Companies that fully embrace social engagement are experiencing four times greater business impact than less-engaged companies, according to a new study conducted by PulsePoint Group, a management and digital consulting firm, in collaboration with The Economist Intelligence Unit. The research identifies six types of socially engaged enterprises and provides insights for organizations that want both to measure themselves against peers and find the right strategy for improving business and economic impact from their investments in social engagement. A socially engaged enterprise actively engages constituents (employees, customers, partners and other stakeholders) in meaningful conversations — enabled by social technologies — so that both parties benefit. This mutual exchange of value is not just about products, but about useful information that builds commonality of interests and a sense of trust. "We believe this research is essential to assure companies that their investments in social engagement can be rewarded, provided they do it right," said Paul Walker, a partner with PulsePoint Group, in a news release. "We felt this was an opportune time to conduct this research and to focus on C-suite executives, because it is clear that there is a growing list of high-performing companies that are achieving superior economic returns from the use of social engagement with key internal and external constituents," Walker continued. "We believe we are seeing an inflection point at which many organizations are moving from an experimentation phase with social technologies to achieving tangible and measurable returns on the investments. Most notably, they are achieving enterprise-level scale that is impacting marketing and sales efficiency, increased sales and market share, and speed to market with new products."
The study, The Economics of the Socially Engaged Enterprise, conducted in February 2012, found that in the most socially engaged companies, the chief executive officer and other C-suite executives are the vital advocates for cultural change that drives deeper levels of engagement.
The study found that a traditional focus on listening centers and influencer engagement, two of the primary enablers of this initial transformation, are now the price of entry for the most advanced socially engaged enterprises. The research revealed specific economic or business impact values across 10 distinctive social engagement activities.
"The research let us develop and test a formula for what combinations of social engagement activities organizations should focus on to improve their engagement and impact," said Michael Gale, PulsePoint Group partner, in the release. "Companies need a more prescriptive path forward to be successful. While the formula is quite straightforward, our experience shows the changes required will not be, so well-defined roadmaps with accountable metrics are essential."
More than three hundred C-suite and senior executives were surveyed for their perspectives on social engagement including definitions, drivers, barriers, and advocates related to current and future activities. Key findings show:
- The average return on social engagement was calculated to be between 3-5%. The most engaged businesses are reporting a calculated 7.7% business impact specifically from social engagement, which is four times the performance of the lowest performers who only achieved a 1.9% estimated return.
- The top two areas where executives thought social engagement had real value were improved marketing and sales effectiveness (84%) and increased sales and market share (81%).
- C-suite advocacy is critical, now and in the future. Two-thirds of the organizations achieving the highest returns reported that their C-suites are active advocates — that is, they commit to social engagement as a strategy and they reallocate resources to make it happen.
- However, a full 28% of C-suite executives still don’t believe in social engagement. And the number one reason? The inability to gauge ROI (45%). For engagement to work, the C-suite has to believe in it and see measurable returns.
- The most socially engaged segments believe that widely distributed buy-in across the organization — and beyond marketing and communications — is key for scale and generating economic business impact. This even includes operations management and financial leadership.
- Executives defined social engagement today as online listening (28%), blogging (24%) and building relationships with online influencers (21%). But the top performers have a different view — they will be more focused on ideas and action in the next two years. Big-return companies crowdsource new products (57%), or let customers participate in developing ideas — they are predicting a significant portion of new products will be derived from social engagement insights.
- Fifty-nine percent of executives/managers interviewed say that young people, as employees and customers, will expect and value engagement; that’s what is driving their engagement plans. Fifty-four percent say that customers’ expectations of social engagement are driving their plans.
- In order for companies to know whether their investments are providing returns, appropriate metrics need to be developed. The research indicates that benchmarks (33%) and key performance indicators (30%) will be the top approaches for measuring social engagement in the next two years. Today, many companies are depending on executive intuition (27%) or are simply not measuring impact (28%).
"The ability to measure the right mix of socially engaged activities has let us create an economic value formula for what organizations can and should invest in," Gale said.