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Executive Search Firm News - The Age of Social Media

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The RSI Executive Search Firm News Center Area is designed as a resource for Employers and Candidates for the Executive Search Recruiting Industry. The RSI Executive Search Firm News Center contains Company Newsletters, Article Series Career Corner, Management Matters & Indutry Related Articles covering RSI's 18 Verticle Search Markets and RSI Client Case Studies.

 
 
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Management Matters - The Age of Social Media

Management Matters: is a New Article series dealing with the issues that arise when managing personnel and how to optimize your current staff in a company.

The Age of Social Media
December 1st, 2009

Imagine life without the internet. Many of us cannot even remember a time without the unlimited resources of the World Wide Web. What began as a program created by the United States Department of Defense quickly transformed into a social environment where kids could get in touch with friends via online chat rooms. Although many people still use the internet for the same things that they did about ten years ago, it has grown to include a much larger demographic of users. As a result of the high level of traffic seen online many of the companies, that are worth their weight in gold, have a well established website that will allow their customers to access the company from home. With the new age of social networking websites, such as Facebook and Twitter, many other opportunities are arising for companies to reach a whole new demographic of consumers.

With the recession upon us many companies have been forced to cut costs, and the first thing to go is usually a company’s advertising budget. A recent survey that was conducted by Forrester Research said that 71 percent of Chief Marketing Officers had cut their ad budgets since the start of the recession. Most of these cuts were being made in the more traditional forms of media such as television, radio, and magazine advertising. When asked about the level of spending that was dedicated to social media, only seven percent of CMO’s said they would be cutting this part of the budget. Around 50 percent of CMO’s said that they would increase spending in social media even though companies are under so much pressure to cut costs. With statistics such as these it is very obvious how companies feel about the influence of social media sources, and the impact that they could have on business.

Many people believe that social media sources are an easy, relatively inexpensive way of getting the company’s name out there. This is very true in regards to most of the tools and services involved in the social networks, such as creating a Facebook or Twitter account. The costs are incurred in the amount of time that employees spend designing and maintaining the site as well as the pay of the manager in charge of the project.

According to a study, “The ROI of Online Customer Service Communities,” by Natalie L. Petouhoff, Ph.D., the overall costs of investing in a social media service can be relatively high, but the potential for return on this investment could be even higher. This study was focused on large consumer services companies including DIRECTV, Intel, and Verizon. As determined by this investigative study, an imaginary company that has around half of a million customers and receives around 30,000 calls per month can expect to spend about 1.2 million dollars within the first three years, on the costs that were stated above. If the company spends around 500,000 dollars in the first year for a well established social network, they can expect to see a payback of almost twice this amount. This same return on investment can be expected to continue throughout the remaining years.

These days, many consumers interact through social media websites, such as Myspace, Facebook, and Twitter, that a company’s involvement in this type of media can give it a considerable advantage over its competitors. A report conducted by Charlene Li of the Altimeter Group and Wetpaint.com, ranked the top 100 brands by their level of interaction with consumers through social media. This report showed a positive correlation between the companies that are deeply involved in social media and the companies that continuously outperform their competitors in revenue and in profits.

As companies begin to start using social media networks as a way to advertise, different methods will need to be used in order to catch the attention of consumers. Many people who are involved in social networks tend to follow certain other people, or leaders. These leaders could range from celebrities, to friends, to the leaders of a group or organization. As a result of this, if a product or brand could be endorsed by the leader of a social networking site, a whole group of people could be captured as potential customers. This can be a very easy way to capture a large group of people in the social networking environment.

Companies will also be able to receive quick and easy feedback from consumers online through a very informal process. This will give companies a very easy and quick way of finding out what consumers think of their brand name as well as their products. With this benefit, also comes the responsibility of maintaining a positive reputation for the company. When a company begins to get involved in online social networks, they are leaving themselves open to possible negative feedback that could possibly tarnish the company’s good reputation. As a result of this it will be very important that the company take care of its online reputation before things spiral out of control.

Although, companies that are involved in social networking sites can be targeted by individuals looking to tarnish their reputation, so can companies that are not involved in this form of media. By being involved in social networks, a company has the ability to manage and defend its reputation online, promote its products, and engage with customers that might not have otherwise been reached. It’s time for companies to begin marketing for the future by getting involved in social media.

 

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