Social Media and Customer Service

A recent McKinsey survey on the benefits of social media gves a good relative benefit pfrom different areas (see above).

They define 4 types of "Socially Networked Organisations":

Developing Group
Among respondents who say their companies are using Web 2.0, most (79 percent) achieved a mean improvement of 5 percent or less across a range of business benefit metrics. Respondents at the companies in this group report the lowest percentages of usage among their employees, customers, and business partners; say that Web 2.0 is less integrated into their employees’ day-to-day work than respondents at other companies do; and are least likely to report high levels of collaboration or information sharing across the organization.

Internally networked organizations.
Some companies are achieving benefits from using Web 2.0 primarily within their own corporate walls. The survey results indicate that companies in this group—13 percent of those using Web 2.0—derive substantial benefits from deploying these technologies in employee interactions. Respondents at such organizations report a higher percentage of employees using Web 2.0 than respondents at developing organizations do. Respondents at half of the internally networked organizations reported that Web 2.0 is integrated tightly into their work flows, for example, compared with only 21 percent of respondents at developing organizations. Web 2.0 also seems to promote significantly more flexible processes at internally networked organizations: respondents say that information is shared more readily and less hierarchically, collaboration across organizational silos is more common, and tasks are more often tackled in a project-based fashion.

Externally networked organizations.
Other companies (5 percent of those deploying Web 2.0) achieved substantial benefits from interactions that spread beyond corporate borders by using Web 2.0 technologies to interact with customers and business partners, according to survey results. Executives at these organizations reported larger percentages of their employees, customers, and partners using Web 2.0 than respondents at internally networked organizations did. But the responses suggest that the internal organizational processes of externally networked organizations are less fluid than those of internally networked ones.

Fully networked enterprises.
Finally, some companies use Web 2.0 in revolutionary ways. This elite group of organizations—3 percent of those in our survey—derives very high levels of benefits from Web 2.0’s widespread use, involving employees, customers, and business partners, according to the survey. Respondents at these organizations reported higher levels of employee benefits than internally networked organizations did and higher levels of customer and partner benefits than did externally networked organizations. In applying Web 2.0 technologies, fully networked enterprises seem to have moved much further along the learning curve than other organizations have. The integration of Web 2.0 into day-to-day activities is high, executives say, and they report that these technologies are promoting higher levels of collaboration by helping to break down organizational barriers that impede information flows.

As you would expect, the more networked, the more high impact Social Media has. The only downside with the survey is that it is self reported results, so there is a "they would say that, wouldn't they" aspect to it but to me the interesting thing is the statistical results (see diagram above) showing that there is a fairly high correlation between Social media and market share improvement for the the better players, but its pretty poor for others, but a much lower correlation between operating margins and market leadership. In terms of market share benefits, the main drivers reported were (see below):


The left hand side - internal productivity - is all very nice, but teh beef is in the middle - how does Social Media increase revenues and/or reduce costs.

- Increased market awareness - 63%
- Increased customer service - 50%
- Reduced marketing costs - 45%
- Reduced support costs - 35%
- Reduced Travel costs - 29%

What is unfortunate is the the magnitude of the benefits is not known (eg by how much was market awareness increased). Note only 24% reported an actual revenue increase, so it seems like although the main impact is on cost of customer acquisition/service/retention, the impact (to date, anyway) has been interesting, but hardly earth shattering. still, if you are a large company witha lw profit margin, even a small % increase makes a big difference.

Another interesting article this weekend was on the Web as a Customer Service tool:

That's what I tell my Gutenbourgeois friends, if they'll listen. I say: Create a service experience around what you publish and sell. Whatever “customer service” means when it comes to books and authors, figure it out and do it. Do it in partnership with your readers. Turn your readers into members. Not visitors, not subscribers; you want members. And then don't just consult them, but give them tools to consult amongst themselves. These things are cheap and easy now if you hire one or two smart people instead of a large consultancy. Define what the boundaries are in your community and punish transgressors without fear of losing a sale. Then, if your product is good, you'll sell things. (Don't count on your fellow Gutenbourgeois to buy things. They're clicking the little thumb icon on YouTube like everyone else.) If you don't want to do that then just find niche communities who might conceivably care about your products and buy great ad placements. It's a better online spend.

Which is interesting. The McKinsey survey feels "kinda right" on 3 counts - firstly the big impacts on market awareness and customer service, secondly the relatively small number of companies doing anything seriously, and thirdly the failrly low correlation - ie this stuff is not a magic bullet, a "just add water" magic pill solution, but is an organisational/workflow issue - i.e non trivial - if one wants to get benefits, and the benefits, though respectable, are not particulalrly game changing for most.