The Collateral Damage to Business From a Social Media Crisis

Most discussions and case studies around social media crises faced by companies is focused on consumer reaction – and direct loss of sales or brand impact. While these are critical, a non-consumer focused company may think they are more immune to these issues and a consumer product company may think the damage is relagated to the consumer segment, not their business to business side. This can be a dangerous assumption. We look at some of the collateral, perhaps harder to measure, damage that can occur.

Mistake Number One: Many companies who only sell business-to-business (B2B) assume that social media is all about consumers and that they are immune to damage. This is a fatal error. Many industries have niche social networks, forums, blogs, Twitter accounts, where industry news is discussed. Failure to understand this can cause significant problems.

Risk From Government Contracts
If a business also sells to governments, contracts may be lost. Depending on the severity of the issue, such as legal actions being talked about or happening, government agencies may be reluctant to buy products or services from a business they feel may be distracted from a contract or unable to fulfil it. It is hard to know if this happens. Some indicators may help determine the risk however.

Competitor Leverage
The bigger the story via social media (whether general sites or industry-focused channels) the more a competitor can cause harm. Employees can quickly and easily share information, this means relying on stories only being in major news media is dangerous. Competitors can shape perceptions with existing clients of yours and use it to foster perceptions of inability to complete work and more.

Every Industry Has Social Media Channels
We’ve conducted research and analysis on many industries. There is always some engagement by people in the industry in specialized niche networks, Facebook groups, LinkedIn discussions, FastPitch, eCademy, forums and newsgroups. Whether or not a CEO or senior executive is aware or participating in them doesn’t matter – employees are. Including from competitors. And they share information. A lot.

Board Perceptions & Risks
If it is a public company or just has a board and a smaller set of investors, once word trickles out, problems of governance come into play. A board or set of shareholders, may feel management has lost control of the company or are nervous of the management teams ability to contain and deal with the issue. If it is a major shareholder or board officer who raises awareness of an issue to management, they may feel management is not suitably aware of industry issues. There is then the possibility of a fractious board, a senior management battle and so on…

Investment Challenges
Companies looking to raise capital from equity sources or even debt, may find themselves in a challenging place if a negative story has reached the ears of those in the financial sector whom they are courting. If financiers perceive problem or potential escalation, they may either require more security or stall on a deal.

Supplier Fears
Suppliers of services or materials to a company who are tuned into the industry networks (often, they are more connected into online channels than the buyer of their product) may be concerned with the company’s ability to surface from a crisis. If they have extended credit, they may retract that credit or require new terms or demand outstanding payment to mitigate increased fears of risk.

Perception Can Rule The Day
The reality of these challenges are ones that businesses are just beginning to grasp.  Since these issues are  beyond just reputation management and are not as quantifiable being more qualitative in nature. It is not as easy as seeing immediate sales losses or a series of negative “tweets” on Twitter. Often, senior management is unaware of the social media tools being used in their industry. Monitoring tools rarely, if ever, pick these up because they are focused a) on mainstream social media channels for consumers, b) more business-to-consumer than B2B and c) perform poorly with smaller data sets to display.

We live in a world where perception can quickly become the reality. And that can spread across far more than just the consumer market and into supplier networks, financial sector and shareholders.

A Whole New Set of Headaches
All of this to say, the CEO and executive management of a company today have a whole new set of risks to manage. In some cases, they may not even realise an issue escalated as the result of a forum discussion or blog posting. Some research into these deep Web sources (where social media monitoring or reputation management tools simply do not go) can help a) understand the issue and b) help address the issue and give management the opportunity to mitigate risks and deflect the damage quickly.

Influence Competitors: The New Corporate Threat

A whole new scale of threat has evolved for corporations, and governments as well, in the court of public opinion. We call them Influence Competitors, some have called them Irregular Competitors. Regardless, these competitors are looking to influence the views and opinions of the same market businesses and governments may be looking to influence. Only they’re opposed to your views.

The way citizens and consumers receive, consume and share information today is highly complex, fast and easily spread to their own networks. Every person has a network of people that they have influence over, just as companies, governments and other organisations do, from markets to the general public. Today, it is very easy to influence people. It is also very hard to influence people. The biggest Influence Competitors that pose a threat to corporations and sometimes governments are activist groups. Non-Government Organisations and Non-Profits who target the practices of corporations they disagree with and government policy attempts or legislative moves they feel threaten their agenda or audience. Sometimes, competing companies will align with Influence Competitors as well, providing an entirely new dynamic to a company’s competitive landscape. At other times, activist groups will work with opposing political parties to the one in power, again adding a new dynamic.

Influence Competitors leverage social media as their primary tools with industrial news media used mainly to drive the message to social media where the battle for influence really begins. In industrial news media, an NGO may only get 3 minutes tops in the news cycle and then for only limited periods. Once they have eyeballs online, compelling content is used through video, images, text and sound to deliver sophisticated messaging and even encourages dialogue.

The Confidence Factor
Once an Influence Competitor has developed online dialogue through social media services and an audience has grown, it’s influence grows and they may then become an Authority Competitor. When citizens or consumers see others engaged in dialogue, actively contributing and adding content, this provides individuals with a sense of confidence – that others are committed to the cause. This creates the authority of the organisation (you might call it crowdsourcing your citizen activists) and it becomes increasingly difficult to unseat an Authority Competitor. Corporations or governments that don’t respond, or offer very little response, quickly lose influence share and citizens then take action.

So What? Why Does Citizens Shouting On Facebook Even Matter?
It’s easy to think they don’t. It’s easy to shrug off people venting on Twitter or blog posts and Facebook group pages. The reality is, it does matter and it has a very tangible, measurable and direct impact. The real-world results are phone calls, emails and letters to Senators, Members of Parliament, Congressional Representatives, industrial news media. Petitions go round. Protests happen. Sometimes, employees are attacked or facilities burned down or otherwise damaged. Or in the case of London, riots occur. Social media tools go from driving the idea to then being used for organising direct real-world activities.

Understanding Influence Competitor Threats
No social media monitoring tool will help. They may tell only part of the story and they’re not good warning indicators. What’s needed is a deep analysis into the lead Influence Competitor social graph, their connections, size of community, past campaigns and outcomes, current activities and more. Monitoring tools play a part, but analysis and insight from industry specialists, anthropologists, sociologists and law enforcement adds an unparalleled level of insight. Once this is known, then a strategy can be used.

Mobile Will Increase The Threat Level
As more and more citizens use SmartPhones and tablets like the iPad to participate in social media services, the threat from Influence Competitors will only increase. With the ability to live-stream video and instantly upload photo’s integrated with real-time services like Twitter, the challenge to monitor and then dig deep into the issues will become increasingly difficult. This will present a new challenge for public and investor relations teams, marketers, corporate legal counsel and the C-suite. CEO’s if they are the spokesperson, will face some interesting challenges. These are issues well beyond simple reputation management of a brand.

What Kind of Threats?
This is where influence and authority trump reputation management. The types of threats coming from Influence Competitors are those that can cause significant economic damage or bring down a government (such as Egypt, but that’s okay, it was a dictatorship) or potentially cause catastrophic damage to a company. These threats include;

- Derailing legislative efforts

- Destroying lobbying efforts

- Changes in legislation that derails a corporate plan

- Causing damage to physical assets

- Threatening employees or causing harm

- Cause a stock price to plummet or a competitors to rise

- Balance the influence in favor of a competitor

- Create petitions and enable an opposition government to cause collapse of a government in power

Fortunately we provide analysis and monitoring of Influence Competitors. Look for our White Paper coming soon. In a world of Big Data, companies and governments need to be able to quickly sift through vast amounts of information to find the intelligence that matters.

Klout or PeerIndex & Their Value or Non-Value

We’ve been knocking about the value and veracity of Klout and others like PeerIndex in our offices for some time now and we posted before on the issue of Klout. So we looked at Klout and PeerIndex a little deeper recently, to try and sort out just where these tools sit in the greater scheme of marketing. We then went out to look and compare Klout with PeerIndex to understand their place in the social media ecosystem.

Where Klout is Good Etc.
Klout: Is all about marketing. For the individual, it is an “ego tool” kind of like the social media version of “ego surfing”. Perhaps if you were a geek or nerd in high school you may find some greater comfort in having a higher Klout score that the “in” crowd you were left out of.

Aside from the ego aspect, Klout wants you to publish more content and build more of a network because that is vital to their business model. Their business value is eyeballs and people that appear – the word appear is key here – to have some “influence” in one or more online communities. Your value to Klout is how many people you might potentially have some level of influence with. They sell peoples apparent (not real) influence to brands and products. You as a consumer may get some free products in return for mentioning these products or services. We find no problem with this and quite frankly, it is a great marketers tool. It relies on human’s competitive nature and as a result, will likely do fairly well. Klout will also likely anger consumers as much as Facebook. It is the love-hate relationship many consumers have with social media tools.

Where Klout Fails
But Klout will not help with understand the true “authority” of someone. Influence is, well, interesting, but in real terms, it’s not influence that matters, its authority. This is where Klout fails. It also fails in matters of small, but powerful communities. Klout looks at the Really Big Picture – for brands like Coca-Cola, Nike, MacDonald’s or Wal-Mart. But it fails at a very local level and it fails when it comes to non-marketing issues like civil society.

Where PeerIndex Wins
PeerIndex has taken the approach to “authority” by looking at the topics people discuss the most in primary social media channels such as Twitter, Facebook and LinkedIn. Don’t be mistaken, they are targeting to sell this “authority” to brands in the same way as Klout. And why not? They are a business and the purpose of a business is to make a profit. PeerIndex is a second to Klout who has gained more media and social media attention and holds first-mover status. So PeerIndex has a catch-up job. We found that compared to Klout though, PeerIndex was “trusted” far more than Klout at a 3:1 ratio. The key will be if PeerIndex can attract the eyeballs and conversion. Klout has lots of well, inexplicable dashboard things like “reach” that really don’t tell you anything. We see PeerIndex as being a bit more focused on methodology and greater transparency on their science.

Where PeerIndex Fails
Where Klout is focused on “influence” it seems PeerIndex has chosen “authority”. We find the PeerIndex approach easier to understand than Klout, but they exclude the level of influence. PeerIndex, like Klout, also excludes the cultural and smaller social networks where greater value can be found. PeerIndex is focused on more channels than Klout, which helps (including Twitter, Facebook and LinkedIn, plus Quora and some blogs) but they too miss the secondary, but often more active networks that could yield a greater sense of authority. They may include an individuals blog that signs up for PeerIndex, but they don’t capture (and it would be a challenge to do this) the broader blogosphere or Blog Rings.

Where Klout & PeerIndex Utterly Fall Down
Both Klout and PeerIndex pretty much ignore non-major social media services in North America such as Orkut, BigAdda, MySpace, hi5, AllAfricans.com and many other vital cultural and hobby-based networks. Essentially, both Klout and PeerIndex really only care about the big brands and the U.S., UK or Canadian markets. They completely miss the influence and authority of the Web as a whole and its interconnected communities which is very multicultural and global in scale.

In Summary
Klout and PeerIndex both offer some value for marketers. In major Western markets and well, that’s where the big bucks are and they’re businesses. But when it comes to where the next growth area is in social media, which is civil society, they both fail terribly. But then so do all social media monitoring and reputation management tools. PeerIndex hopes to own the “authority” segment while Klout wants to own “influence” and there is a difference between the two. Someone should own, or attempt to, both influence and authority. That will be a challenge, but isn’t impossible. So choose your poison as a marketer.

The Problem With Klout & Influence Metrics

Measuring and influence and authority misses something very big and, as it turns out, very important. But some disclosure first; we have software that runs analysis on text and data and measuring “influence” and “authority” is just one of the features of our software. And we have a lot of heated discussions about methodologies. So we have an issue with ourselves, just as we find a major fault in the tools that measure influence. Klout gets the most buzz. But then Klout is looking at influence for one purpose – to monetize “market mavens” for their reach – the less influence you have, the less they care about you. Or anyone who’s monetizing influencers in social media.

But when it comes to actual information that becomes “intelligence” (we’re not talking “secret agent” intelligence here, we’re talking intelligence so you can make a decision), its often not the influential people, who deliver the content/information that is crucial. In fact, it often comes down to just one comment on Twitter. One blog post, one short video, one photo.

Case In Point
As we analysed Haitians use of social media as it related to the Cholera outbreak where they accused the Nepalese soldiers of trying to commit genocide (which is ridiculous), it was one short video that made all the difference. It was a video of Nepalese soldiers in a big white truck with “UN” on the side dumping garbage into a river. It was one person who shot a short video and uploaded it. That person has no big profile online, they are not a person of “influence”. But it was critical.

This is very much the Power Law Curve. It’s a law that has had huge impact in the open source software world; specifically with Linux, in which it wasn’t about 1,000 software engineers delivering an equal amount of input, but one “coder” that provided that one piece of critical code that made everything come together. That was all they produced, but it made the difference.

For companies like Klout, they don’t much care about these non-influential types. That’s OK. They’re in the business of selling influential people to marketers who want to promote a product. That’s their business and they do it very well.

But this can be dangerous for marketers, because they end up focusing their attention on these people of influence. Those with the influence work to get more influence so they get products or deals like discounts. And social media monitoring tools all look at the “macro” of social media, missing the micro. In addition, they only focus on the “mainstream” social media channels, the big brands like Twitter, Facebook and Tumblr. They miss all those other key places where conversations happen and so they may very well miss what actually matters.

It is unlikely that many marketers have the ability or willingness to go beyond their already stressed work overload to deal with adding this consideration into the mix. But it is a good question to ask every now and then. A marketer may uncover some critical information, or a government department may get some good citizen insight.

What Marketers Are Missing in Social Media Analysis

Never before in the history of marketing have marketers had their toes held so close to the fire of profits by senior management. While the C-Suite may not entirely “get” social media or internet marketing, they do know that it affords the ability to collect a lot more “data” than ever before. While that’s true, the challenge is turning that data into information and that information into intelligence – it’s “intelligence” within information that we use to make decisions. But hang on…in this mad drive by marketers to validate dwindling and increasingly fractured budgets, are they missing some of the key intelligence from social media? Perhaps they’re missing the real point of engagement.

Sure, there’ve been some successful social media marketing campaigns. Note the word “campaign” here. And this is the marketing problem with social media. Marketers (driven largely by agencies) STILL see social media engagement as campaign based rather than long term. Through our extensive research, we also see that the only “long-term” engagement by most companies is customer service. And even that is a half-hearted gesture most of the time.

Values Marketers Are Missing in Social Media Analysis
Here we list a few of the valuable metrics and intelligence marketers could be pulling out of social media for their companies. While they may not seem to immediately impact the bottom-line, they can actually help in corporate strategy and long-term survival as well as new opportunities for revenues.

1. Product Feedback: Consumers leave some incredibly valuable insights into features, uses and problems with products. This information can be shared with product management and R&D teams. Try to get that information out of an online survey or focus group – just isn’t going to happen.

2. New Verticals: Some deep research and analysis may (and often has in our research) point out new vertical market opportunities that may have taken years to uncover, if at all.

3. Competitor Woes: Similarly, you can gain vital indicators of problems and challenges your competitors are having. These can be exploited through effective campaigns.

4. Seasonal Trends: Just looking at sales data doesn’t always indicate a seasonal trend. That data may show something post-event, but social media analysis can identify seasonal shifts as they’re happening or ahead of time…so maybe instead of launching your campaign in May, you start in April and get out ahead of competitors.

5. Cooperative & Partnering Opportunities: By cross-referencing your company’s products or services against a semi-competitor or complimentary business, you may find unique co-marketing opportunities. Ones that would’ve otherwise gone missing.

6. Looming Disasters: Social media channels can be your canary in a coal mine. Shifts in consumer attitudes and behaviours can indicate potential problems with your product or market. Be nice to head off a disaster and adapt ahead rather than sit in the ruins of bankruptcy in a bar.

7. Problem Areas: Sales dropping in Topeka? Spiking in Halifax? Why? You can call the sales office in the affected region if you like…you’ll get the usual ass-saving remarks, but likely not the truth. Turn to social media and you may find some answers.

These are seven of well, quite a few valuable metrics we’ve uncovered in our various research projects. Perhaps you can think of a few yourselves.