10. Get Smarter: Social Media Marketing Drives Research and Development

Add the cost factor of market research and you’re looking at a fair investment in activities that have little short-term or direct financial impact on the bottom line.

Social media can lower the cost of research and development, sometimes even eliminating it. These activities can also provide short-term and direct financial impact on your company’s bottom line.

Using social media for research and development takes customer service listening to new and different heights and drives innovation and product development, which has longer-lasting and farther-reaching effects on customers.

It all revolves around your company’s ability to collaborate with its customers or prospective customers in the online space. Whether using collaborative software or simply engaging your audience and watching closely what they are saying about you, your product, or even your competitors, you now have direct access to the largest focus group ever assembled: the Internet.

Collaboration Is the New Black

Do you remember the first conference call you participated in? What about the first videoconference? Even though meetings are still the bane of most businesspeople’s existence, the fact that you can use technology to bring together any number of people from any number of disparate locations in the world has changed how many of our organizations operate.

Now think about that sales or travel & expense report that four or five people had to update before it was submitted. The poor office admin had to collect everyone’s spreadsheets and compile them together into a document. Or, somewhat more efficiently, you would email the Excel file to person one, who would update and send to person two, and so on.

Today, collaborative technologies save thousands of man-hours, not to mention energy by eliminating duplicative file space and bandwidth on your company’s computer system, by allowing dozens of people to update one document at the same time. A sales spreadsheet that 20 people must contribute to can be updated in a matter of minutes because each person can log in concurrently to revise it.

But it grows beyond the departmental level. The evolution of the social web and its accompanying technologies has made it not only possible, but even preferable for some companies to extend collaboration beyond their internal silos. Now, marketing can easily communicate with the product team, which can easily transmit messages to and from the compliance and legal staff, which can coordinate with HR, which can then circle back with marketing. And it doesn’t take 12 days, six meetings, and typed and printed memos.

By using collaborative software—such as Microsoft’s SharePoint, SocialCast, or Yammer—internally, companies are finding that these social media tools can be turned inward as well. As a result, companies are getting faster, smarter, and more efficient.

And we’re not just citing this anecdotally from tech companies. McKinsey’s Global Survey of 1,700 executives from around the globe in 2009 offered a strong validation for social software.² Some 69% of those surveyed reported that their organizations gained “measurable business benefits” that include better access to knowledge, more innovative products and services, lower cost of doing business, and higher revenues.

Collaborating with Customers Breeds Customers

What happens when you turn that collaboration around and invite external audiences, specifically your customers, to the table to collaborate with you? Pretty amazing things it turns out.

Prior to the last 5 to 10 years, collaborating with customers was limited to special focus groups, website comment forms, and the occasional silly slogan naming contest. But with the advent of technologies like social networks, blogs, and even video platforms, customer collaboration and feedback is on its way to becoming standard operating procedure for many companies.

Collaboration is booming. In 2009, Dorito’s Super Bowl ad was created by two unemployed brothers from Indiana (whose commercial, picked from user submissions in a Dorito’s contest, was voted the favorite overall commercial of the entire list of entries for that year). The Pepsi Refresh Project allows the public to submit and vote on cause- and nonprofit-related ideas with winners getting funding (more than $1 million per month.)

And it makes perfect sense. How do you acknowledge someone? Ask his opinion. How do you empower him? Listen to the opinion. We realize this is really hard for many marketers and business owners to do, but put yourself in the role of the customer. Don’t you like it when companies ask your opinion, listen to it, and make changes or take your suggestions to heart? What would happen if you did the same with your customers?

Empowered customers feel that they have a stake in the success of the business. They’re vested to a degree and they’re proud of that. The more listening you do, the more they’re vested and the more passionate they are for your brand. And customers who are worked into a passionate lather because they’re empowered and vested do one thing better than any other type of person in the world: They tell everyone they know how freakin’ cool you are!

Collaboration can extend beyond empowering customers. It can also captivate their passion to the point they feel an ownership or even responsibility to improve your company. Sharing ownership in your brand by collaborating with your most passionate fans builds community. It can even engender them to contribute new product and feature ideas for free.

Was Windows 7 really your idea, like the commercials indicated? No, but the marketing message was that Microsoft listened to its customers and used their changes to make the new version of the operating system their version of the operating system.

Have you ever been mad at a company and called to complain, knowing you would be satisfied if the service representative would only do X, Y, or Z and were pleasantly surprised when he resolved the situation by doing X, Y, or Z? If you know what that feels like, then you know what it feels like to be heard.

Let’s Collaborate About Scissors...Yes, Scissors

Remember the Fiskars community we discussed in Chapter 8, “The Kumbaya Effect: Social Media Marketing Builds Community”? The Fiskateers website has also proven beneficial for the scissor company in the R&D category. The company’s results from using community members, focus groups, and product testers have actually allowed the company to save money for research and development expenses.

“We have a 500 percent value in return on community with Fiskars,” Geno Church from Fiskars’s agency Brains on Fire explained. “Fiskars doesn’t have to pay for R&D groups, focus groups, or certain types of market research. They’ve even been able to reduce the PR budget because the community is so gung ho about the brand and being so intimately involved with it. They don’t need to manufacture buzz around new products or news. The community members create that buzz for them.”

And how’s this for R&D benefit: Fiskars engineers sent an email to the 8,000 community members—passionate fans of the brand who know a thing or two about using the product—that was packed full of technical, engineer speak. The basic premise of the survey and email was to ask the Fiskateers.com site users how they would design a pair of scissors. The email saw a total response rate of 30%. Most email marketing efforts result in just an 11% open rate.³ Not response rate—open rate. Better yet, the brand got 997 responses to the email in 24 hours.

“It has changed the way they do business,” said Church.

Fiskars has combined two goals of social media marketing: building community and facilitating research and development. It’s gone from an R&D department that taped butcher paper on the windows of its Madison, Wisconsin, laboratory to keep inquiring eyeballs away from its research to one that openly sends technical specs to 8,000 people who do not work for the company for feedback. It’s gone from a company that had to spend thousands of dollars per year on public relations to one that has a built-in, buzz-making army to light the fire of conversation around new products and features.

It’s not that Fiskars made scissors sexy. It’s that Fiskars embraced its most ardent customers as an extension of the company. The R&D team collaborates regularly with the Fiskateers community, giving each member a sense of entitlement and ownership in the brand.

When those 30% of folks responded to the technical email, Fiskars got dozens of ideas for new products and feature improvements. The company takes those suggestions seriously and has implemented some of them.

Think about how you would react if you said, “Make the thumb hole bigger and have the blades taper more,” and then Fiskars sent you a new pair with a bigger thumb hole and more tapered blades. You would tell everyone on the planet that was your idea.

Including customers as stakeholders makes customers breed like rabbits. Everyone in the club wants to tell other people they should be in the club.

All it took for Fiskars to make using scissors sexy is a little bit of collaboration with its customers. And that collaboration can happen with your customers. Maybe the research and insights lead you down the road of building an actual online community. Or perhaps your customers prefer a less formal environment like offering you ideas through organized product chats on Twitter or in a Facebook Group.

The platform and technology are less significant than your desire to find a way to listen to your customers’ ideas and wishes for improvements to the product, its features, or your services.

People already purchasing from you probably have ideas that can help you. All that’s left is for you to give them a place to share them. And, believe us, they will surprise you with what they know about your product and how they use it.

Your Customers Know Your Product Better Than You

Why? Because, believe it or not, your customers are smarter than you. They might not know your secret recipe or the 15 steps to get your gizmo to match the thingamabob so the whatchamacallit glides just right, but they use your product. They know what it does and doesn’t do and how it feels or doesn’t feel. They’re the first people to tell you when you screw up because they know your product inside and out. Sometimes they know what is best for your brand better than you do, right New Coke?

The traditional, closed way of thinking is that the brand knows best. But remember the nuggets of good we recommended taking from the purists? Social media is about being open and transparent. That can mean being open to ideas as well.

As we write this book, Domino’s Pizza has a national television campaign promoting its new boneless chicken meal. It is delivered in a box that has a customer rating for the product printed right on the lid. Customers check boxes describing whether or not the chicken was good and return it to the company for consideration. Domino’s Pizza has tapped into the ethos of the social world it operates in and is winning points from consumers by advertising the fact that it is soliciting feedback so openly.

Will Domino’s Pizza make changes based on that feedback? Perhaps. But even if it doesn’t, the notion that customer opinions are that important is helping Domino’s Pizza in the ultracompetitive pizza business.

But they aren’t the only pizza shop tapping consumers for research and development.

Papa’s R&D Is in the House

Trade secrets with the big pie makers are probably protected like they were made at the Pentagon. So turning to a public forum to perform a little R&D just isn’t likely. Unless you’re Papa John’s. The “better ingredients, better pizza” folks didn’t turn to their executive chef or even product development teams for a new specialty pizza recipe in the spring of 2010. They turned to Facebook.

The Specialty Pizza Challenge called on Papa John’s Facebook fans, as well as visitors to the company’s website, to submit their ideas for an original pizza recipe, including a clever name and story of what makes the pie unique, to be judged in a contest. Semifinalists and finalists would be chosen, then a celebrity panel featuring “Papa John” Schnatter, Food Network star Ted Allen, Adam Kuban of the Serious Eats blog, and Rich Eisen of the NFL Network would judge the winner. The criteria included the uniqueness of the pizza, but also the story behind its creation, as well as other online activities to promote each entry.

Barbara Hyman of Los Angeles won with her Cheesy Chicken Cordon Blue recipe, which was in stores by late 2010 and driving sales for the Louisville-based company. Hyman won a stake of the sales of her recipe plus Papa John’s pizza for life.

So, the company sold pizzas based on a fan’s idea. Case closed?

But wait, there’s more.

“The stories behind the recipes were probably more valuable than the different ways people could put together 15 different ingredients,” said Jim Ensign, Papa John’s vice president for digital marketing when he spoke with us in February of 2011. “Those stories helped us understand the customers better. It was the ‘why’ that was so fascinating.”

Ensign did offer a bit of lessons learned after the effort as well.

“It being social media, we asked for one thing and got something totally different,” he said. “That made it fun, though. We asked them to put together a pizza from the list of our 15 ingredients. What we got back was, ‘Yeah, but if you add this ingredient, we could make it so much better.’ We got information above and beyond what we asked for and even some information as to why people would combine certain ingredients, so it was pretty cool to get that level of involvement to pass on to our R&D team.”

Therein lies another lesson. Just because you have access to social media for research and development doesn’t mean you do away with traditional R&D. But even Ensign admitted that social media can change your approach a bit.

“It’s a nice supplement to our R&D efforts,” he explained. “It helps you be more effective and efficient with your R&D if you use social media to start broadly and work to narrow down your focus with the public input. Then you can turn that information over to the traditional R&D folks and go into deeper dives through some of the more traditional research. It augments, if not sometimes replaces, some of the broad, early stuff you would do in a typical R&D process.”

The Specialty Pizza Challenge wasn’t Papa John’s first foray into R&D through social media, either. For the 2010 NCAA Men’s Basketball Tournament, the company was trying to decide what would be a better prize to give away during a March Madness promotion: a trip to the Men’s Basketball Final Four, a year’s supply of Papa John’s Pizza, or a big-screen television.

“So our social media manager just asked people on Facebook and Twitter one day,” Ensign reported. “We thought the trip would be the thing everyone wanted. What we got back was that they wanted a year’s supply of Papa John’s and the television so they could eat their pizza while they watched the games. So we ramped up that as the prize.”

Guess how much that market insight cost ‘em? Not even as much as a single large Papa John’s pizza.

Measuring Research and Development

To those who need to show return on investment (ROI), it’s simple to see that Papa John’s had a pretty easy time quantifying the success of the Specialty Pizza Challenge. You take the new pizza products generated from the contest and track their sales. Add them up and there’s your neat little number.

Despite the money Papa John’s made thanks to this campaign, the pizza company was even more interested in the “why” of its customer’s stories. Learning more about your customers, their needs, wants, uses for your products...that’s a goldmine of information that leads you to be better at delivering satisfied customers. You don’t measure that in dollars. You measure that in insight, intelligence, and ideas.

Maybe collaborating with your customers doesn’t lead to a product feature that sells more. Maybe it leads to a product feature that makes it safer. How do you put numbers around that?

The point is that although dollars and cents certainly need to be reported, the return is not always measured in them. Still, we must measure R&D if we’re going to make our social media marketing efforts facilitate that activity. Looking at our potential strategic goals for research and development in Chapter 1, “Ignore the Hype. Believe the Facts,” we listed the following:

• Generate new product ideas for your company

• Improve your product features

• Improve your service lines

• Generate market research for your company

• Generate sales for your company from R&D activities

Building metrics for these types of goals can be very simple. You can actually count the number of new product ideas generated through your social media efforts and mark that first one off your list.

But to really quantify and qualify what using social media for R&D can give you, your metrics need to be more comprehensive. To measure R&D, you can track things such as

• New product ideas

• Increased sales from new product ideas

• Expanded audience for new product ideas

• Publicity/exposure from new product launch

• New product features

• Increased sales from new product feature additions

• Customer satisfaction levels after new feature implementation

• Increased safety ratings after new feature implementation

• Increased overall customer satisfaction

• Cost savings in product focus groups

• Cost savings in market research focus groups

And you can get ninja, too. We’re sure that at least on an anecdotal level, Fiskar’s R&D team’s morale shifted when they realized they could engage and harvest information directly from customers. When you open the door to collaboration with your audiences, internal communications can improve, employee satisfaction can go up, and more.

When you think about it, what opening the doors and collaborating with your customers does is gives you and your customers more information. You get more data about how they use products, for what reasons, and in what circumstances. They get insight into what you’re thinking as a company about the product or user experience.

More information makes for smarter R&D and smarter customers. That alone is a value-add to their experience with your company. Besides, getting the product and R&D teams out of the lab communicating with other human beings can’t be a bad thing, right? When this happens, your traditional R&D gets a boost in the arm with even more data and consumer insight to consider.

It’s Adding R&D to Your R&D

Like Ensign at Papa John’s, Richard Binhammer from Dell asserts that you can’t get rid of traditional R&D.

“Your traditional R&D is still there,” Binhammer acknowledged when we talked about the penultimate R&D case study in social media: Dell’s IdeaStorm. “IdeaStorm is a great validator and a great place for whittling in on some customer needs and demands so that you are producing the types of products the customer wants. It doesn’t mean you aren’t doing traditional R&D work as well—especially the nuts-and-bolts work on technology.”

But Binhammer knows IdeaStorm has been a boon for the company, not just on the social capital front, but on the financial one as well. As of early 2011, IdeaStorm has harvested 15,000-plus consumer ideas, more than 430 of which have actually been implemented. That’s a clip of about 100 ideas per year. Although the company won’t disclose specific financials, this represents an entire product line—(PRODUCT)RED—that is associated with U2 singer Bono’s (Red) effort to help fight AIDS in Africa, delivering incremental revenue to the company and contributions to a worthwhile cause.

When we probed Binhammer about IdeaStorm being a great market research tool, potentially saving the company that expense, he took the research component well beyond the walls of IdeaStorm.

“IdeaStorm is a great community, but the Web...the social web...is even better from a market research standpoint because it is real-time, unaided conversation,” he said. “That tells you a whole bunch of things.” Like how two people might debate or discuss the products and how they use them, which is a discussion often not found in traditional market research using focus groups.

Binhammer’s point is that although market research forces you to ask certain questions a certain way and with or without the presence of certain people, influences, and so on, listening to the social web eliminates the need.

“If you’re just listening and not asking the questions, then the information and research you’re getting is unaided and more rich,” he said. “That goes beyond IdeaStorm. That’s why the aggregation of data across the social web is so very important to us.”

That importance manifested itself perfectly in the second version of Dell’s Netbook computers. After version one was released, a litany of bloggers and other online voices told Dell, both within IdeaStorm and around the Web, that the placement of the apostrophe key was bothersome. It was positioned too near the Enter key compared with traditional keyboard layouts, so users were hitting apostrophes instead of Enter. Someone submitted the idea to change it on IdeaStorm. Version two of the Netbook had a different keyboard as a result.

“IdeaStorm isn’t about people who would go build a product giving the idea to us,” Binhammer said. “It’s about people who want something fixed or want something better from a company they love. They want us to do those things for them or with them.”

And it works for them, and for Dell. So you’re not Dell. We aren’t, either. Maybe you are a small enough business that research and development just isn’t in your vocabulary. Well, we’ve got good news: Social media means it can be.

But We’re a Small Business; We Don’t Do R&D

Seriously, have you ever wished you could conduct a focus group on your product or service offerings? No, you can’t just open a Twitter account and say, “Hey, what do you think of our new recipe for pie?” But you can approach social media and use it for research and development two different ways, even as a small business or one without an R&D budget.

The first approach is to use social media monitoring to gather intelligence about your company, your product or service, your competitors, or your industry. By listening to online conversations about certain topics your customers might be talking about, you can gather competitive intelligence that can inform your decision making and produce a better offering.

Let’s say you make custom handbags and sell them from your brick-and-mortar location along Fisherman’s Wharf in San Francisco. You have a couple dozen styles of bags, most of which sell fairly well, depending upon the time of year. But you need to keep up with what customers want and need in a handbag. You need some R&D or at least some market research to know if what you’re planning to produce makes sense for the new spring line you intend to roll out in the coming weeks.

So you go to a free monitoring solution like SocialMention.com or even invest a little money in something a bit more sophisticated, like uberVu, which can be had for around $40 per month. You enter some keywords and tinker with a search until you start to see some relevant results for conversations occurring from users in or around Northern California (see Figure 10.1). “My handbag needs more dividers. I can’t keep my stuff organized,” is a phrase you see that pops up a couple of times. “My purse should come with a pocket on the strap for my mace,” is an interesting suggestion.

Figure 10.1. Social media monitoring platforms like uberVu (shown) can pull conversations from online sources based on keywords or keyword phrases and can help keep your R&D staff informed. Source: www.ubervu.com.

But then you see a theme emerging as you dive into more results. You notice that when people are talking about what their handbag or purse needs, they say that the purse needs to be big enough to hold an iPad inconspicuously. And there’s your new product idea harvested from raw data on the Web.

A second approach to using social media for R&D is to openly participate in social media with that intent. Build purposeful relationships and connection with your actual customers so you can turn to them as your focus group. The social media monitoring approach tapped into random conversations. Even though you can filter by geography, keyword, and the like, depending upon your monitoring or online market research solution, you can’t easily identify any of that feedback as coming from actual customers or prospects.

As an active social media participant, however—building followers on Twitter, fans and likes on Facebook, readers of your blog, or even subscribers to your email newsletter—you’re growing your potential focus group every day.

Let’s say you keep it very simple: just Facebook. You log in each morning and post an update to your store’s page that lets folks know things such as you’re expecting a shipment of accessories, you have some material samples in the store for customers to check out and see if they like, or you’re running a 10% off special. Then you go find a couple of handbag photos from new fashion shoots on a couple of blogs you subscribe to and share the links on Facebook.

You check in at lunch and then in the afternoon to respond to any comments, maybe post another update about the store, or tell everyone that they should swing by the store because the bakery across the street just put out fresh French bread. You tell your customers and friends they should “like” your store on Facebook because you’ll be sharing some news and discounts there from time to time. Over the course of a few months, you accumulate 150 or so fans.

When it’s time to find out what folks like or dislike about last year’s line of handbags, or what they’d find useful in new versions for the spring season, you simply post the question on your Facebook page:

“What about your handbag could be better? Any need for more/bigger/smaller pockets? Are you carrying more accessories that we should account for?”

Chances are, you won’t get a lot of responses the first time you ask, but you can keep asking, ask folks to subscribe to an email list specifically for “New Product Ideas & Feedback,” or even incentivize participation by offering discounts to anyone who answers.

No, these two scenarios don’t require big budgets, lots of scientific testing, or even geeks in lab coats. But they are legitimate research and development practices any business can use by implementing social media for R&D purposes. And neither one is very expensive at all.

The key to being successful in using social media marketing for research and development is planning to do so. Set those goals. Write those objectives. Implement whatever plan fits your resource allotment and measure according to what you want to get out of your social media R&D efforts.

How to Plan For Research and Development

You didn’t think we’d say, “Go plan for this,” without giving you a little help, did you?

Planning for research and development is as complicated as you want to make it. We prefer to keep it simple. There are four general steps to conducting research:

1. Set the goals for the research.

2. Establish the important questions to ask.

3. Research and collect answers to the important questions.

4. Analyze the answers to make decisions.

How does that translate to practical application?

Make a list of the product or service feedback items you might want to ask customers about. Make a list of the information you’d like to know about your customers or prospective customers (think market research). Look at that list and pick the one or two major areas you wish you could solve with a little customer input or feedback.

Those one or two major areas need to be addressed in your goal or goals for your social media R&D efforts.

Let’s say your top priority is to get new product feature suggestions. Now start identifying the important questions that you need to ask your customers. Is the handle sturdy enough? Would you change anything about the colors used?

You don’t need to be a market researcher to ask questions, but you should probably try to ask questions that allow your audience to give the most unaided feedback. For example, asking “Is the handle sturdy enough?” might be better asked by saying, “On a scale of 1–10 with 10 being most sturdy and 1 being least sturdy, how sturdy would you rate the handle?” The previous question almost implies you don’t think it is and could bias the answers. You may also want to add the question, “On the same scale, how sturdy do you think a handle should be?” This will give you an indication of your customers’ preferences and feedback on how sturdy they perceive your handle to be, which gives you a point of comparison.

After you’ve listed the questions you want to ask, you just need to deliver them to an audience to answer. You might do this with a quick online survey you ask customers to fill out, anecdotally through questions you ask customers on social networking platforms or blogs, or even by just asking the questions of individuals directly and making note of the results.

Analyzing the results can be done easily if you have people fill out an online survey. It generally consists of tabulating the answers to show averages and consistencies in issues, then looking at the results with the mind-set of discovering insights and trends the answers seem to hold.

If the majority of your customers say the ideal sturdiness of a handle is 8 on a scale of 1–10 but they rated your handle a 4, then you’ve discovered an insight that can help improve the product to the audience’s liking.

Market research questions are a bit different than product research questions. While product questions are focused on just that—the product—market research questions are generally more focused on the customer.

You can certainly try and aggregate and average basic demographic and psychographic profiles of your audience, but be sure to add technographic questions, like what social networks do they use, do they read blogs, how apt are they to visit company websites from their mobile devices, and so on. You can also focus on deeper market research questions like what they think of your competitors, how they feel about your price, and so on.

The important thing is to focus on the questions you want answered—the goal of your research—and not deviate from that too far. The process of asking questions does not require 50 questions if you really only need to ask 5. If that’s the case, then ask the 5 and be done with it.

Your customers will thank you.

And you will be able to give yourself a nice pat on the back, too. Saving money on market research or even harvesting ideas for new products and services without spending hundreds of thousands of dollars in traditional R&D doesn’t get handed to you very often. Social media marketing does just that.

Using your online connections with customers to drive innovations and product development ideas also begins to walk your company down the road of measurable monetary return on investment, too. When you develop a new product or begin selling one with a crowd-sourced feature improvement, you can track sales of those new offerings and match dollars to effort.

The only other of our seven benefit areas for social media marketing that offers a relatively simple direct line from activity on the social web to bottom-line dollars is our next area of focus: driving sales or leads.

Endnotes

1. Battelle, “2011 Global R&D Funding Forecast,” http://www.battelle.org/aboutus/rd/2011.pdf.

2. “How Companies are Benefiting from Web 2.0: McKinsey Global Survey Results,” McKinsey Quarterly, September 2009, http://www.mckinseyquarterly.com/Surveys/How_companies_are_benefiting_from_Web_20_McKinsey_Global_Survey_Results_2432.

3. Marketing Sherpa, “2010 Email Marketing Benchmark Report,” http://www.marketingsherpa.com/EmailMarketingReport2010ESum.pdf.