- Opinion & Analysis
- Read Time: 7 min
With a new scrutiny around technology user data and privacy, we must not forget about the potential dangers of the technology itself.
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The dramatic rise of China’s digital leaders has put the squeeze on Western internet giants. Western players must learn quickly if they are to get back in the game in the world’s fastest growing digital market.
The seductive clamor of social media is a workplace reality from which there’s no retreat. Those who’ll succeed in this distraction-filled world as managers and innovators must combine two seemingly opposing traits: They must to be able to absorb information from many sources and to focus intensely. Together, these apparently contradictory qualities comprise the skill set for managing your most valuable personal resource — your attention — in a hyper-connected age.
Santa Ono, the University of British Columbia’s president and vice-chancellor, details his personal social media strategy and some ways universities can better prepare students to join the workforce in today’s digital era.
In the wake of documented Russian manipulation of the U.S. election via disinformation campaigns on social media platforms, digital platform companies like Facebook and Twitter need to take concrete steps to prevent misuse.
Echo chambers — that is, exposure to information that closely mimics our own experiences and points of view — are burgeoning. In the online world, personalization algorithms lead to even more personalization over time. New research that looked at the way people navigate through videos of TED Talks highlights which types of people are most at risk for falling into extreme echo chambers. The research also suggests ways organizations can help content viewers navigate the noise.
When employees are not fans or supporters of the company’s products on social media, it sends an ambiguous message and could deprive the company of potential supporters. Employers can counter this by encouraging their “digital native” employees to become brand ambassadors for the company.
If your brand is on Instagram or other social media platforms, your current followers are likely also your future customers. Engaging them now, and continuing to keep them engaged, can influence the likelihood of maintaining – and reaping the benefits of – their long-term loyalty.
The biggest challenge with ROI isn’t a technical deficiency but confusion over how it is used. “To calculate ROI accurately, you need to be able to estimate the fraction of profits attributable to the investment,” write Neil T. Bendle and Charan K. Bagga. “In order to calculate ROI, there must be a return (a profit associated with the investment) and an investment. Unless you have both, you cannot calculate ROI.”
Should marketers subtract the cost of acquiring a customer before assessing that customer’s lifetime value (CLV)? Most of the time, no. “CLV is easier to understand, and in our view more useful, if marketers don’t subtract the acquisition cost from their calculation of CLV before reporting it,” write Neil T. Bendle and Charan K. Bagga. “Imagine that a company is selling an old machine. In this scenario, the company’s managers would expect to receive the machine’s current value, not the current value less what the company paid to buy the machine when new.”
Social media strategy shouldn’t be seen as the driver of value difference between a company’s fans and nonfans. Fans are often more favorable toward a brand to start with than nonfans are — indeed, this is probably what motivated them to affiliate in the first place. As well, social media spending should not be justified by an observed difference in customer value that may not have been caused by social media spending. Instead, to understand social media marketing’s impact, companies should run randomized experiments.
The net promoter score (NPS) has become one of the most widely used marketing metrics. Consumers answer a simple question (How likely is it that you would recommend X?) on a scale from 0 to 10. Customers who answer 9 or 10 are considered promoters; those who answer 6 or less are rated as detractors. The score is the percentage of promoters minus the percentage of detractors. One of the strongest selling points of NPS is its simplicity. But the value of NPS may depend upon whether a manager sees it as a metric or as a system.
Market share is a hugely popular metric. But is it really useful? Companies with superior products tend to have high market share and high profitability because product superiority causes both. This means that the two metrics are correlated — but it does not necessarily mean that increasing market share will increase profits. Using market share as a metric of success simply because other companies do can be counterproductive.
Companies that want to draw innovation ideas from social media need customized approaches. An approach that works on Facebook, for example, is different from one that works on LinkedIn. Companies also should emphasize the “social” by helping users create or enhance relationships. Companies that do this often benefit through people’s subsequent engagement with the company’s online innovation activities.
The Spring 2016 issue of MIT Sloan Management features a Special Report on new product development. Articles include “Why Great New Products Fail,” “Finding the Right Role for Social Media in Innovation,” “Developing New Products in Emerging Markets,” “Why Learning is Central to Sustained Innovation,” and a look at the opportunities presented by the Internet of Things, in “Now That Your Products Can Talk, What Will They Tell You?”
Social media provides a game-changing opportunity to support new product development. But taking advantage of the opportunity requires more than just a Facebook presence with a loyal base of “friends.” To use social media for innovation, organizations need clear strategies and objectives. They also should look beyond social media used by the general public to lesser-recognized platforms, such as special user forums or expert blogs, for especially valuable user-generated feedback.
Well-defined metrics are critical to effective marketing. However, despite their widely acknowledged importance, five of the best-known marketing metrics — market share, net promoter score, the value of a “like,” customer lifetime value, and ROI — are regularly misunderstood and misused. This confusion undermines the marketing discipline’s reputation for delivering results. The authors present Do’s and Don’ts for using these metrics and flow charts with detailed advice for developing each metric.
The race for the U.S. presidential nomination is highlighting the increased fragmentation and polarization in American public life. An unprecedented number of candidates continue to stay in the race despite single-digit poll numbers. One reason may be that social media is giving candidates and their supporters an unrealistically optimistic perception of their chances of success — a situation with important implications for business.
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