Today, the social media industry is crowded and swollen like a grilled sausage, right before the heat splits the casing.
The bust is coming. In both social media software and social media services, the herd is about to be thinned. It’s inexorable, as this is a process undergone by all maturing industries. The winners will prosper, and the losers will fade away, remembered only by their one-hit-wonder viral videos and nifty SXSW T-shirt giveaways.
Compared to the last boom/bust technology cycle that culminated with the dot com crash of 2000, the social-era combatants are in an even more precarious position. Back then, the engine of the expansion was e-commerce, which at least generated revenue (although clearly not at ROI sufficient to save Pets.com, Webvan.com, Boo.com and legions of other online ghosts). Last time, success and failure was driven as much by expense control as revenue generation, and the huge influx of public market financing through IPOs allowed start-up companies to essentially trade dollars back and forth in a giant shell game.
This time, the actual business opportunity is more narrow. Social media is part of the marketing and customer satisfaction success path for companies, but it’s not the whole story. Even becoming a “social business” as I wrote about with Amber Naslund in The NOW Revolution, helps companies achieve operational efficiencies and newfound innovations more so than direct, linear revenue or profit. And now with a few exceptions, we don’t have IPO money to burn. Other than the burst of buyouts of the first tier social media management software firms by Oracle, Salesforce and Google, the players in this game largely have to stand on their own feet and balance sheets, augmented with modest A-round venture financing.
This is not just a software battle. If you, like me, are providing social media or social business services in any form or fashion, the shakeout is on the way. There are three, critically important steps you can take to help ensure your survival. You’ve got 18-24 months to figure out how you’re going to have a chair when the music stops.
1. Go Narrow, Not Broad
There’s not a kernel of differentiation in the positioning of just about any social media software or services company. None. I wrote a post about this many months ago, and included a survey asking people to pick the correct tagline for many popular software providers. Best score was 25%. The delightfully wry “jargonated” website skews the ridiculous and vague positioning of social media agencies and the like, which invariably have no differentiation or real-world meaning.
Tell me the difference between Spredfast, Sprinklr, Sprout Social, Argyle Social and Hootsuite? Me or my team have demoed or used all of them, so I know that differences actually exist, but almost all social media software companies (I’m not just picking on these five) want to provide an all-in-one solution, hoping that it increases their market opportunity. This is misguided. Nobody wants a tool that indeed does everything, but does many of those things generically or just adequately. I want the tool that’s tuned precisely for my circumstances. Figure out what you can be the best at, go long on that facet, and then ruthlessly market that advantage.
This issue is perhaps even more acute on the services side, where every agency of every size and type is fighting for a piece of the growing social media budget. Tell me the difference between a PR firm, ad agency, digital agency, or social media agency if they are all providing the exact same services within the realm of social? It’s perfectly okay to offer a broad range of social services (and I advise agencies to embrace at least these 23 services). But from a marketing perspective, you must focus on much smaller number of things you do as well or better than anyone else. That’s why at Convince & Convert we’re redoubling our efforts around Youtility audits and our Social Pros on-call strategic counsel services, two pieces we provide that most do not.
2. Go Touchy-Feely
In markets where competitors are minimally differentiated in terms of their actual offerings, the customer experience becomes an even more important factor in obtaining and retaining business. I know it’s all the rage to hire as many smart, technical people as possible to build wonderful software or hack together custom APIs for your agency clients, but this emphasis on hard skills versus soft skills needs to be turned on its head.
The most important people on your team are the account managers, sales people, client satisfaction managers and anyone else that interacts with confused and stressed customers, whose career paths are now linked to the success of your software or services like a double helix. We’re in a race to replace actual human interaction with digital analogs (Download the “hug your kids” app). All this technology-enablement may be efficient, but it’s psychically disastrous.
Once you’ve pruned your messaging tree and figured out what you stand for, figure out how to acquire, train and empower the very best customer relationship people, and do not let them leave. At Convince & Convert, if we don’t receive at least one note per week from a customer praising us for being fast and responsive (our calling card) something is amiss. I received a hand-written thank you note the other day. Made a big impact. Dave Kerpen of Likeable Media sends out several per day, just because. Smart.
However, Dave’s company is misnamed. Being likeable isn’t the goal, because indeed you can like software, and you can like your agency. But like doesn’t win. LOVE wins, and nobody loves software and nobody loves companies. They love individual people that work for software companies or agencies. Do your customers LOVE your people?
3. Go Translate
The future of marketing isn’t big data, it’s big understanding. (Tweet this)
We’ve spent much time and energy talking about measurement of social media, but we’ve almost wholly neglected to acknowledge that numbers without context are useless. The good news is that most social media software companies and providers of social media services have gotten better about reporting over the past year. There’s less reliance today upon public, aggregated metrics like fans, and followers and impressions. But in their place, too many companies are panning for numerical gold and tracking two dozen metrics from all across the social sphere, hoping to find nuggets of insight. This doesn’t result in clear data that’s understandable and actionable, it results in Excel bloat.
The present era of social media metrics reminds me of late 90s web analytics, when you could download a Webtrends report that included 60 pages of stats and most people would print them out and waive them around like a talisman, as if having access to the percentage of 640 x 480 browsers in Lichtenstein was a data point worth knowing.
Stop creating reports, and start creating understanding. (Tweet this)
Take the time – using your much loved customer relations team – to work with customers to provide context and insight for analytics. Numbers can and should tell a story, and the winners in the coming shakeout will be the companies that can spin a tale with data.