Tata Consultancy Services the leading IT services, consulting and business solutions organization in its latest Global Trend Report, shares that despite the hype and increased investments, it seems that enterprises are still struggling to make the most of social media.
According to the report even though companies across the globe, including India, will spend an average $19 million (Rs 119 crore) on social media this year, still only about 10% of enterprises have generated significant improvements in multiple areas of their business. One of the core reason being organizational silos limiting business benefits of social media.
Entitled as Mastering Digital Feedback: How the best consumer companies use social media, the research explores how 11 global consumer industries and large companies in the world’s four largest economic regions are using social media. ResearchNow surveyed 655 respondents from mostly $1 billion+ consumer companies in June and July 2013, the average revenue of which was $15.6 billion (median of $4.9 billion). The surveyed respondents came from 11 global industries such as Banking/financial services, Retail, High tech, Insurance (life, health, auto, home), Utilities, among others.
After discussing the numerous findings in the report, they were compared by two groups of respondents:
‘Leaders’ in social media – Respondents whose answers to a question asking them to evaluate the benefits they’ve achieved in 16 domains (marketing, sales, service, product innovation and others) put them in the top third in terms of total benefits.
’Followers’ in social media – Respondents whose total benefits in the 16 areas place them in the bottom third of benefits achieved.
Core findings of the TCS Global Trend report
1. 38% of consumer companies report a positive return on their social media investments – more than double the number of companies with a negative ROI – but 44% haven’t measured the return. The number of companies with a negative ROI on social media is 18%. Asia-Pacific and Latin American companies are more likely to report positive ROI on social media than companies in North America and Europe.
2. Industries with greater benefits from social media are more likely to sell products and services that consumers are passionate about: These industries – media, retail, high tech, travel-related and telecom companies – have products and services that are easier to create avid ‘tribes’ of loyalists around.
3. Leaders at social media go far beyond creating company pages on public social networks: a majority of them have blogs, online communities for consumers, mobile apps, and company video channels. Approximately 81% have corporate blogs, 77% have mobile apps for consumers who use social media, and 61% have online video channels. No more than half the followers had blogs, mobile apps or video channels.
4. Leveraging social media requires corporate cultures to be more transparent – both externally (with consumers) and internally (with employees): The majority of the companies with the greatest gains to date from social media have cultures that value consumer opinions and encourage internal transparency and knowledge sharing. Amongst the followers, a minority of companies value consumer opinions and encourage internal sharing of knowledge across functions.
5. The best consumer companies at social media on an average spend double of what the worst companies do; but the leaders are nearly four times more likely to get a positive return on their social media investment. Average spending by leaders – $28 million – is double the average of followers. (Leaders will spend a median of $7 million this year on social media as compared to $1 million for the followers.) But 62% of leaders say their ROI on social media to date is positive, compared with only 17% of followers.
6. Only three business functions are actively involved in monitoring what consumers say about their firm through social media; marketing, customer service and sales: These functions regularly track what consumers are saying on social media in a majority or near majority of consumer companies.
7. Other functions that should be actively listening largely are not: R&D and product management: Only 27% of R&D/product development and 37% of product management departments regularly view social media comments from consumers.
8. In about one-third of companies, marketing controls social media activities – a much higher percentage than any other function. However, only 42% of respondents view their organizational structure for social media activities as effective or highly effective.
9. Companies are investing fewer resources on social media than they are on Big Data (based on previous TCS studies): Median spending this year on social media is $2.7 million per respondent (average is about $19 million). Based on the median number, these companies will invest about a fourth of what they spent in 2012 on Big Data (median of $10 million), and about 37% less than what they spent last year on responding to consumers who want to do business with them through mobile devices.
The report also shares the three biggest success factors for using social media effectively and they are: a) protecting consumer data, b) having a corporate culture that values consumer opinions, and c) responding rapidly to consumers who have issues about a company or its products. Hopefully, going further enterprises can take these outcomes seriously.