Creating the social enterprise

Shaun Smith

Posted by Shaun Smith twitter@shaunsmith_cem


The growth in social media

There has been an explosive growth in social media use over the past year. Twitter now claims 200 million registered users worldwide, up from 75 million just a year ago. LinkedIn has almost doubled in size over the same period and now claims in excess of a million users with 95% of companies using the site for recruitment purposes, whilst the daddy of them all, Facebook, passed the half-billion member mark in 2010. But we are still on the cusp of the revolution; it took Facebook and Twitter just over a 1,000 days to attract 20 million subscribers. Google launched a new social media product called g+ in July of 2011 - it took just 24 days to achieve that same level of penetration.

Image by Leon Håland

The emergence of social media as a primary channel is changing the very way that brands go to market. Take the traditional fashion catwalk show for example, Burberry chose to allow its 8 million followers to preview its cutting edge products by tweeting images of them just before they were shown live on the catwalk at the recent London Fashion Week. No wonder then, a Forrester forecast predicts that spending on interactive marketing will reach $55 billion by 2014. This will be driven by spend on social and mobile marketing that will see compound annual growth rates of 34% and 27% respectively through 2014. According to Angela Ahrendts, Burberry's CEO, unless businesses embrace social media it will be very difficult to survive. Watch Angela Ahrendts discuss Burberry's journey to the social enterprise right here:


There is no doubt that brands in general, and marketers in particular, are excited at the potential for reaching new audiences in new ways and positively influencing consumer word of mouth on the grand scale-the 'Twitter effect'. However, the reality may not be as seductive as the hype.

However, some brands have grasped the opportunity presented by social media and mobile channels and are organising to become, in the words of Marc Benioff, CEO of SalesForce, 'Social Enterprises', ones that are managing to operate seamlessly both off-line and on-line.

The Social Enterprise

The Social Enterprise can be defined as the 'Intentionally using social media to engage with customers and deliver an experience that builds brand loyalty for the enterprise'. There is research to show that in doing so organisations drive up revenues and profits. A 2009 study 1 found that "companies that are both deeply and widely engaged in social media surpass their peers in terms of both revenue and profit performance by a significant difference". Now the data does not prove a causal relationship; merely that those brands that engage the most with customers also happen to be more financially successful, but you don't need to be a rocket scientist to understand that when you are more engaged with customers they are likely to be more engaged with you. However, therein lies the challenge, unless you have a well thought through customer experience strategy that is intentional in delivering your brand seamlessly across multiple channels and the supporting technology to do it, increasing the level of engagement merely increases the level of risk.

Forrester's 'State of Customer Experience 2011' survey of 118 customer experience professionals around the globe found that 76% of them said that improving the on-line experience was their number one priority yet a lack of customer experience strategy was the biggest obstacle to success. So how do organisations climb on board this speeding train without risking a nasty fall?


Creating a social enterprise

There are three key steps to becoming a Social Enterprise:

  1. Engage -Create a customer social profile so that your brand is listening to customers and in the flow of conversation;
  2. Share - Create a social employee network within the organisation to share knowledge so that your people are in the know and able to respond;
  3. Create - Create a customer social network so that your customers become fans of your brand and are able to contribute to it.

Let's take a look at each of these three steps in turn.

1) Engage - being in the flow


Social media is happening whether you are there or not. So the first thing you need to do is to 'be in the flow'. This is easier said than done however. Dipping into social media is like sipping water from a fire hose- you may end up with more than you can handle! This means that you need good technology to help you sort the important from the irrelevant and, more importantly, help your people respond appropriately. There may be many thousands of tweets, blogs, or posts that mention your brand in passing. Most of these will be 'background noise' and not worth the effort to process. So the first thing is to reduce these to the few that are relevant. They also need to be aggregated so that you create a complete view of the customer and what their likes and preferences are. Today, customers expect you to offer a range of communication options—phone, email, website, chat, online forums and communities, fax, traditional mail, and in person. Many customers will use these channels interchangeably, so they must be integrated. This takes the multi-channel concept beyond just providing operational efficiency, it also provides customers with choices about the kind of experience they wish to have and how they wish to have them.

Social media data can be further reduced to those that require attention and finally, to those that need urgent action. For example, one mobile phone company picked up a tweet from a customer complaining that he couldn't get a good signal near his home. That particular customer happened to be a media celebrity with several million followers. The company concerned erected a mast near his home to improve the signal!

Some organisations are not only in the flow but are analysing the social media feeds to present back to its customers. First Direct, the telephonic and on-line bank, monitors social media commentary and reports what its customers are saying live on its 'Talking Point' web page. Customers can view the topics and post their own contributions so that the bank is constantly in the flow of feedback.

Products like SalesForce's 'Radian 6' are designed to manage the flow so that it is reduced to a trickle of insight from a deluge of information. But having arrived at the insight you then need to do something with it.

Dealing with detractors

Recent research by Convergys, the contact centre company, found that 76% of customers who heard about a bad experience via social media intentionally stopped doing business with or avoided doing business with the offending company 2. Given that the same study found that 83% of customers that have a bad experience tell friends and colleagues this is a massive threat to the bottom line. In fact one major brand traced a 25% decline is share price back to a single negative post from a disgruntled customer.

Convergys found that the average detractor would tell 45 friends via a social media site. However, that figure hides a wide range of potential impact. There is the well-known example of Dave Carroll, the United Airlines customer, who created a YouTube video of him and his band singing a song called 'United breaks guitars'. His song relates the story of how, whilst travelling on United, his guitar was damaged and, despite all his efforts to claim for the damage, he was unable to get United to listen to him. Finally, in desperation he wrote a song about his experience and posted it on YouTube on July 6th 2009. United was quick to respond and offered to compensate him but by then it was too late-the damage was done. By the end of July the video had been viewed 4.5 million times and, at the time of writing over ten million people have viewed the video with thousands more posting comments about it. It is impossible to gauge the damage this has done to United's reputation but imagine how much the average company might need to spend in order to create and air an advertisement that attracted ten million willing viewers.

The lesson we should take from the United story is that monitoring social media is one thing, using it to respond to customers effectively quite another. For that you need your people to be equipped.

2) Share - Get your people 'in the know'

In order to respond quickly and knowledgably to customers through whichever channel your customers choose to communicate you need your people to be informed and enabled. This is particularly important in the contact-centre because all so often this is the only contact that customers have with the employees of the brand. Tony Hsieh of on-line retailer Zappos sums this up well,

"We really care about each telephone interaction, and treat it, not as an expense to minimise or an opportunity to get revenue, but one of the best branding opportunities out there. What we've found is that, if we get the interaction right, then customers will remember that for a very long time and tell their friends and family about it." 3


One example is when Wendy Fitch, a regular Zappos customer, posted an 'out of office' announcement in her Outlook saying that she was away on a charity run for breast cancer. When the Zappos e-mail letter she subscribed to bounced back, one of the agents in the call centre picked it up. During her lunch break the agent purchased a gift card and sent it to Wendy with this message,

'Hello, Wendy, while working through e‐mails from our amazing customers, I came across your auto‐reply. Normally we mark them as auto‐replies but yours caught my eye. I just wanted to let you know what an admirable thing you are doing. We at Zappos are proud to have you as a customer and as a part of our family. Thank you for being a wonderful person'.

So what was it that enabled the agent to take that action? Firstly, that agent embodied the Zappos values. There are many bright, well-qualified people that you can hire, but only a few of them will be the right fit for your brand. We tell our clients 'Hire for DNA not MBA'. In other words find the people who share your values and teach them the skills they need. Zappos uses a 360-degree interview process to find the right people for the brand and then offers the new hires $2,000 at the end of their first week of training to leave the company. Why? Because Tony Hsieh only wants people who are passionate about the brand and committed to what it stands for.

Secondly, the processes and technology you use must support and enable the agents or front-line employees to focus on the customer. It needs to provide them with the right information at the right time about the right customer leaving them to focus on creating the right emotional connection. The agent desktop needs to centralise and integrate the various channels and present the information to the agent in the best way possible. Products like 'Service Cloud' and 'Sales Cloud' enable employees to get the right information at the right time about the right customer irrespective of the channel they come in through. In the example of Wendy Fitch, the email bounce back was picked up by one channel and the agent chose to respond via another.

Thirdly, employees need to be kept informed of the latest changes to products or services so that they, in turn, can provide accurate information to customers. Organisations like Symantec and Burberry for example, are now using internal forms of Twitter called 'Chatter' to ensure that employees are in the flow of communication too.

3) Create a Customer and Product Social Network - Turning customers into fans

In November 2009 Burberry launched a web site called 'artofthe' and invited customers to upload images of themselves wearing the brand's iconic trench coats. Within the first week 400,000 people from 191 countries had done just that. Within nine months the site had been visited 9 million times. Delighted with these results the brand started a Facebook page and now has in excess of five million followers.

Burberry and the mobile phone operator O2, both have brand communities. O2 calls it customers 'fans' and has a 'fan club' that provides privileged access to entertainment at the O2 Arena and sporting events. In the process the brand has attracted more users that any other company in the market place and has the highest NPS rating (Net Promoter Score, a measure of advocacy) in the industry. The question though, is how do you convert social media followers into brand fans and fans into paying customers?

High fashion brands promote themselves primarily through annual shows in Milan, Paris, London and New York. The problem is that only a small carefully chosen audience is able to experience these and it is then months before the products are available via the stores. Burberry launched a concept called 'Runway to Reality'. Its shows are now broadcast real-time in 3D to cities around the world to an audience of thousands. Simultaneously the shows are streamed live over the Burberry web site to a potential audience of a million who can view via their computer or iPad. Those viewers are then able to immediately click on the products they like and the products are delivered to the customers' home a few weeks later; and if the product doesn't fit or the customer doesn't like it? No problem, return shipping is free as well. No wonder then, that Burberry has seen such a growth in its sales over the past years.

The final stage of maturity for the Social Enterprise therefore, is to create a customer and product social network so that your brand has a visible presence and the means to facilitate the debate with customers so that they are able to become part of your brand and can co-create with you. This is achieved through raising the profile of your brand through Facebook and Twitter as Burberry has done, as well as creating the means for interaction via innovative applications such as Coca Cola, Nike and O2 are using.

O2 has a sub-brand called 'GiffGaff' that is positioned as a 'people powered network' because the customers use social media to promote the brand, suggest product ideas and provide advice to each other to keep operating costs down in exchange for the lowest prices in the market.



There is no doubt that e-commerce and social media are now main-stream and often the default choice for consumers when they interact with brands. This means that organisations must stop treating social media as an interesting, but peripheral, part of the marketing mix and start integrating it as a fundamental sales and service channel. This in turn requires managers to create a strategy that aligns processes, technology and people so that the experience that customers receive is consistent, intentional, differentiated and valuable irrespective of the channel used to deliver it. This raises an important question, 'who owns our social media strategy? Should it be Marketing because this has been the function responsible for brand reputation; should it be Operations because they run the contact-centre and inbound customer communication; should it be Customer Services because this is the unit that deals with complaints typically, or perhaps it should be IT because they are procurers of technology? In fact, the very nature of social media is that it is joined-up and the only way to become a Social Enterprise is to be equally joined-up. The that extent the Social Enterprise will only be successful if the 'C-Suite' owns it a team and it is approached as an integral part of the overall customer experience strategy.

So if you are one of the organisations intending to contribute to that estimated $55 billion spend on social media marketing by 2014, better start getting your customer experience strategy in place soon.

Copyright. Smith+Co 2011.

  1. 'Engagement' by Altimeter Group and Wetpaint 2009
  2. Convergys 2011 Scorecard Research (UK)
  3. Source: 'Bold-How to be brave in business and win' Shaun Smith and Andy Milligan. Kogan Page 2011
Shaun Smith

Shaun Smith

Consultant, author and speaker

Shaun Smith speaks and consults internationally on the subject of the customer experience. His consulting company Smith+Co work advises leading brands worldwide on their customer experience. Shaun's new book 'BOLD- how to be brave in business and win' co-authored with Andy Milligan examines 14 brands that are embracing social media and transforming their markets.

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