4 Tactics to influence the new, SOCIAL consumer!

Traditionally the value of a customer was measured by his ability to purchase a company's products and services or CLV (customer lifetime value). But now with consumers recommending products and sharing experiences on social networks, the purchase cycle has changed. It is becoming increasingly necessary for companies to measure their social influence. Therefore, as shown below, value of a customer increases with customer revenue as well as social influence, also known as social CLV or CLV 2.0.

So what tactics can Marketing deploy to influence the social consumer?
There are 4 tactics that can be deployed depending on level of customer's revenue and social influence.

4 tactics to influence the social consumer

CLV 3.0: Measuring Co-Creation Value of a Customer

credits: redheadedfrog

While social media finds a way into the enterprise, it is imperative for companies to take a look at an essential metric that measures how much each customer is worth in monetary terms - CLV or customer lifetime value (you may also refer to HBS' CLV Calculator).

However with social CRM's capability to centrally store data that measures and reports on social media activities, there comes a need to revisit how we measure the value of our customers on the basis of two primary actions that they are actively performing -

• Referring actions - Like, share, recommend existing products and services resulting in Customer Referral Value
• Innovation actions - Co-create new products and services  resulting in Customer Innovation Value

Customer Referral Value:

With customers liking, sharing, recommending, influencing our products and services, we need to add the customer's referral value (CRV) to the current CLV metric. (sources: definition by Daniel, Oracle's Tara Robert) 

So CLV 2.0 or social CLV looks something like this: 

CLV 2.0 = CLV + CRV, 

where CRV is Customer Referral Value.

Customer Innovation Value (new metric):

While a very large percentage of users recommending our products and services, there is also a small yet relevant base of customers willing to co-create our next product or service (ref: Starbucks, Dell). These are truly high value, high potential customers. Companies that are able to strengthen relationships with such customers will gain sustainable competitive advantage. And this is the future of competition!

So CLV 3.0 would look something like this:

CLV 3.0 = CLV + CRV + CIV, 

where CIV is Customer Innovation Value.

So how do you think companies can measure CIV? Is there a science to it yet?

And should companies tweak their loyalty programs to reward customers who have made contributions of outstanding significance to a company's profitability, measured in terms of monetary, social, and innovation value? Maybe call it "Customer Lifetime Value Rewards" :) ?... what do you think? (Pardon the analogy to Grammy's Lifetime Achievement Awards!)

(Check out my next posting on how companies can leverage the purchasing power and social influence of their consumers.)

Social media's big push within the enterprise (finally!)

Six years after the term Web 2.0 was defined, it's extremely heartening to know that social media is finally entering the enterprise in a big way with the blessings of Oracle and Salesforce.com!

With Oracle's acquisition of Virtue and Collective Intellect, and Salesforce.com's acquisition of Buddy Media, social media and the new facets of customer engagement and innovation will finally begin to see the light of day within the enterprise in the form of social CRM - a key customer relationship management offering that will plug into social media platforms such as Facebook, Twitter, etc and provide the missing piece of the 360 degree view of the customer.

Through these acquisitions — and the eye-opening price tags behind them — Oracle and Salesforce.com show that the business world is getting ready for social media. It’s no longer considered a fad, definitely not just hype, and not going away any time soon. Businesses must care about social media because it’s clear that consumers already do. - Forbes

What does this mean for Marketing and IT teams?

Marketing will now be able to centrally create, publish, moderate, manage, measure and report on social marketing campaigns and activities on social media platforms such as Facebook, Twitter, YouTube and Google+.

So suit up, IT... and get ready to shake hands with Marketing and drive the social CRM story forward...  what say?

Digital Pandey: Rise of the underdog from your IT backyard

When Bollywood star - Salman Khan - decided to take on the role of Chulbul Pandey in the blockbuster – Dabangg, little did anyone foresee the impact of social media and customer segmentation in the film industry. While many corporations still stayed resistant to tweet or create a fan page, here was a fantasy hero breaking records with more than 19,000 followers in one day and tweeting his experience live during the shooting of this movie. The positioning of the brand – Chulbul – was strategic, and marketing of ‘Munni Badnam Hui’ was extravagant. Touching the hearts and minds of a target audience, this movie set out to become a lesson for businesses to learn, consume, and act upon.

Can the real Chulbul please stand up? Let's be honest. The PC age, Y2K phase, and Dot com era have come and gone; each of them highlighting the relevance of effectively managing Information Technology (IT) in the business environment. Despite multiple attempts to prove its worth, the IT department in many organizations is still undermined and under-funded. It continues to struggle to change its perception of being merely a support function for the business.

So what is it going to take for IT to prove its worth and come in the limelight? When will companies truly believe in IT as a strategic driver for the business?

Well, the time has come!

Today there is a lot of pressure for IT to innovate in support of their businesses and help drive new product development, increase operational efficiencies, and improve customer satisfaction. Similar to social media, other disruptive trends such as cloud and mobility have also emerged. IT is now on the forefront of business. It seems as if it’s now or never.

While the time to rise and shine has come for IT, the expectations to drive business strategies have also increased dramatically. IT will need to continue to act as a support function for the business. But now with the expectation to drive technology-driven strategic changes in the enterprise, IT seems to officially have an added responsibility of playing the role of Chulbul Pandey in today’s business context.

Here are three ways to Dabangg-ify your IT department to meet new business expectations:

1. Get business-savvy. If IT wants to lead fearlessly, then it will need to develop its business acumen as well as understand the business well. Going forward, IT will increasingly be invited to present their innovation plans at board meetings. Skills such as financial forecasting and budgeting will become imperative to justifying large investments. These new IT investments are bound to face resistance from CFOs if IT is unable to demonstrate their value in a clear and measurable way. IT will need to develop business cases and explain how new technology investments will make the company more profitable and competitive in the marketplace.

2. Effectively align IT with business. IT will not only need to talk business but also closely work with business to understand their goals and effectively apply new technologies to meet their goals. However, in order to work closely work with business, IT leaders will firstly need to build strong relationships with key business stakeholders and patiently listen to their current concerns and future needs. In doing so, IT will be able to become a trusted partner on the journey to innovation.

For instance, it is not uncommon to find companies these days adopting customer centricity as the means to sustainable business growth. As consumers spend increasing proportion of their time connecting and expressing themselves on the internet today, companies are looking for ways to leverage these social behaviors to understand, acquire, and retain their customers across digital channels. These intensive data collection and analysis efforts can only be successful if IT effectively partners with business teams – Marketing, Sales, and Customer Service. IT should not just provide technology services and tools but use the opportunity to effectively apply these consumer-facing platforms and technologies to meet the goals of the business. To ensure effectiveness, reduce risk, and justify cost of a radically new technology investment, a detailed technology assessment (including a proof of concept) should be collaboratively conducted and reviewed with business. Once the project is approved, releases should be incrementally rolled out. To build further credibility for such efforts, tying technology metrics to business metrics is also strongly recommended.


3. Sustain innovation capabilities. Social media, cloud computing, mobility, analytics, and Green IT are some of the emerging zones of technology heroism. This is only the beginning of an age of enterprise innovation. Tomorrow there will be a new wave of technologies and trends coming our way that companies will want to leverage in order to refine their business processes or even redefine their business models. 

To drive the business with IT-enabled innovation, IT leaders will need to embody creative leadership and inspire others to walk the path of innovation. 

They will need to develop the right long term strategy and supporting structure, such as creating a nimble, high performance team of business-savvy IT resources and dedicating time to assessing emerging technologies on a regular basis.

To summarize, if you are a part of the IT department in your organization and are excited about innovation, chances are that there is a Digital Pandey in you. So why not take this opportunity to transform yourself, put measurable value from innovation on the enterprise table, and change the perception for IT in your organization!

Your company's Facebook makeover: A social face with skin deep value

Two years back when I wrote a point of view on the business value of social media and what it could mean for business, I pointed out 4 underlying concepts - social networking, collaboration, broadcasting, and rich user experience. With Facebook becoming a clear leader on the web today] that leverages all these concepts, CEOs, please be advised that "Facebook is not going anywhere!".

Many wise digital marketing experts will tell you that Facebook is NOT a strategy but merely a platform for effective consumer engagement, brand management, and marketing efforts. While this is quite true (technically speaking), Facebook is no more a matter of choice but a necessity for companies today.

CIOs need to seriously take a look at leveraging Facebook as an initiative to enhance consumer engagement and viral outreach. In today's web where the network is your customer, the power of 'Like' and other social plugins must not be underestimated.

Before jumping on to the Facebook bandwagon, it is advisable to first understand your consumers and build your presence around them with a 360 degree marketing strategy that connects both online and offline worlds.

In one way, it actually a good thing that the web is dead! With users spending more time on Facebook than other websites, it makes it easier for CIOs to develop an integrated online strategy. You should nevertheless take a look at your company's online ecosystem more holistically and build the right structure and processes to continuously refine it for sustainable benefits.

Product Innovation 2.0 - The new facets of innovation in a virtually boundaryless enterprise

It is no unwritten fact that organizations are actively seeking ways to harness the collective intelligence of its employees and customers for product innovation.

The Knowledge Worker

Much of the value added today to products and services comes from knowledge work. This could be streamlining operations for better supply chain management or synthesizing organizational cultures in mergers and acquisitions. Enterprises are looking for opportunities to increase the productivity of workers involved in such complex interactions that constitute 41% of the workforce in the US (according to McKinsey).

The Informed Customer

With information more easily accessible and readily available, customers are getting smarter about products and demanding a say in the design of products. It has become challenging not only to gain the trust of new customers but also retain the loyalty of existing ones. Predicting buying patterns and satisfying the demands of today’s customers are complex business issues that are difficult to define in advance.

Three New Facets of Innovation from the Long Tail

Traditionally, innovation has been internally-driven with a top-down approach where leadership bears the structural authority and controls interactions within the enterprise. Also, traditional innovation is driven by a “go to the customer” corporate strategy and based on market research, surveys, and focus groups. Legacy business models that use such a reactive, structured approach to innovation have failed to effectively address today’s business issues.

Enabled by Web 2.0-based collaboration platforms, today enterprises are seeing the birth of a vibrant, unstructured collaborative ecosystem as entities, within and outside the enterprise, interact with each other (refer to diagram above for a graphical representation of these enterprise interactions). Collaborating, sharing, and learning are rapidly becoming the norms for the next generation enterprise. These interactions are shaping three new facets of innovation:

• Intranovation – employees in the organization collectively provide ideas on products and services in an unstructured yet guided (and not controlled) format
• Internovation – innovation with customers and the enterprise collaboratively design products and services
• Extranovation – innovation with customers designing products and services
  

The table below further describes these new facets of innovation and explains how sustainable value can be created.

	Intranovation	Internovation	Extranovation
Description	This innovation technique will cause innovation, content creation, and control to exist at the bottom of the enterprise. It will turn control upside down. Bottom up innovators usually will not have the structural authority to order people to join a team; instead the innovator will succeed by influencing them and leveraging a personal network – collaborating, sharing, inspiring, and leading.	Customers and the enterprise will collaborate to create new products and services. The size, needs, and engagement of customers in product design and promotion will build a vibrant ecosystem that would continuously help the enterprise to create and improve products and services.	In such an outwardly driven innovation technique, customers come together to define the products and services they need, without interference from the enterprise. The enterprise may provide the platform and facilitate such an innovation.
Innovator(s)	Employee	Employee and Customer	Customer
How is sustainable value created?	Value creation through improved employee productivity and greater employee satisfaction, significant internal shift of control when employees have greater control to easily create or change business processes	Value creation when customers and employees collaborate to build a vibrant ecosystem leading to greater customer loyalty and retention	Value creation with greater customer satisfaction and loyalty when customers create products/services causing a significant external shift of control to customer

These new facets of innovation represent new opportunities for open, continuous innovation driven by the enterprise’s intellectual capital of its employees and demands of its consumers. The fact that the outcome does not tend to have an end state and there is always potential to improve existing products and services, causes the business value generated to be truly sustainable.

The next generation, virtually boundaryless enterprise will leverage these innovation techniques to support unstructured, complex interactions and gain competitive advantage from the knowledge of its employees and customers. The enterprise will become more competitive in the market, build and maintain customer stickiness, be able to respond to market changes and improve employee productivity. Tactically, enterprise applications will need to increase access to data and information, support decisions, improve communications, and support multi-party workflows and collaboration.

So does your enterprise currently employ any these techniques? In what organization functions do you see the potential of these new facets in revealing untapped innovation for your enterprise?

Convergence of Forces are driving Consumer Innovation! (Updated: May 2012) 

Three years after I wrote the above article on the new facets of Innovation, we are seeing forces come together to redefine how business will be conducted, keeping the consumer in the center of all decisions. 

Multimedia, social media, and the Internet of Things is fueling exponential growth in data for the foreseeable future. To enable the next frontier for innovation, competition and productivity, companies will need to leverage big data. Companies will need to change their systems to conform to the nexus of converging forces - social (behavior), mobile (access), cloud (delivery), information (context) - and shift control to the consumer / end user. 

Developing a discipline of innovation through information will enable organizations to respond to customer, employee, product or environmental changes as they occur. It will enable companies to leap ahead of their competition in operational or business performance. 

In the foreseeable future, companies who do not leverage big data to innovate will be forced to seize operations!

I recently provided thoughts to the CIO community on how Big Data will drive innovation and beat competition:

Indian CIOs: Big data analytics help beat competition

What's driving business analytics? CIOs ponder

So is leveraging big data a part your company's innovation strategy? How is your company leveraging data coming from social networks and pervasive technologies? 

Web 2.0 is NOT the new Coke: Understand its value and get your enterprise ready

Can Web 2.0 positively impact business value?

CIOs and CEOs listen up! Web 2.0 is not going anywhere. This is NOT the new Coke that many hope it is. This is the beginning of digital socialism. The sonner IT realizes this, the faster it will be able to truly become a strategic partner of the business. Agreed that it is difficult to measure ROI for Web 2.0 or social media implementations but can you afford to not leverage the underlying concepts and technologies to empower your employees, untap hidden networks, enable better collaboration, and foster innovation?

Business today requires change and Web 2.0 has the potential to positively impact your business. So stop making excuses and just go for it!! And here's why (in business terms) -

Web 2.0 technology	What does it do?	Impact	Value Driver
Wikis	Allow users to contribute and share information available in real-time	Improve corporate/shared service efficiency	Reduce cost of internal business interactions > Lower Operating Margin
Social networks	Decentralize decision-making and let solutions evolve through collaboration	Increase staff productivity	Improve asset productivity > Higher Asset Turns
Mashups	Aggregate online content sources within and outside the enterprise to create new, richer services or situational applications	Increase integration efficiencies	Reduce total cost of integration > Lower Operating Margin
Blogs	Improve the ability to provide instantaneous feedback on products and services	Acquire new customers and retain current customers	Higher volume > Grow revenue
RSS feeds	Subscribe to digital content, such as news feeds, podcasts, or blogs	Improve customer interaction efficiency	Reduce cost of external business interactions > Lower Operating Margin
Web services	Help analyze and make decisions faster by making it possible for different business systems to talk to each other	Improve execution capabilities and increase business adaptability	Improve information utilization à Grow revenue
Rich internet applications	Rich user experience by bringing the interactivity of desktop applications to the web	Retain and grow current customers	Higher volume > Grow revenue

*Note: The table lists one benefit for each Web 2.0 technology in order to demonstrate its business value. The benefit may not necessarily be the most popular application of the technology.

The democratization of supply and consumption may threaten the traditional enterprise, thereby classifying Web 2.0 as a disruptive trend. However, enterprises that leverage the long tail will reap the benefits of open, continuous innovation – a sustainable competitive advantage.

So what will it take? And is your enterprise really, really ready?

As consumers and knowledge workers become more internet savvy and collaborate for information, enterprises should be better prepared to adopt Web 2.0. Today’s mainstream consumers are taking control – wanting to help each other and solve each others’ problems. Not only are consumers demanding intuitive, engaging, and relevant digital experiences, knowledge workers (consumers within the enterprise) are also demanding richer user experiences with customizable business process applications that can talk to each other. Gone are the “green screen” days of the mainframe within the enterprise. The confidence around web based technologies to run the business and the maturity and comfort of the work force using these technologies are compelling drivers for early adoption of Web 2.0.

To fully benefit from Web 2.0 technologies within the enterprise, the enterprise will not just need to be comfortable with web-based technologies, but will also need to adopt the following socially-driven business principles:

• The enterprise leverages the web to diffuse enterprise boundaries, resulting in –

a) less vertical boundaries (flatter organization structures),

b) loose horizontal boundaries (more cross-functional interactions),

c) external boundaries (customer and enterprise interactions), and

d) shrinking geographic (global business units) boundaries

• The enterprise considers open innovation as a key strategic driver to leverage the wisdom of the knowledge worker and needs of the customer for sustainable growth
• The enterprise promotes the culture of collaborating, sharing, and knowledge creation.

Once bitten by the internet revolution, the enterprise will be shy to take advantage of the Web 2.0 trends and welcome it within the enterprise. Also the decentralization of control may cause reluctance in Web 2.0 adoption, however the value created by improving the productivity of the knowledge worker and building customer loyalty far outweigh such risks.

As Web 2.0 revolutionizes innovation with its emergent, unstructured, collaborative approach, this will probably need to be one of the most influential strategic initiatives for web-based innovation within the enterprise. To reap the benefits of Web 2.0, the management needs to create a receptive culture and a common platform for a collaboration infrastructure. Interactions should be guided and not controlled. A transitional, informal rollout of the technologies is recommended more than a formal procedural change. Web 2.0 will definitely need the support from leadership but this [unstructured, let it collaboratively evolve] path to value should not be treated like just any other strategic initiative. This path does actually pledge a truly non-replicable, sustainable competitive advantage for the enterprise.