SN's as business drivers

The topic of this blog is whether SN's will be a major driver for a company's success in the future. A company is known to be the more successful whenever it has a competitive advantage over rivals. As this entry will show, these advantages could also be created by SN's as cross functional "divisions" of a company. Although there are other possibilities to use SN's, I will concentrate in this blog entry on SN's of persons outside the company that help the firm to improve their products to fit to the customers' needs or to improve the identification of the customer with the firm. For illustration, I will give you three examples of actual projects I found on the web.

1. SN's as development drivers
Many of you are familiar with the concept of 'The House of Quality'. The HoQ's main aim is to implement customers' needs in the development of new products on early stage to save R&D costs and to better meet the market requirements. This can be done by a SN. When you form an active community of loyal customers or testers you are able to get information on customers' needs on a very broad but cost effective base. One good example for this approach is http://www.threadless.com where everyone in the community is able to design t-shirts for the company. The rest of the community is then voting on the designs and the ones with the most votes get produced, including a kick-back for the designer. This way threadless is able to save development costs because it does not need to hire designers and at the same time makes sure to only produce those products with the highest market demand.
Another way to use SN's as a development tool is www.innocentive.com , a page where many R&D labs are bundled to work on specific development problems of firms. A firm using this network is able to communicate its specific problem to far more R&D persons than any normal firm would be able to hire but still only needs to pay for those who come up with the best solution.
By using these approaches, companies with active SN's in this field will in the future have a competitive advantage in effective and fast development over others. The SN's are a competitive driver for innovation (like innocentive) and cost reduction in R&D (threadless).

2. Using customers SN's for marketing
Social networks can also be a strong driver when it comes to marketing for a customer group. Especially binding the customer emotionally to a brand can be very effectively achieved through SN's.
One way is the approach of some Obama supporters' campaign which offered videos like the one on the cnnbc page which I sent around this afternoon (http://www.cnnbcvideo.com/taf.shtml). By motivating other supporters (firm's customers) to send around their advertisement for free to their own personal networks, they were able to reach many people with the same opinion (target group) on a very low cost base. If a firm can use measures like that, they can effectively use their customers SN's to spread their advertisement and thus reach their target group more effectively and also avoid high advertisement costs for tv or print. Reaching the target while saving money will be a great advantage over firms implementing traditional marketing. Thus, SN's can also be a driver for a company's marketing success.

3. Building a firm's SN to integrate customers
The last approach for SN's for companies that I want to discuss in this entry is the possibility of building a firm owned network portal, attached to its products. Advantages of having this can be numerous, including a stronger attachment of the customer to the brand, finding out more about customers' interests and behavior and having blogs where the customers can discuss products and campaigns. All of this information can help a company to measure their success and to identify potential of improvement.
A good example for a firm's SN I found on the web is of Triumph's subsidiary Sloggi, a firm that produces underwear for young people. They built up the portal 'Show me your Sloggi' (smys.sloggi.com). The original idea was to have a contest where all customers were able to post a picture of themselves. The community rated their looks and the winners got a model contract with Sloggi. This way, the company was able to get their customers involved in the company's decisions while on the other hand got a non-professional model for a lower price. Since that contest was really successful and many people opened account on their webpage, they afterwards decided to drive the idea further and offered full SN functionalities like on facebook and alike. By doing so, they got their signees to fill in more personal data and found out more about their connections and interests. They also offer sections where the customer can rate products or offer events like a live photo shooting where the users can actively take part in deciding the set-ups. Sloggi's SN so creates a strong interaction inbetween the firm and its customers offering affection for the customer and giving Sloggi worthy information on its customers demands and lifestyles. Thus, Sloggi can find out much more about the success of their products, reasons for it and what their target group actually is. This integrated approach can be used for development as well as for the development of more effective marketing strategies.

Overall, these examples show that SN's can be effective drivers for organizational success. If used in the right way, those SN's can especially help to significantly improve the flow of information between firms and theirs customers as well as emotionally bind them more effectively. Innovation and communication improvements can increase the success by saving costs in development and advertisement and by the same time make a firm's product more adequate to the market needs.

Lennart Bösch