Tag Archives: Shutterfly

Social Networks for Business Tip #3: Pick your destination before you leave

I have found ten common themes that apply irrespective of what your enterprise does, your market is or what technology platform you are using. The post below is my third of 10 tips; each with a particular theme. These are intended to be read in the order presented, as they will build upon each other…

Tip03

If you don’t know where you’re going, how will you know when you get there?

dest1In my last post in this series, I wrote about the importance of first defining what business problem you are trying to solve before diving in with technology. However, you still have one more thing to do before beginning implementation: defining what success looks like.

This, too, may seem trivial. It is not. If you don’t define what business outcomes you must achieve to solve the problem at hand you—

  1. Will not implement your community in a way that enables you to measure business value or
  2. Be able to determine whether you have succeeded to address the problem at hand.

We have all seen this. You implement the new technology at the request of a business unit leader. The solution launches and works from a technical perspective (it may even be on time and under budget). However, within six months, people (usually business unit leaders) begin to indicate that the solution was a failure and that the team needs to do something else. The rest of this post describes how to avoid this.

Define success in business terms

Your defined your Problem in business terms. You need to do the same with a your definition of success. You can then use value chain analysis to map your community against your enterprise to determine what you have to deliver through your community to achieve this.

software-value-chain1

Yes, this is harder than defining success in terms of counting “eye balls,” registered members, comments or ideas. However it is no different that what you have been doing for before social media (or the Internet or even “Old Media” advertising) existed. Once you have done this, you will have three benefits:

  1. Specific requirements you must implement within your community both to trigger the value chain and to measure how much you have done this
  2. The ability to track your progress towards solving your business problem
  3. True business metrics to demonstrate the return on your investment (ROI) to your CFO or Board

This isn’t as hard (or theoretical) as it sounds

At the most base level, communities do two things:

  1. Attract and engage stakeholders (staff, customers, voters, etc.) and
  2. Capture their ideas, opinions and interests regarding this engagement

It is easy to tie this to many value chains. Here are five examples:

  • Members join your topic- or brand-based community >> You get leads to market and sell >> You can measure the conversion rate of members to paying customers.
  • Members join your community >> They add content >> This generates pages and page view >> This increases advertising inventory and revenue
  • Members Tag their content based on topics of interest >> You now know what topics they care about >> You use this to build affiliate marketing campaigns (e.g., cross-registration, sale of targeted leads) – this is very lucrative
  • Members Tag and Rate others’ content >> You know which topics are most popular >> You can now sell access to targeted advertising campaigns based on volume and interest – also lucrative
  • You promote a contest or marketing campaign >> You enable participants to click through to what you are promoting register or purchase>> You can measure the cost per participant of this channel vs. others.

What value chain you need for success will drive what data you need to capture and what systems you need to integrate (in batch or real time). It is much less costly to know this before you build your community than after.

Examples of those who have applied this well

It is always easiest to understand how to apply this by looking at good examples. Here are three. (Click on the logo to visit the community that demonstrates this concept. Please note that I am not disclosing any numbers here due to basic professionalism and protection of privacy)

Men’s Health

Rodale wanted to boost revenue and brand loyalty in a way that fully aligned with their mission. They created the Belly-off Community and liked it to online and in-print promotions. Men read about tips to lose weigh online and Men’s Health magazine, then go online to upload their photo, compete to lose weight, get ideas from others and simply get moral support. The result was a hugely popular community that increased subscription and online advertising revenue. It also expanded a new lower-cost online channel to maintain engagement with subscribers.

HGTV’s Rate My Space

Scripps wanted to boost their online revenue and become the place for people to think about home improvement. They created on online community to let people share their improvements, ask questions and provide feedback to others. The community expanded Scripps inventory to present ads (increasing ad revenue) and enabled topic-based add targeting (enabling even more lucrative affiliate marketing with companies such as Lowes). The site created so much value that it led to the creation of a TV show.

Kodak’s Idea Center

Kodak had a large number of registered online customers. It provided a community that used photo sharing to encourage conversion of shared content to purchased products (e.g., mugs and calendars with uploaded photos). It leveraged community interaction to enable customers to highlight their creations, creating demand for other customers to do the same. Did this site have as many “eye balls” as Flickr? No. Did it create a clearer value proposition and easier-to-measure business results? Yes.

Note: Kodak’s Gallery and Idea Center community is now known as ShutterFly

Wrap-up: Business and technology strategy changes in the Age of Social Networks

First and foremost, we had great attendance (twice the registered attendance–an excellent achievement given that it was the Friday before Memorial Day Weekend) and lots of excellent questions. Second–and equally great–the attendees and panelists spent over 90% of the time discussing the business implications of social networking (rather than dwelling on the latest technology widget or social-network-of-the-week). This was a strong confirmation that social networking is now a mainstream business concern, rather than an experimental concept. (Again, it reminds me of 1999 all over again…)

Here are the top five items that came up over and over in our discussion:

#1. What is the business model for social networking?

I could tell I was at a business school as this was the first question out of nearly everyone’s mouths. It is a very valid question (especially in light of wide swings in valuation of social networking companies).

A key theme I highlighted here was viewing social networking not as a ends unto itself but as a new medium to interact with your customers, staff, stakeholders and partners. Specifically, I discussed how Rodalle (Men’s Health Belly-off and Ink Link), Kodak (Idea Center — now ShutterFly) and a Blue Chip Financial Services Company (I cannot name for at least four more weeks) have incorporated social media into how they interact with their customers to build loyalty and revenue.

#2. What data do you collect, how do you use it?

Here is where I could see EMTM’s strength in showing its students and alumni how to harness technology for business use. Everyone knew that understanding data was key to demonstrating business value.

We discussed the challenges of slicing and mining data that come from many users (UGC, user-generated content) and from understanding these peer-to-peer relationships. Ultimately, we all shared the concept that you need the ability to dimensionally mine data (not just run reports) and integrate these data with the rest of your enterprise’s data warehouses on customers, commerce, direct marketing response, etc. Not enough people are doing this today. Personally, I believe creation of social networking data mining capabilities this will be the biggest expansion area over the next 12-15 months.

#3. How do you reward people for providing UGC?

Basically, when will sharing your information for the fun of it fall out of fashion and become a fad. Some of our panelists thought this would never happen (indicating that Web 2.0 brought on the Age of Online Individualism). I fell back to the classic microeconomic arguement:

People will stop sharing online content and information when the value they obtain from this is no longer worth the effort and risk.

Right now we still have a “in fashion effect” that encourages this sharing. However, the key (as an enterprise) is to use this sharing and interaction to create value for both the enteprise and the network participants. I highlighted who I knew was doing this well: HGTV’s Rate My Space, the same Blue Chip Financial Services Company (I cannot name for at least four more weeks) and the SINdicate (to name a few)…

#4. How do you use this for work with the federal government?

This was the surprise topic. I definitely reflects the state of the economy and reliance on TARP and stimulus spending.

This was the “softball” for me (as the only panelist with public sector social networking experience). I mentioned that the best way to work in the public sector is to align your social networking strategy with the nine modes of public engagement and interagency interaction (identified by Kim Patrick Kobza through his years of experience in this area and discussed in my recent white paper) common at the Federal, State and Local levels of government.

#5. How Does Anyone Make Money Using Twitter?

Twitter was less of the elephant in the room than I expected. However, it came up both in our panelist discussion and the keynote presentation by Guy Kawasaki later in the evening. Guy summed it up well (not surprising, given his presence on Twitter):

Twitter is not about making friends or building relationships. Twitter is a marketing and business development tool. Use it to share your message, search for people discussing similar topics, and direct message them to build and develop business connections. No other technology (outside of those employed by NSA) lets you see what people are talking about and to reach our to people talking about your reason for existence.

Not everyone uses Twitter this effectively (I was happy for the lesson). I will be curious–however–to see what happens when enough people catch on and stop using Twitter to simply talk about themselves: this will reduce the opportunity to see what people are discussing and directly market to them.

Again, it was a great discussion. We had enough questions to go beyond our allotted two hours. It definitely let me know there is a need for these types of panel discussions at more places than Wharton. My thanks to Steve Ennen and Dwight Jaggard for a great day.