The risks and rewards of business in a social world
Updated: Jul 11, 2020
In today’s day and age, it is impossible to deny the influence and power of social media. For many users, social media has evolved into a daily part of life that allows them to connect with people from all over the world. The transformations that society has undergone due to this increased connectivity has been as rapid as it has been disruptive and could scarcely have been imagined just a few short years ago. For the first time in history, a lot of people can share their thoughts and other information at any time to anyone who would listen.
3.2 billion people, or 42% of the world’s population, currently utilize social media (Emarys). With such reach, social media has become a powerful force in marketing. In the US 90.4% of Millenials, 77.5% of Gen X, and 48.2% of Baby Boomers actively use some form of social media. Of those that use social media, 54% leverage social platforms to look up and research the products and services they may purchase (Oberlo) However, as with any new technology, social platforms must be used wisely and with the proper precautions as to avoid some key pitfalls a business or marketer may stumble into.
Social media comes with distinct risks. Some risks stem from how corporations utilize the social media platforms, while other risks originate from external user content targeting corporations. Even singular tweets have impacted stock prices, such as in the case of a single tweet from President Trump regarding Toyota’s Mexican factory that caused a $1.2 billion dollar drop in market value (ogilvy). US cybercrime has grown nearly 300 fold from 2015 to 2017. On a worldwide scale, nearly 1 in 5 organizations have been recently impacted by malware distributed on social media.
There are many other risk vectors that stem from the usage of social media, especially in a business context. These include:
IP and sensitive data loss
Corporate espionage is an old problem now made more prevalent due to the wealth of information that is available online. Corporate spies can now link together the posts of multiple employees from a multitude of platforms to gain insight into a company. Furthermore, social engineering has been made much simpler with social media, making assuming another’s identity easier than ever before.
In a couple of highly publicized instances, various social media platforms experienced security breaches that released confidential user information. This could include emails, phone numbers, direct messages from customers, location data, as well as other types of customer information shared via social media. Even as recently as November of 2019, 1.2 billion records were found exposed online in a single server with data from Facebook, Twitter, and Linkedin profiles (Wired).
Loss of Reputation/Brand Damage
In the case of reputation loss, internal and external factors can cause risks. Customers have the ability to post complaints and concerns about the company or one of their products publicly with potentially unlimited reach. Proper processes and governance must be in place to properly mitigate potentially damaging posts and to respond to customers comments quickly and efficiently. In recent news, an incident from Peloton is a clear example of how to poorly handle negative brand imaging (inc). They had released an advertisement that had people up in arms and the response given from the brand was passive-aggressive and seen as a non-apology. This has led to irreparable brand damage as well as a considerable dip in their stock value. As such, properly addressing issues and dealing with the fallout of disaster scenarios is vital to maintaining a company’s reputation.
If these risks can be properly managed, there are some very distinct rewards that come from tapping into the wellspring social media offers. Some of the benefits include:
Social media is an extremely useful resource for getting to audiences that were once out of reach. By effectively using the multitude of platforms available, one can generate leads and boost sales. To aid in this effort, many social media companies offer targeted advertising to help target people in specific demographics best suited for the company's offerings.
Furthermore, brand managers can use social media to contact their consumers and provide more immediate help. Although consumers expect a response time of 0-4 hours, the average brand response time is closer to 10 hours (sprout social). This has been shown to correlate to an increase in their willingness to pay more for the company’s services in the future. Social media offers numerous methods for contacting and learning about their own audience.
The use of social media allows companies to extend their reach and help build their brand. By using social media to be proactive in image cultivation companies can both create a favorable customer view as well as offer the ability to manage damaging exposure quickly and efficiently. Furthermore, if there are any brand-damaging events that occur social media is well suited for rapid response to prevent further exposure.
Information is king in this day and age. Social media provides a wealth of data that can be mined to get a better understanding of the needs and wants of consumers. By monitoring (collecting social messages) and social listening (querying social messages for keywords/topics) businesses can measure and analyze their specific audience. This analysis can help gain knowledge on brand reputation, customer complaints and feedback, and understanding to see how competitors are growing their audiences as well.
If managed wisely, social media is a powerful tool for businesses to engage with and understand their consumers. A well-thought-out risk management practice can help mitigate the risks and maximize the benefits associated with social media platforms.
Stay tuned for part 2 where we will be going into an in-depth look into what components equate to a successful social media risk management policy. Until then, contact us with any questions you may have.