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Companies have put tools in place to interact socially with customers: The sporting goods marketing department sends out an Instagram picture of the newest youth baseball glove; tweets from irate customers are identified and funneled to the contact center for action. These interactions improve sales and service, but they do little to alter the company itself, and industry observers think that must change if businesses want to maximize these tools. “Social media provides companies with a gold mine of information, but most businesses now pan for only a few nuggets,” says Donna Fluss, president of DMG Consulting, a contact center market research and consulting firm.

Rather than engage in rudimentary communications, firms can use these channels to drive dramatic alterations throughout the organization. Customer complaints can spark aggressive actions, such as pricing adjustments. Consumer input can be fed into product design early in the process and increase the likelihood that a company’s  new shoes will be a hit rather than a miss. The process of handling complaints can be streamlined to require less manpower and be more likely to satisfy customers.

But reaching this holy grail can be a daunting quest. Current information technology (IT) systems were designed in silos and cannot be easily integrated. Communication barriers between departments need to be struck down. Staff has to be trained not only in the new social media tools but also in how to deal with the tools’ cohorts. Money (often significant amounts) has to be allocated to projects without a clear return on investment (ROI). Yet, despite the many obstacles, corporations are moving in this direction, and some have even reaped significant rewards. “We are seeing leading-edge businesses start to use social conversations to enact dramatic business change,” says Jenny Sussin, research director at market research firm Gartner. 

Starting Simple

Companies appreciate the power of social media to drive customer perceptions, but most corporations are currently using it in simple ways. “Most businesses only listen to social exchanges,” says Carmen Sutter, product manager of social at Adobe. To date, customers have largely directed the conversation, and businesses have followed their lead. 

Consequently, social media has become the main channel for trying to identify and assuage irate customers. The most common application: responding to negative tweets or Facebook posts. The goal is to develop processes to address damning messages before they go viral and start top-10 trending on Yahoo! and Google. 

But firms also want to spread positive news. “Increasingly, companies see social media as a marketing channel, one where they can improve brand perception,” says Ali Ardalan, director of strategy at Sprinklr, a social media tool supplier. Simple applications have emerged. When new products are announced or recognition (awards, a large number of likes) is garnered, the management team trumpets that information via social channels.

Moving Beyond Social 1.0

Observers view such applications as Social 1.0, in which companies put mechanisms in place to start assimilating social communication and build up social media expertise within their corporate walls. But enterprises desire to do more: They want to use the channel in a more dynamic manner, one in which social input has an impact on product plans and business processes, and in which businesses interact with customers in new, powerful, and (ideally) effective ways.

For instance, social media gives companies the ability to respond to customers in a more personal manner. Operating since 2007, Virgin America serves about 20 cities in the United States. “Because we were a start-up, we could use social in a more proactive manner than established airlines,” says Monzie Amrich, social media manager at Virgin America. Customers had been asking the airline to expand service to Hawaii, for instance; when those plans were about to be announced, the airline reached out to those individuals via Twitter and informed them of the change.  

Founded in 1919, KLM Royal Dutch Airlines has become a leader in using social media progressively. Ironically, the genesis of its work was more happenstance than grandiose plan. In April 2010, an Icelandic volcano created a huge ash cloud above Europe, making plane travel impossible for about five days. The catastrophe overwhelmed KLM’s phone lines, email, and ticket counters. At the time, the company was using social media on a small scale, dabbling with Twitter and Facebook. Desperate to get in touch with the airline, customers started posting questions on these pages. As the volume of inquiries rose, the airline formed a volunteer group of non-operational staff at the head office. For four days and nights, about 100 employees used social media to converse with customers and try to help them make alternative travel plans. The press picked up on the company’s initiative. The shutdown was very bad for business, but the social media experiment provided a silver lining.

Moving Social into the Corporate Mainstream

Recognizing the potential power of social media, KLM committed to the new communication channel and expanded its efforts. Currently, the airline handles about 75,000 messages each week, across a variety of social platforms including Facebook, Twitter, and LinkedIn. The firm communicates in 14 languages and recently began tinkering with country-specific social tools, like Sina Weibo, Tencent Weibo, WeChat, and Renren in China and VKontakte in Russia. 

The airline has found novel ways to leverage social interactions and improve business processes. At Schiphol Airport in Amsterdam, passengers who left something on a plane had to wait days before retrieving their lost-and-found items. After noting the high volume of tweets complaining about the slow-moving process, the airline dedicated special staff to check planes and reunite people with their belongings before they left the airport. A video made to promote the service went viral, increasing positive perceptions about the airline.

Back home, General Motors is also using social media to drive business change. In 2014, the auto supplier launched two pickup trucks based on its K2XX vehicle platform, the Chevrolet Silverado and the GMC Sierra. Shortly after the debut, new owners, mostly those based in the warmer southern region of the U.S., complained that the aluminum steering wheels became extremely hot. Others were unhappy that the air-cooling system blew hot air into the rear seats. General Motors had put mechanisms in place to gather such data via social channels. The company relayed that feedback to the quality, engineering, and manufacturing teams. Within months, the aluminum steering wheels became optional, and engineers worked with manufacturing teams to fix the seat-cooling air vents.

Lunch Is on Us

Virgin America had a guest on board who was having trouble using his credit card to purchase a menu item in-flight. The social media team came across his tweet and reached out to the operations center, which sent a message to the flight crew. An attendant delivered a sandwich to the guest, free of charge.

Five Guys, a fast-food chain with about 2,500 locations, went through the typical marketing process before changing the recipe for its popular fries. The vendor conducted market research, held focus groups, and tested the change in a few locations. Those steps went well, but when the chain began serving the new fries, consumers noticed and were incensed. “Customers were using the hashtag #soggyfries to illustrate their displeasure about the change,” says Adobe’s Sutter. The company became aware of the backlash, contacted the customers, gathered their input, and changed the fries again, encountering far less resistance on the second go-round.  

While the number of such social media success stories is growing, the process of taking social information and turning it into meaningful business improvements is strewn with obstacles. “Most companies are not in a good position right now to leverage social data,” notes DMG Consulting’s Fluss.

NOT AN EASY PROCESS 

Businesses need to make significant investments in their social monitoring tools. A wide and ever-growing array of systems are available, and their capabilities are rapidly evolving. The new solutions typically provide one piece of the puzzle, and businesses must put the pieces in place themselves. Since the tools are new, features like robust application programming interfaces (APIs) and scalability are often lacking.

Also, these products were designed in vacuums, but companies need to tie them into existing systems, like CRM. Integrating the various components can be a time-consuming and tedious task that involves both technical and human elements. 

On the technology side, many existing applications have been running for years, and their APIs were designed well before social media was envisioned. Compounding the problem, new channels are constantly emerging. Video sites like YouTube and streaming tools like Hulu are becoming popular social media outposts. Since these outlets are new, their APIs are often rudimentary. Also, the new channels generate unstructured data that is difficult to tag and categorize. “Instagram generates an image but no text, so how does a social listening tool recognize it and then differentiate it from other images?” asks Adobe’s Sutter. The upshot: Integrating existing systems with fledgling social media systems can be onerous, and expensive.

PUTTING THE PIECES TOGETHER

Increasingly, social media is becoming a marketing tool, a channel to advertise various campaigns and products, but this approach works only if following up on the action item (buy my product, download our coupon) is easy. In some cases, a social media message will send the customer to the company’s Web site. Moving from a tweet to the Web for action is often not easy or intuitive. 

For instance, KLM wanted to use social media to help consumers book flights. While the idea was sound, the conversion got stuck at the payment part of the process because the airline could not easily and safely transmit credit card details through social platforms. Illustrating the fledgling nature of these tools, the company searched for a payment solution to fix the problem but could not find one. Consequently, the airline had to work with one of its payment service providers and build the platform itself. 

The sheer quantity of data presents additional challenges. The volume of information that social tools generate is enormous and growing daily: More than 330 million tweets are now sent every day; in October 2013, that number was 100 million. Corporations need to buy or upgrade server, storage, and network hardware to collect this mountain of data.

Businesses must then consolidate the information and ensure that it’s accurate and consistent. For instance, items such as the customer identifying information must be uniform. One application might ask for a home and work telephone number, and a second system might add a mobile number to the list. A consistent set of categories has to be developed before data from different systems can be consolidated. 

Once consistency is achieved, the information needs to be filtered and pertinent data gleaned. “‘I drove past McDonald’s on the way to work’ does not interest the company as much as ‘I wish McDonald’s sold onion rings,’” says DMG Consulting’s Fluss. Humans pick up on the nuance, but machines often do not. There’s often some trial and error before a business hones its data analytics reporting so that actionable data percolates up from the social chatter. 

Corporations face management challenges as well. In most large companies, business units operate largely in an autonomous manner, and firms typically have clear delimiters among departments. A question about a refund may start in the customer service department but be pushed out because the agent cannot authorize the repayment. 

More Cohesion Needed

With social media, cohesion is a must. Customers don’t care if the company representative works in marketing, accounts payable, public relations, or customer care; they only want the person to understand who they are and solve their problem. For social strategies to sprout, barriers between departments need to fall and different groups must work in a cooperative and cohesive manner. “For social to succeed, no one has to care about who gets the credit,” says Virgin Airline’s Amrich. “It is all about serving the customer.” Such thinking is hard to nurture in organizations where historically performance was measured strictly in dollars and cents and departments were often pitted against one another. 

The process also requires that companies make significant investments in these tools. At General Motors, 500 employees engage with customers across 400 social media channels, from Twitter and Facebook to specialist forums for motoring enthusiasts. In the U.S. alone, GM operates 20 different Facebook pages. 

Corporate investments require an ROI. In select instances, the payback can be easily translated. The KLM booking system, which cost €3,500 to develop, allows its social media reps to offer a quick payment link and stay with the customer from booking to ticket issue. The social media booking application is generating more than €100,000 each business day and the number has been rising every week. In 2014, the system contributed €25 million to the company’s year-end revenue. 

Payback Is Murky, Not Clear

Unfortunately, most paybacks are much more nebulous. The line from improved customer service to the quarterly profit-and-loss statement is more difficult to draw than traditional manufacturing-based ROI models. Businesses are not measuring how many widgets are sold or the cost of a plastic case. They are building relationships with customers. Rather than the cost of goods sold or the number of sales, businesses are trying to measure the quality of interactions and track customer emotions, new areas that are hard to quantify, and volatile.

 But progress is being made. Adobe is using natural-language artificial intelligence to monitor how customers feel about their interactions. The system can differentiate between sad, which means disappointment in how the company responded, and frustrated, which may lead to anger, according to Adobe’s Sutter.

KLM has put satisfaction measurements in place for its social contact center. The agent enters the measurement at the start and end of each contact center conversation to measure how customer sentiment changed during the interaction.

Move More Widgets

But where exactly is the payoff? As noted, the customer is not a widget. It seems clear that happy consumers will buy from a company again. But when they will buy is often quite murky; the payback may not come for months or even years, and linking the eventual purchase back to a couple of positive social interactions seems impossible.

Social systems are nevertheless changing the ways companies interact with customers. To switch from reactive to proactive, businesses must not only revamp themselves but change how they measure success and failure. Those willing to change have seen successes, and as others follow, we’ll likely see a social media gold rush.  

Paul Korzeniowski is a freelance writer based in Sudbury, MA, who specializes in technology issues. He can be reached at paulkorzen@aol.com.