Foto: Paul Blau

The Myth of the Empowered Consumer

How Social Media failed to deliver on its promise.

 

What we thought Social Media would change

(This is the summary of a talk I gave at re:publica 2015,together with Max Orgeldinger. It was also recorded, you can listen to it here.)

When we look back to the very early years of Social Media, it seems there was a lot to look forward to.

Social Media was not only expected to change how we communicate or how we use the internet. The utopia was much bigger: experts predicted that Social Media would change the world.

 

 

 

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Lifehack

Of course, something that changes the whole world would also change many other aspects of our lives, including the way we work. According to the headlines from 2005 to 2009 Social Media was most definitely supposed to change the business world forever.

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Bloomberg Business

The prophecy was not only change, but a total revolution. Social Media would force companies to become more consumer-centric, making the demands of existing and potential customers the number one priority. The new internet would finally turn consumers into proverbial kings and queens.

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The Economist

So empowered, we as consumers would dictate what, how, and where corporations and smaller businesses sell to us and at which price. Companies ignoring the Social Media armed consumers would be out of business faster than you can tweet bankruptcy. So went the utopia.

In summary, we as consumers were promised:

  • better products & services through direct feedback

  • better prices through transparency

  • better advertising through personalization

  • more power!

Of course, there were also big promises for the companies that would succeed in Social Media:

  • more & happier customers through direct engagement

  • more sales through higher reach and visibility

  • less cost through “viral” and targeted ads

  • more profit and a better image!

Eight years after Facebook went global, this still doesn’t sound like the reality we live, consume and do business in.
So it might be time for a reality check.

What Social Media actually changed  

If we want to find out if Social Media is actually forcing companies to empower consumers, it makes sense to break that question down.
When we looked at examples, we were searching for the companies that significantly changed their business or at least their marketing strategies due to Social Media. We then looked at the brands known for setting benchmarks in the use of Social Media and checked if that truly made them more successful with consumers and in which way consumers profited from that.
At the same time, we checked for well-known companies that were not active on Social Media at all. According to the thesis that consumers would punish the later, we looked for signs of decreasing revenues.

So here is what we found:

So it seems all the big promises were high hopes that did not become reality.
Today, Social Media is part of the corporate routine in every consumer facing industry. We estimate that on average about 60% of all Social Media related efforts is advertising, another 20% is PR and the remaining 20% is actual customer service.
Advertising, PR, costumer service. Nothing we haven’t seen before 2005.
New channels of course bring some new possibilities but in general, the revolution didn’t happen.

The real driver of change

So Social Media did not change the world. Still, it is undeniably that the business world has changed drastically within the last decade. Was it maybe just a too narrow definition of the technology?
Let’s take a look on some of the new champions in the business world. Take for example Airbnb, Netflix, Spotify or Uber. While all of them are present on all of the common Social Media channels, none of them has a specifically unique Social Media strategy. And none of them relies on Social Media as the sole marketing pilar. Airbnb used billboards, there were printed ads for Dropbox and Uber handed out paper vouchers.

So if it wasn’t Social Media what else made them so successful so fast?
They succeed because they understand the technological and economical realities of our times.
(I will explain what that means in a separate article as is worth a more detailed exploration.)

How consumers & companies need to change

All in all, companies, especially large corporations still operate like they did 20 years ago.
Consumers are still largely at the receiving end and by far not as empowered as we expected before Social Media became mainstream. And no company could use Social Media to out its competitors.
This is the good news, that the original utopia doesn’t have to be all wrong. There are still levers we can pull to push the business world in that directions.
The bad news is: it involves a little more effort than clicking an icon.

If consumers want to be empowered, they need to follow three rules:

  1. Know what Social Media can do and what not
    Activism that takes place only in Social Media will impact the tangible actions of any organization. Of course Social Media makes it much easier to spread the word for instance about unfavorable trade laws. But these laws won’t be changed online. Using Social Media to organize events with politicians or even just asking people to call representatives proved to be much more effective.

  2. Communicate like the empowered consumer they want to be
    If we truly want to spark a dialog with companies (or anyone else!) on Social Media we need to communicate in a way that invites to talk. Just posting hateful messages about the bad service from an airline will do nothing but make you look angry whilst constructive criticism on Social Media made an airline once schedule a completely new flight.

  3. Act accordingly to their communication
    You shared a documentation about the terrible sweatshops in Bangladesh but couldn’t resist that shirt for 4 Euros the other day? Talk is cheap, even more so on Social Media. If you really want to change how companies do business, you have to literally put your money where your mouth is. Or walk the talk, if you prefer that metaphor.
    That means, trying to live up to the standards of your digital self and seriously changing the way you spend your money. Yes, that involves time and effort. But you can do it and your totally allowed to share your accomplishments via Social Media!

Of course, we also want to take a look to the other side, the companies that serve all these more or less empowered consumers. How can they really set themselves apart and succeed in today’s business?

If companies want to be successful in an increasingly digital world, they need to master three steps.
Before we get to them, let me get one thing out of the way:

Have a good Social Media strategy

This should be a no-brainer. Unless you are Apple, don’t even think of not needing a Social Media strategy. Just as every company needs to do accounting, every company needs to do Social Media.
If you want do bring change to the corporate Social Media landscape, maybe try to reduce the efforts for marketing and increase actual customer service on these channels.

  1. Understand what Digital Transformation means for your business
    Social Media is a byproduct, not the core of a much bigger change happening to virtually all industries. Web-based technologies are used to fundamentally and almost instantly change (not to say disrupt…) business models that used to work for centuries. Companies that had not much more than a few computers overtook the market share of former giants. Companies that still want to be in business in 20 years need to think ahead how the Digital Transformation affects their products, their processes and their consumers.

  2. Adapt your organization to facilitate change
    If one thing is for sure, it is that the internet, and especially cloud-based services, have increased the speed of change exponentially. Most traditional companies are still organized hierarchically, most larger ones have a matrix structure in place. Corporations already complain about their functional “silos”, slowing down interaction between roles that should be working together. Inflexible structures like this will prohibit organizations to adapt to changes in the necessary time. You don’t need to get rid of all structures and implement holacracy. But you definitely need to establish structures and processes that allow fast changes. Imagine your company as device that is always able to update to the best software available.

  3. Don’t just update, innovate
    Updating is necessary, but not sufficient. As briefly explained in point 1, Digital Transformation implies the emergence of completely new markets and the sudden extinction of others. Preparing for that might mean to radically change the way your company currently operates or even what you sell. Maybe you need to get in bed with your competitor or cannibalize your own products.
    Focusing on what you do best and think about new ways to monetize your strenghts is the way to go. Who would have thought that Google would become a car manufacturer? But they have always been superior in rapidly processing large amounts of data and that’s just what a self-driving car does.
    So what is going to be your self-driving car? Please share with us on – Social Media of course!

 

More International Voices on EDITION F

How Writing Helped Me Build A Network. Read on

Six Years at SoundCloud, Five Lessons Learned. Read on

Jennifer Dulski: „You need to be there for your team“. Read on

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