Nike stirred some controversy when it announced in fall 2012 that it would take control of its social media marketing in-house instead of relying on its digital advertising agencies “to connect better with its fans.” Even more noteworthy, this strategic decision was part of Nike’s broader shift in marketing from television and print to digital. This should also serve as a wake-up call for agencies that are expanding their social media services, allowing brands to hand over their social media tasks. Marketing Week notes, “Digital marketing experts see that the role of agencies in managing social media is evolving as marketers gain more confidence in creating their own strategies.”

This is just the beginning. Brands can gain significant benefits by connecting directly with their stakeholders. Stakeholders can be customers, suppliers, influencers, employees, channel partners, and more. As I will explain, the idea of “social” will change rapidly from 2013 to 2017, and those who act early will have a unique advantage. Forward-thinking agencies can protect themselves against declining social media profits by preparing to reduce social media activities and transition to services focused on social business.

Brands stand to reap massive rewards from relating to their stakeholders directly.

The Evolving “Social” Market

Broadly speaking, up to now, brands have treated social media as a marketing and public relations function that emphasized content and outbound communication with responses playing a supporting role.

Social business aims to improve the firm’s relationship with high priority stakeholders by interacting around their desired outcomes (of using the firm’s product/service), and it uses content as a supporting tool.

Social media exhibits relatively superficial conversations so brands can outsource it to their agencies, which have developed competencies in social media monitoring, content development, and social media response protocols (including crisis management).

Social business conversations are more in depth, so it requires significant domain knowledge related to stakeholder outcomes, and it is more difficult to outsource to agencies.

I project that social media will continue to grow through 2017, but it will shrink as a portion of the entire “social” market which will become dominated by social business. As stakeholders experience brands’/firms’ individualized attention, social media’s share of attention will fall. One example of this is “Customer Service is the New Marketing.”

Interactions among brands’ employees, partners, and stakeholders will become more rich, intense and intimate, and brands will not earn a spot at the table unless they have serious value to add.

Brands’ agencies do not have the domain knowledge to do this, so I predict the outsourced to agency social media model will fade. Let’s look at some examples.

Examples of Brand-stakeholder Collaboration

  • A fitness equipment manufacturer pairs its engineers, fitness specialists, and customer service experts with several stakeholder communities who build and use home gyms for various outcomes. They create rapid innovation cycles by understanding outcomes, designing equipment, and helping stakeholders to get results with the equipment. The entire cycle is visible to the community which drives more sales.
  • An athletic equipment brand connects its engineers, designers, and running scientists with high impact stakeholders to discuss body types, running surfaces, conditions, and shoe performance.
  • A national bank with a large small business division organizes online communities in which it facilitates discussions among its clients while bankers offer specialized expertise. The focus is empowering clients to solve business problems and show the bank’s commitment to their clients’ success as well as a banker’s relevance and expertise.
  • An electric utility has nuclear safety engineers blog and discuss safety procedures with customers, informing them of the safety protocols they follow every day and sharing what running a nuclear power plant is like.

“Domain” Knowledge Is License to Connect and Engage

In 2013, stakeholders aren’t yet accustomed to accessing and interaction with brands’ high-value knowledge. In 2007, they weren’t used to tweeting problems to brands and getting instant help from brand customer service, or other customers, on Twitter and Facebook. Once they do experience it, it will become table stakes to getting and maintaining the attention of stakeholders.

This spells a significant change in brands’ relationships with their stakeholders because outsourcing communications will become less viable unless agencies develop very specific practices with product/service domain knowledge. In most cases, brands will choose to do it themselves because pervasive, continuous, direct interactions focused on stakeholder outcomes will become central to the brand’s ability to maintain relevance and innovate.

Having another layer in between brands and stakeholders will slow and dull feedback and innovation processes.

How Brands Will Build Social Business Competency

The process of “taking social media in-house” will vary on a case-by-case basis. Generally speaking, if you have engaged your agencies to manage social media, keep them retained while you develop social business competency as outlined here. Don’t engage scarce internal resources in social media because it can crowd out your ability to develop social business competency (assuming you don’t have limitless resources).

  • Define and prioritize stakeholders according to their impact on your business. This will enable you to be authentic. Stakeholders are not equal, and you will not be able to commit equally to everyone. You need to be very clear about who is most important and how they impact your business results.
  • Locate digital venues in which stakeholders are having the most specific interactions about outcomes. Study these conversations carefully and note the outcomes. What challenges and opportunities do stakeholders have and in which use cases are your products and services most relevant and have the most impact?
  • Survey your organization’s knowledge that is relevant to stakeholder outcomes and who your experts are. Survey your people’s skills with an interest in social technologies, too. This internal analysis will enable you to optimize experts by social tech skills and interests. Notably, “organizational knowledge” might include data you gather from selling product or delivering services. For example, retailers could share sales data summaries of certain products by stakeholder/location/time of year when that helps stakeholders with their outcomes. Organizations can create “performance metrics” when using products for certain use cases; use them to gather and share users’ results. Social business makes it relatively easy and inexpensive to create the metrics and gather the data.
  • Scope several pilots that define goals, resources, processes, and measurements for engaging with stakeholders and helping them to improve the kinds of outcomes that are most important to you. Design pilots so they require small defined contributions from several people. This will enable contributors to begin their roles in their spare time. Include mentoring and make sure some of your measurements define and improve contributor satisfaction. That will make your pilot process sustainable.
  • The best pilots are meant to test your strategy and teach your people, continuously. Outcomes for each pilot are scaling success, adjusting to improve or closing down. Set your metrics according to pilots’ priority as defined by your business goals. Most pilots are six to eight weeks.
    • Lead the due diligence and creation of your social business strategy. Socialize strategy and its recommended pilots to relevant businesses. Ideally, you will have engaged relevant businesses during the diligence and strategy process.
    • Design suggested pilots and mentor contributors. Debrief pilot teams and record learnings. Note that they mentor contributors in mentoring, too, which scales the process.
    • Set up and administer a (digital) SBCT community/creation/learning space. Select and use free or paid invitation only cloud solutions. In most cases, make sure they have great mobile interfaces.
    • Define social business competencies and good practices that pilot teams develop on the job. Share these in the SBCT community.
    • Serve as the nerve center for the enterprise’s identification, definition, and sharing of social business competencies. Keep in mind that all enterprise/brand functions will be leading pilots relevant to their businesses and/or functions. The SBCT significantly increases the enterprise’s ROI on social business. They also have an immediate impact on each pilot or initiative because results are consistently far more rewarding.
  • Successful pilots naturally evolve into ongoing initiatives that the brand scales in accordance with business goals and results. Later, they will naturally displace legacy processes. Nike has replaced a significant portion of its legacy marketing and advertising programs with digital. Social business will displace legacy digital and analog processes over time.

Insights

  • The diligence/strategy/pilot process can make your social business initiatives very efficient from a cost/benefit perspective. By defining and prioritizing stakeholders and focusing on most relevant interactions, you can filter out low-impact activities that have no direct impact on the business. By scoping pilots small, you minimize upfront investment needed before you see business relevant results.
  • A big part of success is understanding the enterprise/brand adoption process. You can use this simple enterprise Social Business Life Cycle. It can help you to manage your social business competency.

[Click on visual to enlarge]

  • Few marketing (or other) executives have had substantial direct interactions/collaboration with stakeholders because there has never been an economical means to do so. It may be difficult to imagine the transformational power of direct interaction before you see it and get involved with stakeholders. Pilots enable brands/firms to start small and experience it. Stakeholder collaboration is critical to business viability.
  • When brands create meaningful outcomes based interactions with stakeholders, they naturally create fast cycle innovation processes. In the medium to long term, this will be vital to survival because only by connecting with your users will you be able to maintain your relevance. Product life cycles will plummet.
  • Social business tears down the artificial communication barrier between brands and users (erstwhile “producers” and “consumers”). Brands that pursue the connection will redefine their markets.