Tag Archives: Chipotle

The Effect of Social Media on Business

7 Oct

I recently wrote about my reasons why I really enjoy Twitter and how I think it can be a great tool for people to use. One of the reasons I mentioned was that Twitter (or social media in general) holds companies accountable. Although briefly explained in my previous post, I wanted to write about it more thoroughly. Social media can effect business by having a substantial positive and negative effect on the perception of the organization as well as creating actual results that can lead to greater profitability in some cases.

First, I will start with the negative effects social media can have on business. I recently read a BBC article talking about how organizations are handling this new social media trend towards business. I think the opening sentence deserves to be repeated here:

“Once upon a time companies could afford to be rude. Unhappy customers would grumble to a few friends, withdraw their custom, but there was little else they could do.”

However, today, in a world of followers, friends, views, and fans, a company that behaves this way is likely to suffer serious repercussions that can seriously effect the business in negative ways. More and more customer service is becoming key to an organizations success. Look at Zappos. That is a company with customer service at its very core, which, because of that, was sold to Amazon for over $1 billion dollars in 2009. In this BBC article, the author describes the story of Dave Carrol whose expensive Taylor guitar had gotten broken by handlers at United Airlines. After “nine months of complaining” to United and receiving no compensation Mr. Carrol decided to take out his aggression online and make a music video and post it on YouTube. Within months the video received over 1 million views and now has over 9 million views! Think about how incredible this is. I bet more people have seen his video on YouTube bashing United Airlines than people have seen the company’s own commercials on TV.

Side note: In a brilliant move, Bob Taylor himself (from Taylor guitars) decided to use the attention from this video and make a video of his own to not only offer Mr. Carrol a sympathetic apology and state his support of him, he also gave helpful tips on how to travel with a guitar and tell everyone about their guitar repair service! Genius! Not only were they sincere and supportive of their customer they suggested helpful advice and reminded people of their services offered. Brilliantly executed.

What makes social media such a great environment for business is people’s recommendations; good or bad. For the most part, when the people who I follow on Twitter and am friends with on Facebook have opinions or recommendations about products or services, I listen, and so do their other followers and friends. That’s powerful. If my friend on Twitter tweets about horrible customer service they have received from somewhere I am sure to listen and second-guess giving that place my business. The flip side is true too. If my friend tweets about how great a place was, I will often make sure I make an effort to experience it for myself. This can be for any kind of business, from restaurants to specific products or services. This form of marketing is far more effective and concentrated than almost any other form.

Second, social media can also have a tremendous positive impact on businesses. The more people who talk positively about a product or service the more ‘viral’ it becomes and the more people listen and act on those recommendations. That is what every business that engages in social media hopes to accomplish with their efforts: going viral. Not only does this lead to potentially new business, it also opens a door for communication and customer relationships to be formed which are vital. Learning more about your customer is never a bad thing. I recently tweeted about how much I enjoyed using Chipotle’s iPhone app and within 10 minutes I got a reply from the official Chipotle twitter account agreeing with me and not trying to sell me anything. I was already excited about Chipotle before receiving that, but because they took the time and effort to say a simple comment made me even more excited about the company overall. So simple. I have heard and read about other amazing stories of companies using social media to connect with their customers in meaningful ways that have either fixed present issues or reinforced that customer’s appreciation for that company.

Lastly, social media for companies can lead to substantial results, other than positive comments. I have read several articles detailing how various organizations are creatively using social media to connect with customers in a way that had never existed before. Not only are there meaningful relationships being formed between business and customer, but also real substantial results are becoming of social media in business. Social media is no longer just something teenagers do to talk to their friends. Social media is where the people are, and where the people are is where businesses need to be. Facebook alone has over 500 million active users, not to mention the 120+ million users using Twitter, or the millions of users using other social media channels. Businesses wouldn’t second-guess having a website today even though plenty did when the web first came around.

This may seem like a “no duh” to some, but I have talked to and read about many business professionals in the business world who are completely ignorant to the importance of social media for their firm. However, it would be difficult to make the argument that social media could be a form of sustainable competitive advantage, but there is no doubt that there lies many opportunities to be had for businesses to take advantage of this new form of communication and connection.

Interesting Findings:

Businesses Using Social Media Well

Dell Computers Making $1 million Using Social Media

Why Social Media is Worth Your Time

Any other stories of businesses using social media effectively? Share in the comments.

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