Social Sigma -- getting customers to improve your products

Social_SigmaIf you're a typical CEO, you're probably wondering what the hell all of these social technologies like Twitter are useful for. A question I get from a lot of leaders is: "How can we use social to make money?" Actually, the more frequent question is: "Why do these social things have such stupid names?"

Many CEOs only encounter the downside of social -- the disparaging YouTube video or the irrational Twitter attack on the company's brand or products. I've got personal experience here -- Forrester was recently the subject of a small Twitter tantrum based on inaccurate information. So it's easy to understand the skepticism and the questioning.

Trust me though -- social networks contain utility that your company will use to get ahead. I'll be posting some examples in the near future. 

But for the moment, let's stay focused on one specific way that you will use social to make money -- something I call Social Sigma. While Six Sigma is a discipline for improving products through better process, Social Sigma is about improving products through social feedback. It's about using social networks as a means for customers (and potential customers) to continually critique, analyze, and offer suggestions about your products. It's a powerful tool for continually increasing the value of what you make. 

I see three elements of Social Sigma:

1) Listening -- closely monitoring social channels to pick up faint and strong signals from the marketplace about your products. Zappos and JetBlue, have dedicated staff for this task. Here's the secret: Many companies gather and resolve complaints using social, but they don't mine product data and get it to the right place at the right time in the company. Valuable Social Sigma data ends up on the cutting room floor before it ever reaches product managers or R&D staff that could use it.

2) Soliciting feedback -- actively using social channels to engage customers in the act of creating or improving a product. Credit Mutuel in France and Domino's Pizza in the U.S. have made product leaps through programs they ran on social networks. Credit Mutuel improved their banking services, while Domino's built a better pizza. I'll have more on these guys in a later post. There's a simple way to get feedback flowing: have a place on your site where people can give you their ideas. See Starbucks for a great example.

3) Marketing -- clearly communicating to customers that the company is listening, making changes based on feedback, and responding. In other words, making sure that the world knows that the company isn't faking it -- it is closing the loop. Toyota is doing just that here.

And now for the CEO caveats. Social Sigma will take guts to pursue -- this is not for the faint of heart. You will be exposing your defects, flaws, and problems to the world and actively discussing them in public. But hey -- people will discuss your products whether you are there or not. It's better to be there.

A second caveat is around execution. Social Sigma is not a one-way communication like a press release. You're initiating a continuous, real-time, fast interchange with hundreds or perhaps thousands of customers. Don't get involved in Social Sigma unless you're ready to uphold your end of the conversation. In other words, operationalize your Social Sigma effort, with staff, budget, planning, and a strategy. Social Sigma done badly will do more damage to your brand and company name than if you'd done nothing. 

I'll be following up this post with some case studies that will show Social Sigma in action. In the meantime, what do you think -- how will Social Sigma unfold? What are the risks? Who has done it well? What companies have done it badly? I'd love to get your thoughts.

Comments

Markets

This is an interesting topic especially in markets with a great degree of digital social penetration. Would also like to see how makers of Social CRM can (or are) incorporate your 3 steps into their products (including sentiment analysis). The interesting challenge is to see how can this have an impact in developing digital social economies such as India, SE Asia, ... wherein there is still a greater 'real world' social impact rather than the digital effect. What could be a few reasons (besides being first to market) for companies in such situations to invest money and more importantly time in this kind of an effort?

re: Social Sigma -- getting customers to improve your products

George, thought it might help to mention that folks planning to come to Forrester’s Marketing Forum in LA next month will hear more of a prescription for the Social CEO in your upcoming keynote: http://www.forrester.com/marketingforum2010

re: Social Sigma -- getting customers to improve your products

Goerge, I utterly and totally agree. Social networks puts us back where we belong, In front of the customer. We no longer can drown out the voice of this unhappy individual with billions (for me it might be rather millions) of advertizing. I go personally to user group meetings and I stand the tough questions online and in person. I have however always done that and saved a few million.

I just don't like the term Social Sigma, which I assume you relate to Six Sigma. I think Six Sigma is not only nonsense but it is inhumane and a statistical illusion. If you make numbers your goal then what you produce is numbers. Six Sigma and ISO9000 organizations look inside and not outside no matter how much they plan differently. Efficiency is measured inside and effectiveness is customer perception and can't be measured.

People don't come standardized no matter how much you process their data statistically. If you classify your customers in five groups then your target definition will be off by up to twenty percent. Six Sigma cannot account for that and will report that as error free.

In service operations we need errors to improve things. Errors are not wrong! They are the normal and the more the organization does not treat them as aberratin but as a service aspect then the more the customer will perceive satisfaction. Errors are the customers way to be treated individually.

Pushing your error rate down to that level can only be achieved by faking statistics in terms of what constitutes a satisfactory result. It means you have to standardize the product you deliver, which is fine for manufacturing but not for human interaction.

Imagine you go to a restaurant and the service is perfect. But you feel your steak is too well done. The waiters response: 'No, sir. It is perfect! That's how we cook it for your age group.'

re: Social Sigma -- getting customers to improve your products

George ... sorry for the previous typos ... too early morning here and someone yelling from behind to get going. Question: Do the typos really reduce the content of my message? I certainly don't think so.

re: Social Sigma -- getting customers to improve your products

Mr. Colony:

Great article. One additional point: the techniques that you mention are accessible not only to large companies, but also to smaller companies. Here's a story about how a small business (a restaurant) uses social media to improve operations, thereby improving its product (the dining experience). And helping it become a large company.

http://thefussymarketer.blogspot.com/2009/07/beyond-marketing-how-social-media-can.html

re: Social Sigma -- getting customers to improve your products

One has to be careful though - a company can easily get social s*t*igma which can snowball.

re: Social Sigma -- getting customers to improve your products

George - great post!

The three things you listed - Listening, seeking feedback, and marketing, are all vital cogs in the social sigma wheel.

However, the most important bottleneck could very well be the ability of a company to A) change company culture from within to make info gathering & decision making more democratic, more participatory,and inclusive in nature & B) have a social media policy & Enterprise 2.0 strategy (process) in place to take advantage of the "feedback", and turn it into a sustainable competitive advantage. My $0.02 :) What do you think?

Thanks again for a very topical post, and I look forward to the real world examples you plan to expand on.

Cheers,
Prince

re: Social Sigma -- getting customers to improve your products

George,

Thanks for a very instructive note. See the following however for a few complications related to listening to customers:

http://bit.ly/4EYvuh

Thanks for you perspective.

@ariegoldshlager

re: Social Sigma -- getting customers to improve your products

George,
Nice post, and you bring out some key points for success. The one thing I will add to the points you mentioned is the need to have an Analytics team that rocks.

In today's world with a plethora of technologies and tools available, it is relatively easy (if you put your mind to) to monitor, listen, collect data, do research etc. using the social channels. However, I am willing to bet there are very few companies out there that have modeled what this incoming data means in relation to the data they collect about their customers from the other channels. Anyway, this is a big discussion by itself - but did want to post a note that analytics is key to separating the noise from the signal, decoding the signals, and finding relationships between the signals (pattern recognition).

Regards,
@nedkumar

re: Social Sigma -- getting customers to improve your products

Mr. Colony: Great article! I strongly feel that every small business should have some kind of Twitter presence. The amount of social media tools that are now available to us today makes it so much easier to network and to get our message out. I really enjoy reading your blog. Keep up the great work! Richard Hadermann http://entrepreneur.podbean.com/