TSIA's executive director, Thomas Lah, asked me recently for my thoughts on how social media is most disruptive to technology companies, and to provide the single most poignant example of social media helping or hurting a product company.

A disruptive technology is an innovation that disrupts an existing market. The term is used to describe innovations that improve a product or service in ways that the market does not expect, typically by reducing costs, increasing revenue, transforming business processes or realigning strategies for a different set of customers or customer expectations. Does this sound like social media?

When asked about examples of social media helping or hurting product companies, a hundred social media "firestorms" went through my head. Social media firestorms are situations where a company debacle would not have occurred if social media was not available, or otherwise, where social media was the instrument used to inflame the situation. And there are plenty of examples. View Jeremiah Owyang's chronology, dating back to 2001, of brands that got "punk'd" by social media here. But if you take a closer look, there aren't very many good examples of technology product companies getting "punk'd" by social media except, of course, the most profound social media "rags to riches" story out there--inspired by Dell.

But first, let's look at five reasons why social media should be considered a disruptive technology. I know there are probably more reasons out there, so please leave your comments below and I will consider adding them to this post!

#1 Social Media Impacts Revenue and the Bottom Line

For many companies, one of the most significant reasons social media is disruptive is because it has either generated new revenue streams or helped reduce operating costs. Here are some great examples. Do you have others to share?

  • Lenovo attributed a 20% reduction in call center activity to use of their online support community (ReadWriteWeb).
  • Intuit introduced online community functionality into their TurboTax products, and due in part to the resulting word-of-mouth, they have seen unit sales increase +30% each year and have now integrated community into their other products like QuickBooks and Quicken. "Live Community" as it's known, allows customers to seek support, and in some instances, the customer can answer questions that Intuit isn’t allowed to answer because of regulatory restrictions.
  • In the last couple of years, Dell has sold $6.5 million in products through their Dell Outlet Twitter account.
  • TransUnion CTO John Parkinson said that his $50,000 investment in social media has avoided $2.5 million in tech support spending in one year (Social Text).
  • A Cisco study found that 43% of visits to their online support forum are in lieu of opening up a support case in traditional (more expensive) channels (ReadWriteWeb). (Note: cost per interaction in customer support averages $162 for phone support via the contact center versus $0.06 via self-service options according to the TSIA Benchmark).
  • Ebay found that participants in online communities spend 54% more than non-community users (ReadWriteWeb)


#2 The Ubiquity of Social Media Can’t be Ignored

Some think that, like Paris Hilton, social media is so popular simply because it's so popular. Others think that social media is so popular because it's actually useful. Whatever camp you're in, you can't ignore that the overwhelming ubiquity of social media among both consumers and businesses makes it a disruptive technology.

  • Facebook currently reaches 57% of the U.S. population, and the average visit length is 23 minutes. (Social Media Today)
  • 60% of all mobile internet time spent on social networks. (Ground Truth Social Survey 2010)
  • 25% of all Internet page views go to Top 10 Social Networks. (Experian Hitwise December 09)
  • Percentage of global 100 companies that use at least one form of social media: 86% (Mashable)
  • Facebook’s compound annual growth rate is 200%. If the current growth rate continues, the number of Facebook members on Jan. 1, 2013 will be 6.5 billion (world population in 2010: 6.87 billion) (All Facebook)


#3 Investments Increase Despite Most Companies' Inability to Demonstrate ROI

The rush to social media has lead to some operational and business process pain points for many companies. What's interesting, is that some companies continue to invest in social media without measuring or reporting on ROI. Unlike with most other customer channels, the pervasive and disruptive force of social media has changed the way business-use cases are laid out for management teams.

  • Forrester Research estimates that $716 million was spent on social media marketing in 2010, and the figure will reach $3.1 billion by 2014. At that point, social media will be a bigger channel than email or mobile.
  • TSIA Research estimates that 57% of the technology services industry will increase social media investments in 2011.
  • In 2010, a full 65% of tech services companies indicated that they haven’t yet measured or are otherwise unable to measure ROI, while 11% indicated they measured ROI--but didn't receive any--according to TSIA’s Social Media Survey.


#4 Balance of Power & Communication Preferences Shift

Without a doubt, people are changing where and how they receive information. Notable on many fronts--from getting updates on political turmoil from mobile Twitter apps, to the emergence of Wikipedia as a desktop resource--people have become more peer-oriented when it comes to acquiring knowledge. Social media has been the disruptive force that has enabled this significant paradigm shift.

  • 40% of patients doubted their doctor’s opinion when different from peer opinions in online forums (Pew Study 2010)
  • 50% of Facebook users login any day & spend 55 minutes on the site (Pew Center Facebook Study 2010)
  • Social networking sites account for over 60% of the total content sharing click-throughs, a bump up of over 16% from last year, making it the clear leader. (SocialTwist)
  • 85% of technology customers are reading, viewing or contributing to social content. (Forrester, June 2009)
  • Americans spent nearly a quarter of their time online on social networking sites in 2010, a 43% increase from a year earlier. (Nielsen Wire)
  • Percentage of business buyers that believe all companies should have a presence in social media: 93% (Buzz Marketing – Paul Dunay)
  • 8 out of 10 IT decision-makers say word of mouth recommendations are the most important source when making buying decisions. (Forrester)
  • Online support communities are now considered entrenched within technology companies: TSIA’s survey data shows that adoption has jumped from 36% in 2007 to 74% in 2010, and it is expected to reach 85% by the end of 2011. Online support communities and super-user programs like Microsoft “MVPs” have forever disrupted how and where many customers go for support.


#5 Voice of the Customer Takes on New Meaning

Question: Where would we be if we didn't listen to our customers? Answer: Unemployed. For at least the last decade, companies have tirelessly pursued the "360 degree view" of customers. Why? The more we know about customers, the better our products become, the more we sell, and the happier our customers are. Social media gives VOC new meaning because it disrupts previous notions of how and where we can learn from our customers, and opens up a broad new horizon for listening and responding in the socially connected world.

  • Crowdsourcing and customer feedback channels like Adobe's "Dear Adobe," Dell’s “Ideastorm” and Salesforce.com's "IdeaExchange" disrupt traditional customer feedback mechanisms by encouraging the submission of gripes, ideas and insights in a transparent environment. These channels have greatly benefited product development, marketing, services and other functions in the organizations that leverage them.
  • Listening & monitoring tools give companies new opportunities to learn from and connect with customers and prospects, from platforms that consolidate multiple accounts/streams/searches into one dashboard (think Tweet Deck, Hootsuite, Co-Tweet), to robust social analytics platforms like Radian 6, Buzz Metrics and Awareness Networks.
  • Conventional marketing wisdom tells us that a customer can share their sales or service experience with ten people. In the new era of social media, the means are available to share their experience with ten thousand people, making it an extremely effective—or risky—channel, and lending yet another definition to "voice of the customer."


Social Media Case Study: Inspired by Dell


Dell is a “darling” when it comes to social media industry case studies. Why? They are the de facto “rags to riches” story that bridges several market segments including consumer, enterprise, SMB and healthcare; and they offer an industry-leading example of “listening” to their customers in social media channels, from blogs to Twitter. And perhaps even more compelling is Dell’s approach to managing the oceans of new information that they uncover on a daily basis—from support requests and product feedback to complaints and high-level topic discussions.

In 2005, Dell’s service & support was apparently not what it is today. Combine the subsequent low-levels of customer satisfaction with the rapid adoption of social technologies that can spread discontent very far, very quickly, and you have the beginnings of a major brand backlash. That’s exactly what happened with the now famous social media firestorm of “Dell Hell.”

However, Dell weathered the storm because Michael Dell recognized the importance of social media—both the risks and the opportunities—and got personally involved, “we need to listen to customers—wherever we can find them—and we need to engage them. We need to do it quickly, and we need to do it as a company.”

One of the first moves by Michael Dell was to create a dedicated corporate blogger that would span functional groups. Dell nominated Lionel Menchaca for the new position, who found immediate success dealing with Jeff Jarvis and other connected bloggers by speaking "honestly and directly”—effectively giving the company a human voice.

But Menchaca and his growing team did much more than blogger outreach. They started a “listening & responding” program, and not exclusively for the prevention of “fires,” but for customer service & support, community-building and topic discussions with subject matter experts (SMEs).

However, their experience was not without its share of starts, stops and “what now’s.” When the small team finally hit the “on” switch for their listening platforms, four to five thousand conversations about Dell started landing in their lap—every single day.

They ended up creating a new position called Dell’s “Listening Czar” (an actual job title), which became one of the most important components of their social media program. The Czar is the overall integration lead for all of Dell’s social media functions—from their support forums  to Ideastorm —and leads a mix of resources from Dell and Radian 6 to segment out conversations for different business functions.

Dell's Social Media Command Center: Listening & Responding 2.0
Dell's Listening and Response Engine (Slide: courtesy of Dell)

Additionally, the Czar monitors a customized social media dashboard to identify trends & emerging issues. If a given threshold is reached, that is, if there are a lot of people talking or asking about a certain issue, a blog post on Direct2Dell is initiated.

Recently, they’ve expanded their program even further by launching Dell’s “Ground Control,” a social media command center focused purely on listening, engaging and responding to all-things-Dell in the social space.