The usual Twitter response misses the point,” he continues. “If someone tweets something derogatory about Telstra, they want to be asked what the problem is, not fed a PR message.

“If we look at banks, telcos and insurance companies, there is low differentiation in the services provided and a disgruntled customer whose concerns aren’t addressed has a higher propensity to change providers than normal.

“Even so, if the problem is not resolved in an expedient manner it doesn’t help with retention.”

Facebook and Twitter may be the best known, but there are literally thousands of social media websites and applications. Many are specific about individual services and products, where “the conversations might be smaller but they are more detailed”, says Mittelmark, adding that in terms of customer acquisition, social media’s role is very important and has the potential to significantly grow in value.

“For example, a new computer may be analysed on review sites or discussed on sites like Whirlpool, where conversations are very articulate and technical.

“Even if comments are taken with a grain of salt, they can be enough to push a customer over the line in terms of switching to a new brand or staying with what you know. The feedback given in the chats and whether people love it or hate it is more important because of the expertise of the people writing the reviews.”

Uvent is a complaints website (built by Mittelmark) that allows industry access to the complainant. It operates on the principle that “the first person to resolve my issue when I put it out there will gain my business” and while Mittelmark says it is still relatively new on the scene, he believes that sites like this offer companies a great opportunity to attract new customers, and strengthen relationships with existing customers.

“Of course, this depends on their being able to act swiftly enough in response to a complaint being posted.”

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!

Error: Please check your email address.

Tags University of Sydney Business SchoolMatt PancinoSuncorpsocial media

More about Andrew Corporation (Australia)FacebookGartnerGoogleHMVPricewaterhouseCoopersStumbleUponSuncorp GroupTelstra CorporationUniversity of SydneyUniversity of Sydney

Show Comments
Computerworld
ARN
Techworld
CMO