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When Canadian musician Dave Carroll watched ground crew at O’Hare airport toss his beloved guitar around the tarmac back in 2009, YouTube, Twitter and Facebook were in their infancy.

Customers were still mostly locked into traditional, often fruitless complaint mechanisms, and companies’ service lapses were not instant fodder for the masses.

But a little creativity, inspired by United’s abysmal response to Carroll’s broken guitar, changed everything. His quirky song, “United breaks guitars”, went viral, causing considerable damage to the airline’s reputation and linking corporate social media strategy to reputation and brand management.

“Carroll became the personification of the vigilante, the customer avenger,” says Yany Grégoire, associate professor at HEC Montreal who specialises in customer revenge.

Today, anyone with a presence on Twitter, Instagram or Facebook can exact revenge for poor service or products. “Social media can represent a big threat, but also a very big opportunity if it’s done right, with humour,” says Prof Grégoire.

When the UK-based travel company Thomas Cook was asked for a free holiday by an enterprising 20-something who shared the company’s name, it sent him a colourless stock refusal.

Rival company lowcostholidays.com saw a chance for a cheap public relations boost, and swooped in with an offer of a free week in Paris.

“Social media for existing customers adds transparency and accountability in a truly magnificent way,” says Frances Frei, a professor at Harvard Business School who focuses on customer service. “But if jokey conversations are your sole customer acquisition strategy, then you’re in trouble.” The corporate world’s new agility in responding to customer revenge scenarios on social media is the result of a revolution in talent acquisition for social media management, says Prof Grégoire.

If companies are going to have the capacity to respond to “customer revenge” situations quickly and creatively, they need to employ highly skilled staff with a level of autonomy. This carries its own risks, but as Prof Grégoire adds: “If a company comes on to social media and tries to control everything, it will not work. You have to roll with the punches, go with the flow.”

Internal experts, gifted communicators and data analysts are prized hires, as companies seek to not only protect their brand and find new customers but also to create significant value from the flow of information.

“In the past few years, companies have learnt that if they want to do social media in a world-class way they need high-class analytics talent,” says H James Wilson, managing director at the Accenture Institute for High Performance, the professional services group. Social media strategy is no longer “owned and operated” solely by marketing or public relations executives in companies, he argues — analysts need to be crunching social media data and regularly talking with the top executives to identify business opportunities. In industries where a lot of transactional data can be mapped, such as banking, retail and insurance, the benefits of assigning skilled data analysts to social media information flows are clear.

The interface between social media and the “Internet of Things”, how everything is connected, is also ripe for exploitation, says Mr Wilson.

“This is where we increase the value of digital platforms for users and for companies, particularly in the energy sector and automotive and health. There’s going to be a lot more creative exploration — for example, home thermostats interfacing with social platforms to build a picture of neighbourhood environmental impacts.”

Wearable fitness technology and smart cars were also creating opportunities for companies to harness social media to motivate behaviours in customers or micro-target groups.

“Companies are becoming more analytical,” says Mr Wilson.

“They’ve got more data at their fingertips. Ways to use those data, to improve engagement with customers and even improve operational decisions. Information is coming not just from online, personal computers, social media; it’s coming from wearable tech, from cars, from the interface between social media and tech.”

Facebook climbs ever higher in brand ranking

At the beginning of his course on digital strategies, David Dubois, an assistant professor of marketing at Insead, does a short survey in which he asks his students what words they associate with digital and social media.

Invariably, he says, Facebook accounts for 30-60 per cent of the words entered by participants in his classes at the Swiss business school. The same survey done elsewhere would probably yield similar results. In the same way, Facebook continues its leverage in the ranking, climbing even higher this year from number 21 to 12.

Facebook was not the first company in the field of social media. Friendster, Friends Reunited, MySpace are just some of the others who gave it a go. The question is how Facebook has surpassed them all and continues to achieve results.

According to Prof Dubois, the Silicon Valley company stands out for its focus on product and its ability to manage growth. “Facebook’s priority has always been on making sure the capabilities — for example storage and data processing — were there before launch.

In addition, the balance between strategy and execution has always been on the execution side, with most resources and attention focused to achieving the perfect product/experience, he says, pointing out the company’s initial reluctance to build in ads to the product.

Facebook’s interest in product has extended to buying other fast rising start-ups, most notably Instagram and WhatsApp, both of which Facebook acquired, in 2012 and 2014, respectively. The list of acquisitions numbers more than 40. Most have been called “talent acquisitions”. Another potential indicator of its success, perhaps.

Prof Dubois praises Facebook chief executive Mark Zuckerberg’s people management, as well as his choice of advisers, which have included Apple founder Steve Jobs, entrepreneur Marc Andreessen, investor Peter Thiel, Jim Breyer of Accel Partners, Donald Graham of the Washington Post and Warren Buffett.

The company did struggle for a while to communicate how it would make money from online content, he says, “but it has recently invested a lot on that front”.

The challenge now on the horizon is European disintegration. In a recent article in the FT, Richard Allan, Facebook’s vice-president of public policy in Europe, wrote: “National regulators in a number of countries, including Belgium and the Netherlands, appear to be initiating multiple, overlapping investigations of Facebook, revisiting basic questions about how our services work”.

The extent of national regulation could greatly reduce time spent on product development and execution. Alternatively, Facebook may finally be big enough to handle it.

Privacy and security: Demand for transparency

It was no accident that Apple put privacy and security features at the heart of its pitch when it launched Apple Pay late last year.

The mobile payment service was a direct challenge to providers such as PayPal, one of the world’s biggest internet payment companies, and privacy is consistently among the top concerns of social media users.

PayPal moved swiftly to buy the Israel-based malware detection specialist, CyActive, and mobile wallet company Paydiant to enhance its security capabilities.

H James Wilson, managing director at the Accenture Institute for High Performance, the professional services group, expects companies increasingly to compete for customers with appeals based on privacy features. As the lines between business, social media and the internet of things blur, demand for transparency and privacy will become ever greater, he says.

Already, social media users have far more contact with robots and automated communications than they realise, says Mr Wilson.

He adds: “Concerning the meaning of the word ‘social’ itself, there’s a growing inconsistency, ambiguity. Social media is not humans connecting with humans in an emotionally engaging way. We’re seeing an increasing amount of automation in the social space.”

Copyright The Financial Times Limited 2017. All rights reserved.
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