Enterprises reaping huge benefits from social media tools

by CXOtoday News Desk    Mar 28, 2013

Social media

Social media and social technologies are disrupting the way enterprises view their marketing strategies. It saw a strong uptake from its hitherto peripheral uses to what is now mainstream. Enterprises are rethinking ways to derive insights and gains from social tools and sustain it over a period of time.

According to the results of the sixth annual survey conducted by McKinsey & Company, on the business use of social technologies, 90 percent of executives whose companies use social technologies report measurable benefits from these tools, and what’s more, a small yet growing number of companies—the most skilled and intensive technology users—are racking up outsize benefits.

McKinsey found that nine out of ten executives whose organizations use social tools report some measurable business benefit with employees, customers, and business partners. While the percentages reporting certain benefits (such as quicker access to external knowledge) plateaued or even decreased since 2011, increased shares cite cost-cutting benefits in 2012. This is especially true for travel costs, perhaps in response to economic pressures and the prevalence of videoconferencing. Respondents also report a greater level of marketing-related benefits: on average, they say their companies’ use of social technologies with customers increases brand awareness by 36 percent and conversion of customers by 20 percent.

Most executives say their companies employ a variety of platforms to access social technologies—65 percent say their companies have adopted at least one technology that’s used on a mobile device and that 48 percent of their companies’ employees have mobile access.

This is nearly as large as the share of employees using technologies on other devices: across functions, executives say 52 percent of their organizations’ employees use social tools on non-mobile devices, up from 46 percent in 2011. The functions that used social technologies most often in previous surveys—marketing, sales, and IT—also use these tools on mobile more often than others. The cloud is a commonly used delivery platform as well: nearly half of executives say their companies deploy technologies through a third-party vendor, while 62 percent say their companies use their own servers and IT systems.

Respondents also report that their companies have begun using the big data that social technologies generate to capture value from interactions with different stakeholders. About one-third of executives say their companies use data from social-technology interactions to respond immediately to either consumer or employee concerns, and roughly one-fourth say the same about interactions with business partners.

Pros and Cons

Financially, respondents say social tools contribute 20 percent and 18 percent, respectively, to the revenue increases and cost improvements their companies attribute to the use of all digital technologies. These percentages may appear small but are driven by the extent to which—and the ways in which—companies deploy the technologies. At companies using at least six tools (or half of the tools the survey asked about), executives say this usage amounts to a larger share of financial benefits. Even larger shares at the companies using six or more tools on mobile say so: these respondents report that social tools contribute 32 percent and 26 percent, respectively, to their companies’ revenue and cost-cutting benefits.

Achieving this high level of benefits will likely require substantial organizational changes. When asked about the changes that technologies might facilitate, executives are twice as likely to say these tools could enable entirely or mostly new processes for four of eight business activities at a hypothetical company without the technology-related constraints their own organizations face.

Road ahead

The report stated that the results suggest that companies continue to enjoy organizational improvements against intermediate metrics—such as the speed of access to experts and expertise, the quality of customer service and feedback, employee engagement, and cost reductions—that are easier to track. Further adoption of social technologies and a critical mass of participation within (and outside of) the organization should facilitate even greater benefits.

With respect to productivity benefits in particular, the results indicate that companies must invest time and effort to enable greater productivity (particularly among knowledge workers) and competitive advantage. The likely need for significant organizational change is a challenging problem—and one that must be met by doing far more than changing the tools in a company’s portfolio. Companies can realize potential advantages more quickly by getting started early on the organizational transformations that will facilitate better use of technologies.

One way to facilitate and encourage more employee use of social technologies—and thus enhance their related benefits—is equipping workers with mobile access to these tools. Companies can also deploy cloud-based solutions when appropriate to make these solutions more scalable and decrease time to value.