srisomthavil-natee-2012-13-msc management-38
TRANSCRIPT
Social Networks and Their Effects on Market Share
Topic 38: How can social networks help companies to maintain and increase market shares?
What are the risks involved, and how can they be managed? Discuss with examples.
5,251 Words
BS0918 Management Report
MSc Management Imperial College Business School
September 2013
Natee Srisomthavil CID: 00785868
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Abstract
It has become clear that social network marketing has changed the way
marketing managers craft their marketing program and that this new media is one of
the most cost-effective marketing tools available. When used correctly, social
networking sites, also referred to as ‘social media’, allow companies to directly
engage and build relationship with their customers. This report describes how social
media helps companies to maintain and increase their market share through
facilitating customer relationship management (CRM), product and service
promotions and advertisements, and the spread of positive electronic word-of-mouth
(eWOM). Despite the benefits, social media marketing also comes with risks that can
be divided into five categories, which are risk concerning the company’s system
security and disclosure of confidential information, risk concerning company’s fake
social network accounts and account hackings, risk concerning laws and regulations,
risk concerning employees’ unproductivity, and risk concerning the propagation of
negative eWOM. Lastly, risk management methods are discussed.
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Table of Content
Abstract ............................................................................................................................... II 1. Introduction .................................................................................................................... 1 2. Benefits of Social Media on Market Share ........................................................ 2
2.1 Customer Relationship Management ............................................................................. 2 2.2 Promotions and Advertisements on Social Networking Sites .................................. 6 2.3 Electronic Word-Of-Mouth (eWOM) ................................................................................ 7
3. The Risks of Social Media ..................................................................................... 10 3.1 Risk Concerning Company’s System Security and Disclosure of Confidential Information .................................................................................................................................. 10 3.2 Risk Concerning Fake Social Media Accounts and Account Hackings ............. 11 3.3 Risks Concerning Laws and Regulations ................................................................... 12 3.4 Risk Concerning Employees’ Unproductivity ............................................................. 12 3.5 Risks Concerning Propagation of Negative eWOM ................................................. 13
4. Social Media Risk Management .......................................................................... 14 4.1 Being Present on Social Media ..................................................................................... 14 4.2 Actively Engaging in Social Media ................................................................................ 14 4.3 Establishing a Clear Social Media Policy ................................................................... 15
5. Conclusion .................................................................................................................. 16 6. Reference List ............................................................................................................ 17 7. Bibliography ............................................................................................................... 21 Appendix A: Facebook Metrics .................................................................................... i
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1. Introduction
Social networking sites, and for the purpose of this report will also be referred
to as ‘social media’, have become indispensible marketing tools for businesses.
Hamid et. al, (2013) has stated in his study that a company’s use of social media is
directly correlated to its customer retention, suggesting that a company’s presence
on social media is likely to have a positive effect on maintaining market share. Social
networking sites not only help companies maintain their market share, but they also
help in market share expansion. According to Marketing Charts (2012), as cited in
Macarthy (2013), 77% of businesses have acquired new customers through the use
of Facebook.
Today, an increasing number of consumers are regularly visiting blogs,
product review sites and social networking sites to search for reviews on products
and services before making purchasing decisions (Ratchford et. al, 2001; Lee et. al,
2006). As of August 2012, 69% of online adults in North America regularly used
social networking sites. This proportion increases to 92% for people with ages
between 18-29 (Macarthy, 2013). This signals that consumers today spend more
time on social networks and that there are opportunities for companies to use social
networking sites to market their products and services. According to Tariq and Wahid
(2011), changes that social media brings to marketers include making media
instantly updatable, media control, archive accessibility, freedom, and the ability to
measure the effectiveness of a marketing campaign.
In regards to the marketing mix model, social media heavily contributes to the
promotion mix by allowing companies to directly interact with their customers (Tariq
& Wahid, 2011). Social media marketing must be incorporated into the company’s
overall business and marketing strategy (Castronovo & Huang, 2012) in order to
provide an integrated form of marketing communication that will help the company
maintain and expand its customer base.
This report discusses how social media helps businesses maintain and
increase their market share by facilitating customer relationship management,
product and service promotions, and the spread of electronic word-of-mouth. Social
media risks are also discussed and risk management methods are outlined.
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2. Benefits of Social Media on Market Share
Social media have contributed to the retention and increase in market share
in three ways: facilitating customer relationship management, facilitating product and
service promotions, and facilitating the spread of positive electronic word-of-mouth.
2.1 Customer Relationship Management
A social media is defined as an Internet-based application built on the
foundations of Web 2.0 technology that allows for the creation, exchange and
sharing of user-generated content (Kaplan & Haenlein, 2010). The unique features of
social networking sites have allowed businesses to build relationships and engage
with customers like never before (Macarthy, 2013), therefore providing businesses
with a good foundation for effective customer relationship management (CRM).
There are two key components to effective customer relationship
management strategies. The first is the firm’s competence in knowledge
management, which is the collection, analysis and application of customer
information from its database (Castronovo & Huang, 2012). Social networking sites
such as Facebook provide companies with insights, also known as metrics, of the
customers who interact with the company’s social networking page. Facebook
metrics are divided in to two main categories: page-level metrics and post-level
metrics (Dunphy 2013). Some of the ‘page-level’ metrics include total likes of the
page, demographic statistics, and locations of the customers who like the page
(Facebook, n.d.). These metrics provide companies with invaluable information on
the customers. While readily accessible to page administrators, insights are not
available to the public. Figure 1 illustrates of how some of these insights are
displayed.
With information such as the customers’ age group in hand, marketing
managers know exactly who their target audiences are and will be able to generate
online posts which are specifically tailored for their target groups. Through the use of
Facebook metrics, Yamaha Music School (The Mall BKP Branch, Bangkok,
Thailand) was able to create posts specifically tailored for their audiences and
increase their page likes by 30% in just three months (Yamaha Music School The
Mall BKP Facebook Page, 2013). These new page likes represent the potential for
the school to reach out for more customers and therefore increase their market
share.
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Figure 1. Page-level insights on demographics and locations of the people who ‘liked’ the fan page of Yamaha Music School, The Mall BKP Branch in Bangkok, Thailand (Yamaha Music School The Mall BKP Facebook Page, 2013).
Apart from the page-level metrics, which provide information of the people
who liked the page and reflect the page overall performance, post-level metrics can
also be obtained. Post-level metrics reflect the performance of each post measured
by the level of engagement of the audiences. Figure 2 illustrates how some of these
post-level metrics are displayed.
Figure 2. Post-level insights reflecting the performance of each post of Yamaha Music School, The Mall BKP Bangkok, Thailand fan page (Yamaha Music School The Mall BKP Facebook Page, 2013). One of the ways in which post performance can be measured is through the
use of Talking About This metrics (please refer to Appendix A for more information
on selected Facebook’s metrics). Posts that receive a high score on Talking About
This, in general, contain information or idea that customers like and are interested in.
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Knowing what the customers like or dislike, marketing managers will have a good
idea on what to do and what not to do. In the case of Yamaha Music School,
receiving high score on a post related to the launch of a new course suggests that
the course is well received by the customers and that the launch should be made as
soon as possible. The school will be able to increase their market share as new
customers enroll in the new course.
The source of marketing metrics is not limited to only Facebook. Through the
use of third party websites, metrics of other social networking sites such as Twitter,
Instagram and Google+ can be obtained. A good example of such third party website
is simplymeasured.com.
Figure 3. Sample report on Instagram metrics by simplymeasured.com. (Simply Measured, 2012)
Figure 3 illustrates how simplymeasured.com provides users with reports on
number of likes and comments on each photo posted on Instagram. These data are
most useful to companies that sell physical products. Products whose pictures
receive the highest amount of likes tend to be the ones that are mostly preferred by
the customers. This signals production managers to execute measures necessary to
prevent those products from being out of stock and hence the lost in market share,
as customers would buy products from the competitors instead.
The feature of social networking sites that allow for the creation of user-
generated-content also provides marketing managers with invaluable resource for
product development and innovation (Boitor et. al, 2011). With a better
understanding of what the customers want, companies have a greater chance to
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release desired products and maintain, or even increase, their market share. Figure
4 shows how Biore Skincare uses Facebook for crowdsourcing.
Figure 4. Biore Skincare using Facebook for crowdsourcing. (Spiegel, 2011)
The second key component to effective CRM is the firm’s competence in
relationship marketing, which is the development and maintenance of intimate
relationships with the customers over time (Castronovo & Huang, 2012).
Social networking sites provide companies with channels that allow them to
directly communicate and build relationships with their customers (Golfoil & Jobs,
2011). Moreover, a company’s presence on social networking sites causes it to be
perceived as more personal, encouraging customers to interact and build relationship
with (Campbell et. al, 2013). With the ability to communicate, firms have the
opportunity to listen to their customers and respond accordingly. This is done by, for
example, replying to customers’ comments and direct messages on Facebook and
Twitter.
Starbucks is a very good example of a company that uses social media to
communicate and build relationship with their customers (Grand Social Central, n.d.).
Most of their tweets on Twitter are directed toward individual customers, replying to
his or her concerns and comments (Gembarski, 2012). In 2008, Starbucks launched
their own social networking page called “My Starbucks Idea”. The page allows
customers to provide Starbucks with ideas on how to make the business better, and
the selected ideas will be launched. Some of the ideas given by customers include
getting free drinks on your birthday and buying ten cups of coffee and get the
eleventh cup for free. My Starbucks Idea page helps the company build relationships
with their customers by showing that Starbucks is willing to listen to their customers
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and that the customers’ requests are not going unheard. As a result of their effort, old
customers keep coming back to Starbucks for more coffee (Grand Social Central,
n.d.). When customers feel that the company is listening to them, they feel valued
and become loyal to the company (Estep, 2010).
2.2 Promotions and Advertisements on Social Networking Sites
Social networking sites provide companies with channels where they can
promote their products at minimal cost. Youtube is a very good example of such
networking site. Over four billion videos are viewed on Youtube everyday and 60
hours of video are uploaded on Youtube each minute (Bullas, n.d.). Rokenbok, a
company selling high-end robotic toys, is one of the companies that uses of Youtube
to promote their products. It is difficult for them to demonstrate the sophisticated
construction system of their toys using only static images. Their solution was to post
video clips on Youtube showing customers how their products work. This proved to
be a successful promotion strategy because more customers visited their website
after the clips were launched and 50% of their customers are from Youtube alone
(Youtube, n.d.). This is an example of how Youtube can help businesses expand
their market share.
Promotions and advertisements are especially effective when they are
launched on social media because they have the potential to be shared and go viral.
Users often share posts they like to friends that have similar interests (Berger &
Milkman, 2012). In the case of video advertisements, users will share videos of a
product to friends whom they know are also interested in the product. Social
networking sites therefore have the ability to spread advertisements to potential
customers who would most likely purchase the product.
Video advertisement is not the only form of advertisement found on social
networking sites. Text and image advertisements such as Facebook Ads, shown in
Figure 5, have also gained popularity over the past few years. When creating
Facebook Ads, companies have the ability to target the ads to specific groups of
audiences. Some of the basic targeting parameters are the audiences’ locations, age
and gender while the more advanced parameters include audiences’ interests and
relationship statuses (Facebook, n.d.).
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Figure 5. Example of Facebook Ads. (Synergi Design, n.d.)
Once targeting parameters were registered into the system, Facebook will
scan for profiles that match with the given information and users with the targeted
profiles will be shown specific ads from various companies (Klosowski, 2013). For
audiences’ “interest” parameter, Facebook will look at pages that the users ‘like’ and
segregate them into different interest groups (Klosowski, 2013). The ads targeting
strategy used by Facebook is especially effective because advertisements that
Facebook users see are often related to their interests and lifestyles, increasing the
chance for users to click through the ads (Diffley et. al, 2011).
Tough Mudder, a company hosting obstacle-course events based in New
York, is an example of a company that builds customer base though the use of
Facebook Ads. With the total startup fund of $10,000, $8,200 was primarily dedicated
to Facebook Ads (Lapowsky, 2012). According to Lapowsky (2012), the company
was able to lure almost 5,000 attendees to their very first event, which was a big
success on their market share expansion because only 500 were initially expected to
show up. It was calculated that for every dollar spent on Facebook ads by Tough
Mudder, the return was $5 to $10 (Lapowsky, 2012).
2.3 Electronic Word-Of-Mouth (eWOM)
One of the most important features of social networking sites is the ability to
facilitate the spread electronic word-of-mouth (eWOM). It is known that word-of-
mouth (WOM) is more effective in influencing purchasing decisions than any other
traditional advertising methods (Godes & Mayzlin, 2004). Consumers today
frequently visit social networking sites and weblogs for reviews on products or
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services before they make any purchasing decisions (Ratchford et. al, 2001; Lee et.
al, 2006).
According to Metcalf’s law, the broadcasting value of a network increases by
the square of number (n2) of users in the network. Therefore, a network with 100
users is worth a hundred times more than the one with 10 users, provided that there
is any form of two-way communication between the users. Moreover, Reed’s law
states that the value of a network increases by even more than n2 when the network
allows for the formation of groups and communities via the inter-communications
among users. This is the very case for social networking sites, which allow users to
create communities, groups and subgroups within the site (Tariq & Wahid, 2011).
Since the number of users in social media increases all the time, it can be inferred
from Metcalf’s law and Reed’s law that social media actually holds significant value
for marketers in terms of advertisement broadcasting and positive eWOM spreading.
The power of word-of-mouth can be explained by using Cialdini’s principles of
persuasion. Social proof principle suggests that people are more likely to purchase a
product or service if everybody else is also using it (Polanski, n.d.). Therefore in the
case of eWOM, the greater the amount of positive reviews of a brand found on blogs
and social media, the more likely consumers would trust and use its products (Gilfoil
& Jobs, 2011).
Krispy Kreme, a global doughnut retailer, is one of the companies that
successfully used eWOM to market their doughnuts. The brand heavily launched
grassroots campaigns on social media and avoided using traditional marketing
methods such as TV and radio ads. An example is their “Think Inside the Box”
campaign launched in the UK in March 2012. As part of the campaign, customers
were encouraged to post their favorite work disaster or triumph on Krispy Kreme’s
Twitter and Facebook page and winners of each day will receive a dozen-box of
Krispy Kreme doughnuts for free (The Drum, 2012).
By the end of 2012, more than 42 million Internet searches for Krispy Kreme
were conducted and their campaigns were massively shared online. Moreover, their
Hot Light mobile app was downloaded over 230,000 times within one year after it
was launched as a result of their social media marketing (Peer Index, n.d.).
Numerous amount of positive word-of-mouth that circulated on the Internet and high
number of app downloads acted as social proofs for Krispy Kreme, inducing even
more WOM circulation and app downloads. The massive positive eWOM circulation
represents the potential for Krispy Kreme to expand their market share.
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By allowing users to assess contents and share opinions with one another,
social media has greatly contributed to the emergence of opinion leaders, consumers
with the ability to greatly influence the beliefs and behaviors of other consumers
(Diffley et. al, 2011; Acar & Polonsky, 2007). Recently, marketers have used various
tactics to influence opinion leaders, hoping to initiate positive eWOM that would work
in favor of their companies (Castronovo & Huang, 2012). This marketing strategy
goes hand in hand with Cialdini’s principle of authority, which states that people tend
to follow suggestions given by real experts (Polanski, n.d.), and in the case of social
media, opinion leaders. Moreover, Richins and Root-Shaffer (1988) have stated in
their report that opinion leaders actually do facilitate the spread of word-of-mouth.
When Novartis, a pharmaceutical company based in Switzerland, planned to
launch Prevacid®24HR for the treatment of frequent heartburn in 2009, they also
planned dominate the market. In order to achieve this goal, they chose to ignite
positive eWOM by offering a group of opinion leaders who are frequent heartburn
sufferers a 2-week product trial and have them upload video diaries of their trial
experiences online. As a result, Prevacid®24HR became the second branded OTC
heartburn treatment in the years 2009 and 2010 (Affinitive, n.d.). This shows how
opinion leaders and eWOM can greatly contribute to the increase in market share.
Tie strength, or the strength of an interpersonal relationship, also plays an
important role in influencing the spread of word-of-mouth (Brown & Reingen, 1987).
Because social networking sites allow users to build online network based on the
connections they have in the real world, the ties between the users on social media
are very strong. The stronger the tie, the greater the influence word-of-mouth has on
the users (Brown & Reingen, 1987).
Users that are highly connected online are the ones that have many friends.
The more friends, the greater the potential a user has to develop relationships, links
and even more friends. People that know each other through social networking sites
can eventually become friends in the real world. With the ability to facilitate
relationship development and network expansion, social networking sites are ideal
media for marketers to generate and dissipate electronic word-of-mouth in relation to
a product or service (Barabasi & Bonabeau, 2003).
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3. The Risks of Social Media The benefits of social networking sites also come with significant amount
risks, which can be divided into five major categories: risk concerning the company’s
system security and disclosure of confidential information, risk concerning company’s
fake social network accounts and account hackings, risk concerning laws and
regulations, risk concerning employees’ unproductivity, and risk concerning the
propagation of negative eWOM. These five groups of risks pose major threats to both
the company’s performance and reputation.
3.1 Risk Concerning Company’s System Security and Disclosure of Confidential
Information
Risk in regards to the company’s system security and leakage of confidential
information often involves the actions of the company’s own employees. According to
a study on employees using social networking sites, 14% have posted status
updates or tweeted about their work and 28% have posted photos of colleagues or
business activities (Simpson, 2012). This poses a great threat to organizations, as
there are chances for those status updates or photos to contain inappropriate
information that should not be exposed to the public. In 2012, Netflix CEO Reed
Hastings caused a big commotion in the financial community by announcing on
Facebook that Netflix has exceeded 1 billion viewing hours in one month. Many
people questioned the appropriateness of the CEO’s action of divulging such
sensitive information on social media (Breuer, 2013).
The emergence of new features on social networking sites has also made it
more difficult for managers and employers to prevent confidential information from
leaking into the public. In 2010, a feature that enables the integration between Skype
and Facebook was made available (Pocket-Lint, 2013). This poses threat to
organizations in the sense that the camera might pickup any inappropriate
information behind the user and broadcast it online (KM World, 2012).
A company’s privacy can also be breached through the actions of malwares.
These malwares often come together with social networking apps (Channel Insider,
2011) or are embedded in links circulated on social networking sites (Westervelt,
2013). Employees can be lured to click on such links while using the company’s
network and unknowingly allow malwares into the company’s system. According to a
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survey, over 50% of respondents said their organizations had been attacked by
malwares as a result of employees’ use of social media (Channel Insider, 2011).
Staples, an office supply chain based in the United States, is one of the
companies that got attacked by a malware. It was reported that the malware initially
spread via spam messages and links on social networking sites. When the malware
successfully infiltrated Staples’ system, it spread quickly throughout the
organization’s network and frequently changed itself to avoid being detected by
antivirus programs. This incident had caused a great deal of trouble for Staple’s IT
department in trying to stop the malware from pirating the company’s data
(Westervelt, 2013).
3.2 Risk Concerning Fake Social Media Accounts and Account Hackings
The lack of engagement in social media is also a form of risk for
organizations. Because it is very easy to set up an online social networking account,
a lot of people have tried to forge companies’ social networking accounts for their
own benefits. This is what exactly happened to the Bank of America. In November
2011, a Google+ page using the name “Bank of America” was seen posting a series
of satirical updates (Huffington Post, 2011). The fake page used the bank’s official
logo, address, and phone number, so it is therefore difficult that tell, at first, that the
account is a counterfeit. Even though the page remained online for only a bit more
than two weeks, the negative image of the Bank of America remained (Button, 2012).
At the time when it was the victim of the fake page, Bank of America also had
its own Google+ page, but did not engage with the site in any way. The page was left
blank, having almost no content on it. This shows that not engaging in social media is
a risk on its own (Button, 2012).
What is more dangerous than a fake social media account is people hacking
into a company’s official social network page and post malicious contents.
Companies usually spend a great deal of time and effort on leveraging their presence
on social media. This includes building reputation, followers and fan base, which can
be badly severed by a single attack.
Such incident happened in February 2013, when Burger King’s twitter
account was hacked by an unknown individual. A tweet stating that the account was
sold to a rival hamburger chain McDonald’s was posted and the profile picture was
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changed to McDonald’s logo, creating great confusion to the customers. The tweets
continue for about one hour before Burger King was able to regain control over the
account (BBC, 2013).
Burger King was lucky that the hacking was easily detected. However, some
of the hackings can be very subtle and hackers can use the company’s social media
account for their own benefit. An example would be sending private messages to
customers luring them to transfer money to the hackers own account. These kinds of
actions are detrimental to the company’s reputation and managers should use any
means necessary to prevent them from happening.
3.3 Risks Concerning Laws and Regulations
Because it is easy for an employee to post on a company’s social media
page, it is also easy for him or her to inadvertently violate a third party’s copyright by
posting contents in which the creator might not wish to share. Even though unwanted
posts can be deliberately deleted off a social media page, once a lawsuit begins,
post deletion bears no benefit to the company (Goldberg, 2011).
A lot of attention regarding copyright infringement is being directed to
Pinterest, a social media platform that allows users to share and re-share (repin)
pictures and video contents. Pinterest supporters claim that the sole purpose of the
platform is just to share contents with people who have similar interests. However,
detractors argue that contents can be shared and re-shared on Pinterest without the
originator being correctly credited. If this is the case, the person who does the “repin”
could face liability. Managers should be aware that illicit repins by an organization
could lead to the lost of money and reputation (McHugh, 2012).
3.4 Risk Concerning Employees’ Unproductivity
Even though an increasing number of social media analysts have argued that
social media actually helps increase employees’ productivity, their risk in decreasing
productivity should not be overlooked. According to a study on Irish employees, more
than 80% spend almost 60 minutes of the working day for personal social media use
(The Irish Times, 2013). The problem arises because most organizations lack a clear
policy to govern the use of social media during working hours (Simpson, 2012). More
details on social media policy will be discussed later in this report.
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3.5 Risks Concerning Propagation of Negative eWOM
Even though positive word-of-mouth does have remarkable benefits for
companies and their market share, positive word-of-mouth need not be the only thing
propagated throughout online communities. A lot of times, businesses are negatively
affected by the spread of negative word-of-mouth on the Internet.
One extreme case is when Domino’s Pizza, an international pizza franchise,
faced a social media crisis. In April 2009, two of Domino’s employees in Conover
N.C. franchise uploaded a video of themselves on Youtube doing nauseating things
to a sandwich that would be delivered to one of their customers. The video instantly
went viral and Domino’s suddenly faced one of the worst social media crises that a
food retailer could be facing. What made things worse was that Domino’s did not
have any form of presence on social media at the time and thus did not have any
channel they could use to broadcast their corrective actions to the public. This
incident heavily devastated Domino’s reputation and posed a great threat to their
customer base retention (Agnes, 2012).
Consumers today are well aware of the power of social media (Campbell et.
al, 2013) and even use social media to threaten businesses. Coming back to
Yamaha Music School (The Mall BKP branch) in Bangkok, Thailand. In May 2013, a
customer enrolled in a singing course was dissatisfied with how the teacher is
frequently absent. As a result, she threatened the school by telling the manager that
she would post a Facebook update telling people not to come to the school if the
teacher is not immediately replaced (Siripoke, 2013). This shows how easily negative
electronic word-of-mouth can be initiated and that consumers now have more
negotiating power due to social media.
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4. Social Media Risk Management Because of the considerable amount of risks associated with social media
marketing, companies should be equipped with tools and policies that would enable
them to effectively manage social media risks in a timely manner.
4.1 Being Present on Social Media
The easiest way for organizations to manage social media risks is to be
present on social media. As discussed earlier that Domino’s Pizza was not able to
retaliate the spread of negative word-of-mouth on online communities because they
were not present on social media. When Domino’s came to be aware of their
employees’ misconduct, they immediately took actions (Agnes, 2012). However, due
to the lack of presence on social media, they were not able to publicize their
awareness of the mistake and the corrective actions that they took. More outcries
resulted and upset customers heavily attacked the company because Domino’s was
thought to be ignoring the situation (Agnes, 2012). Had Dominos been present on
social media, things would not have turned out the way they did.
According to Steven Ramirez, the chief executive of a customer
communication consultant company called Beyond the Arc, an organization should
establish its presence on new social media platforms as soon as possible to prevent
ill-intentioned individuals from using social media to forge the company’s name and
ruin its reputation (Button, 2012).
4.2 Actively Engaging in Social Media
Only being present on social media is not enough to effectively manage
social media risks, organizations must also spend time and effort in engaging in
social media and respond, publicly, to any harmful comments as soon as possible.
Bank of America, introduced in the previous section, was the victim of fraud social
media account because they did not sufficiently engage in social media activities.
It is best for organizations to use social media to monitor customers’ and
competitors’ activity online. By doing so, companies not only gain insights on their
customers and competitors, but also would be able to respond to unfavorable
contents timely manner. In order to effectively counteract the negative comments,
employees should be educated on how to deal with detrimental contents (Button,
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2012) and managers should be reported as soon as possible if the contents seem to
go out of control.
JetBlue Airways Corporation, an American low-cost airline, is a company that
effectively uses Twitter to monitor customer’s dissatisfaction and take actions within
one or two hours. An example is how they responded to a customer’s tweet about a
delayed flight by asking the customer to provide them with the flight number. Once
the flight number was submitted, JetBlue was able to provide the customer with the
exact flight schedule within an hour. Even though nothing can be done about the
delayed flight, JetBlue was able to reduce the customer’s anxiety and stop the
negative word-of-mouth from spreading (Sprung, 2013).
By being present on and actively engaging in social media, companies are
able to mitigate risks concerning fake social media accounts and the propagation of
negative electronic word-of-mouth.
4.3 Establishing a Clear Social Media Policy
Organizations must have a clear social media governance policy. According
to Simpson (2012), a good policy should address social media use both during and
outside work hours, define parameters of permitted use at work, outline prohibitions
in regards to online posts, and restrain employees from making abusive comments
about third parties during work hours. Moreover, the company should clearly state in
their policy that employees are prohibited from making derogatory comments about
the organization, colleagues and customers, disclosing confidential information
belonging to the organization, and disclosing information about colleagues without
written consent. Penalties and disciplinary actions should be made clear to the
employees if any conditions in the policy happens to be violated. Furthermore, in
order to prevent the organization’s social media account from being hacked, the
account password should only be given to the employees responsible for the
company’s social media activities.
Well-crafted social media policies allow companies to mitigate risks
concerning system security, social media hacking, disclosure of confidential
information, laws and regulations, and employees’ unproductivity. However,
companies must be careful not to make their policy overly broad that it violates the
employees’ rights. It is best for companies to consult professionals specialized in the
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field of employment-practices liability when drafting social media governance policies
(Strickland, 2011).
5. Conclusion
Social media has become invaluable marketing tools for businesses and
organizations operating in the modern business environment. By facilitating customer
relationship management, advertisement broadcasting, and the spread of positive
electronic work-of-mouth, social media not only helps companies maintain their
market share but also helps them expand their customer base.
Despite their positive attributes, social media also comes with considerable
amount of risks. These risks can be divided into five main categories, namely the
risks concerning system security and disclosure of confidential information, fake
social network accounts and account hackings, laws and regulations, employees’
unproductivity, and propagation of negative eWOM. In order to mitigate these risks,
companies must actively engage in social networking sites, monitoring both
customers’ and competitors’ activities on social media. Furthermore, companies must
also have a clear social media governance policy that outlines what employees can
and cannot do in regards to online social networking activities along with indicating
what the consequences are if the terms and conditions outlined in the policy are
breached.
Companies must keep in mind that social media marketing must be
integrated into the company’s overall marketing communication program to create a
clear marketing message that goes in the same direction with the companies
marketing objective (Castronovo & Huang, 2012). It is also advisable for companies
to hire staffs specifically for social media marketing, who would be responsible for all
the social media activities and serve to monitor the customers’ and competitors’
social media activities online.
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i
Appendix A: Facebook Metrics These are some of the page-level metrics marketers can obtain directly from Facebook. No. Metrics Definition 1 Total Likes The number of unique people who like your Page/Post as
of the last day of your selected date range. 2 Friends of Fans The number of unique people who are friends with your
fans as of the last day of your selected date range, including your current fans.
3 Talking About This
The number of unique people who have created a story about your Page/Post during your selected date range. A story is created when someone:
• Likes your Page • Likes, comments on, or shares your post • Answers a question you've asked • Responds to your event • Mentions your Page • Tags your Page in a photo • Checks into or recommends your Place
4 Total Reach The number of unique people who have seen any content
associated with your Page/Post (including any Ads or Sponsored Stories pointing to your Page) during your selected date range.
Note - Metric definitions are taken from http://www.facebook.com. Reference: Facebook (n.d.) Getting Started & General Page Metrics. [Online]. Available from: https://www.facebook.com/help/383440231709427 [Accessed 13th August 2013].