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Social connectivity: Friend or foe to corporations?

Added on Jan 09, 2012 by Bart Perkins
Bart Perkins About the author

Bart Perkins

Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com .

In 1929, Frigyes Karinthy conjectured that anyone on Earth was connected to anyone else, on average, through just six people. Social networking may be increasing connectedness. Facebook recently studied connectedness among its 721 million active users, concluding that the average distance between any two Facebook users is now only 4.74 "hops" (down from 5.28 in 2008).

That connectedness has benefits for corporations, which can use social networking to provide easy two-way customer communication and facilitate targeted marketing. But increased connectivity has other implications:

News travels faster. Thirty years ago, dissatisfied customers usually told eight to 15 friends about their experience. Today they can (and do!) tell many more. The title of Pete Blackshaw's book says it all: Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000: Running a Business in Today's Consumer-Driven World. Moreover, according to Conversocial, many retailers fail to sufficiently monitor social networks ; it reported that several Fortune 500 retailers missed all consumer complaints on social networking sites during a five-day study in September 2011. Unfortunately, oblivious companies also miss the opportunity to address complaints before they spread widely. Reports of poor customer service can potentially result in numerous customer defections.

Even corporations with superior customer service can be trashed (or "bombed," in current lingo) by those who dislike their products or corporate policies. In an Amazon-bombing, for example, people coordinate an effort to give a product negative reviews. That's what happened to psychiatrist Carole Lieberman's book after she offended members of the gaming community by linking sexual scenes in video games to an increase in rape. Similarly, Google-bombing can trash organizational reputations through highly linked websites or social networks.

Stakeholders are connected. Everyone within your business ecosystem could potentially be connected: your customers, suppliers, bankers, lawyers and so on. (And any of them could be connected to your competitors.) Suppliers and customers could easily attempt to bypass you, thereby undermining your business and profits. Minimize this danger by treating your suppliers well. They are far less likely to bypass you if they feel you accommodate their business needs and enable them to earn a fair profit. The days of squeezing your suppliers are long over. Aim for mutual success.

Customers have more information. Retail customers do a lot of research before buying a product or service. Besides studying product features, many ask friends for recommendations. For major brands, the social-media link here is marketing tools like Facebook's Sponsored Stories program , which offers product comments and recommendations from a user's Facebook friends. Facebook contends that these stories increase customer engagement significantly over standard advertising.

Social connectedness should receive significant corporate attention. Besides improving its monitoring and response strategies, your corporation should set up a way to connect regularly with its employees, suppliers, customers and other critical stakeholders. By connecting early, it will be able to establish the initial tone and perspective when an issue arises and not be forced to play catch-up.

Connect early, connect often and connect effectively. Leverage social connectedness to polish and protect your corporate reputation and to enhance future success.

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