By Colin Jacobs, Managing Director, Immediate Future
Warren Buffet, the World’s most successful corporate investor, built £77 billion in personal wealth on a simple mantra. He only puts his money into companies that he considers have good management.
Buffet eschews emerging markets, quick returns, and stayed out of the dot com boom. He looks at senior managers. If they don’t impress, he won’t invest. This policy has made him one of the wealthiest individuals of all time.
But how do you identify a company as being managed well. A quick to use new criteria may seem unlikely, but there is an irrefutable truth behind the use of social media as an accurate guide to standard of management, and future corporate success. This is not to do with clever marketing. It is about data.
Most often we find social media is used for short term calls to action, and CSR announcements. Sometimes great creativity may be involved, a high profile influencer enrolled, or it can be a simple message aimed at a specialist market. But essentially, content is about asking people to buy in the short term, or is a demonstration of socially responsibility.
Then consider the alternative use. The use of social media as the single most effective and detailed market analysis tool there is. This statement may come as a surprise, but nevertheless, it is true.
All social media activity leaves tell-tale trails of information. Little snippets of code called pixels, that can be gathered to produce deep insights. It can tell you what buyers and prospective buyers think of a company, a brand, a product, customer service, what customers really want, when how and they want it, what they want improved, and what they expect in the future. It can tell all of these things and more, including a great detail about the attitudes consumers have towards competitors.
Social media can measure more than 40 million attributes to create detailed psychographic market understanding, and it can monitor relevant conversations. It can track all of this on a running basis to reveal what markets want, to what degree a company is fulfilling those wants, what it needs to do to achieve more sales, and counter activity from rivals.
In sales and marketing terms, knowing what buyers seek, and when and how they want it creates significant commercial advantage. However, the use of social media for analytical purposes goes far beyond marketing. It is a planning tool, and its use tells something fundamentally important about how well a company is managed, and its future performance.
If a company is using social media analytics, then it is probable other forms of reliable data are being used for key decision making. If it is not being employed, it is an indicator that other key data formats are not being used. This is really important.
The Rule of Ten is a case in point. Studies show it costs ten times as much to complete a unit of work when data is flawed. If data is perfect, a total cost might be 100 x £1 = £100. But if only 50 per cent of data is accurate then another £50 is added to the equation. These are purely monetary costs. In the case of something like logistics fulfilment, the true cost from lost customers, and damage to brand reputation would be significantly higher.
A recent survey by Deloitte found that 49 per cent of managers say analytics helps them make better decisions, with 16 per cent responding that it allows them to make better strategic choices, and ten per cent responding that it helps create better relationships with customers and partners.
The use data is not only significantly enlightening in its own right, it is a demonstration that senior managers have a will to employ people that can collate and interpret critical intelligence, and that C level executives and the boardroom are able to make decisions based on the best possible information.
Ironically, it is often marketing departments that show greatest resistance to using social media strategically, whether it is for developing long term relationships as opposed to short term tactics, or in the use of analytics. This is usually due to sales and marketing professionals having been immersed in a ‘demand’ culture in which individuals succeed or fail based on constant quick returns rather than building long term value.
The demand culture is not one in which there is an interest in analysis that generates returns in six months, a year or five years. Results are measured in days, weeks or a few months at best. However, senior level executives often see the benefit of big picture knowledge. They understand that corporate prosperity cannot be based on feeding tactical sales. Sustained growth is built on knowing markets, appropriate R&D, and understanding and building long term relationships with buyers.
The difference in the futures of companies that use information analysis for strategic decision making, and those that operate with data myopia are necessarily different. Social media is able to play a crucial role not only in understanding the best direction for companies, but also optimising proposition and communication during the journey. And that is why use of the medium is a key indicator of how well a company is managed, and how it will perform in the future.