How to use social networking technology to co-create unique value with customers

How to use social networking technology to co-create unique value with customers

Article Type: The strategist’s bookshelf From: Strategy & Leadership, Volume 36, Issue 5

GroundswellCharlene Li and Josh Bernoff (Harvard Business Press, Boston, 2007).

If you are not clear on the concept of co-creating unique value with customers you might want to read The Future of Competition by C.K. Prahalad and Venkat Ramaswamy before you read the how-to book Groundswell by Charlene Li and Josh Bernoff. Co-creation of value, one of the big ideas to emerge in strategy in the past five years, explains how to successfully manage customer involvement in product and service development and improvement. One of its key features is the DART model: engage in “Dialog” with customer, make your company “Accessible” to customers and opinion leaders, provide “Risk Assessment” to customers and create “Transparency” in your relationship with customers. The Groundswell authors offer practical advice for implementing the theory.

Li and Bernoff, two vice presidents at the well-known technology consulting firm Forrester Research, have written an experience-based and hands-on book about how to manage extensive engagement with customers, and how to monitor relationships with customers and opinion leaders in cyberspace. The “groundswell” to which they refer in their title is driven by three forces:

1. 1.

   The emergence of social technologies permitting individual to communicate and discuss their experiences with products, services or ideas.

2. 2.

   The ubiquity of the Internet.

3. 3.

   The changing economics of communication technologies.

According to Li and Bernoff, leaders must manage these three forces to create a collective and perpetual memory about a company’s activities, products and service experiences.

Li and Bernoff argue that the groundswell of accessible public opinion and ratings of products and services is irresistible. Moreover, they say, it offers an opportunity for companies to speed innovation, identify quality and service problems, improve loyalty, lower marketing costs and create improved products and brands. Of particular usefulness is the book’s description of the “technographic” segmentation of participants in cyberspace. Forrester research identifies six major segments (see Exhibit I).

Much of the advice in the book is straightforward and telegraphic. Do your homework on your users. Structure your strategy based upon your technographic profile of your users. See what the competition is doing. Make somebody accountable and responsible for the interaction with customers.

Exhibit 1 Groundswell by Charlene Li and Josh Bernoff (Harvard Business Press, Boston, 2007)

The authors provide practical advice on setting up blogs and interactive web sites and give example ROIs. But for most executives, the most important takeaway from the book is, “Don’t underestimate your users.” Thinking about the Internet and interactions with customers solely as a way to promote your product is likely to lead to failure. The better practice, figuring out what customers care about and listening very carefully to them is more likely to lead you to develop a strategy that will be useful and productive. In sum, users should be highly valued.

Li and Bernoff’s overall guidelines are pretty straightforward: start small, educate your executives, get the right people to run your groundswell strategy, get your agency and technology partners in sync, plan for the next step and for the long term. But the authors also go into more detail to illustrate how to profile the technographics of a customer base, and the importance of the groundswell of customer information. They also provide tips on using different technology approaches. For example, for successful blogging, one of the technologies included in social networking, they suggest.

1. 1.

   “Start by listening.”

2. 2.

   “Determine a goal for the blog. Will you focus on announcing new products? Supporting existing customers? Responding to news announcements? Making your executives seem more human?”

3. 3.

   “Develop a plan.” Are you going to have a single corporate blog, multiple blogs? What is the frequency of update?

4. 4.

   “Rehearse. Write five or ten posts before you go public.”

5. 5.

   “Develop an editorial process: Who if anyone needs to review it?” What can go in the blog?

6. 6.

   “Design the blog and its connection to your site.”

7. 7.

   “Develop a marketing plan so people can find the blog.”

8. 8.

   “Remember blogging is more than writing: a successful blog involves monitoring and commenting on the blogosphere and not existing in a vacuum.”

9. 9.

   “Be honest. …Bad things happen to companies… A company that responds honestly even when things go wrong, boots its credibility.”

As case study of the new use of Internet social network technology, the authors describe Proctor & Gamble’s website called beinggirl.com. The maker of Tampax products, P&G’s objective in designing the site was to inform young girls about tampons, a topic of potential embarrassment, and not likely a subject that girls would frequently blog about. However, P&G’s site is not primarily about tampons. Its subject matter is everything that young girls deal with. In other words, it is a community targeting 12-15 year old girls, 48 percent of whom are Joiners, 37 percent of which are Creators and 93 percent of which are spectators. Rather than thinking like an advertiser, P&G is in effect creating and exploiting content rather like a magazine, but one that encourages user-created content. The site provides a unique platform for reaching P&G’s target audience; in a way, it’s the social network version of the soap operas P&G funded and owned in the 1950s.

Other examples of social networking projects in the book include Dell’s social networks that pay attention to quality and service problems, HP’s multiple targeted blogs to support its complex product line, Massachusetts General Hospital’s patient support networks, Best Buy’s internal networking to link employees and their expertise, eBag’s customer feedback system to improve product selection and have suppliers improve products, and BearingPoint’s wiki to expose its intellectual property to potential customers and allow them to contribute their knowledge.

As these examples show, marketers are increasingly moving from one-way communication with customers, broadcast-oriented advertising and cost-based promotional activity and moving towards more interaction with customers. As a result, say the authors, companies will increasingly have to develop or hire marketing managers who have technology experience and knowledge and the ability to integrate across strategic, project management, marketing, new product development, iterative innovation, quality management, customer support, and information management disciplines.

The authors close their book by suggesting:

“First, never forget that the groundswell is about person-to-person activity …

Second, be a good listener. Marketers sometimes have trouble with this – they think their job is about talking to customers (or shouting at them) …

Third, be patient. The technology moves to fast, it’s easy to think you’re about to fall behind. But these applications touch so many parts of your company that it going to take time for everybody to buy in …

Fourth, be opportunistic … start small … This means seeking places to build applications that make progress on connecting with customers … then seek opportunities to expand that success. When you get a green light or have an idea, get moving. You may not have another chance …

Fifth, be collaborative … and humble.”

Groundswell is a useful initial guide to this brave new world where heavy-handed marketing is risky, and companies that try to act on behalf of their customers are more likely to develop the preferred brands and relationships with them.

Notes

1. Davidson, Alistair and Copulsky, Jonathan, “Managing webmavens: relationships with sophisticated customers via the Internet can transform marketing and speed innovation,” Strategy & Leadership, Volume 34, Issue 3, 2006.2. Prahalad, C.K. and Ramaswamy, Venkat, The Future of Competition, HBS Press, Boston, 2004.

Alistair DavidsonStrategy & Leadership Contributing Editor, has been CEO of several start-up companies and is currently a strategic management and marketing consultant (Alistair@eclicktick.com).