“I think you are being too optimistic about how companies will use the data from social media.”
I had the chance this week to attend and speak at the Webtrends Engage Conference in San Francisco. Overall, it was a great conference and an impressive line up of speakers and attendees.
I got the chance to speak about Smarter Social Media and also be on an impromptu panel about financial services and social media. Christian Howes (@drcasio) from Webtrends was the moderator, a speaker from Lloyds provided eloquent real life insight in dealing with the challenges of messy social media data.
The audience asked very good questions. Many were as you expect about privacy in an age of always on media. Which is always difficult to definitely answer because it really does depend. It depends on the laws, on the customer, on the program and the company’s policies. No one likes to say it depends, but in that case because you can never please everyone, it really does depend.
But there was one comment as part of a question that really got me thinking. “I think you are being too optimistic about how companies will use the data from social media.”
Really, I thought to myself, because usually I am very cynical. I have spent a couple decades dealing with marketing based on consumer data. I watched CRM often morph from “relationship” to an endless stream of clutter, irrelevant and indistinguishable marketing. I understand the ability to find really useful data through data mining. And I have seen a few excellent organizations that have been able to capitalize on this data.
This question really made me think why I sound optimistic about how we can change marketing in a social / mobile world. And I think there are three reasons.
Consumers are in Control: Until recently marketing owned the communications channels and had technological superiority. Whether it was advertising on Radio and TV, direct mail systems, outbound auto-dialers or e-mail spamming. Marketers always had an upper hand in technology and information. Until now. Consumers are in control, with Search and social they know more about the company & product than the company does. And they have the megaphone to share negative experiences.
Marketers are imprisoned by legacy approaches: There was a recent Fortune article that looked at social media as a customer service channel and erroneously concluded that twitter care wasn’t as effective as telephone. The entire analysis was based on measuring twitter based on call center like metrics – and twitter still won more than 30% of the time. Developing the right metrics takes time and realignment. Are legacy tools important? Yes, but don’t try to force social media into your legacy mindset. There is a good blog post at IT business edge about this topic.
Companies that transform will win: The question itself exposes a misunderstanding of forces of change that can rapidly impact a business model. Using data to drive an assymetrical advantage is a win-lose approach to business. Commerce has always been a win-win proposition – the exchange of things of equal value. Companies that are winning are exchanging value for data – eBay’s rating systems, Netflix and Amazon’s recommendation capabilities, Google Search. These are all based on win-win and data.
Companies that think they can analyze social media data to drive asymmetric advantage are missing the opportunity to transform. Lets take the example of customer lifecycle marketing:
It is possible to analyze relationship patterns with Facebook – oh look, new baby. Baby pictures everywhere on Facebook.
Old School: Drive marketing campaign targeting people who got married, have kids etc. Hey look same product, but with a picture of a baby. You have to buy now, we tested it. If you don’t we’ll send you an e-mail with a different baby picture in it. If this is how you approach lifecycle marketing, then I suggest you check out the 7 things people don’t say meme.
New School: What is going on with consumers when they have a baby? Does my product make that time easier, better? How does this information help me rethink my product. New baby makes people tired, do they really want to read about my product right now? What are they saying about them – rather than me.
This is the difference between owned media and earned media. We can’t take the same approach to data mining with earned media that we do with owned media. In respect to this specific question – Financial Services firms have one of most intimate relationships with their customers and therefore probably one of the most fragile, especially today. Trying to force earned media data into paradigms meant for owned media could result in slightly better models or slightly worse. But that approach will completely miss the opportunity to transform how you do business. To understand this new paradigm.
So when I reflected on the question am I being too optimistic. I don’t think so. Because the organizations that get that consumers are in control, that they have to earn trust and respect – not just expect it because they are a big brand – understand that this is different.
So go with optimism on this one.
