Social media strategist and CEO of The Social Executive Dionne Lew has written for Forbes, Leading Company, Smart Company, and is currently rated in the top 1% for global community influence by Kred. In other words, the woman you go to when you need a credible resource about social media.
Which is why we’re ecstatic she’s let us share this article she wrote for our Australian Firebrand blog.
Read on to find out why leaders who don’t embrace social media are missing out on much more than pictures of people’s food.
THE FUTURE IS SOCIAL
A common sentiment I hear echoed when I speak with senior executives about the importance of social media for business is that ‘well I’m successful and so are my peers and we don’t use it.’
There are a couple of problems here. While this can be true (and often is) a personal anecdote drawn from experiences under very different circumstances can’t be extrapolated to understanding current trends. More importantly, it fails to take into account that there are billions of new consumers coming onto the market who have never lived without social media.
Social media is 14 years old if you count established platform like LinkedIn, but online forums and networks predate this by many years. These people (consumers, voters) expect to find you in social not because you’re cutting edge, but just as we presume we’ll find inventory on shelves.
When Boston Consulting Group (BCG) put out its report on the internet economy in 2013 it showed that engaged, online businesses were outperforming peers by around 20%, a figure confirmed by Capgemini-MIT Sloane and McKinsey in 2014.
These figures are strong enough on their own, but only reveal part of the story since only businesses that were still around could be surveyed, this is called ‘survivor bias’ and it means the impact may be greater since many businesses folded as online emerged.
With two billion people already using social media you’ve got to take it seriously; but with a flood of ‘digital natives’ into the market and digital growing at double digit rates it’s going to be mission-critical for the future. Stewarding an organisation into the future is a leader’s role.
SOCIAL MEDIA SHAPES TRUST
We like to do business with people we know and trust, this much is not new. What’s new is the impact of virtual relationships on that phenomenon.
The Edelman Trust Barometer, with its hefty sample of 35,000, reports a decline in trust year on year in particular in institutions. Pew looked at trust from a generational perspective and found Millennials scored lower on trust than any other age group. On the other hand, trust in peers and subject matter experts is high and growing.
This is how it plays out. If I’m coming to see you and ask what café you recommend nearby, I am likely to act on that no matter how much clever marketing I get from other cafés in the area. From my perspective, I trust the advice because I know you gain nothing from giving me a good steer, other than the warm glow we get when someone likes a suggestion.
These conversations go on all the time in real life and there are billions of them happening in social media every day. In August last year for the first time Facebook reached a milestone in which a billion people were active on a single day.
The question is – does this virtual trust matter? The answer is yes. We trust a virtual recommendation as much as one we get face-to-face.
72% of consumers trust online reviews. Bazaarvoice and Kelton Research show Millennials trust the expertise of strangers even more than that of family and friends.
For example, if you’re booking a room on AirBNB you read the reviews, this is called user-generated content (UGC). These are strangers that you don’t know and are unlikely to meet, yet their experiences have the biggest bearing on where you decide to spend money. This trend doesn’t just apply to buying holidays and shoes. We’re seeing it play out in investment choices through business and into politics.
SOCIAL MEDIA INFLUENCES INVESTORS
Investors are influenced by research they find on social media, according to Cogent Research, 90 percent of high net worth investor groups use social media. The report showed a third of affluent investors use social media specifically for personal finance and investing purposes. Importantly as many as 70 percent changed relationships or reallocated investments as a result of content they’d found in the networks.
In the financial services sector Cogent found that 46 percent of investors who used social media did not have a financial advisor, 52 percent said they would connect with an advisor through social media.
From a brand perspective, a further 28 percent of investors said they would see a financial company as “innovative” or a “leader in the industry” for offering social options.
While in the US most Fortune 100 companies use social media and in the UK the FTSE100 Social Media Index shows 86% of FTSE100 businesses used LinkedIn as part of communications strategy, last year research by Web Profits on the social media activity of Australia’s top publicly listed companies found almost half the top 100 companies don’t bother.
Use is however growing.
A study conducted in 2013 by Beaton Research and Consulting for Zurich on use of social media for financial advisors showed a ‘123% growth in advisers’ usage of Twitter since December 2011 and a 74% growth in the use of LinkedIn.” (Arguably off a low base.) According to a joint Putnam-FIT Consulting Survey of Financial Advisors’ Use of Social Media nearly half of advisors using social media for business acquired new clients through social networking.
SOCIAL DRIVES BUSINESS GROWTH
Companies are also using social media for equity raising (within regulatory constraints) and business growth.
Social allows you to:
- Tell your story directly
- Identify value-added potential investors including past investors in comparable funds
- Engage with experts, potential investors, entrepreneurs, investment banks and intermediaries thought content, groups and mail at every stage of the investment cycle
- Grow a trusted network through common connections, reaching out to relevant people and by nurturing the connections you already have.
Australian security software company MailGuard recently grew the business into 27 countries using a LinkedIn-only strategy.
CEO of MailGuard Craig McDonald says one reason LinkedIn content is so powerful is that people tend to read content after hours when they’re more open and accessible, to the message as well as after hours communication.
A quick search for equity raising on LinkedIn puts you directly in front of relevant experts, groups and content whether you’re looking to attract funding or for the right opportunity to invest.
David Teten, Chairman of Harvard Business School Alumni Angels says social media is key to investment strategy and that of the 1,000 venture capitalists in the US actively seeking deals about 10-15% blog.
Social media can be used through the whole investment cycle to raise capital, originate investments, for due diligence and exit investment.
SOCIAL DRIVES SALES
In the past if you wanted to buy something like a new car, you’d do a bit of research then head off to speak with a salesperson.
Nowadays, as social selling expert Timothy Hughes points out, you can be 60 – 80% of the way through a buying cycle before you talk to someone.
Sales expert Ken Krogue says social shortens the sales pathway which typically requires six contacts before a prospect tips over, because extending a ‘real life’ connection into LinkedIn and talking there increases the number of touches.
When someone clicks on a profile and is also able to see that you’re publishing or sharing there’s also immediate resonance and a reason to engage. It takes cold calling pretty much out of the equation.
People also research products online but purchase offline, an effect that is called ROPO. Roughly two-thirds of people use the internet for price discovery and social media channels are of the most important and trusted sources of recommendations.
SOCIAL’S EMBEDDED IN A MULTI TRILLION-DOLLAR ECONOMY
It’s hard sourcing figures on social media value separate from digital and ecommerce because social media is part of a broader ecosystem, but the numbers are big.
BCG said that by 2016 online would contribute $4.2 trillion to the GDP of G20 nations, making it the equivalent of the fifth biggest economy worldwide. More importantly from my perspective, BCG said it would contribute 5.5% to GDP.
In the UK, the internet is already the second biggest economic contributor behind property contributing 10% of GDP. In Deloitte’s latest report the digital economy in Australia has been valued at $79 billion, 5.1% of GDP and bigger than agriculture, retail and transport.
The Australian economy has been bolstered by resources. A key question for Australia is how we remain competitive as that sector slows. Online is a critical part of that mix.
SOCIAL MEDIA IMPACTS MARKETS
In 2013, the Twitter account of Associated Press was hacked and a tweet was up for 2 minutes saying there had been a bomb at the Whitehouse. The Dow Jones plummeted and $20 billion worth of stock changed hands during the brief trading hiccup. This raised questions both about the security of Twitter and quality control of algorithmic traders.
In Australian that same year Whitehaven Coal dropped 6% after a fake press that claimed to be from the ANZ bank overturning a recent $1.2 billion loan to Whitehaven Coal that would have had a significant impact on its Maules Creek project.
Both Whitehaven and ANZ later confirmed the hoax, but not before $314 million was wiped off the share price and the company was placed in a trading halt. Moylan was subsequently investigated by the Australian Securities and Investments Commission (ASIC) for allegedly engaging in misleading and deceptive conduct.
Such events are creating shifts in the regulatory environment, probably slower than many industries would have liked. The lack of or in some cases misdirected guidance on social media by industry bodies has meant that many businesses have not had the confidence to set out and leverage opportunities.
In April 2013, U.S. Securities and Exchange Commission (SEC) announced social media could be used to let companies make corporate announcements. It’s important to note that disclosure laws vary in Australia, which has an ASX-first approach. Working closely with the Australian Securities and Investment Commission, in 2013 the ASX updated its guidance on disclosure, advising companies to monitor online for sensitive information.
In September 2016 Bloomberg announced customers would now be able to view a live feed of financial tweets into its terminals, the Twitter data will improve alerts and provide sentiment analysis and the ability to “graph historical Twitter volume related to securities or topics”.
SOCIAL MENTORS HELP SHAPE SOCIAL LEADERS
Despite these dramatic impacts there’s a low level of awareness in senior leaders about social media, a McKinsey Global Survey conducted last year found 31% believe CEOs sponsor digital. Fewer still use it even though social CEO positively impacts perceptions of trust, reputation and engagement.
- Weber Shandwick – 81% of executives want a social CEO.
- Brandfog – two thirds of customer’s trust companies with a social CEO more.
- Statista – 82% of employees think a social CEO positively shapes reputation.
Unfortunately, some leaders have been poorly advised on what social is, with a recent AFR report suggesting some Australian CEOs have signed up to fake followers.
As Ted Coine, author of A World Gone Social, says there are numerous problems with executives and other leaders doing a hack job on social, coming across as arrogant and broadcasting or sharing tweets clearly created by PR and not themselves. However, it’s a problem that can be fixed with a good social mentor.
Social is time intense and there’s nothing wrong with getting support, co-management makes sense for a leader but they still have to show up in person and be social.
With three billion Internet users and two billion on social and growing, a social CEO is a CEO for the times.