By Ytzik Aranov, Managing Partner, Social2B

For those of you who’ve been through business school lectures on Michael Porter’s Value Chain Analysis this doesn’t come as news to you.  But when asked to implement social media practices, policies, platforms, tools, etc., in today’s corporation or enterprise, we throw out all of what we learned that makes the enterprise tick and elect to “surf” it through!

Attention – and I quote:

“Social Media (in the Enterprise) is a Business Process, not a channel, department, or vertical silo”.

End quote.

You heard it here!  Think about it.  Social media touches upon every department, every business process, every channel, every prospect / customer interaction, every investor, every supplier, in short, it touches the entire organization.

In today’s marketplace, social media and an enterprise’s’ online brand architecture and social media footprint is arguably, the most important business process affecting the entire Enterprise Value Chain.  Poor implementation of a solid online & social media platform strategy & tactics directly impacts a company’s ability to market, sell and extend its brand reach, globally.  Failure to effectively implement an integrated social media strategy & tactics across the entire Value Chain could potentially lead to lower revenues (read, shareholder value), slippage in market share, increased financial exposure, risk, and more

One of the most effective measurement techniques to measure enterprise social media effectiveness, both pre- and post-implementation, is to diagnose the “Social Media Maturity Index” (see graphic), which establishes a recognizable industry-specific metric with which to assess the social media value, influence, depth, and footprint of an enterprise’s value chain components – combining both departments and business processes.  Moreover, the social media maturity Index in its very essence is a barometer of how the value chain is capable of moving at the speed of (digital & social) business today.

So, when looking for added revenue stream, cost savings, internal value, constraints, and external interfaces with the world, then social media maturity acutely identifies the lack of, or plethora, of business excellence in sync with today’s pace of commerce.

OK, skeptics, How do we drill down into the Enterprise Value Chain and establish Social Value Chain Maturity & Scalability? Let’s break it apart into pieces.  Look at the following chart that defines touch points throughout selected departments throughout the enterprise, and their social media impacts.

The same goes for every other vertical silo, and, every business processes.  Each and every business process running across – horizontally – the enterprise has multiple social media touch points.

Social media maturity, coupled with an integrated online, SEO, SEM and Social Community Marketing strategy replaces one-way communication with dialogue. Participation by customers, suppliers, employees, the industry, the market, etc., and feedback from them all (!), must be listened to because it has the power to make or break your enterprise or enterprise function.  Social media tools allow us to observe the conversations, measure, monitor, track and quantify the online & social media reach and influence. It allows us to assess and re-assess the correct strategy & tactics from the bottom up to increase revenues, open new markets, capture greater market share, lower costs and in general, improve the bottom-line ROI.

So, what about ROI?

If done right — and you’ll have to come back for a later post on this subject — the Social Media Maturity Index is then mapped by those of you honored to be the “Keeper of the Social Keys” in the enterprise, to any existing enterprise Balanced Scorecard KPIs (Key Performance Indicators) in use by the Executive suite (read CFO), in order to assess true ROI, Economic Value & shareholder value. And, by the way, to justify shifting dollars from traditional advertising / marketing into your online / social media marketing budget.

In Summary:

The value in executing a Social Media Maturity Index exercise, as the very first step prior to embarking on that “Journey to the Edge of the Social World”, includes, but by no means is limited to:

• Creating a more aligned and more cohesive internal organization (whether vertical silo or horizontal business process) involved with social media and its offshoots;
• Developing a cross-enterprise social media policy – let me guess, you’re thinking about it, while hundreds of employees across the value chain are uncontrollably blogging & Tweeting about the company without any filters – to manage the social media impact;
• Channeling the endless volume of Content across the enterprise that is not “curated”, re-purposed or managed effectively throughout the enterprise, thereby losing SEO and ranking power;
• Implementing a solid, instantaneous, Reputation Management process – what’s that? – more on that in another post …;
• Hiring – training – more targeted and experienced human resources to effectively channel the enterprise’s social media assets and better utilization of current ones;
• Mapping out a better-defined path to enterprise success by assessing the maturity of the organization and its readiness to embrace a new channel (SM) affecting the entire value chain – from customer service to distributor relations to marketing;
• Establishing a quantifiable and actionable ROI – well, we know what that means (Return-On-Ignoring, Return-on-I (me!), etc. – in short, how we justify the extra capital needed to implement targeted social media campaigns to accelerate products or services sales.

The Social Media Maturity Index provides an immediate snapshot of where every Value Chain component of the organization is today is with respect to social media & market acceleration and what can be expected in terms of performance based on the overall social media maturity of the enterprise. It also maps out where each Value Chain component is lacking and what can be done to accelerate it and better sync it to the other Value Chain components thereby creating a powerhouse enterprise that socially rocks!

By Alex Romanovich June 10th, 2009 Alex Romanovich is the Founder and CMO at Social2B ** Yes, it is another channel, however, it is also forcing corporations (brands) to look at how they engage with their clients, how they use information, and how they respond to events. It is forcing companies to treat Social Media as part of their overall Value Chain. Embracing Social Media channel requires discipline, and in many cases, courage – starting is the most difficult step and you have to engage with your audience in a much more interactive mode – your approach to communications has to evolve. With current tools and analysis methods, marketers have a newly found muscle to provide insight and to demand accountability. New technologies allow enterprise to ‘mash’ multiple channels into one cohesive, client-centric view. Inference engines, text analytics tools, and mining methodologies allow businesses to come as close to predicting performance, as you can get these days. Yes, it is another Channel, but I would call it the ‘Mother of all Channels’. Let’s take a look at how it can be potentially utilized. The Enterprise can not only predict sales performance based on historical and trend data, but it can validate it with real, live, on-demand information coming from the ‘user generated’ feedback. Marketing can potentially assess the risks associated with brand performance based on events – this ‘event-driven’ response, and subsequent analysis can mean better client engagement, and better handle on the overall ‘brand reputation’, leading to a much more ‘predictable’ performance. Woody Allen ad by American Apparel was a good example of an ‘event driven’ phenomenon. Yes, American Apparel did the ‘wrong thing’ and yes, Woody Allen was upset – but what will be the short term, and long term effect of this ‘event’? Will the sales go up or down, will the conversion rate increase or decrease, and will the public respond favorably or negatively to the next assortment of communications coming from the brand. The ‘channel’ will tell all and the analytics crowd at American Apparel should be using this opportunity to capture, analyze and mash information related to the community feedback. In the end, Social Media could be considered just another channel by some, but the benefits and opportunities it presents is something we’ve never seen before. It is becoming an integrated fiber, connecting all points of Value Chain. I will talk more on this topic in an upcoming series titled ‘“What would Michael Porter do, or Social Value Chain and Impact of Social Media on the overall corporate structure’.

I recently sat down with my friend, Pete Karinik, the founder of The CMO Club (www.thecmoclub.com), to have a frank discussion about crisis and how marketers should handle it. Here is what we’ve discussed.

1)    How is marketing of “services” different from marketing tangible products?

Selling ‘services’ was always a fascinating topic for many companies – product and services firms alike. The reason for that is simple – when you sell services, you sell value, and selling value is always more difficult than selling a tangible product, like the iPhone, an automobile, or a piece of clothing. Any services business, from a neighborhood beauty salon to a giant accounting firm, such as KPMG, knows that clients value quality, consistency, transparency (honesty), and innovation. I also think that at times of peril, meaning now, we have to look at selling the ‘basic idea’ – if you do your work well, and you are passionate about your clients, you will do fine. The other basic idea we often overlook is that when you are selling a ‘service’, you are selling a relationship with your client, and trust, not just an offering or an innovative idea. That relationship is built on numerous nuances, from a simple greeting to a major overhaul of the client’s financial system, and is backed by months and years of proven experience, trust and history. And that’s what defines your brand.

2)    What is different about marketing of services based on the economic downturn?

We are faced with one of the biggest economic downturns of our century (counting the 20th as well) – almost all of the traditional rules of business are either erased or redefined. We are not just losing jobs, but entire industry segments, and perhaps service professions, as we know them. With these extensive changes in business, and in our society, marketing of services continues to be very challenging, if not impossible, in some cases. Innovation is threatened by myopic thinking of ‘cost-cutting’ and business progress can only be made through ‘cost justification’, not passion, creative reasoning, or risk taking. In these times service marketers are challenged the most, and yet by now, they also have a greater opportunity and toolsets at their fingertips. Yes, they still need to prove the value of their respective companies, and listen to their clients, and improve their services; however they have an easier time doing it, surrounded by new advances in social media, communication approaches, and client interactions. At times like these, it seems that all traditional ‘bets are off’ when it comes to communicating to your clients, yet difficult decision still need to be made when an important customer, for example, is asking you to lower your cost, or provide your service free of charge for a period of time. That’s when the relationship will be tested. Face to face. And that’s when service marketers and their CEOs will need courage, most of all. I still think that going back to basics is important. Services executives need to communicate more and better – to clients, employees, partners, and competitors. I do see many progressive companies doing just that.

3) Who does a great job of marketing services and why?

First, let’s agree on a definition of a ‘services’ company, in contrast to a company selling or manufacturing a product. I think there are numerous examples of traditional services companies, such as airlines, financial services institutions, healthcare and education institutions, technology services companies, and government agencies. We have seen the service levels of many improve, and some have disappointed us. I will talk about some examples of where we have seen progress and consistency, and the ones that have lowered their bar. And many companies will continue to prove their mettle in times like these, so the judgment is out for at least the next 2-3 years.

Examples:

I was always impressed by Federal Express, yet I have to say that United Parcel Service (UPS) has come a long way and proved to be a worthy competitor, and in many cases, a leader in the Logistics and Delivery category. UPS’ basic delivery service has improved tremendously, yet there were also many improvements on the interaction side, via Internet and face-to-face. And, yes the United States Post Office is not doing badly either.

We are experiencing a tremendous shift in the travel and hospitality industry – the ‘frequent flyers’ are being replaced by ‘empty runways and underutilized hotel lobbies’, yet some airlines and hotel chains are trying to go out of their way to please, and yet some take an attitude of ‘hey, we are in a crisis mode, what do you expect?’. I have always been pleased with the international airlines, such as Lufthansa (for their consistency), Asiana Airlines (for their superb service), and Virgin Atlantic (for their innovative ideas and spunk). I am impressed with how well Continental is doing in times of crisis, and somewhat disappointed with American, for their ‘apathy in service’.

There are other numerous examples of companies continuing to do well, even at times of peril and cost cutting, and yes, layoffs. Goldman Sachs, Medco Health Solutions, American Express, Whole Foods Market, Nordstrom, and others are glaring examples of great services companies, continuing to earn their trust and innovating. And I am sure many of us can also add a number of thousands of small and medium size businesses, who love their clients and live for their satisfaction.

4) What should a marketer do in a time of crisis?

Analyze first, and then act. And go back to basics.

Before doing anything, know your service well. Know every nuance, every quark, and every issue that can potentially embarrass you or lower the level of the service. Analyze what you can do better to improve your service levels and innovate with that in mind.

Then, know your clients, your partners, and your competitors well. Dig deep into the surveys (if you don’t, conduct them) and analyze data from promotions, client engagements, and competitive wins and losses. In our new and brave world of marketing analytics, you have plenty of help.

Talk to your clients with an open mind, realistic expectations, and a set of new ideas on how to improve your service, their business, and your overall relationship. Especially now, get to know their business better, dig deeper into their operations and learn more about their challenges.

Once you are armed with information, act and act quickly. This is not the time to sit back and contemplate on the past performance and the fear of the future – you have to execute now! Execute by promoting your best and brightest – remember that the services business is all about people – your clients and your employees. Review and eliminate the worst performing service categories or offerings – if they were doing badly during good times, they will be completely dead now. Corral the rest of the company around the ‘centralized minimalist’ strategy – if we have to cut cost, let’s do it together, in a well balanced approach, and keeping our clients at the forefront of our minds. Marketers have an opportunity to continue to be the ‘cheerleaders’ during the times of struggle – but it has to be done with data in hand and a set of specific, concrete, and justifiable actions.

Once you have the data, you have the support of others, and you have your clients in plain view – execute. Go out to your clients and talk to them, emphasize, preempt any difficult conversations by frank and open communications, and listen. Listen and act. Act with conviction, passion and empathy. And that becomes your every day ‘routine’.

And finally, innovate. Use the latest Social Marketing techniques, build client communities, and partner with others. It may sound all too logical, but executing the above takes discipline.