Social networks are all the rage and many of my posts at OnlineMarketerBlog recommend social tools for businesses. However, there are potential pitfalls to consider before you facilitate interaction between customers and your business.

Here are 21 things your business should consider before starting a social network:

Internal (Your Business Capabilities)

1. Can you invest the necessary resources to run a social network properly? Can you afford the tens or hundreds of thousands of dollars it takes to properly create and staff this resource?

2. What is the role of marketing, sales, IT, customer service, advertising, HR, etc.? Social networks often delve into all of these departments and more. Make sure all of your teams are engaged, enthused, and prepared.

3. While the potential ROI of a social network is proven, is this the best investment of your time? If you don't have a unique product or your customers aren't enthused (or your product isn't any good), don't look to a social network to solve your problems.

4. What are your expectations - number of members, amount of content, etc - on a weekly, monthly, and yearly basis? Create little benchmarks to ensure you do not go far off course.

5. Will your employees have their own voice on the network? Will they use their full names? This transparency can be daunting, but it can also provide high emotional buy-in from employees.

6. Is the correct employee in charge of the social network? This is often not the highest paid or the most experienced.

7. Which came first: customer need, company strategy, or cool technology? If it's anything besides customer need, reconsider everything.

External (The World You Compete In)

8. Are your audience Joiners? You should read Li and Bernoff's book of the same name, but at the very least check out the free Groundswell tool from Forrester. If your audience isn't likely to join any social network, it's highly unlikely they will join your social network.

9. What value does the community offer your customer? Do not think of the social network as a marketing tool - its primary existence is for the good of your customer.

10. Who are your network's competitors? If someone is already offering the service you want to provide, don't spend time trying to re-invent the wheel.

11. What does your network do better than anyone else? Use that strength to separate your network from imitators and provide a quality service to your customers. If you cannot identify that unique quality, consider piggy-backing on someone else's network.

Before The Launch

12. Who approves interaction or content? What is the chain of command? Is your process streamlined to react to breaking news or is it clogged with a bunch of red tape?

13. How will negative comments be handled? Have you prepared a code of conduct for participants? Will constructive criticism be considered honestly and without pride?

14. How does the social network affect the priorities of your business? In other words, is it clear to your employees when they should opt to work on the social network as opposed to their other tasks?

15. How will you promote the network? Will there be a URL on your print advertising? Should customer service mention the website? Use existing channels to promote this new one.

16. What capabilities will members have? Can they speak to each other, create profiles, or upload files? All of these aspects have their complications.

17. Are there different levels of engagement? For instance, could a member of your social network take on an administrative or editorial role? What are possible levels of engagement and how do members move up?

18. What motivation do people have to participate? What is their incentive?

19. Is your network "sticky"? Is there a reason for participants to tell their friends?

After The Launch

20. What will you do with the community once you have it? Will you have the infrastructure set up to benefit from customer insights, free market research, justified criticisms, helpful customers, etc.?

21. How will you gauge success? While the potential ROI of social networks is great, it is rarely as cut-and-dry as most other marketing. Are visitors more important than commenters? How is beneficial engagement quantified?

The Most Important Consideration

I think one of these considerations is more important than every other one and I will write a post on it later this week. Make sure you don't miss it.

What Did I Forget?

Did I forget anything? Feel free to leave other considerations in the comments section below.

Or, am I wrong about anything listed here? Please let us know!

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Johna Burke, VP of BurrellesLuce pried open that black box at the IABC Phoenix lunch seminar this afternoon. The "Four Generations" approach to media measurement means the Gen Xers and Millennials have to be reached --and tracked-- in the same sweep as the Traditional and the Boomers.

It means PR practitioners and communicators should start paying attention to the core values, and what make these audiences tick. It's not just about targeting (for marketing) but engaging them (for internal communications.) Media measurement is a "good pulse check" to understand how to best reach and manage these diverse generations, said Burke. For Millennials for instance, she recommends managers personalize their work and even their benefits package because one size does not fit all in their world. There were lots of other insights about measuring the outcomes based on this approach and the metrics.

Sidebar: There were echoes of the 'social technographic profile' made popular by Forrester analysts Charlene Li and Josh Bernoff in their blog, and their book, Groundswell.

If you are interested, a condensed version of Johna's presentation, "Four Generations of Audience, Four Generations of Media--One Approach to Media Measurement," can be found at Bulldog Reporter.

My review copy of Groundswell never arrived but my boss had one so I'm reading that. Yesterday I put up a post on my internal blog about how our customers are moving into Web 2.0 spaces so if we're not there...

Then I got to p75, where Charlene Li and Josh Bernoff write:

You cannot ignore this trend. You cannot sit this one out. Unless you are retiring in the next six months, it's too late to quit and let someone else handle it. The groundswell trend is unstoppable and you're customers are there. You may go a little slower or a little faster, but you have to move forward. There is no going back.

Always nice when the experts agree with you ;)

ReadWriteWeb (RWW) recently published a summary from the Forrester study: "IT Departments Play Key Role In The Acquisition And Deployment Of Web 2.0 Technologies". RWW relays how Forrester originally predicted that IT depts would take on a leadership position by 2008 for Web 2.0 technologies, but now has a new tune since their latest findings (anyone surprised?). The report says "63% of IT depts say Web 2.0 will impact their business". Further, it is said that IT depts feel the impact will be a positive one (wow, this almost makes me want to hug someone in tech support!). That comes as a huge optimistic sigh of relief because I believe that the future will rely on IT people working "with" 2.0 and learning from results of tech populism to find practicality and harmony. That being said, of course IT people have their concerns (79%) about "the risks (slacking off? planning an attack on America?) of unsanctioned use of these tools by employees". Quick Murray, call the dogs! Someone's using "unsanctioned" social media!!

So what about the (supposed) dangers of employees slacking off and geeking out at the work place? Well, in the case of facebook and the myriad of popular social networking sites, many companies simply "block" users from accessing them (good luck keeping up!). Blocking social sites can be both bad and good for a business I suppose (but mostly bad I think, however it would depend greatly on circumstance). The benefits of rich social interaction tools seem apparent (to me). Marketing people can benefit tremendously from social sites for networking and communication. Almost all company departments can benefit from collaboration web services. The list really goes on and on. So I guess management and control is the next step for companies, but is that really even possible? Enforcing rules seems to come to mind, but what extent is reasonable? I guess we'll see, and probably through case by case.

On the start up flip side, tech populism plays a huge role in spreading the use of new innovations in the social media realm that are popping up like wild fire. I guess this term will come to good use for me at Tynt, as we join the line of start ups cheering on the adoption from office geeks and the slackers. With any luck we'll further enhance their style communication by offering newer and better ways of using the web, if we're sanctioned by the watch dogs.

Tim O'Reilly:

.... the internet as Web 2.0 is displacing Microsoft Windows as the dominant software development platform,

.... the competitive edge comes from aggregating the collective intelligence of everyone who uses the platform..... '

'Web 2.0 is a transformative force that's propelling companies across all industries
towards a new way of doing business characterized by harnessing collective intelligence, ....

from: http://radar.oreilly.com/web2/

Wikipedia's definition of Web 2.0

The two other sites that I like best to keep me current on Web 2.0 developments are:

• ReadWriteWeb

• Programmableweb

Some of the Web 2.0 platforms that I am using:

Social Software:

• LinkedIn.com
• Facebook.com
• FriendFeed.com

Blog related:

• Wordpress.com
• twitter.com
• bloglines.com
• feedburner.com
• technorati.com
• digg.com
• pingomatic

Content oriented sites:

• Flickr.com

Bookmarking:

• del.icio.us

My posts on Web 2.0:

Definition:

• What is Web 2.0
• Groundswell - by Charlene Li and Josh Bernoff (Forrester)

IT market and trends:

• Gartner on Web 2.0
• Forrester Research on Web 2.0
• What is Wikinomics? ‘How Mass Collaboration Changes Everything’
• Enterprise 2.0 and Web 2.0

Platforms:

• On Facebook
• On LinkedIn
• On Mashup's
• Comprehensive list of Web 2.0 applications

Vertical platforms:

• What is Twitter
• Customer Services
• Web 2.0 and projectmanagement

Social networking and Blogging; privacy:

• Social networking and privacy

• Video explaining Social networking

Technology:

• Identity management and Web 2.0
• Bookmark sharing

Blogging:

• Blog hitrate increases
• Tips for writing the best blog post
• Desktop tool for blogging

Great sites where you can learn more about Web 2.0:

• http://radar.oreilly.com/web2
• http://www.programmableweb.com/
• http://www.readwriteweb.com/

Forrester research on Social Networking in the Enterprise:

Video

On Web 2.0:

• managers: try it yourself; play with RSS, feeds, make your own blog, participate in a wiki, ....
• it is still very early stage
• some things work; some things do not work

' The Impact of Web 2.0 and Emerging Social Network Models':

Video

Great video on Web 2.0 (Davos Annual Meeting 2007)

'The rapid rise of online social networks is both a social and business phenomenon, the impact of which is only beginning to be understood. The consumer-powered Web 2.0 creates innovative ways for businesses to operate and people to communicate.

1. What is driving the emergence of virtual communities? Is the rapid rise in their valuations justified?
2. How are companies beginning to use social networking strategies for product and market development, as well as for communication?

• Caterina Fake, Founder, Flickr, USA
• William H. Gates III, Chairman, Microsoft Corporation, USA
• Chad Hurley, Co-Founder and Chief Executive Officer, YouTube, USA
• Mark G. Parker, President and Chief Executive Officer, Nike, USA
• Viviane Reding, Commissioner, Information Society and Media, European Commission, Brussels'

Related information:

Web 2.0 summit 2007

Web 2.0 ... The Machine is Us/ing Us: great short video explaining the technological essence of Web 2.0

Web 2.0 Expo

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What are your favorite books on Social Media (Web 2.0)? My favorites are:
- Web 2.0: A Strategy Guide - by Amy Shuen - 'Business thinking and strategies behind successful Web 2.0 implementations.'
- The Tipping Point by Malcolm Bradwell - '... that magic moment when ideas, trends and social behaviours cross a threshold, tip and spead like wildfire...'
More of my ideas on Web 2.0 at: http://jeroendemiranda.wordpress.com

Q/A on LinkedIn

----------------------------------

Answers:

Katherine Coombs

Senior Innovation Manager at Lloyds TSB

see all my answers

Best Answers in: Change Management (1)

This was selected as Best Answer

I am reading Groundswell by Charlene Li and Josh Bernoff. It's interesting, but to be honest I dare say that it would be impossible to write a futureproof book about Web 2.0 in the Web 2.0 world! Content and views change so often, and behaviours change, and new websites are launched that I suspect that the best sources of information aren't going to be books but are going to be digital blogs.

Links:

• http://forrester.typepad.com/charleneli/

Ralph Bernstein

Web Manager at Productivity Press

see all my answers

Best Answers in: Business Development (1)... see more, Supply Chain Management (1) see less

Naked Conversations, by Shel Israel and Robert Scoble. It's a book about corporate blogging.

Messages from Ralph Bernstein (1):

• RE: Your favorite books on Social Media (Web 2.0) are?

Kelly Rusk

Digital marketing and social media enthusiast

see all my answers

Best Answers in: Internet Marketing (2)... see more, Direct Marketing (1) see less

I'm also reading Groundswell and loving it. Though I will disagree that they are focusing on theories and strategies to adapt to changing technology so it will be relevant for years to come (though the examples may get out dated)
What's interesting is right before I read the Cluetrain Manifesto, which just hit the 10 year mark. The funny thing is there are so many similarities between the two.

Daniel B. Honigman

Social Media Coordinator/Strategy, Chicago Tribune

see all my answers

I liked "Wikinomics" by Don Tapscott and Anthony Williams. It talks about the sheer social and economic force of collaborative media.

Baseer Mohammed

Owner, Future Consulting Inc

see all my answers

Interesting question. I am traditionalist (is it a real word) Dale Carnegi's good old book still holds true "How to win friends and keeping them"
Baseer.

Most interesting book on Social Media (Web 2.0) seems to be: Groundswell, by Charlene Li and Josh Bernoff.

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To put it bluntly, it is the bandwagon and herd mentality of B2B Marketers and their inability and or ignorance to figure out how to get their corporate message out without vomiting and regurgitating all over their audience.  It’s the Bullhorn effect.  Many marketers have not gotten the clue or the hint that what they’re doing isn’t working.  They saw blogs as this great new soapbox to jump on and push out their truckloads full of hackneyed slogans and contrite pitches.  They still think a blog is merely a tool to blast out another message, and they are dumbfounded that it isn’t working!

They think; “Hey, we are part of the social media scene!  We have a blog, we’re cool! Buy from us!” They just don’t get it.  They are trying to butt their way into the conversation, instead of joining it.  They think that their blogging style should be heavy-handed with all of their slogans, and carefully crafted branded content and they are forgetting the basic purpose of blogging – to start a conversation.

Forrester also reported that most B2B blogs are dull, drab, and don't stimulate discussion.  More than 70% of the corporate blogs it reviewed stuck strictly to business or technical topics and didn't share much personal insight or experience.

The report noted that; “team blogging may lighten the burden, but group blogs seem even more impersonal as writers bounce between topics and fail to deliver a unifying narrative thread. Team efforts also suffer from participation ups and downs. In the past year, for example, about half of Intel's featured bloggers have moved on to other pursuits.”

As a result, 74% of B2B blogs receive a minimum of commentary or trackbacks because readers fail to find conversations worthy of their involvement.

Successful blogging, Forrester insists, is not a one-way street, but most corporate bloggers yak away about their companies and products, seemingly oblivious to whether their audience is listening or not.

The report states; “Similar to last year, 56% of blogs we examined simply regurgitate company news or executive views, while relatively fewer blogs work to establish thought leadership by enlisting internal experts--with deep, specific knowledge of a particular topic--as their primary blog authors.”

That last line speaks to precisely the strategy we use at Sterling Cross Communications to advise and coach our blogging clients on their own blogging strategy.  To open dialogues where in the course of discussion you can establish your thought leadership position by speaking clearly, concisely, and passionately on the area of expertise you bring to the market.

B2B Bloggers need to get this message if you want to reap the rewards a blog can bring.  You can learn this lesson, or you can leave your blogs abandoned and continue to heavy hand Twitter or the next shiny new tool!  If you can learn from these mistakes, you can assist your blog in rising above the buzz!

**NOTE:

Lest you think we were generalizing all b2b bloggers, Laura Ramos the author of the report wished that I would clarify that they were researching the following:

"Just a point or two of clarification: in the report we reviewed 90 large B2B companies where blogging activity was evident from their home page. This number is not meant to be representative of all blogging in the B2B space.

We looked for blogs by Fortune 500 companies and top tech firms, who are enthusiastically embracing blogging because this research follows-up on a report we published last year that reviewed the same group. The intent was to look for trends and patterns in “enterprise” blogging activity, not to size the effort as a whole."

Thanks Laura!

Sono noiosi perché il 70% dei blog analizzati tratta argomenti troppo tecnici, sono incapaci di stimolare la conversazione perchè nel 74% dei casi ricevono pochi commenti, sono scialbi perché i 56% si limita a postare dei comunicati stampa.

Il report di Forrester individua la causa di questi risultati poco soddisfacenti nell'atteggiamento di fondo degli addetti al marketing, i quali nel 53% dei casi considerano i blog come del tutto irrilevanti per le proprie strategie aziendali.

Aprire un blog vuol dire aprirsi alle discussioni, essere disposti a discutere anche di argomenti difficili (vedi qui per esempio) prendere una posizione chiara e trasparente nel rapporto con gli utenti e i partners. E' dalla percezione dell'atteggiamento diverso che ha un'azienda che apre un blog che si ottengono dei vantaggi dal blogging. Se le aziende non credono in uno strumento sociale, come i blog, è molto difficile che riescano ad instaurare un dialogo, suscitando la partecipazione dei propri utenti e ottenendo dei ritorni in termini di reputazione prima e di revenues poi.

Per avere successo, secondo Forrester, i blog aziendali dovrebbero sforrsi di avviare delle conversazioni e non semplicemente riprenderle, creando contenuti divertenti e facili da diffondere, creando connessioni tra il blog ed eventi e invitando i maggiori rappresentanti dell'azienda a scrivere nel blog.

Sebbene il panorama complessivo non sia entusiasmante, lo studio Forrester cita alcuni esempi positivi, tra i quali, gli italiani DesmoBlog della Ducati a Papero Giallo di Gambero Rosso.

Proprio oggi leggo del lancio del blog della LG Electronics....speriamo che (la LG) tragga insegnamento dagli errori dei suoi predecessori.

Rejoice ye visionary readers, rejoice!  The tide of marketing is turning at last.  After more than 13 years of battling against autistic -- and largely inefficient -- old world marketing techniques and visions, we are now witnessing a few cracks in the ice of top-down marketing strategy.  Firstly, Regis Mc Kenna and Geoffrey Moore introduced new ways of dealing with clients mainly in the IT world at the end of the 1980s and the beginning of the 1990s.  The approach was no longer demographic but behavioural.  Secondly, European researchers Badot & Cova wrote their ground-breaking opus entitled "neo-marketing[Fr]" in 1992 (many were to follow) introducing so-called "societal" approaches to marketing and even suggesting we use the term "societing [En]" instead of marketing.  (Wasn't that visionary?  Bernard Cova now teaches mostly at the prestigious Bocconi school in Milan, and I've also had the pleasure of becoming friends with him in the meantime).

The end of the 1990s were the founding years of -- not only of the Internet but -- the revision of marketing as we know it.  Seth Godin taught us that ideas are viruses -- and so are products and services -- hence the newer and more pervasive notions of Buzz marketing.  He also re-educated us (yes, I insist, really re-educated) in order to ask permission from our clients to do business with them.  Not only was that the early sign that e-mail marketing had to be done differently, but it also sent a clear warning sign to mass marketers that business habits had to change in view of evolving consumer behaviours.  1999 was the kick-off year for the much revered Clue-train manifesto, a source which is still quoted today as the reference for online marketing.  And more recently, Tara Hunt has developed and notion of Pinko marketing, a rather weird and politically orientated way of putting that communication power is handed over to the people. Yet, this is very effective when it comes to getting the message across.  Even more recently, François Laurent published a new book entitled marketing 2.0[Fr].  Marketing 2.0 is in fact the sequel to his influential blog: marketing is dead[Fr], but what is really striking is that François -- a former marketer at European ex-consumer electronics manufacturer Thomson -- is more widely known as the president of one of the two French associations of marketing, Adetem.  Lastly Alain Thys is adding to the bargain by expostulating in his excellent marketing accountability presentation that marketing is not only dead but that it committed suicide in front of its shareholders, clients and even the earth!  Nothing less.

No doubt this time, things are moving ahead, even though the proportion of UGC is still low, there is an underlying trend of change, and this is not coming back to what it was before. So as it is becoming more and more obvious to all that markets really are conversations there is this requirement for a growng number of enterprises to quickly be in sync with this evolution and gear up to community marketing

And then there is Forrester research VP and Principal Analyst Laura Ramos, with whom I had the benefit of being acquainted a few days ago, as we were exchanging on the subject.  In May 2007, Laura (see links to some of the most recent and most relevant articles) had a story entitled: "B2B marketers fail the community marketing test".  Her conclusions are clear-cut and uncompromising.  To sum them up in a few words:

1. marketing needs to change in the light of evolving behaviour and rising power of clients (is not only consumers guys, we are talking b2b here!)
2. top-down and patronising, self-centred, at marketing messages and must be adapted to reflect these changes.  A new tone of voice must be adopted.
3. current marketers are doing a pretty bad job at tying the knot with their clients and -- to put it in the words of the blue train manifesto -- engaging in conversations with them.

Strangely enough, I see hope through this report of Laura's.  After years of evangelisation I am not now feeling that there is this shared requirement -- I get it from talking to managers themselves -- to turn marketing practices around and better use web (even though it was her lately rebranded ‘social media', see my other comments on Frederic Cavazza's post here) techniques to better market.

This is why Corporate Web content policies have to change too in order to accomodate these evolutions. This was the gist of my presentation at HEC (the leading European business school) on June 20, in which I depicted my vision of the business world and how we web professionals should respond to that requirement. The title of my presentation couldn't be anything else than 'reinventing marketing', and moving towards what I call 'addictive' web content policies.  In essence, there is nothing new with things I did even more than ten years ago. When wanting to position our new Internet Banking venture at Unisys rather than build yet another web page on our supposed capabilities -- and few could believe us because we hadn't proved our point yet -- I went on building the 'Internet Banking Barometer' (still visible here at archive.org, the memory of the Internet) based on a comprehensive review of all British banks I had made. Since we couldn't prove our point with declarations of our own making, we could evaluate existing initiatives instead and ensure that, through the design of pertinent content and comments, we were establishing the credibility we lacked and could engage in discussions with people who didn't even know we existed before. Each review was carefully worded and validated not only internally but also with each of the representatives of each bank, included the then state-owned Bank of England. How encouraging that was, and how useful too in our engagements with newor existing clients. This was sufficient to prove our point that we too had something to bring in the Internet banking arena. To an extent we were only applying Seth Godin's ideavirus principle ... 5 years before it was written though.

Thus we have established the requirement for reinventing marketing, in part two we will soon investigate how the web can support community marketing.

This post closes out my series on the Forrester Finance Forum held in New York City on June 23rd and 24th, 2008. You can read part one here and part two here. I always walk away from a Forrester Forum with a rich list of insights. If I were to stop and try to characterize one benefit that attending a Forrester Forums gives me, its energize me to challenge the status quo.

Photo Credit: Steve A Furman

Brad Strothkamp, principal analyst at Forrester, presented Mastering Web Sales by Focusing on Shoppers' Expectations on the second day. The stats are interesting and compelling. 40MM consumers applied for a financial service product online in 2007, and 50% of them were applying online for the first time. That's significant, because most of us who design online applications do so with deep knowledge of financial products and how the systems work. We are also keenly aware of what we want as a business, which influences how applications are designed and coded. We are too close and too knowledgable. Consumers are seeing our application designs for the first time. Brad's presentation caused me to step back.

He talked about how there are many missed opportunities, and if we got even a little bit better, we would be richly rewarded. His stats say that consumers appear to be happier applying by phone or in person vs. the web, despite all the work and time that has been put into creating online applications. We in financial services want everyone to apply online, but of course the reality is not everyone will. Consistent and systematic improvement is the goal.

I have seen a statistic from Jupiter Research that states, 50% of consumers who start an online financial services application have no intention of completing it. They are there to shop or learn more about products. I didn't see this referenced in Brad's presentation. I wonder if Forrester has come across this, if it was taken into account, and what they would say about it. Forrester takes questions on 3 x 5 cards that are passed to analysts during the talks. Questions are then asked in the room at the end of each session. I submitted this question, but it wasn't asked.

Consumers have a set of expectations they carry across all channels. Clarity, anonymity (only give as much personal information as is absolutely necessary) and speed. But they hold the web to a higher standard. Convenience (can I do it all online?) and the desire to not be pressured score high with prospects. The online process must of course be simple, secure and transparent throughout. And consumers want a safety valve if things go wrong, meaning human assistance immediately. Firms need to balance having a lower cost for taking the online application with offering human help in case it's needed. This is a maximize sales at the lowest cost problem that needs to be explored through testing.

Brad spent his time on human reported behavior as well as presenting some good and not so good real life examples that drove the point home. He did not touch on application form design, but design is critical to getting someone to the finish line. There are oh so many ways to design a form, but there are clear best practices. Here is a short slide show that offers some. Coupling Brad's insights with web form best practices would be a winner.

[slideshare id=37570&doc=best-practices-for-form-design-12059&w=425]

I was a little surprised Brad didn't address a growing trend on the part of consumers to consult the social sphere of information before completing a transaction. Clearly his focus was on the application process, but there is a very complex set of interactions now at play immediately prior to and perhaps even during this moment of truth. That would be the social community. Consumers trust companies less and their peers more. The traditional marketing funnel is losing power. I've heard Forrester talk about this, but was it wasn't brought out here, probably due to keeping the talk focused.

I am seeing a lot of evidence that consumers research on company sites, then pause their shopping to consult the social sphere of information. Who else has this product? What are they saying about it? If it passes the test, a consumer will possibly return to the company site and proceed through the sales funnel.

Once they come back to the site, the basic requirement seems to be speed, as 46% of consumers expect to complete the application in 10 minutes or less. People want to do everything fast, even when it comes to complicated or critical financial transactions. And of course FI's want it to happen fast as well. Convenience is not a feature of the channel, it's an assumption, and more importantly, 57% of consumers expect to be using the product in 24 hours or less. Instant gratification for an instant society.

Financial services products have become very much a commodity over the last few years, which makes it more difficult for firms to find meaningful differentiators. Each company copies the other as competition for the credit worthy or wealthy has become fierce. We all chase the same customers for the most part, which elevates the application process to an extremely significant moment of truth.

One thing that is critical to remember to get dead on right is the product page. Although consumers say they want speed, they want the right product even more. This is where your product page comes in. It's got to work hard and deliver on the key features of your product and why it's better. No one is applying for anything without looking at the product page. Get it right.

Looking forward to the Forrester Consumer Forum in the fall.

Services & Sourcing Brochure 2008Forrester

Second in a three part series of observations from the annual Forrester Finance Forum, How to Deliver Great Customer Experiences, held in New York June 23rd and 24th. Go here to read part one.

Photo Credit: Steve A Furman

Bill Doyle, Vice President and Principal Analyst at Forrester, was very clear and consistent in his refrain about creating great customer experiences, "Easy to say, hard to do." This simple phrase is at once a mantra and a warning. In financial services mahogany suites around the world the following response to creating great customer experiences can frequently be heard, "We already do that." This is where the warning makes its entrance. Unless your firm has a customer experience executive that is fully engaged and integrated across the firm and understands that customer experience is everyone's job, then you probably have a ways to go.

Ask those quick responders how they know. What are their metrics? Do they have them for each channel? Do they have them when customers are using multiple channels for the same transaction? Are the channels weighted? What is the weighting? Do they understand which channels are used by which customer segments? Ask them to show you their benchmarks. Are the benchmarks moving in lock-step with business results? And my personal favorite, where's the customer experience roadmap that shows customer value, channel usage, level of interactivity, all correlated to likelihood to recommend?

One of the biggest challenges is getting people to understand and share a common vocabulary about customer experience. The next is to recognize it when they see it. Obstacles to delivering great experiences are not new.

• Silos (yes, still siloed)
• Department goals not aligned (often not even shared)
• Consumers use multiple channels (well, you made them available, what did you think was going to happen?)
• Technology infrastructure is not designed to allow data to flow freely across channels (no comment)
• Business strategy changes (need to close the quarter)
• External forces create surprise (economy, consumer confidence)

These are massive problems that cannot be easily solved. Forrester poured the forum foundation by demonstrating that a great customer experience does indeed drive positive business results. Fred Reichheld, founder of Bain & Company and author of The Loyalty Effect and Loyalty Rules spoke about his groundbreaking Net Promoter Score framework, in a talk entitled Winning the Loyalty of Financial Services Consumers.

Photo Credit: Fred Reichheld by Steve A Furman

For 30 years, Mr. Reichheld has studied customer loyalty and has arrived at a simple, highly supported hypothesis that loyalty transforms economics. He has a loyalty chain slide to help companies understand the components of loyalty.

Slide: Fred Reichheld

The Net Promoter Score (NPS) measures customer satisfaction. They are questions asked via phone or online after an engagement with the company. Customers that turn in scores 9-10 are bucketed as promoters. Scores 7-8 are categorized as passives. Detractors weighed in between 0 and 6. Throw out the number of passives, subtract your detractors from your promoters and you've got your NPS.

Slide: Fred Reichheld

Mr. Reichheld was informative, engaging and humorous. He told a personal experience he had with a rental car company. On a recent trip he returned the car 45 minutes late. The check-in attendant regrettably informed him that he would have to add half of a daily rate to the bill. Then there was the gasoline fee at three times retail price (that's something like $12 per gallon). Mr. Reichheld protested, but to no avail. The attendant responded that he should have purchased the protection plan. "Protection plan," said Fred. "Is this a rental car business or organized crime?" The attendant had the nerve to ask for a top 2 box satisfaction score. We've all been there.

Apple was referenced as a regular user of NPS. I made a purchase at my local Apple store yesterday. They hate cash registers and so my purchase was done in the middle of the store by a clerk tapping on a wireless device. My receipt was emailed to me. Here's the email that has a link to the online satisfaction survey (also a great way to collect email addresses).

Here's the entry page to the survey web site.

When a 10 comes in the employee of the Apple store is celebrated. When a detractor score comes in the store manager makes an outbound call to find out why. I was a promoter in this instance, but made a very detailed suggestion about store layout. In my opinion, the side shelving units are too close to the walls and there is not enough room to inspect the products and have someone walk behind you. The current floor plan hides a significant amount of SKUs. I provided them a detailed description of how they should reconfigure the layout into a series of V shapes. It would be visually more interesting and direct customers to walk in an interlacing fashion through the store. They could also improve their signage. I know I'm a pain, but I spent 9 years as the general manager of a retail bookstore chain. Retail is customer experience design.

Forrester analysts are sharp, and always make it look easy. Maybe too easy. But inside corporate America it needs nurturing and a fact-based approach. Of course getting NPS deployed needs support from the very top; everything does. Just prior to Fred, Walt Bettinger II, President and COO of Charles Schwab & Co. presented. He employed NPS and made some tough decisions to try and get their business back on track. Walt was pitch perfect in his delivery and obviously was the guy Schwab needed to pull this off. It seems to have worked, but they were in crisis. What if your business is not in crisis? What if you hear everyone around you say, "We already deliver a great customer experience?" It's much tougher. Forrester should tackle that topic next.

In closing remarks, Fred offered some thoughts on how to get champions for adoption.

• Explain that it's your reputation on the line. It's your name. Ask, "What do you want to be known for?"
• NPS is still somewhat soft, but is gaining traction. Lots of case studies and blog entries can be found at netpromoter.com.
• It is more psychological and sociological in nature, but these are converging with business facts thanks to the rise of social media.
• You can't improve your entire book of business with NPS. Look at profitability (vertical) and NPS (horizontal) together. Like everything, prioritize what you work on.
• B2B firms have adopted NPS at a faster rate than B2C.
• It requires a rethinking of the entire channel relationship with your customers.

My take is that Fred's really on to something. After all here's a brilliant man who has put 30 years of his life into one thing. Improving customer experience requires more than one strategy, and this one appears to be close to the tipping point. The meteoric growth of the online social community just might push it over.

P.S. The photo of the New York Times building (first photo above) was taken from a taxi. I immediately had a spontaneous urge to scale the building. Fortunately my agency partners were with me and kept me in the cab. Thanks Heather and Frank.

The era of social media is in full swing with the growth of myspace communities, Twitter conversations, Ning sites and such.  The reasons individuals participate in online communities are pretty clear but how does a business navigate the fast changing maze of social media business development opportunity?  If you question why you should consider entering this world, I would say to you that many people (probably some of your prospects) are using the power of “one another” in online communities to make life and purchase decisions; so there is a persuasive argument for businesses to consider slowly entering the pool.
 
With their book Groundswell, Forrester research analysts Charlene Li and Josh Bernoff have made it easier for business owners and managers to make sound decisions in planning a social media strategy.  For my taste too much attention is given to case studies featuring large corporations but the decision making processes behind the strategies are applicable to businesses of any size.

Throughout the book Li and Bernoff stress the idea that a successful social media strategy involves first determining what you want to get from your social media effort (generate buzz, refine a product, obtain customer feedback, generate more business…) then selecting social media tools and tactics that match the behavioral profile of your target audience (groundswell technographics profile).  With this principle as a guide, the authors walk you through real world approaches to meeting just about any marketing goal.  In the video below Bernoff talks about what to consider when entering the groundswell.

Related Topics:

1. Your Own Media Juggernaut!
2. Embrace Your Citizen Marketers
3. For hundreds of ways to get customers to call you (subscribe to our newsletter) (browse archive)

What to do next?

Why I think Jeremiah is doing great work.  He practices what he preaches.  He's pragmatic but tries new stuff.  Most importanly he shares, innovates, and listens.  At PodTech many thought Jermemiah shouldn't be  blogging.  I stood my ground and supported Jeremiah because he was doing it right.  He supported my vision while others didn't agree (I can't wait to write the case study post on what really happened at PodTech).  I'm sure folks even at Forrester might say that Jeremiah is giving away valuable research that could be monetized...Sure thats and position someone can take, but I submit that Forrester will sell more research at higher prices by keeping the blogging going.. it build a community.  Congrats Jeremiah.

Here are some of his secrets.

Created focused content

Publish frequently

Think of readers first

Interact

“Productized” content

Have Passion

Generation Y - roughly those aged 13-29 - are among the strongest consumers and influencers. And while social media like Facebook, delicious, and Flickr have garnered media attention, many businesses are still wary of dipping a toe in the social media water.

I argue that we can gauge return on investment (or influence) for Gen Y by looking at their buying power and online behavior and therefore that it is imperative that (most) businesses participate in social media. Plus, I will give you the research to back up these assertions so you can prove it to your boss.

Flashback: Ohio

Growing up in pre-internet Ohio, I spent a good chunk of my allowance and lawn-mowing money on comic books at the local pharmacy. If they were sold out of my usual books, I was SOL until the following month. Scarcity of goods required that I go where they were (and quickly!) or I would miss out.

Fast-Forward: Today

Now, post-internet, these stories sound quaint. Given a bank account, any kid can get any comic book from anywhere in the world. So what does this have to do with social media and Generation Y?: proximity to resources.

Today, consumers expect businesses to come to them. Long gone are the lazy summer bike rides to the pharmacy - today, young people expect to be able to spend their money just about anywhere. And where are they? Online, in general, and on social media, specifically.

Maybe this shift isn't a surprise to you, but let me prove it with research (easily printable for timid bosses or humbugs).

Gen Y By The Numbers

• Buying Power: "Among 13 to 21 year-olds alone, over $120 billion was spent in 2007...The group's income is predicted to rise through at least 2017, when it will approach $3.5 trillion." (The Harris Poll and Javelin Strategy & Research via eMarketer.)
• Influence: "71% have influence over parental decisions about cable, DSL or dish-satellite services...62% have influence over which HDTV set and programming package to buy...70% feel their expectations and demands are far greater than their parents' for rich media experiences...and on-the-go broadband access." (Motorola via MarketingVox)
• Online Consumption: "The group is very comfortable shopping online. One-half of consumers under age 24 made an Internet purchase between April 2007 and February 2008." (Nielsen Online via eMarketer)
• Social: "One statistic that jumps out is that young men and women are very likely to be Joiners, with around 60% participation in social networks, more than twice the level of participation of average adults." ("Groundswell: Winning in a World Transformed by Social Technologies, Li and Bernoff, pg. 46)

Simply put, Gen Y are very powerful consumers. Plus, they are more social online than any other group. Facebook isn't a fad. You cannot bury you head in the sand and wait for a return to the good, ol' marketing funnel. That model is gone. Long live the new model.

Convincing Your Boss: Relate It To What S/he Knows And Emphasize ROI And Cost

The change is scary for everyone, but come on - this fits into an old-school model your boss will understand. S/he knows to target an audience and speak their language. S/he knows you go to where your consumer hangs out. The key to pitching a social media strategy to an old-school boss is to relate it in an old-school way.

Here's another leg up on your rivals in the company: with a social media strategy, you will have the ROI to prove success rather than just conjecture. Web metrics and communication being what it is online, it's likely that you will have more information than you can handle about your progress than less.

Finally, social media is cheap. Like, dirt cheap. I have worked in print publication and direct mail. That world is slower, less precise, and loads more expensive. Plus, if things change between the writing and the printing, you are stuck with useless package filler. Online is better.

The Gist

In other words, to convince your boss to partake in social media, speak his/her language. You do it with consumers all the time. Turn your methods inward and go for it.

Sidenote: If your boss still reacts negatively to social media, this is a useful sign that your company is not acknowledging the passing of time. Get off that sinking ship quickly!

While I have fond memories of biking to the pharmacy pre-internet, they are not memories so fond that I want to go back to them. I understand that while those times were nice, the times ahead are probably going to be nicer. Hopefully your boss will too.

Have you convinced an old-school boss to partake in social media? Feel free to suggest other tactics in the comments section. And if you like what you just read please consider signing up for email updates below.

These problems have been mirrored within the outsourcing industry. Executives within outsourcing constantly complain that outsourced IT is not delivering bottom line benefits. IT, both in-house and outsourced, needs joined up thinking to succeed. There is no point having SLAs if a) the implementers do not know what they are and b) if they are not directly relevant to the business. Having service level agreements is a fantastic way to measure a service being delivered, but they are of little use if the service itself is not the right service that the business needs or if suppliers can’t actually deliver them.

I think that it is interesting that Forrester suggests that end user monitoring as a way of measuring results. Of course it is the end user that is paying for the supplier so in theory they should be the one that gauges the results. However, practice can work quite differently to theory: end users can’t be the only determinants of success because they can put suppliers over a barrel because there might be "customer" induced reasons for service reduction (such as change). Like the project itself, the determination of success in outsourcing needs to be a joint venture. If an outsourcing project has been a truly collaborative effort, with end user input throughout, then a similarly joint approach to measuring success should be found.

In fact the NOA recently carried out research onto Business Orientated Metrics (so called BOMs), basically measuring performance and rewards based on delivering continuous business benefits. Another great idea applauded by users and suppliers, but our research showed only 4% of contracts had some element of BOMs within it.  Maybe IT orientated SLAs are just easier?

Some of the business outcomes of this "OmniVideo" will be: Consumer-electronics makers, not wanting to miss out, will partner with every major content provider instead of betting on just one; companies will spend more to create a video that accompanies every internal and external message; and every surface will become a video marketing opportunity (think ads piped directly on to your plates).

What's surprising in reading this is just how unsurprising it all is. In fact, 2013 seems to be late given how quickly things change.

(Image of headrest screens courtesy of Idea City.)

•Can Sharon and Jack continue to work with Phyllis and Nick on Restless Style?
•Jeff is going to propose this week. Will he choose Gloria or Jill?
•Michael finds out something about his father’s past
•David tells Nikki that he is leaving her. Will his sudden departure from their marriage temp Nikki to drink?
•Chloe is going to try to come between Cane and Lily.

The Bold & the Beautiful

•Ridge makes an announcement this week at the meeting that will forever change the Forrester family (again)
•A family is reunited
•Phoebe has some information that can hurt someone. What does she do?
•Is Stephanie up to her old games again? Marcus wants to know.
•Katie receives two gifts from Nick this week. What are they?

As the World Turns

•Noah finds out more information about his father
•Alison says what she is feeling
•Will Carly convince Holden to do something?
•Look out Jack, Janet is up to something
•Paul may be in more trouble when Sofie thinks of more things

Guiding Light

•Doris is trying to be a supportive mother to Ashlee
•Look out Grady…Jeffrey and Frank are joining together to come after you
•What does Ashlee think when she sees Coop and Blake together?
•Cassie is finally getting back at someone
•Cyrus, don’t cross Buzz this week…Buzz has a warning for you.

• Content. I find it hard to see the interest in anything content-free. I suppose that there might be a social network so purely about connection as to be unencumbered by content, but...
• Management. I find it hard to see the point of something that can't be managed, especially if we have an eye to the business market as well as to the consumer market.
• System-ness: but let's not get into what that might mean.

Since I don't know what a CMS isn't, I can't claim to know what a CMS is. But I do claim to recognize one when I see one, which is perhaps good enough for Web 2.0 (whatever that is) work.

I do understand the argument for free/open source software, in CMSs and elsewhere. So do Forrester, who just wrote a report on what they call WCM (web content management) and open source. Clients are looking at OSWCM (may as well go all the way with the alphabet soup) "as a way of controlling software costs and increasing their access to product-specific expertise in the marketplace."

The Forrester page doesn't provide much detail, but there are quotes elsewhere. For example:

For an open source WCM vendor to be relevant, it must have a satisfactory product offering, proven enterprise-level implementations, and a large--and passionate--community of developers and service providers. Currently, enterprises interested in open source should keep an eye on two offerings--Alfresco Software and Drupal.

That quote from the report was posted by Matt Asay of Alfresco. He of course likes the report. So does Jeff Whatcott of Acquia, who wrote that:

Forrester analysts... highlight Drupal (with Acquia backing) and Alfresco as the most "relevant". Among a wildly crowded field, Drupal+Acquia and Alfresco stood out for strong technical architecture, active communities, and strong commercial backing that make the technology more accessible. Sounds about right, doesn't it?

By the way, Jeff is among those in the CMS world who don't like the term CMS. We even find discussion of problems with the term at the site called CMS Report.

Having identified "free is good" as one of things I do understand about CMS, I find it hard to see good prospects for a CMS that is neither free/open source nor free of charge. Nevertheless Markup Factory just launched exactly that.

I have to agree with Mashable Paul that Markup Factory will turn away quite a few interested users who would otherwise quickly become adopters with its paid subsciption model, starting at $14.95/month and with no apparent option of a free trial. Given that, I'm puzzled that it got featured at Mashable, which I believe features only a subset of the launched products it's told about.

Puzzling place, this CMSland. Rather more complicated than Blogistan.

Nobody is going to be surprised that top shelf investors seized the opportunity to put some money to work inside LinkedIn, nor will they be surprised that LinkedIn, though profitable, is taking capital to further propel its growth.

What will certainly surprise the skeptics is the $1 billion valuation -- at a time when the bloom seemed to be off the valuation rose for social networking sites. I saw someone quoted recently (on Techcrunch? Can't remember) that Facebook is not worth the$240 million investment Microsoft made in Facebook. The 1.6% stake Microsoft bought valued Facebook at a cool $15 billion.

I have no trouble with the LinkedIn valuation because they are doing what comparatively few other sites are doing: Delivering real value to their audience. The value per member -- approximately $44 assuming 23 million members -- is not out of line with other deals we have seen in the social networking space. Forrester's Charlene Li blogged on this in March, quoting the NewsCorp/MySpace deal in 2005 at $27.62/user and the AOL/Bebo sale earlier this year at $21.25/member. In my opinion, LinkedIn has two significant advantages that justify the premium valuation: A more attractive demographic and a value proposition that its members will pay for. Bain Capital must see that.

The audience is the source of value, and companies that can attract and engage the right audiences will find numerous ways to capitalize. It's early days for social media monetization.

I said in my April post here that if LinkedIn "came to me tomorrow and said I have to pay to maintain the relationship, I’d do it in an instant." The valuation set by Bain Capital and its supporting cast suggests there are a lot of others that share my enthusiasm!