Charlene Li, the founder of the Altimeter Group consultancy in San Mateo, Calif., has built a reputation as one of the savviest thinkers around on social media and Web technologies. She spoke to The Financialist about how companies can better understand the impact social media has on their bottom lines.
The Financialist: What are marketers afraid to ask publicly about social media?
Charlene Li:The thing that it all keeps coming back to is measurement.
People who have a Facebook page kind of know what to do. They have some form of engagement. But if you’re a business manager looking at social media engagement from an investment point of view, you’re asking yourself: “Is it worth it? And how do I think about it as part of an overall, integrated marketing strategy?”
Digital moves so quickly compared to all the other channels. (Technology) keeps changing faster than we can adapt, and so the question then also becomes: How do we catch up, and stay on top of and understand all of these changes?
TF: In establishing a social media strategy, should technology be the starting point?
CL: If you start with the technology, you are doomed. You have to think about your customers first and understand what they want. Those (needs) change much slower than the technologies. So, if you just think about the relationships you want to have (with customers) over time and have a good understanding of what your customers need, you’ll be able to build social media campaigns supported by the right technology and the right messages.
Brands That Get Social Media
Kohl’s
The U.S. mid-market retailer has more than 10 million fans on Facebook, where the company regularly posts promotions and responds to as many as two-thirds of its customers’ social media comments, Li says. “That sets a tone, and customers start to support each other. They’re asking: ‘Hey, I’m looking for this coupon. Does anybody know where it is?’ Then they’re sending each other links.”
Dell
Dell has gone from “the poster child of how not to do social media” to an industry darling, Li says. After bloggers battered Dell’s reputation in 2005, the company shook off its reluctance to engage critics and responded to every single blog post, she says. “Now they have 11,000 out of 90,000 employees trained on how to use social media … Michael Dell himself is active in social media.”
American Express
American Express used social media to create a new shopping “holiday,” says Michael Wiley, chief social media officer at VivaKi. Major retailers usually have their biggest sales day of the year the day after Thanksgiving, but small businesses are often forgotten. So, AmEx devised Small Business Saturday, a new shopping holiday that takes place the day after Black Friday. “Then, AmEx used Facebook, Twitter and Foursquare in ways unique to each platform to drive awareness and, ultimately, in-store purchases,” Wiley says.
TF: If questions surrounding return on investment, or ROI, are difficult to answer, how should brands move forward?
CL:People know they can fly halfway around the world, look somebody in the eye and shake their hand. They can’t put an ROI number on it, but they know it’s effective. Social media is very much that way. It’s not about a specific ROI output.
What is the return you’re looking for? What are the business impacts you’re looking for? It could be that I’m not looking to drive revenue – I’m looking for innovation. I’m looking for ideas…to bring our products and services to the next level. It could be (that) I want people to provide support, too — so it’s not just my company providing support, it’s an entire ecosystem of partners and companies and employees and customers supporting each other. That’s a very different relationship than if you go out there as a marketer and say, “You know what? I’m just going to push a product out there.”
ROI isn’t the one question to ask. It’s a sub-question, and an important one. But the first question is: What are you trying to accomplish? What is your goal?
TF: As individuals, we all use social media. Why does it seem risky to companies and the brands they support?
Risk is something companies, in general, have a hard time with. They can’t tolerate even the smallest mistakes, and social media is a two-way dialogue. It’s a relationship. But they don’t want to acknowledge that relationships are not perfect.
The companies that can deal with this are the ones that have enough resilience to bounce back from setbacks, from mistakes and failures. That kind of organizational fortitude – that thick skin – is what a lot of companies are having a hard time with because they’ve never had to deal with it before. (Traditional marketing has) always been a one-way conversation, and if there was any criticism that was coming back, it was very much in private channels.
But the reality is, (companies) can’t make (criticism) go away unless they actively participate in that conversation.
TF: How can organizations adapt to this new reality?
CL: I wrote a book two years ago called “Open Leadership,” and its premise is understanding that you’re not in control of relationships. So, as a leader of an organization, or as a CEO or head of marketing, if you’re engaging and you want to have those relationships, knowing and realizing that you’re not in control is a first step.
Companies, in general, have a really hard time with that. Overall, this goes back to business fundamentals. We all too often focus on the hot new technologies. Technologies will come and go; the apps will come and go. You have to be prepared for that as an organization and keep your relationship with your customers front and center.
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