For Enterprieses: 5 Building Blocks of Social Media

Last week, a piece I wrote about social media and enterprises was published on ReadWriteWeb. Here's the reposting. We've had some discussion in the comments on RWW (I love RWW readers--always very thoughtful comments). If you'd like to join the conversation, please go here and add your thoughts.

Enterprises and Social Media: 5 Must-Haves

Corporations know that their relationships with customers are drastically changing as a result of the new capabilities made possible by Web 2.0 and social media. Customers increasingly expect to engage with brands instantaneously and satisfactorily. They no longer tolerate long delays in response, live operators buried down the 1-800-line call tree, or the ever-mounting irrelevant spam.

Gradually, but extremely well, customers are learning to sound their voices for everyone to hear. Gone are the days when a customer needed to write a letter to an anonymous clerk at a random PO box address, leaving response to chance and corrective action to a Hanukkah miracle. Customers today can sound their likes and dislikes at anytime across multiple media, uncensored: no smart nephew, neighbor with a printer, or attorney needed.

Corporations are recognizing this shift as well. To survive, brands know they must interact with their customers in new ways across all channels: from outbound marketing to product feedback to sales to support. They also know that as undefined as the space is at the moment, they must take a highly creative and strategic approach to connecting with their customers online and offline. There is no corporate manual yet, no large consultancy slideshow to refer to. Customers themselves are setting the rules, which is a challenging model for most large corporations.

But some enterprises are starting to figure it out. They try different approaches, push the boundaries of experimentation, and continually test themselves, asking their customers to play judge. BurgerKing's WhopperSacrifice campaign is one example. When else has a large corporation asked people to sacrifice 10 of their friends? The campaign resulted in a whopping 233,906 people interacting with the brand in a new way (and to great controversy, always a good sign). Starbucks tried a safer approach after customer backlash against the automated coffee brewers it introduced in its stores. The MyStarbucksIdea campaign brought back some customers and put baristas back behind the coffee machines.

So what makes some brands more successful than others when interacting with customers online? What sets them apart? Here are five fundamental requirements for brands that want to form relationships with their customers in a Web 2.0 world:

1. Be a Panther, Not a Dinosaur

Size, complexity, and distance from the end customer play a substantial part in any enterprise's ability to effectively connect with customers. The closer a company's employees are to end customers and the more direct contact C-level executives have with customers, the faster the company will be able to adapt to new means of customer interaction, to allocate budget, and to get everyone on board with an actionable plan.

Zappos' CEO, Tony Hsieh, grew his company into a $1 billion a year retailer with his unmitigated commitment to customers. Hsieh applied a dynamic method early on, changing Zappos' offerings constantly and agilely (free shipping, new product lines, 360-day return policy) until they fit customers just right. Corporations today must learn agility, be able to adapt and change quickly, and commit to making all decisions based on customer benefit. The corporate dinosaur will not survive for long.

2. Evolve Your Organizational Culture and Structure

While some brands, like Disney and Zappos, have always put the customer at the center of their organizational culture, others, like Wal-Mart and Panda Express, are just now figuring out the importance of aligning their internal culture with their customers' culture. This evolution is easier for brands that are already structured around their customers, but for others it will be trial and error.

No matter how it gets there, every enterprise -- whether B2C or B2B -- will have to evolve its culture in the coming three to five years to survive. This evolution means re-examining traditional approaches to inbound and outbound customer outreach and being willing to shift ownership and re-structure so that each and every employee is responsible for the customer experience. Organizations will likely become flatter and return to cultivating leaders from within who can move the organizational culture forward.

3. Understand that Loyalty Is Key to Revenue

For most people, the mere thought of switching online banking providers and having to re-enter all of their information in a new system is dreadful enough that they just don't do it. Cell phone carriers in the US have contract termination fees that are higher than the cost of most phones. These companies rely less on loyalty than on "customer hijacking."

Other companies, including software and hardware manufacturers such as Dell, HP, and Lenovo, cannot constrict customer choice. These companies compete for mostly similar markets -- offering similar products, services, and prices -- and are after customer loyalty most of all. Ask any of these three corporations what it would like to be when it grows up, and it will point to Apple. Apple is the gold standard for generating customer loyalty -- no ransom required.

As Web 2.0 breaks down the walls among customers and between customers and brands, the tie between loyalty and revenue will grow even stronger, and brands that hold customers hostage will be deserted for those that provide real value. A corporation's ability to demonstrate value and secure loyalty will now be measured by their presence and customer relationships online.

4. Bring in the Right People

Traditional consultancies like McKinsey and Bain were once valuable to corporations because of their subject matter expertise. They provided top-down know-how that was adopted by executives and pushed down the chain of command. This approach is completely useless for expanding a corporation's connection to customers online. The right people today possess two key qualities. The first, which is the more easily found of the two, is "in the trenches" experience. People with this quality regularly interact with others online, use various social media conversation tools, are passionate about communities, and can mobilize others with a 140-character line.

The second, much more difficult to find, is the ability to articulate and translate this in-the-trenches knowledge in a way that makes sense to corporations. The right people for an enterprise's interactions with customers have to be able to connect the new psychology of customers with the traditional way in which corporations work. They must know how to help corporations create new strategies, foster change management, and create action plans that lead to clear and measurable results. Corporations will have a tough time finding people with just the right combination of qualities and capabilities; but once found, these emissaries will deliver crucial and uncompromising value to the customer-oriented corporation in the Web 2.0 world.

5. Have a Strategy!

Brands today that have an effective online presence didn't just stumble on the right formula. Getting things right takes work, commitment, experimentation, and genuine care. Whether they realize it or not, brands that are successful in social media have always acted on strategies. They have always set clear goals, developed a plan to reach those goals, and put budgets and people behind them.

Before Web 2.0, Southwest Airlines was the poster child of great customer service. Today, Zappos does for online retail what Southwest did for the discount airline industry. Wal-Mart may not pay its merchants to blog, but the merchants' time is paid for with their salaries. Corporations today, more than ever, need to reassess their strategies and ensure that those strategies are an expression of their desire to move forward rather than fear of losing momentum or control.

Having a Twitter or Facebook page is not a strategy. Nor is it very effective to hire community managers and charge them with reducing marketing dollars. The corporation today must first figure out its goals in the Web 2.0 world, set relevant metrics, invest in understanding customer needs, and map out an actionable plan it can implement. Only then will its full potential in the online social world be realized.

With 68% of online adults using one or more social media tools and 42% of online adults reporting an interest in at least one type of social application from brands they like, enterprises cannot ignore the changing landscape of customer relationships. In the coming years, corporations will not survive on product lines and competitive pricing alone. For corporations to remain competitive, they will need to become more flexible, put people at the center of their culture, and remain dynamically attentive to human needs. It is time again to realize that change should be embraced, not feared, and to put in place the right structures, strategies, and people to support this change.