Trouble Harnessing Social Media? Relationships Can’t Be Automated

Today I can’t imagine recommending a brand not be on Facebook. It’s hard to ignore reaching one billion people. A recent survey of CMOs indicate they know this. In fact 82% said they plan to increase their use of social media over the next 3-5 years. But that same IBM study indicates marketers are struggling to harness their social media investment. They feel overwhelmed by the volume of customer data on websites like Facebook and consider themselves ill-equipped to leverage it.

IBM’s solution is more robust software. Marketing executive Marcel Holsheimer says, “Marketing is going to become much more an automated software play than it was in the past. This is why IBM is now making the investment in this space.” I agree that automation is key to collect and analyze social media information, and we need more robust software to manage big data. But we shouldn’t pretend that is the only part of the solution. In all the hype over big data let’s not forget the human at the end of the technology.

Social media has exploded because it connects real people. Humans by nature are social creatures. Relationships give meaning and purpose to our lives like no other activity or endeavor. Despite the attempts of HAL 9000 in 2001: A Space Odyssey you can’t have a relationship with automated software. Use all the social media dashboards you want, but there still has to be a human with that update, post and tweet investing time into the customer relationship.

How do you develop strong social relationships? Student health services at University of Indiana suggests the following as essential relationship skills:

  1. Listen to what the other person is saying.
  2. Develop solutions that suit both of your needs.
  3. Express your appreciation.
  4. Show empathy and genuine concern.

A similar list emphasizes these key interpersonal skills:

  1. Look
  2. Listen
  3. Ask
  4. Learn
  5. Understand
  6. Acknowledge
  7. Provide
  8. Commit
  9. Contribute
  10. Follow up

If your brand is on Facebook, good, you probably need to be there. But are you acting the right way? Go to your page, look at the activity and compare it to the two lists above. Then estimate your brand’s social skills score. How are you doing?

For those who have seen 2001: A Space Odyssey you know how HAL 9000’s personal interactions turn out for the Discovery spacecraft and crew. If you haven’t seen the movie, take a break from big data software automation to interact with an epic film filled with real human drama.

Brand Equity: Tangible Assets Are A Small Part Today’s Brand Value

According to Interbrand Corporation’s Best Global Brands Ranking the value of Microsoft brand was $60.8 billion in 2010. How can the Microsoft brand be worth so much?

Lets start by figuring out what that number means. In the past, one of the undervalued assets of companies was their brand, because they are off-balance-sheet items. Haigh & Knowles, (2004) tell us that today, looking at a typical company like Microsoft, net tangible assets make a small percentage of total value. When comparing brand value to percentage of market capitalization we find that, based on the 2005 Interbrand study, Microsoft’s brand value was $59.9 billion compared to a market capitalization of only $13.2 billion.

So why does the Microsoft brand contribute so much to its value? There has been this value shift from tangible to intangible assets. The tangible assets of Microsoft including land, equipment, inventory, networking, only account for roughly 22% of its value. Especially in a software company like Microsoft, its real value comes in its intangible assets such as patents, distribution rights, customer data bases, brands/sub-brands, and the quality of their workforce and management. Intellectual property rights, trademarks, trade names, patents, and designs protect these intangibles and help make a brand a valuable asset.

Brands like Microsoft establish a level of quality and performance in the minds of individuals and businesses. These satisfied buyers choose to buy the product again. The brand loyalty represents predictability and security for demand. It also makes it very difficult for competitors to enter the market. As the old saying goes, “No one ever got fired for buying IBM.” All the years of marketing and product experience have helped secure a competitive advantage for Microsoft. That’s why there is such a price premium paid for companies like Microsoft. Imagine trying to build a Microsoft from scratch? Even if you were given the 22% in tangibles of equipment and other assets it would be a difficult task. In creating a new software company from scratch that 78% is a high hill to get over.

A good example of how the power and value of Microsoft’s brand created competitive advantage was back in the late 1990’s. Netscape tried to compete with Microsoft by getting into the Internet browser arena quickly while Microsoft underestimated its popularity and potential.

Discovering it made a mistake as Netscape gained prominence, Microsoft used its brand power to squelch Netscape’s threat to its desktop software dominance by pressuring its distributors (PC manufactures) to restrict the distribution and usage of Netscape’s browser. Today Wal-Mart uses its brand power to negotiate, or as some would say demand, lower prices from its supplier.

Do you think the rise of store brands lowered brand value in package goods?