Monday, April 23, 2012

"People do business with people they like"

In recent times, companies  have recognized a shift occurring in the way they engage with their customers. This shift places customers in the driver's seat and new marketing approaches, tools and skills are required for companies to stay competitive. The four challenges I feel that could be universal game changers are Data Explosion, Social Media, Proliferation of Channels, and Shifting Consumer Demographics.

Welcome to the start of the social era where digital Darwinism has caused the evolution of consumer behavior when society and technology evolve faster than their ability to adapt. The millennial generation represents one-quarter of the American population. 70% of millennials feel that once they find a company or product they like, they write about their positive experience online with companies and products online. On the flipside, 39% will share negative experiences. Because of this, customers are in the driver's seat and new approaches, tools and skills are required for companies to stay competitive. Due to this change, nothing today is too big to fail or too small to succeed. This has become a major game changer in all aspects of business. Some will fail, some will thrive, however all businesses will have to evolve to this new environment or risk termination.  Organizations such as Tower Records, Borders Books and Music, Ann Arbor News and Blockbuster Video to name a few, that once appeared invincible to any market conditions have all fallen to the social era and are now terminally ill or deceased. The days where great organizations, products and services organically connected with their markets are numbered. Social media changes the way organizations operate internally and externally. In this highly competitive attention economy, where attention is a precious commodity, organizations must firmly connect with connected consumers and deliver exceptional experiences. Organizations need to transform into a social enterprise.

In his book, The Living Company, Arie De Geus did a study on the Fortune 500 companies and found out that the average life expectancy of a multinational corporation is about 40 to 50 years. About a third of the organizations listed in the 1970 Fortune 500 had disappeared by 1983. He also found out that long- lived organizations, which were 200 years old or more, survived for a couple of reasons. One of the main reasons was because these organizations were sensitive to their environments. He states, “Societal considerations were rarely given prominence in the deliberations of company boards. Yet they managed to react in a timely fashion to the conditions of society around them.” In fact, a report by David Mearman Scott showed that the stock price of Fortune 500 companies that engage with their customers was up 67% but those that didn’t was up only 42%.

In today's social era, organizations need to find better ways to listen and connect with their customers. As the old saying goes, "People do business with people they like."

Most organizations are afraid of change and they are not comfortable with the idea of going social. In fact, by understanding how businesses should be managed, they can better comprehend the benefits of going social. A customer has specific needs and wants and looks to businesses to fulfill them. Those needs are either satisfied or they’re not and products and services represent varying levels of value to customers in addressing those needs before, during and after the sale. Organizations need to become more customer-centric in order to provide better products and services, as it is difficult to see the customer or empathize with them if organizations are too focused on a spreadsheet
Organizations need to become more transparent in dealing with the public.  They also need to have an active team of “listeners” that can respond immediately to comments from the public. This is where social media comes into play. Social Media allows for real time responses and it also allows organizations to develop real time strategies based on customers’ feedback. Technologies have changed how organizations are operating. Customers have more information on organizations, and organizations have more information on customers. With this much transparency, organizational success will be increasingly dictated by those that can use social media and technology in the smartest way possible to better understand what is happening with customers and competition.


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