Top 10 Social Business Questions in 2013
2) What’s the tangible business value?
Here’s the second of ten posts in this Q&A series covering the top 10 social business questions of 2013.
2) What’s the tangible business value?
One of our mantras at Kanbee is ‘if it doesn’t save you money or make you money, don’t do it’. This is business after all. Social isn’t a shiny, gimmicky, nice-to-have – it’s a set of practices that deliver tangible business value.
Fellow social consultant Leon Benjamin put it very nicely during a presentation on Virgin Media’s internal social networking platform when he said “Trying to quantify the value of social business is a bit like trying to quantify the value of your mother and everything she has ever done for you.”
Making your workforce more effective, your processes more efficient and your organisation truly customer driven has too many emergent, often unpredictable, benefits to cover here.
Saying that, there are a few key areas you might like to focus on…
Increase revenue through social business
Numerous studies have shown that organisations using social business practices generate higher revenue, profits, or both, vs those who aren’t.
To quantify potential gains, you could look at things like:
Increased web traffic through better SEO
Community-building will drive more traffic to your site. The more effort you put into listening to, participating in and stimulating conversations – including a robust content strategy – the greater value you’ll get from earned media over time. This could enable you to reduce your reliance on paid search, which requires you to keep spending to get the same results, vs earned media which continues to drive more traffic cumulatively over time. For some organisations, community becomes the #1 traffic driver to their site.
Increased ATV & conversions
Not only do more people arrive at your website, due to the SEO benefits of community-building – but when they do arrive, they’re more likely to buy and when they do they’re more likely to spend more. Average transaction value (ATV) increases when customers are better educated about product benefits. For example, say I’m going to buy a camera, but I don’t know much about cameras – chances are I’ll just default to the cheapest option. If, however, I come across fellow buyers or camera enthusiasts, who can unpack the value of a more expensive camera in their own trusted voice, I’m more likely to spend a bit extra. Likewise, surfacing advocacy in amongst the purchase path will increase conversions as I arrive better informed and more confident about completing the sale.
Understanding the 21st century sales funnel and today’s more complex customer journeys is fundamental to driving increased revenue. Perhaps I’ll do another post on that later!
Increased satisfaction, referral & retention
Not only does social feed the sales funnel by driving traffic to your site, but once those sales are converted, it can drive referral and retention. Social improves customer experience by enabling customers to communicate with your organisation on their terms, helping make you and your expertise more accessible at the right place and right time. It also gives you the opportunity to create ‘magic moments’ of remarkable service (i.e. worth making a remark about’). Organisations with customer communities report higher satisfaction levels – sometimes around 30% – and 20% higher loyalty.
Many organisations leave money on the table due to disparate databases. Say I have business broadband from one company but don’t know they also do card machines and home phones – chances are I could by-pass them altogether; or end up being bombarded with marketing / sales calls from agents in one part of the business who aren’t aware I’m already a customer in another area. Annoying.
If you’re planning to shift towards a single customer view, social should be part of that picture; and social media monitoring can throw up opportunities to proactively create sales opportunities – e.g. when I’ve just tweeted ‘can anyone recommend a card machine supplier’.
Reduce costs through social business
Reduced service costs
As well as improving customer satisfaction, building community can enable you to reduce service costs. This business case is one of the easiest to build, if you typically rely on a call centre to handle support queries. By building a knowledge base and vibrant community where customers can help one-another, asking and answering questions, you can deflect calls from your call centre, saving you the cost per call. It’s worth modeling both direct deflection (I didn’t call because I asked the question online instead) and indirect deflection (I didn’t need to ask the question because I found the answer online, seeing as someone else had already experienced the same problem). As well as reducing service costs, building a support community is engagement marketing too, not to mention a source of insight.
Social business always has a wonderful way of blurring the lines between different functions. That’s why the emergent benefits are so far-ranging.
Many companies are frittering a big chunk (typically 10%) of salary cost just on people looking for the information they need to do their job. Internal collaboration and social networking platforms make it much easier to find the right person and the right information you need, instantly. Aiming to slash time spent resolving queries internally by about a third is often a realistic goal.
Reducing meetings and email are two other key savings. I believe at least half the time we spend in meetings is wasted, for one reason or another. In a company of 5000 people you could well be looking at around $50 million waste. The cost of email is also much higher than we realise – perhaps even higher than meeting waste – given the destructive interruptions it brings; and ambiguous, unclear messages. Email is great for some purposes, but not all. In many ways, it isn’t collaborative, as we copy in some people, exclude others and important information is often lost or buried.
Reducing onboarding time of new employees is another quantifiable benefit, as is employee engagement (which is linked to customer satisfaction – happy staff make happy customers) and productivity.
Those are just some of the tangible benefits of becoming a social business. There are many more, including reduced travel and facilities costs, better investment decisions and increased innovation. Any questions just shout!