CIO Magazine: October Issue

How Social Media Can Influence High-Stakes Business Decisions

Social media is more than just amassing likes. Companies are using advanced social techniques to rehabilitate corporate reputations, uncover ideas for breakthrough products, and figure out what competitors are up to.

social media
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In a battle against Southwest Airlines this year for control of two gates at Dallas Love Field airport, Virgin America launched a social media blitz using Twitter, Facebook and YouTube, plus an Internet petition to local government officials. The conflict started when the Department of Justice told American Airlines it had to give up its positions at Love Field before it could acquire US Airways. Southwest already controlled 16 of the airport's 20 gates, and Virgin wanted in.

The airline pleaded its case to the DoJ, which would weigh in as it sorted out the competitive landscape. But the final decision was up to Dallas city leaders and it was tough to fight Southwest, a hometown player. So Virgin took its case to the public.

Virgin's "Free Love Field" campaign asked customers on Facebook and Twitter to make supportive posts and to sign and share an online petition. Virgin emailed its top frequent flyers directly to do the same. The airline also publicized its pledge to donate $20 to a local school group for every ticket it booked out of Love Field on a designated day. And Virgin enlisted its founder, Richard Branson, to put out a YouTube video of the celebrity executive writing a cheeky love letter to the airport. "No one should have a monopoly on your love," he said. "My virile young planes yearn for your runways." In one week, more than 20,000 people signed a petition on Change.org urging Dallas to let Virgin fly at Love Field.

In May, the city gave Virgin what it wanted. The $1.4 billion airline now runs 26 flights in and out of Love Field, with another six to be added next year.

"Social technology allows people to publish their thoughts in a way the audience can't avoid," says Luanne Calvert, CMO at Virgin America. "There's no other way we could have been more effective."

If you think social media means simply amassing "likes" and followers and offering ad hoc customer service, you've already lost. Companies are using advanced social techniques to rehabilitate corporate reputations, uncover ideas for breakthrough products, and figure out what competitors are up to. And as Virgin America knows, aggressive, targeted use of social media can influence high-stakes political and business decisions in your favor.

[See Sidebar on Page 2: How to Use Your Influencers]

At particularly adept companies, the whole C-suite sees the value of social media. Patrick Doyle, CEO of Domino's Pizza, doesn't go a day without thinking about social media, which he says is inseparable from his business strategy. Being smart on social networks "doesn't start from, 'Let's have a new advertising campaign and put a social media extension on it,'" he says. "A critical part of our strategy is understanding [online] conversation."

Most companies don't reap the full benefits from social media because they're stuck in old thinking, don't know how to properly use digital, or are pushing out one-way messages like they do on TV or in print, says Mark Fidelman, CEO of Raynforest, a sports marketing network, and author of Socialized! How the Most Successful Businesses Harness the Power of Social. "There's a difference between having a presence on social media and using social media well," Fidelman says.

Skillful companies take chances and perhaps make mistakes. But for those that use social media as more than a popularity contest--such as Domino's, Ford, Wells Fargo and Virgin America--the rewards can be dramatic.

Seeing the Future

Using social media for competitive intelligence can yield big strategic payback, says Estelle Metayer, an adjunct professor at McGill University and founder and president of Competia, a strategic consulting firm. One intelligence tactic: Track the LinkedIn connections of the top salespeople at the competition to figure out what new markets--geographic and conceptual--they are entering.

While many companies focus on engaging with their own customers, some have realized they can learn a lot from studying their competitor's customers. Identify them with targeted searches to see what they are saying and doing in online social circles, Metayer advises. Note where they are traveling, what they are buying, eating and reading, she says, because that information can offer insights into how to grab market share.

Analyzing the social behavior of both your own customers and those you'd like to steal from rivals is even more telling when that information is combined with internal data from supply chain, marketing and point-of-sale systems, says Dave Hanley, a principal at Deloitte Consulting and lead at Deloitte Digital.

"Social as a silo is over," Hanley says.

The idea is to watch natural conversations as they trend this way or that and correlate the observations to movements in sales. Then a company can try to influence outcomes, Hanley says. Building a database of customers' Twitter and Facebook names can lead to targeting individuals with special, unpublished prices and traceable coupons. Such experiments may result in sales or simply further chatter about the company or brand, he says.

Hanley says companies may need to hire specialists to interpret social conversations: data scientists to crunch numbers and digital anthropologists to analyze the behaviors before and after those online conversations. This goes beyond simple positive-negative-neutral sentiment analysis, he says, to more nuanced evaluations.

At Ford Motor Co., for example, studying social media behavior helped the company decide to build a hands-free lift gate that has proven to be a selling point with consumers, says Michael Cavaretta, data science leader at the $147 billion automaker.

Sensors under the tailgate detect the driver's leg motion and communicate with his programmed key fob to unlock the hatch. The driver doesn't have to put down packages to open the back of the car or truck by hand.

But Ford didn't immediately proceed with the idea. The company's advanced product-marketing group was getting mixed signals from the data it normally studies while planning new car features and wasn't sure whether the feature would be worth the effort. Did customers want it enough? The group called on Cavaretta's team of data scientists to answer this specific question.

Rather than trying to survey social media channels in general--which would have yielded too much data to assess quickly--the team swept Ford enthusiast forums and blogs to look for discussions about the topic. High-powered servers can collect data fast, vacuuming social networks for keywords in minutes. But the ability to automatically interpret it for business decision-makers isn't as advanced, Cavaretta says. "One challenge is developing algorithms to find the right data and do the right things to it."

Ford found that people, four to one, favored the hands-free method. But more than statistics, the team discovered context. People talking about the lift gate had also talked about why they wanted it, what kind of cars they had, and other wished-for features. "You could build that data into a story," he says, which is important when trying to get approval for projects.

Lurking on social media lets Ford capture knowledge without influencing the conversation the way a focus group would, he says. He credits former CEO Alan Mulally for instilling an approach to decision making at Ford that relies in equal measure on data and qualitative stories to explain the numbers.

"A computer can help, but it's people who make those decisions," he says. "It was a huge cultural change."

Moving the Needle

Virgin America used social media to change what might have been a painful loss in the growing Dallas airline market into a key victory, just a couple of months before it filed for an initial public stock offering.

Domino's Pizza has used social media to change its very reputation. It used to be that companies could control what customers knew or thought about a brand, says Doyle, CEO of the $1.8 billion company. But now people trust friends and family more than they trust big business, he says. And where are friends and family? Online.

"What people are saying about our brands on social media is more important than what we say about our brand," he says.

For example, when someone named Bryce in Minnesota posted a picture of the messy pizza that was delivered to him on a Domino's website, ShowUsYourPizza.com, Doyle himself starred in a national TV commercial apologizing and promising the company would do better--and he showed the bad pie.

"We may have been the first company in the history of advertising to spend millions of dollars showing our product in an unfavorable light," he says.

It takes guts and it takes time. Domino's began its social media rehab campaign in 2010, launching a reformulated pizza recipe at the same time. Bryce in Minnesota suffered his upsetting pizza incident in 2010. For the past several years, the company has deployed social engagement to help change its reputation as a slapdash pizza maker with a bad-tasting product. "We've spent tens of millions of dollars to tell customers we are listening to them, and they didn't think our pizza was very good," Doyle says. "We're listening, reacting to customers, and doing something about it."

As social media gets more powerful, however, some very large companies recognize the dangers. Bad news, misinformation, rumors and comments move faster than some public relations teams. Target, the $73 billion retailer, explains its worries in the "Risk Factors" section of its annual report. That is where the Securities and Exchange Commission requires a company to specify threats it considers significantly harmful.

"While reputations may take decades to build, any negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or litigation," the company wrote in its annual report in March. After a 2013 security breach compromised 70 million customer records, Target experienced all four of those potentially devastating consequences and admits it doesn't know what the long-term effects may be.

Pfizer, a $52 billion pharmaceutical company that makes drugs for erectile dysfunction, cancer, Alzheimer's disease and other conditions, names social and mobile technologies as well as "blogger outreach" as risks, specifically when legal cases arise and these outlets compound damage to its reputation.

Part of the problem is that few issues online ever really die. Conversation may decrease, but even outdated or disproven accusations get rediscovered and recirculated. McDonald's continues to take hits about "pink slime" processed meat trimmings in its burgers, though the chain stopped using them in 2011. McDonald's calls out social and mobile communications as a risk when activists "promote adverse perceptions" of fast food, the McDonald's brand, its managers and suppliers.

"If you have a controversial product, it's hard to take a step forward [on social media]," says Fidelman, "and it does seem threatening."

Nonetheless, you have to be there.

Pushing the Right Levers

The $84 billion Wells Fargo, which last year was the most profitable bank in the U.S., used to let business units and divisions conduct their own social media activity separately. As a result, a number of different strategies and initiatives ran on a hodgepodge of tools, says Rene Brown, director of social media. The bank then decided to create an enterprisewide social media strategy, to present a more coherent and controlled voice online.

Last year, Wells Fargo opened a social media command center in San Francisco, with a secondary center in Charlotte, N.C. Two more Wells Fargo employees in the Philippines monitor the action after the West Coast shuts down for the night. In the San Francisco office, marketing and customer service staff sit in front of eight monitors, assigned to follow different channels. Legal, compliance and special "social care bankers" are on call in case any complicated customer situations or crises arise.

Every morning, the team walks through its planned posts to assess them against events in world news and the financial services industry, as well as news specific to Wells Fargo, Brown says, to avoid "the wrong voice if there's a tragedy somewhere."

From the command center, the bank executes proactive strategies, such as Twitter and Facebook posts during the FIFA World Cup this summer. Wells Fargo sponsors the Mexican National Team, in part to reach Hispanic customers and potential customers. The bank responded in real time during popular matches, posting pictures of players and cheering for teams. The work garnered 8 million responses, such as retweets, in the course of three major games, Brown says.

Just as important as real-time marketing is having the right timing and tone when responding to controversy. In March, Wells Fargo faced a surprise online assault regarding a branch in New Mexico. An American flag had been thumbtacked to a wall there for several months. When a property manager mentioned to the bank manager that the flag could be displayed more appropriately, it was removed. A few days later, the flag was hung on a pole near the entrance. In the interim, a local TV station aired a story in which a customer alleged that other customers had pressured the bank to take down the flag, implying that Wells Fargo had bowed to anti-American sentiment.

Conservative websites and blogs soon joined the fray, some saying Wells Fargo had banned the U.S. flag and others calling for customers to drop their accounts. Many simply copied and pasted errant stories from other sites, generating comments from followers outraged at the bank.

"A symbol like the American flag takes off in a news cycle," Brown says. "It was such an inaccurate story that it made it tough for us not to sound defensive." But the bank had to address the controversy. In a Facebook post, Wells Fargo said, in part, "We have standards of how to display the flag with the appropriate respect. In this case, we made a simple change to adhere more closely to those standards."

Even events outside the bank's control put its social media team on alert. After the Target data breach, for example, Wells Fargo customers on social media were concerned about passwords and whether their debit cards were linked to their Target accounts. Wells Fargo decided not to issue statements because the worries weren't widespread. Always, the team has to consider when to respond to social media activity and when not to, Brown says. "We have to be both transparent and accurate and not oversharing or undersharing."

A flurry of social media posts on a specific topic--say, 100 posts in 60 minutes--will trigger a statement from the bank. For example, a denial-of-service attack against Wells Fargo's website last year warranted a response from the bank. Posts provided information to customers while simultaneously reassuring them. Corporate communications, IT, the digital channels groups and other departments work together to craft plans like that, Brown says. "In our industry, we can't do anything without a lot of eyes reviewing," she says.

The Ultimate Metric

The business benefit of next-generation social media work goes well beyond the number of interactions a tweet can trigger. Wells Fargo, for example, is testing whether it can spur social media users to go through a loan-application process at its website, experimenting with different posts and tracking the responses to see what works best.

And yes, these companies do measure interaction. But they're also able to measure new business. Domino's CEO Doyle easily rattles off stats about his company's followers on Facebook, Twitter and Instagram. But, he says, "First, ultimately, it's about sales." Calvert, Virgin America's CMO, agrees. Virgin counted up the over 17,000 views of its Branson video and was happy to get more than double the number of petitioners it expected. "But the biggest metric," Calvert says, "was getting the two gates."

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