reading

The ZHAW School of Management and Law is one of today’s leading business schools in Switzerland, offering internationally recognized Bachelor’s and Master’s degree programs, a broad range of continuing education courses and programs, and innovative research and development projects. The Institute of Marketing Management of the ZHAW School of Management and Law aims to connect scientific knowledge and practical application in the field of modern marketing.

Lardi & Partner Consulting GmbH helps companies get clarity on their strategic goals and find ways to reach them. Combining professional expertise with proven methodologies, we develop strategies, define pragmatic and measurable solutions and support our clients in implementing them.
Visit us at www.lardipartner.com

Design book cover: Pauline Hoogweg, www.paulinehoogweg.com
Layout: Manuel Gächter, Oberegg/Zürich

Bibliographic Information published by Die Deutsche Nationalbibliothek
Die Deutsche Nationalbibliothek lists this publication in the Internet at http://dnb.d-nb.de.

All rights reserved. Nothing from this publication may be reproduced, stored in computerised systems or published in any form or in any manner, including electronic, mechanical, reprographic or photographic, without prior written permission from the publisher.

ISBN 978-3-7281-3557-5 Print
ISBN 978-3-7281-3578-0 eBook
Doi-Nr. 10.3218/3558-2

eBook-Herstellung und Auslieferung:
Brockhaus Commission, Kornwestheim
www.brocom.de

The difference between social media strategy and social media marketing strategy

A Sustainable Approach to Social Media for Businesses

Glancing at the agenda for the next executive board meeting, David Wallmer prepares himself for a challenging session. As the senior director of business development in a company with more than 10,000 employees in two continents, David is responsible for all initiatives labelled ‘social media’. He vividly remembers some of the board’s previous discussions in the topic, which have sometimes been challenging. The lack of understanding of social media’s business value and potential on the part of several executives, as well as his own inability to demonstrate returns on investment from the channels have left David frustrated.

The company David has been with for over ten years is very good at gauging the behaviour of its customers, and tailoring its products and services to their specific needs. After great effort, it has managed to position itself as a leading player and innovator in the highly competitive environment of consumer goods and today covers all major markets.

David’s department was quick to recognise the digital changes affecting society. They observed the emergence of social networks with interest and soon initiated their own concept. Well ahead of the competition, David’s team joined forces with the company’s marketing and distribution teams in setting up a Facebook profile. While this initially focused on disseminating information to customers, interaction gradually increased. Today, the company offers customer support via Facebook. Many customer questions are answered directly by other customers, and support is provided by customer service staff only where it is necessary or requested.

Facebook was proceeded by Twitter, which was initially quite effective for one-way communication. The company mainly tweeted corporate news relating to new products or special achievements. While the Twitter feed was originally followed by journalists and existing loyal customers, the channel eventually became increasingly active and, after only a few months began to be used by potential new customers as well. Twitter followers started to use the account to respond to tweets and to make service enquiries.

As a result, the customer service department became quite busy with social media channel requests. Enquiries coming in via Twitter had to be addressed (and dealt with) immediately, in line with the dynamic nature of the medium and high customer expectations. This in turn led to higher staffing costs, particularly to cover weekend shifts. David has had several discussions with other departments regarding the impact of social media in the company. For example, the head of customer relationship management (CRM) argues that receiving requests and complaints on social media channels make it difficult to use standard CRM tools to manage and follow-up on enquiries as well as customer lead. This is because the platforms and customer data are not integrated.

As a consequence, it is becoming increasingly challenging to develop and maintain successful relationships with customers and other stakeholders. As social media became more popular throughout Europe, customers became more active in wanting to shape their experiences with the company and its products and services. They accessed their friends and peers online and interacted with them on different levels: by exchanging information and ideas, by providing peer support, leveraging their bargaining power and even engaging in co-creation. Eventually, the corporate communications department became involved and expressed the need for more proactive control of user-generated content on the social media channels used by the company.

David’s company also initiated important developments in HR management including convincing recruiters to utilise social media channels to search for high potential candidates. Early on, individual staff members started using Xing to establish and maintain business contacts. As the company’s operations became more international, LinkedIn also gained importance. Today, the HR managers actively use these platforms in their international recruiting activities to advertise job vacancies and identify potential candidates. However, to date this has not led to a reduction in the use, and thus the costs of more traditional recruitment methods.

In recent months there has been an increase in evaluation of the company on platforms such as | www.kelzen.com |, which is used by former and current employees and job seekers to evaluate potential employers. Negative comments by individual former employees give external users a biased opinion of the day-to-day operations of the company. Management fears that this may result in a highly subjective (one-sided) company profile affecting public opinion and perhaps even influencing representatives of employers’ associations. So far, however, the company’s efforts to address these risks have neither been effective nor coordinated.

Admittedly, David has profited from a very open and dynamic corporate culture that encourages a trial-and-error approach towards embracing new developments. On the other hand, pressure from senior management has increased to present financial figures justifying the investments made or proposed. At the beginning, external social media consultants promised great things and internal stakeholders placed high hopes on the use of social media tools for their business. Indeed, initially the company made remarkable progress in establishing direct access to its customers for the first time and took advantage of opportunities to learn about their likes, dislikes and desires. Customer interaction became more targeted and personal, leading to very valuable feedback. At the same time, in many ways the changes proved to be too radical for the company. While David’s fellow board members appreciate the great potential of social media, they are feeling uneasy about the risks and the uncertain outcome of social media measures with regard to the company’s profitability.

David will need to propose to the executive board a well-managed, top-down strategic approach embracing not only the company’s goals and overall strategic direction, but also to manage reputational risks and trigger changes in organisational culture. The approach will need to demonstrate how social media could contribute to cost effectiveness and efficiency of processes such as recruitment and customer service. In addition, the company will have to implement reliable feedback mechanisms to monitor success and profitability over the coming months.

David’s case is an example of the issues and sensitivities of senior executive clients of Lardi & Partner as well as the project partners of the Zurich University of Applied Sciences (ZHAW) face regularly. Those days when companies paid for their social media activities out of their marketing budgets and hoped for the best are long gone. The increasing popularity and significance of social media in the consumer lifecycle that developed over the past decade has created real challenges for companies and their long-term strategies. Social and collaborative technologies are no longer just marketing tools; they promise a broad range of benefits for companies in terms of internal and external collaboration, communication and interaction | MERCHANT, 2010 |. In the medium and long term, these benefits must be transformed into sustainable, measurable profits. To this end, management today must deal with the following key questions:

How can the advantages of social media be utilised to a company’s best advantage?

How can a company create measurable added value by using social media?

What are the effects of such measures on the long-term strategy of a company, and what cultural and structural changes need to be taken into consideration?

How can a company effectively manage reputational risks and potential opportunities arising from independent content produced by users of social media (e. g., loss of influence over the dissemination of information, users advocating brands and products)?

What future developments must be taken into account today and integrated into a company’s corporate strategy for tomorrow?

A number of books have been published on the topic of social media over the last few years. Most of them either focus on strategic guidelines for the use of social media in marketing or distribution activities or they serve as instructions for creating social media communities. Only a few of them take into consideration a holistic business approach.

In order for a company to grasp and utilise the potential of new developments in the social web, the various approaches available must be thoroughly understood and dissected. They can be categorised in two ways:

According to field of application, as ‘Business 2.0’ or ‘Enterprise collaboration’

According to type of interaction, as ‘transactional’ or ‘cooperative’ models

Business 2.0 describes the activities of companies aiming to interact with social media groups outside their own organisation. In addition to marketing and branding activities, such approaches are becoming popular in many other corporate areas, such as CRM, innovation development, competitive intelligence, revenue creation and operational excellence | SOLIS, 2011, BERNOFF & SCHADLER, 2010, BRUHN, SCHOENMUELLER & SCHAEFER, 2012 |.
Companies generally like to use well-known, well-established tools, such as Facebook, Twitter, LinkedIn, Flickr, Google+ and YouTube. However, there are also numerous smaller social media channels and aggregator sites that companies could utilise.

Enterprise collaboration comprises activities based on internal collaboration in companies and includes knowledge sharing, innovating, content creation and reusing, communication and learning | MICHELIS, 2012, ZHOU, HONG & LIU, 2013, LI & BERNOFF, 2011 |. The companies again employ well-establish tools in addition to their existing technology infrastructure as well as customised solutions.

In a transactional interaction model, the participants in a social network exchange services for money or another material advantage. Loyalty programs, for instance, operate by exchanging customer information or data for loyalty points or coupons the customer can use towards buying the products, and thus to save money (e. g., Nespresso Club or the Tesco Clubcard). Often, companies collect Facebook ‘likes’ and reward the clicks they get with an opportunity to take part in a contest or to receive some similar benefit | cf. http://bysb.eu/c1r1 or http://bysb.eu/c1r2 | .

In cooperative interaction models, on the other hand, the material transaction is effectively replaced (or supplemented) by an immaterial benefit that makes a transaction superfluous. Thus, the companies and their stakeholders cooperate; or rather, they invest reciprocally in the relationship because they believe that they will eventually receive something in return. Relationships based on cooperation are thus less stable than transactional relationships, where the agreed trade-off is always something of tangible value for both sides | O’DONNEL, O’REGAN, COATES, KENNEDY, KEARY & BERKERY, 2003 |.

This type of immaterial interaction can work only if both parties are able to profit, i. e. if they receive an added value from their collaboration. At the same time, they must both be prepared to collaborate and be perceived as trustworthy. In return, both consumers and employees must put their trust in the company. In a social network, such trust must be gained – and it must be justified. Without it, immaterial exchange cannot take place in the long run | CHASERANT, 2003 |.

Compared to transactional models, cooperative models have two major advantages. There is an inherent culture of trust between the sender (the customer or employee) and the receiver (the company) of information, and more data (particularly personal data), is typically exchanged between sender and receiver | JOHANN, 2011 |. Furthermore, the return on investment on the part of the company is higher when no material transaction is necessary to achieve the interaction and the customer relationship the company wishes to have.

Yet, how can companies sift through the multitude of possible social media initiatives and identify those that will produce sustainable benefits in the context of their own business and market environment? How could these opportunities be aligned with the overarching corporate goals or functional strategic goals? Currently no proven management tools are available for use in developing sustainable interactive practices that create value and meet the following requirements:

Firmly built into the company’s overall strategy

Embedded in the company’s processes with a high degree of organisational fit

Measurable in terms of effort versus value add

This book is designed as a practical manual for executives whose responsibilities include social media initiatives as part of their strategic activities. Further, it is aimed at anyone interested in methods to realise value-added, sustainable Business 2.0 and Enterprise collaboration measures in their companies. The book serves the following objectives:

It introduces an integrated social media framework describing all possibilities of social media in a business and enterprise context and includes both cooperative and transactional initiatives.

It presents a state-of-the-art guide that has been extensively field-tested and can be used to develop, implement and maintain a social media strategy in the reader’s own company.

A web-based platform that continuously provides up-to-date information about the most promising approaches and most recent success stories.

It was a conscious decision by the authors not to include a chronological history of developments in social media over the last few years. Neither does the book provide an overview of the relevant platforms in social media. Rather, the authors refer to other sources where such information is readily available, e. g the book titled ‘The New Community Rules’ from Tamar Weinberg.

Instead, the following chapters describe a framework that has been field tested and found to be sound: the Social Media Strategy Framework to develop and implement social media for business use. This book uses the Framework to develop a step-by-step guide to help companies achieve the following:

Identify and develop social media initiatives based on the business context and taking business goals and challenges into consideration. | → The Social Media Strategy Framework, Chapter 2 |.

Based on the strategy developed, implement initiatives for the company’s internal use | → Enterprise Collaboration, Chapter 3 |, or in order to achieve external business goals | → Business 2.0, Chapter 4 |.

Finally, the last chapter | → Successful Examples, Chapter 5 | provides the reader with an overview of success stories from various sectors of industry and commerce. These are published on a case-study platform created to accompany the book. This database of online case studies will be continuously updated and expanded to offer readers additional inspiration for their own projects.

BERNOFF, J. / SCHADLER, T. (2010). Empowered. Massachusetts: Harvard Business School Publishing.

BRUHN, M. / SCHOENMUELLER, V. / SCHAEFER, D. B. (2012). Are social media replacing traditional media in terms of brand equity creation? In: Management Research Review, 35(9), 770–790.

CHASERANT, C. (2003). Cooperation, Contracts and Social Networks: From a Bounded to a Procedural Rationality Approach. In: Journal of Management & Governance, 7(2), 163–186.