The social matrix and ten IT-enabled business trends

Blue pill, red pill? What is the social matrix?

An article in the McKinsey Quarterly by Jacques Bughin, Michael Chui, and James Manyika, Ten IT-enabled business trends for the decade ahead, describes ten key digital information trends looming large on management agendas.

These ten trends are listed below but the most relevant is the first: joining the social matrix. The social matrix is not just relevant to big business. Anyone with a stake in an organisation needs to be aware of how these trends are going to affect how they conduct business.

The social matrix is much more than social media: it connects many organisations internally, and increasingly externally, to reach audiences, like suppliers and customers. The social matrix also extends beyond the co-creation of products and organisational networks. It is now the environment in which more and more business is conducted.

Many organisations rely on networked problem-solving, using the thinking power of a number of people inside and outside the company for new ideas and solutions. The pharmaceutical giant Boehringer Ingelheim, for instance, sponsored a competition on Kaggle (a platform for data-analysis contests) to predict the likelihood that a new drug molecule would cause genetic mutations. The winning team, from among nearly 9,000 competitors, combined experience in insurance, physics and neuroscience and its analysis beat existing predictive methods by more than 25 percent.

Blue pill, red pill

This is your last chance…after this, there is no turning back. You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe…

Searching for information, reading and responding to e-mails and collaborating with colleagues can take up about 60 percent of knowledge workers’ time: they could become up to 25 percent more productive through the use of social technologies. IT-services supplier Atos has pledged to become a zero e-mail company by 2014, aiming to boost employee productivity by replacing e-mail with a social networking platform.

Companies also are becoming more open, ready to communicate across traditional functions and assemble teams with the specific knowledge required for a project. Kraft Foods, for example, has invested in a more powerful social technology platform that supports microblogging, content tagging and the creation and maintenance of specialised communities. Benefits include accelerated knowledge-sharing, shorter product-development cycles and faster competitive response times.

Enterprises still have plenty of room to improve: only ten percent of the executives surveyed last year said their organisations were realising substantial value from the use of social technologies to connect all stakeholders: customers, employees, and business partners.

Social features, meanwhile, can become part of any digital communication or transaction — embedded in products, markets and business systems. Business users can like things and may soon be able to register what they want, enabling new means of registering preferences and, as a by-product, inceasing motivation.

Department-store chain Macy’s has used Facebook Likes to decide on colors for upcoming apparel lines, while Wal-Mart Stores chooses its weekly toy specials through input from user panels powered by social media. In broadcasting, RTL Group is using social media to create viewer feedback loops for popular shows such as X Factor: a steady stream of reactions from fans allows RTL to fine-tune episodes.

The ten trends from the research and article are:

1.  Joining the social matrix.

2.  Competing with ‘big data’ and advanced analytics: three years ago, McKinsey described new opportunities to experiment with and segment consumer markets using big data. As with the social matrix, the firm now sees data and analytics as part of a new foundation for competitiveness.

3.  Deploying the Internet-of-All-Things: tiny sensors and actuators, proliferating at astounding rates, are expected to explode in number over the next decade.

4.  Offering anything as a service: the buying and selling of services derived from physical products is a business-model shift that’s gaining steam: a prominent example of this shift is the embrace of cloud-based IT services.

5.  Automating knowledge work.

6.  Engaging the next 3 billion digital citizens.

7.  Charting experiences where digital meets physical: real-life activities, from shopping to factory work, become rich with digital information and as the mobile internet and advances in natural user interfaces give the physical world digital characteristics.

8.  ‘Freeing’ your business model through Internet-inspired personalisation and simplification: customers expect services to be free, personalised and easy to use without instructions.

9.  Buying and selling as digital commerce leaps ahead: reducing barriers to entry across a wide swath of economic activity.

10. Transforming government, healthcare, and education: technology-enabled productivity growth could help reduce the cost burden while improving the quality of services and outcomes, as well as boosting long-term global-growth prospects.

Toby Bloomberg (Diva Marketing) interviews Jamie Turner: generating a return on social media

Diva Marketing/Toby: Before we dive into this interview, let’s set the stage with a question I often ask, “What does social media mean to you?”

Jamie Turner: Several years ago, someone I respect a great deal, named Toby Bloomberg, introduced me to social media. One of the first things she said to me was that social media was about having a conversation. I’ve always been grateful for the insight you provided me from the very start.

That said, if you’re a business, social media isn’t just about a conversation – it’s also about turning that conversation into revenue. After all, businesses don’t do social media to be social – they do social media to make money. That’s something that’s overlooked way too frequently.

Diva Marketing/Toby: And look where you are now… a famous author! But Jamie, there are zillions of books about social media with more published every second, or so it seems. Why this book? What was special about your vision that the reader would take away from the read?

Jamie Turner: This is one of the few books out there that provides a step-by-step roadmap on how to set up a social media campaign so that it generates a return on investment. Most of the other books on social media are just about the conversation. This one is about turning the conversation into revenue.

Diva Marketing/Toby: The title of your book is captivating. It s indeed the $10 million dollar question! So, Jamie let’s cut to the chase…what is the insider’s secret on using social media to make money?

Jamie Turner: Okay, first the bad news. If you’re going to make money with social media, you’re going to have to know maths. That was a surprise to me when I first started writing the book, but the maths is relatively simple once you get the hang of it.

The maths starts with a direct response formula called Customer Lifetime Value (CLV). In its simplest form, CLV is the amount of revenue a typical customer generates for your business over the course of their engagement with your brand.

So, if you’re a lawn care company and the typical customer is generating $80/month and stays with you an average of 3 years, then your CLV is $2,880. Once you know your Customer Lifetime Value, you can then calculate how much you’d be willing to spend to acquire a customer, which is called your Cost Per Sale (CPS).

In most cases, Cost Per Sale is 10% of your Customer Lifetime Value. In the case of the lawncare company, the Cost Per Sale would be $280. In other words, you’d be willing to invest $280 to acquire a customer that will generate $2,880 for your company during their engagement with your brand.

Once you’ve established your Customer Lifetime Value and once you know your Cost Per Sale, then you can use those figures to help calculate the ROI of your social media campaign.

For example, going back to the lawn care company, you might spend $280,000 on an extensive social media campaign that includes YouTube videos, Facebook promotions, Twitter updates, LinkedIn updates, e-newsletters and other social media tools. But, if that $280,000 generates 1,000 new customers, then you know your Cost Per Sale was $280, which works out perfectly.

It sounds complex the first time you come across the formulas. But if you understand Customer Lifetime Value and Cost Per Sale, you’re well on your way to making money with social media.

Diva Marketing/Toby: In your book you compare a successful social media to that of a successful marriage built on great mutual communication. I get the communication part, but how does that really play out in the social web?

Jamie Turner: When I first started in social media many years ago, I thought you could just do it in 15 minutes a day, so I’d crank up my computer in the morning, spend 15 minutes on Twitter, YouTube, Facebook, etc. and then sit back and wait. And wait. And wait.

Unfortunately, nothing happened. Which is when I shifted over to an ongoing conversation during the entire course of the day.

Like any good relationship, a social media relationship has to be ongoing. You can’t have a successful marriage in 15 minutes a day. Nor can you have a successful social media campaign.

Diva Marketing/Toby: One of the most elusive aspects of a social media strategy has always been aligning it with Return On Investment. For some people ROI translates only to sales dollars. For other people ROI can mean a set of metrics that support a strategy’s goals. Which camp are you in and why?

Jamie Turner: That’s a good question. I’m definitely in the ROI camp. After all, in this day and age, the Chief Financial Officer wants to see specific results for their investment. When you use the formulas outlined above and covered in detail in the book, you can track your ROI and show the CFO that for every $1 invested in social media, it generated $10 or more in revenue.

Diva Marketing/Toby: Let’s wrap this by playing “what if.” What if a client came to you to create the ultimate social media initiative that would lead to making the cash register sing. How would go about creating that program?

Jamie Turner: I would do what Dell does and what we do here at BKV. That is, I’d make sure that every social media channel has a link that drives through to a landing page on our website. In Dell’s case, that landing page sells their products directly via e-commerce. In BKV’s case (we’re an ad agency), we have to track downloads of our white papers, then re-market to those prospects to see if we can turn them into customers.

The bottom line is that it’s all trackable. As such, we’re able to show a return-on-investment. So, in a nutshell, the ultimate social media initiative is one that can be tracked and measured on an ROI basis.

Credit: Diva Marketing Blog

Jamie Turner is the Chief Content Officer for the60 Second Marketer, the online magazine of BKV Digital and Direct Response. He is also the co-author of How to Make Money with Social Media.

Making business sense of social media ROI


Olivier Blanchard is perhaps the most sought-after expert for those looking to connect the dots between social media and ROI (return-on-investment). This is an interview from SmartBlog on Social Media.

The chatter around ROI seems to be as loud as ever. What would you attribute this to? Are we at a pivotal moment for business proving value for social media activities?

The chatter around social media marketing ROI is as strong as ever for two reasons: the first is simply because ROI points to one of the most important questions an organisation can ask before green-lighting a social media programme: I could spend this budget somewhere else — why should I spend it on social media? Before any other questions can be asked, you have to start with “why”.

The second is that most social media “experts” seem incapable of:

a) being able to define ROI … and

b) plug social media into a profit-and-loss statement and actual business objectives.

Most social media marketers, having no true management background, simply don’t understand how to tie social media measurement and performance to business measurement and performance. This lack of business management experience is a major problem in a field where everyone seems to have become an “expert” overnight.

Olivier Blanchard, Principal at BrandBuilder Marketing, Principal at BrandBuilder Marketing, a Greenville-based Brand Consulting and Marketing Management firm

Olivier Blanchard, Principal at BrandBuilder Marketing

As long as these so called “experts” fail to answer the ROI question, the chatter will continue. Ironically, the question can be answered in about three minutes. All it takes is someone on the social media side of the table who understands how to plug new communications into a business from the board’s perspective.

Have you noticed a recurring point where businesses and organisations decide to get serious about applying ROI to social activities? Is it based on experience, resources allocated or both?

Every organisation is different. Some want to establish upfront measurement practices that include ROI from the very start. These are organisations with a specific focus or clear goals. ROI is based on accomplishing those goals. The programme won’t get the go-ahead until every “t” has been crossed.

Others don’t get around to asking about ROI until six to 18 months after a programme has begun and budgets need to be reviewed. Trust me, when 10% of your group’s budget is being cut, you start asking hard questions. Social media programmes not clearly in support of specific business objectives had better come up with a good answer when the budget hatchet starts to come down.

Typically, companies that start by identifying ROI before a social media marketing budget is assigned, people are recruited and the project is even outlined, fare better than their counterparts.

How can those who are in the trenches, but not selling product or services themselves, best justify their social efforts/hours to their bosses and peers?

By aligning their activities and objectives with key business objectives. The fastest way to ensure that your budget is renewed or validated is to show that you play a part in making the P&L positive.

Perhaps your group saves the organisation money by using social media. Customer service is an example.

Media buying, reach, could also show some interesting cost reductions, with social media increasing reach while reducing relative cost-per-impression. Perhaps your group generates not sales but leads by using social-media channels in interesting ways. There are dozens upon dozens of ways to ensure that your programme can be shown to contribute to either reducing costs or generating revenue. What you don’t want to be is a “cost centre” alone, or worse yet, the project team that can’t articulate its value to the organisation. Which happens.