The 6 Hidden Dangers of Social Media

NEW YORK, August 4, 2010 — "There are so many companies that believe they need to jump on the bandwagon of social media," said Art Hall, manager of customer relations at Altanta-based firm Alvarez & Marsal, on Day 3 of the CRM Evolution 2010 conference. "They believe having a social media strategy equals a Facebook fan page or a Twitter handle."

[Editors' Note: For more coverage from the CRM Evolution conference, please click here.]

Hall revealed to attendees that it kills him to see organizations dishing out tens of thousands of dollars on flashy Facebook pages. "There are people paying an ungodly amount of money to have a Facebook fan page-and that's all they got," Hall said. "They have no idea what it means." Hall told attendees that the lack of clarity around social media strategies has moved him to share the top six potholes companies need to avoid in social.

1. The unavoidable ROI discussion.

"ROI draws a lot of contention," Hall said. "If results aren't shown immediately, there will be some problems." In many cases, marketing and digital employees kick off the organization's social efforts. When those individuals want to ramp up activity they find it difficult to show an ROI. Hall contended that it's not because it's impossible to show an ROI on social, but because it's difficult to translate qualitative business benefits into qualitative ones. "What makes a good ROI is a strong business case," Hall said. "But many... aren't not going through the full disciples of a business case."

There have been many discussions that "ROI" should really stand for "return on influence" or be rewritten as "ROE," for "return on engagement," Hall said. "What's clear is that the ‘I' does not stand for 'ignorance.' " Whether you like it or not, Hall stressed that you have to get at the money question with social media. He recommended that marketing or customer service-or whomever proponents of social may be-partner with someone in organization who can be trusted to prove that an investment in social media will impact some part of the revenue statement. It might help to show the boardroom the potential consequences if a brand is damaged on the social Web. Estimate the impact and how sanctioning resources on social networks will mitigate the risk.

2. Brand identity.

Customers are talking about your brand. This undoubtedly is true. But what happens when an individual uses your brand identity for purposes you had not designed? A danger to look out for, Hall said, is making sure the brand identity is consistent.

3. Value to the audience.

"There's a delicate balance in delivering value to the customer and deriving value from the customer," Hall stated. Based on how much value a company gives, customers decide how much loyalty or money they will give back. "The key in the social arena is whatever content you give has to be of value," Hall said.

Often social participants make the mistake of talking before listening.

4. Compliance and regulation.

Using a bank as an example, Hall said there might be a lot of actions a financial services or other highly regulated company would like to take, but should consider company policies first. Remember, he said to attendees, corporate risk and regulatory compliance needs to be embedded in marketing. If you aren't prepared on how to respond, don't take action quite yet.

One bank Hall was familiar with identified its top mortgage customers through a campaign. The bank sent out thank-you letters saying, "Dear Valued Customer...." One customer responded to the letter by asking, "If I'm such a ‘valued customer' please give me 1.5 points off my service rates." The bank, astonished at the request, realized it may have been over its head with its marketing campaign.

The same scenario often occurs in social, organizations try to dip a toe in, but soon realize they don't have the power — or are too encumbered by regulation — to move forward. Instead of hitting a wall, Hall recommended that highly regulated companies adopt "crawl, walk, run" strategies and fully investigate regulatory compliance implications before any sort of engaging. 

5. Corporate policies and procedures.

Social media guidelines are a good start to making social an enterprise-wide goal. However, make sure your employees know and respect the guidelines before they act. IBM, for instance, has a widely recognizes social media policy that it expects all of its stakeholders to abide by. This can sometimes get in the way of what employees really want to say. Hall shared a story about an IBM employee who wrote in a forum, "you screwed up." Apparently that phrase was against corporate policies. "Be cognizant that if you have a policy, it changes the dynamic of what you can and can't say," Hall said.

6. Authenticity and transparency.

"Trust is really coming to light now with social," Hall conveyed. "Today consumers are looking for more transparency and are determining who they do business based on if that company will act in their best interest." Although customers would love to see your brand on their favorite social networks, if you aren't being real, it might come to haunt you. A few years back Target had a secret word-of-mouth marketing group called "Target Rounders." The goal was to leave positive comments about the brand without admitting to working for the company. Although the group has been disbarred, it's that type of activity that Hall cautioned against. The speaker again advocated listening before any social activity.

Hall warned attendees not to use Facebook and Twitter as knee-jerk reactions to the demand for a social presence. In the early days of CRM, he recalled, many companies reflexively adopted software from industry pioneer Siebel Systems hoping that, if they could get the right system in place, their problems would dissolve. In social media, Hall said, a mindset is starting to emerge in some quarters that "social" equals "Twitter." Trying to dissuade attendees from subscribing to this idea, Hall proposed adopting social media strategy before tools and platforms.

"It is possible to integrate social as a broader marketing and CRM campaign," Hall concluded, "but understanding the audience is key."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine.

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