Social media’s trend is no doubt only going upwards in our business environment nowadays. However it is important to keep in mind that it is a very effective tool that could turn into a disaster if used without care. There are many companies that have failed because of the lack of sophistication and understanding of the bad and the ugly of social media. There are also cases that social media do more harm than good to the company.
Brand disasters caused by viral network
Facebook effect was the reason Subway got sued for their less-than-12-inch foot-long sub. In 2012, there is a list of biggest brand disasters from well-known companies such as Fedex, McDonald’s, D&G going around the internet. These brand disasters are caused by social media and how powerfully it could influence the network. This is when social media creates an ugly network effect; and companies reputation could get damaged a second after somebody spreads the ugly information only.
On December 19th, 2011, a FedEx customer caught a FedEx employee on camera throwing a brand-new and expensive TV over the gate, instead of ringing the bell to find out if anybody is home. The number of views grows exponentially.
How effective is this solution? If right now while I am writing this post, May 2nd, 2012, the total number of views is almost 9 million. And the most recent comment posted on this video is 2 months ago. Apparently, only crisis such as this incident could damage a company’s brand significantly and for a long time. On the internet and through social media, almost nothing is private and retrievable.
Online demand generation and wrongful information could impact sales and bottom line
How companies use social media as a marketing tool determines their reach and target audience. External marketplace has evolved much faster than what businesses can integrate social media into their models. The challenge here is how to generate demand using social media, while keeping up with the rapid changes social media causes in consumer perception, hence, demand generation.
The challenge here is to determine how far we should rely on social media. Gen Y is the early adopters and tech-savvy folks that drive heavy traffic on social media sites. Teen spending has been increasing since Spring 2012, and they prefer to shop in-store rather than online. The importance of social media on their shopping habit is also decreasing. This puzzles business because while moving a lot of their marketing forces only, how are businesses going to deal with such phenomenon? Finding the balance and finding how far to take social media are challenging marketers.
The ugly of getting demand generation wrong could be wasted resources. Though social media is a cheap way to market, it could make company become disoriented in their marketing segmentation strategy. For example, Pizza Hut pushes their products beyond public interest, resulting in negative publicity. In the end, companies are not able to accomplish anything from using the tool. Rather, social media efforts backfire, resulting in decreased sales and bottom line.
Companies that are not understanding how their customers use social media could easily fail in their social media marketing campaign. For example, if the company keeps pushing promotions and discounts to the wrong target audience, which results in negative impacts on consumer’s likelihood to purchase from the company. According to J.D. Power and Associates Reports: Poor Social Media Practices can Negatively Impact a Businesses’ Bottom Line and Brand Image, among highly-satisfied consumers (satisfaction scores of 951 and higher on a 1,000-point scale), 87 percent indicate that the online social interaction with the company “positively impacted” their likelihood to purchase from that company. Conversely, among consumers who are less satisfied (scores less than 500), one in 10 consumers indicate that the interaction “negatively impacted” their likelihood to purchase from the company.
The battle for attention driven by social media is a great challenge for business and it could negatively impact on businesses. To follow up with my previous post on social media and emergency management, here is an article to stress the flip side of the story: Four Ways The Media Failed In Covering The Boston Bombings, And One Reason Why. Moreover, these four ways apply to anybody or any business that uses social media. The growth of social media is comparable to a contagious virus. The question is: social media is a race, who will be able to keep up? It probably depends on how we can avoid the bad virus and keep the good one.
P.S. I assume that you all are looking for jobs as MBA students (I hope?!?!) Then you should read this article on How Social Media Can Help (Or Hurt) You In Your Job Search. It’s almost a MUST to use social media for your search, just try to avoid things getting ugly.