The business value of social tools
Miranda Man, Social Business Strategist: Ever wondered what the business values of social tools are? I’ve dug deep into the latest McKinsey report on employee and customer engagement and drawn out some of BLOOM’s key takeaways.
We recently published a series of blog posts on social technology to help break up our Navigating The Social Technology Landscape report into more sizeable chunks. We provided an overview of a number of social tools, including use cases for business and core functionality.
It goes without saying that social media has transformed the way that humans interact and communicate. However, what of the business value of social technology? Can businesses utilise and benefit from the shift in human interaction and communication?
In a recent report, McKinsey explored the business value of social technology for both employee and customer engagement. The report gives several examples of how organisations can use social technologies to unlock business value and backs up this research with statistics.
“In a study of four large industry sectors, it was estimated that social platforms could unlock up to $1.3 trillion in economic surplus value in those four sectors alone.”
From this figure, two-thirds of this value creation opportunity lies in improving internal communication and collaboration – a business area that I am greatly interested in. So what are the key takeaways of the report?
Improved collaboration can raise employee productivity
Social technologies could facilitate a fundamental shift in employee communication from one to one channels such as email, to social channels that allow for communication ‘en masse.’
“McKinsey estimates that currently, 28% of an employee’s day is spent on email.”
The effect of this could mark a profound shift in the way that employees communicate with each other as communication effectively becomes content: the information is visible and is easily accessible rather than being locked away in a person’s inbox. From a business perspective, McKinsey estimate that using social technologies to improve employee collaboration and communication could increase employee productivity by 20 – 25% (figure 1).
Furthermore, if we look beyond email and to the company’s knowledge workers, social technologies can improve the time spent looking for information.
“McKinsey estimates that a searchable store of social messages could repurpose up to 35% of the time spent searching for information.”
Collaboration among knowledge workers based in multiple locations could also increase effectiveness and efficiency – often such knowledge is ‘siloed’ within business units.
Social tools can be used to open up collaboration with a company’s clients too and to manage project communications, therefore speeding up access to knowledge and information.
However, it is not simply a case of implementing social tools and hoping they come up with the goods. Capturing the full potential of social tools will require changes to the organisation and management approach which take time and effort to implement.
Social tools can be used to improve consumer marketing and sales
McKinsey highlights the fact that social technology can be used as a cost effective way to derive customer insights – some leading companies have reduced some of their marketing costs by up to 40% by using insights from online communities rather than traditional marketing panels and focus groups.
“Interactive product campaigns that make use of social tools can also increase the productivity of advertising budgets by up to a considerable 60%.”
Product development times can be reduced too through collaborative engagement with customers. For example Kraft used communities of nutrition experts and potential customers and discovered key consumer insights. This led to a significant reduced time to market for a range of 48 products.
Social technology can therefore be used to achieve tangible results, for example budget reductions and reduced product development times.
Discovering next practices
Rather than provide a prescriptive set of guidelines or methodology for businesses to follow to implement social technology, McKinsey suggests that businesses should discover ‘next practices’ instead and suggest the following:
- Think about how to encourage interactions amongst people – social tools can act as a powerful facilitator but a successful implementation will rely on best practices and culture.
- Each company is different so activities that are successful in one organisation may not be as successful in another. Trialling practices and technologies is important to help companies learn what works for them.
- The technology is only as good or successful as those who use it – creating a mass of participation is therefore crucial. Bottom-up use of technologies and support by leaders are essential to any social technology adoption programme.
The report concludes that whilst more and more companies are embracing social technology, there is still a large untapped potential for them to create business value. If you would like to find out more, you can read the full report here.