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Thursday
Jan212010

Social Networking, Performance Improvement, and Service Differentiation: A Rising Tide

By Dennis D. McDonald, Ph.D.

In How the Trends of 2000-2009 Will Shape Performance Improvement in This New Decade, Debashis Sarkar, a writer for Six Sigma & Process Excellence, lists as number 1 the following trend:

1. Power of Social Networking Sites: Something That Companies Can No Longer Ignore

Not that I’m surprised. I’ve been seeing this developing for at least 5 years. Even now a broader population of business analysts and consultants is recognizing both the actual and potential value of social media, Web 2.0, Enterprise 2.0, and social networking. That’s a good thing, right?

Absolutely. Significantly, Sarkar avoids a common trap that other short-sighted observers fall into when discussing social media benefits for the business. He sees social networking not as just another advertising or PR channel, he sees social networking as a way to connect with customers. Here’s his “takeway” for this:

While looking at performance improvement projects, leverage social networking sites to connect with customers to collect their feedback, test out products/solutions, etc. Social networking sites provide immense possibilities that have still yet to be fully leveraged.

My only quibble with Sarkar is his use of the word “sites,” as in “social networking sites.”  Just as the most important thing that happens with a web site is not what happens with the page but what happens behind the customer’s eyeballs, the most important thing that happens with social networking “sites” is what goes on, relationship- and communication-wise, among a company’e employees and its customers. In short, the “site” is a vehicle, not a destination.

Item 6 in Sarkar’s list of trends is also significant:

6.Service Differentiation: Evergreen Strategic Weapon for All Businesses

Companies have realized that as products get commoditized, differentiation becomes a big challenge. Even if companies launch new products sooner rather than later, their products get copied by others and their unique selling proposition is lost in the marketplace. In such a context, quality service can be a distinct differentiator that competitors will find difficult to compete with. This will be possible when companies provide a superior experience and cater to customers’ demands that are valued by customers.

It’s not much of a leap to suggest that combining 1 and 6 — social networking plus service differentiation — is a winning combination. Getting closer to the customer before, during, and after the sale is critical.

There is a challenge, though, to using service as an important differentiator and driver of customer sales and satisfaction. That is that service and customer communication need to be driven by a unified strategy and managed in a coordinated fashion. Information about the customer needs to be shared across organizational boundaries. That means that ALL customer touch points need to collaborate.

This doesn’t mean that what’s needed is one giant integrated system to manage everything there is to know about customers. It does mean  that traditional organizational and departmental boundaries need to be transparent when it comes to sharing information that can help improve the customer experience.

For many organizations, unfortunately, achieving a higher level of collaboration will prove to be a challenge that even improved technology support may not be able to overcome. Will such organizations be able to survive in the coming decade?

Copyright (c) 2010 by Dennis D. McDonald. Email Dennis at ddmcd@yahoo.com.

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Reader Comments (4)

Dennis - Your linking of relationship and service reminds me of a then groundbreaking consulting study, lead by Stuart Richards of Nolan, Norton's London office, to help Ford of Europe pull off a fundamental transformation. It was early '80's, Ford was a weak sister in Europe (not doing so well in the US then).
Adapting Michael Porter's Value Added Chain Richards et al showed that the way a customer perceived value in the buying cycle could be linked through ownership/maintenance and to renewal with active practices and policies and underlying systems to make the customers' experience with Ford more enduring.
The focus was on creating and encouraging ongoing relationships, to the point of breaking down silos between sales, maintenance, HQ, field, mfg, engineering, etc. It was a killer success, increasing renewal sales significantly while reducing the costs of sales, support, even maintenance. I think the Ford Europe exec was named Trottman, ended up running Ford globally based, at least in part, on the success they had.
Today they would accelerate the value by adding Web 2.0.

Doug Brockway
January 21, 2010 | Unregistered CommenterDoug Brockway
Sounds like Sarkar is only focusing on consumer product companies. I've primarily worked at technology and B2B companies, where consumer thinking doesn't apply much. However, social networking technology has a place there too - but it's more along the lines of fostering / supporting "communities of practice", where people connect and share information about a company's products / services (as opposed to simply another conduit for the vendor to service the customer - it's about mutli-direction connections, not just one-way).
Yes, that idea would be covered in the "connect with customers" statement at the beginning of the post - it's just that the specific examples start to sound consumption-centric.
January 21, 2010 | Unregistered CommenterJim MacLennan
Doug - the nice thing about the Ford example is that building an objective function (we'd call it "calculating ROI" today) is simplified by linking actions to purchasing.

Jim - Sarkar does base some of his other writings on having applied Lean Six Sigma processes to service companies. But I think the comments apply to customers who are consumers and customers who are part of any industrial value chain. See my white paper "Web 2.0 and Sales Process Management" ( http://www.ddmcd.com/highlights.html ) for example.

Thank you both for your comments! - Dennis
January 22, 2010 | Registered CommenterDennis D. McDonald
You are right. In the coming years social networking medias and sites are going to take this world.
January 24, 2010 | Unregistered CommenterSocial Network Design

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