Creating ProductsThey Want:Consumer DrivenInnovation via SocialMedia Monitoring

8th in the Social Media ROI Series

Authored in Conjunction with Deb Robinson

With Connie Bensen

LLEETT’’SS TTAALLKK::Social Media ROI

Whitepaper

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

Executive Summary:

A company’s prime objective is to take a product to market and sell as much as possible. Imagine if the product was not only snapped up,but consumers eagerly recommended it to their friends. This would significantly reduce the company’s marketing and public relations costs.

Whether a product is in its conceptual phase or near refinement, it is important to consider the wealth of insight available in social networks.A social media monitoring tool can gather the conversations and tap into the collective intellect of consumers at large. It provides brandswith the opportunity to learn directly from their customers, target markets, that of competitors and the industry as a whole. In addition,companies can take it to the next level and invite their advocates to give their input and help them create new products. In this world ofemerging media and technologies, users expect to be more engaged with the companies that make their products of choice.

Dell is an excellent example of how a brand can gather and utilize customer’s ideas. In 2007 Dell implemented IdeaStorm, a social mediaoutreach project. Dell consumers provided invaluable feedback and voted on their favorite ideas. While listening to their customers, Dellwas able to create customized PCs that met the needs of consumers. Since IdeaStorm’s inception, Dell has gathered more than 10,000ideas and implemented approximately 400 of them. It has allowed them to connect their product development directly to their customers.

This Whitepaper is the 8th in Alterian’s ROI series. Let’s Talk! about using social media monitoring for product development and findingnew markets.

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

In order to be successful, companies must maximize their product development cycle and reduce excesscost. In lean economic times, it becomes more important than ever to leverage the wisdom of the socialweb. Can you afford to take a product to market that does not fit what consumers need and want?

A social media monitoring tool provides specific demographic data about consumers as well as thesentiment around the conversations they’re having. It provides measurable returns by shortening theproduct development cycle, creating more saleable products and reducing marketing costs. This whitepaper will provide an overview of the following ways that a social media monitoring tool directly impactsthe return on investment in product development:

• Reduce traditional market research costs

• Shorten the product development cycle

• Post-production feedback

• Identify influencers & advocates

• Discover new markets

Objectives of Using Social Media Monitoring for Product Development

The overarching theme of this series of white papers has been listening. It is one of the first places to startwhen creating a new product or improving an existing one. It is tempting to limit input to that of thedevelopers and the engineers. They know what they want to build, but will it be innovative enough to winover consumers?

Every company should take some time to consider what people are saying online about their brand,competitors and the industry. Online conversations provide a wealth of information about consumers’opinions of your brand, products and the direction your company is taking. Many companies are workingdirectly with consumers to improve their products by gathering feedback from online conversations duringthe development phases and at pre- and post- release. If there are no conversations about your brand,then gather industry related conversations; they provide a high-level look at direction that your productsneed to go and the differentiators that the market is demanding. Lastly, a social media monitoring tool alsocan provide considerable insight into what your competitors are doing. This insight is invaluable whenconsidering product direction. The next white paper in the ROI series will cover competitive analysis in-depth.

Introduction

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

The social web creates the perfect incubation area for new product ideas. People from all walks of lifegather in social networks such as Twitter, LinkedIn and Facebook to share information about their likes anddislikes of products and brands. Traditional market research relies on surveys, focus groups, filtered contentsources and aggregate data about a particular consumer “profile.” The selection process of theparticipants, survey-writing and usage of acquired data are all based on the subjective bias of theresearcher. In addition, traditional market research is very expensive.

In contrast, the organic nature of social media conversations provides unique value. Consumers openlyshare information about brands, comparing them and making suggestions in real time. They contribute tothe conversation at large with no reservations or filters in place. Most importantly, they participate becausethey want to. Rather than focus groups that are pre-selected, consumers gather in social networks based oncommon interests. They are frequently passionate about their beliefs and more than willing to providefeedback in order to improve the products they use. In many cases, they are so knowledgeable andinfluential that they are selling the brands’ products for them.

A social media monitoring tool allows one to segment the data and identify demographic trends around abrand.

The following Theme Clouds show the words that women used in regard to McDonald’s McCafe products.The larger the word, the more frequently they were used in the conversations about the brand. The seconddiagram shows how each word can be drilled in to view specific results and gather direct feedback.

The following words offer excellent opportunities to gather product development ideas: iced, free, mocha,love, chocolate, breakfast, tea, vanilla and cheese.

Reduced traditionalmarket research costs

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

A traditional product development cycle can take many quarters, if not years, and the investment ofresources considerably increases the cost of a product. This excess needs to be recouped when theproduct is taken to market. It is now possible to shorten the development cycle and, at the same time,increase the probability of having a more successful product life cycle.

Again, the answer lies in having the product team listen to online communities. Consumers are more likelyto provide feedback, and it is the perfect opportunity for the product team not only to listen, but also toparticipate. This will reduce the time needed to research new product ideas, vet feature lists (provide theopportunity to vote) and test the pre-release version (beta). Many companies find that when they engagetheir customers, not only do they lower production costs, but they build brand loyalty and generateexcitement about the product.

When consumers talk about the products you are creating and express their anticipation, they can reduceyour marketing costs significantly. Consumers will share their excitement with their friends, which buildsyour brand visibility. This phenomenon can greatly assist with your information gathering phase as yourinformal online focus group grows.

For example, a brand can create a private or public community and use a social monitoring tool to identifymain themes and sentiment. Many social media monitoring tools allow the ability to add custom RSS feeds.This allows you to analyze the content of the conversations. Specific topics of concern to the usercommunity can be identified. It also offers the ability to see patterns in feedback on sentiment about theproducts.

Shorten the productdevelopment cycle

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

There are additional benefits from utilizing the social web; once the product is on the market loyalcustomers engage others by sharing their experiences with the production process. These brand advocatesare influential because they had direct experience in the creation of the products. Consumers shoppingonline are more likely to purchase a product when it is recommended by a friend; this is especially true ifthe friend helped in the product development phase.

Additionally, post-production feedback can help work out any bugs. Loyal followers who were part of theprocess will reassure those with concerns. They can confidently speak on behalf of the company, thuspreventing customer backlash and negative feedback when there is a problem.

Toyota provides a great example of failing to listen and refusing to address negativefeedback. When the public heard Toyota was trying to save money by not recallingdefective cars, the outrage developed into thousands of comments, discussions andarticles across the internet. Toyota’s failure to listen and build a community was not only amissed opportunity in terms of product development, but a costly mistake when the publiclearned of the product recall. Through listening to customer feedback earlier, Toyota wouldhave saved more money and prevented the costly response from consumers.

Another benefit of post-production feedback is that real-time feedback enables companiesto make changes in the supply chain. Brands no longer need to wait months to see thefruits of market research. Changes to a product can be made at iteration based on

consumer feedback. With a strong online community, self-support among the community membersreduces customer service costs and helps a brand identify negative and positive tone.

The following chart shows the tone of the results. The negative ones offer the obvious place to dig into. It’salso important to not overlook the positive ones. They will provide many clues as to what is effective alongwith hints as to what additional features consumers desire.

Post-production feedback

With a strong online community,self-support among the community members reducescustomer service costs and helpsa brand identify negative andpositive tone.

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

The ability to find influencers and engage with them and their communities takes product development tothe next level. As you work with them to understand their needs, you build customer loyalty in addition todeveloping a better product.

Influencers, also known as brand champions, are out there promoting your product, and identifying them iskey. Reviewing the demographic data associated with the search results can help you learn who and wherethey are. Prospects are more likely to adopt your product if they read a peer review or get a reference fromfamily or friends.

Relationships with influencers and online communities are based on trust. People buy products when theylearn from others’ positive experiences. By following influencers and their communities, companies canexpand their reach as they learn the sentiment towards a product, as well as the demographics andgeography of those who use it. This information can be used to create customer profiles.

A review of the domains where your product is most frequently being discussed will pinpoint onlinecommunities that can provide assistance with product development.

Case Study: Microsoft Crowdsources LiveWriterDevelopment

In 2007 Connie Bensen was blogging about effective online social mediatools. She blogged about LiveWriter, a Microsoft product in beta. Hercommunity experienced some problems and left comments on the post.

Sean O’Driscoll, GM of Marketing at Microsoft, was listening to the socialchannels. He commented on the blog post and forwarded it to the development team. The leaddeveloper contacted Connie and asked for suggestions on what would make the tool better. Conniesurveyed the community and compiled a list of problems and feature requests.

One morning Connie awoke to a message on Facebook from the lead developer of LiveWriterletting her know about the changes they had made to the updated release that had just come out,including changes they made based on her suggestions and those of her community.

This simple note resulted in Connie heavily advocating for LiveWriter. She blogs about it on a regularbasis as a must have tool. She has also continued providing feedback.

Key Takeaway: Microsoft not only listened, responded and requested feedback, but mostimportantly, they followed through! This created an advocate that has been influencing people touse the product for three years!

Identify influencers & advocates

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

Are you interested in new markets? Social media monitoring reveals potential markets by identifyingdemographics and online communities with a need for your products. It is important to set up broadsearches for industry keywords. Don’t limit the language to specific brands, but include products andfeatures. A social media monitoring tool can also help you identify unexpected uses of your products.

Social Media Marketing provides key data that enables a company to refine a product and expand its reachat the same time. Listening to your market and online communities helps guide market research andcustomer engagement in the process, and it builds brand loyalty for post-production. Having beeninvolved in the product development process, many influencers will sell your product for you. Beyonddeveloping existing products and markets, using a social media monitoring tool leads to identifying newmarkets. Instead of limiting idea generation to an internal team and costly market research, the ability toleverage existing online conversations leads to innovative products that consumers need and want.

Discover new markets

Conclusion

© 2010 Alterian. All trademarks belong to their respective owners.

The ROI of Using a Social Media Monitoring Tool

Consumer Driven Innovation via Social Media Monitoring

About the “Let’sTalk” Series withConnie Bensen

Social Media marketing is providing a whole new dimension for brands to connect with consumers. Thesocial web is a vast entity and every marketer needs a tool to harness the information in the most costeffective and efficient manner. A social media monitoring tool offers the ability to maximize the digitalportion of your marketing budget in order to create, execute, measure and report on a social mediastrategy.

The Let's Talk Series, by Connie Bensen, is a series of 10 whitepapers describing the variety of ways thatmarketers can increase the ROI of their marketing efforts. Topics will include how to use a social mediamonitoring tool for SEO, Lead Generation, Social Media campaigns, Customer Service, CompetitiveInsight, Corporate marketing, PR and reputation management, etc.

Connie is the Director of Social Media and Community Strategy at Alterian, which provides marketingsoftware to help brands engage with their customers. She is a key voice amongst online CommunityManagers. Her blog, www.conniebensen.com is recognized as a leading resource for cultivating onlinecommunities, providing best practices for this emerging role and it is listed in Forbes.com as one of the 20Best Marketing and Social Media Blogs by Women.

The 8th paper in the ROI series was written in conjunction with Deb Robinson. Deb is anemerging media consultant who helps organizations integrate and build new mediacommunications plans and strategy. She is an early-adopter, trail runner, and baker, andshe lives in Denver, CO.

Alterian’s SM2 is a social media monitoring and analysis solution designed for PR andMarketing professionals. SM2 helps you track conversations, review positive/negative

sentiment for your brand, clients, competitors and partners across social media channels such as blogs,wikis, micro-blogs, social networks, video/photo sharing sites and real-time alerts.

Alterian (LSE: ALN) empowers organizations to create relevant, effective and engaging experiences withtheir audience that help build value and reinforce commitment to their brand, through the use of theAlterian Integrated Marketing Platform. Alterian drives the transformation of marketing andcommunications, making it practical and cost-effective for companies to orchestrate multichannelengagement with the individual.

Alterian’s unprecedented integration of analytics, content and execution through industry leading tools,such as the Dynamic Messenger email platform, SM2 Social Media Monitoring platform and the awardwinning Content Management solutions, enables companies to build integrated communication strategieswhich create a true picture of the individual.

Alterian works with marketing services partners, system integrators and agencies who recognize the needto plan and deliver coordinated customer engagement services in partnership with their clients. For moreinformation about Alterian, products within the Alterian Integrated Marketing Platform or Alterian’s PartnerNetwork, visit www.alterian.com or the Alterian blog at www.engagingtimes.com.

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