Social Exchange through Social Media

In today’s business world, the companies ought to harness competencies from the customers. In this respect, the markets are viewed as forums for firms and active users to share and combine resources and capabilities of each other in the process of product/ service development. Co-creation and Co-production are used to describe the relationship between firms and consumers. Co-creation is based on the idea that value is solely determined by the consumers and firms serve as either to facilitate value or to co-create by becoming involved in the customer’s value creation process. The Co-production on the other hand refers to the mere involvement of consumers in product and service development. According to Prahalad and Ramaswamy (2000), the morphing of customers’ role in the dynamic business environment from passive to active players demands companies to involve customers around four axes: 1) Engage in dialogue with the customers, 2) mobilize communities, 3) Manage customer diversity and 4) Co-create personalize experience. Today Social Media comes at the heart of mobilizing Social Exchange mechanisms in various forms.

Today, the purview of social media has swept away all the firm boundaries and customer premises. Online forums and tweeter feeds used for marketers and product developers towards discernment of customers desires is now an old story. The world is now at the verge of technological change and there is yet much more to be delivered by social media that will come at the later part of the talk. Looking at social media from Prahalad and Ramaswamy’s pivot points to exploit customer’s knowledge and ideas, we can think of social media providing the following:

•  Engage in Dialogues with Customers: Social media has long been thought to providing a new channel for companies to communicate with their customers but now it has fundamentally challenged to other forms of communication. Today companies are moving towards using social platform and social design mechanics to manage interactions across all communication channels to customers (Social-driven IT, Accenture Technology Vision 2012). This will also add value by insuring value adding communication among customers, employees and enterprises.
• Mobilize Communities: Matt Shaw (2011) reported that 84% of the adult customers feel that they feel more loyal to the brands because of social media and on the other hand, only 9% reported that social media are best to obtaining clear comprehensions about their favorite brands and 85% believe that a brand could not reach out to them over past 3 months. This indicates a clear gap between the potential of social media and the under-utilization of it. Hence social media needs to capitalize on mobilizing the communities in view of potential of social media to do that.
• Customer Diversity: Can be achieved effectively by social media. Social media provides the opportunity to manage various groups and networks and therefore an effective social exchange mechanism can take place by exploiting each fragment managed via independent network.
• Co-create personalize experience: It is very important to understand that Social media is just not about marketing. Social media is among the technologies, that Bingham and Conner in their book “” write as innovations that enable a new kind of knowledge-building ecosystem with people at its core. With examples from Best Buy to Intel and from Deloitte to U.S. Central Intelligence Agency, social media improves the way you recruit talent, engage employees, and build work-force capacities. Social media creates useful learning assets from customer’s experience with respect to your product and customer’s feedback. Hence, interaction between users and developers can establish valuable ties that can result into more customer loyalty and business value. Facebook recently launched the new version of Open Graph. It’s a framework that enables content developers to build applications that allow users to share whatever they are doing without overwhelming their friends.

Opportunities provided by Social Media:

Social media provides new opportunities to capture, measure, analyze and exploit social interactions in new ways.

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S   Social Polling which is an effective marketing tool to determine what works and what doesn’t. In this way, firms produce directly usable information which serves as the key to making business decision (Johnny S. John, 2009). 

     F8 event (Facebook event to bring together the developers, entrepreneurs and innovators who are building a more social web), facebook is now involved in exploiting the users activity by adding more verbs in addition to “Like”, such as “Read”, “Watch”, “Listen”, or “Travel”. In this way, if a travel agency learns that a user is planning for travel, they can render lucrative offers and cheap tickets to his desired place to travel. This is an insight that would not have triggered the travel agency had the user clicked “Like” for Madagascar.

    

    The traditional customer-firm relation is blurring away because users are now more actively involved in sharingexperience with each other. Toyota Private Social Network provides an opportunity for Toyota owners, dealers and cars. You can be alerted when your car needs battery recharging and also provides you with tips on maintenance from the dealers.

P    Provision of a social commerce platform like “The Gifts Projects” of eBay.

     Provision of commerce services like Geico’s service to pay bill online on Facebook without even clicking Geico’s own website.

    Better handling of customer’s problems, for example telco’s implementation of lodging complaints over twitter and that result into increasing the customer satisfaction level from 70% to 85%. 

Challenges - What firms need to capitalize on?

·         Companies need to revisit the whole business process and systems that implement them. All the firm boundaries where firm interact with customers need to be integrated with each other and “socially enabled”. This would mean at the very least that customers get the same answer to question whether asked over email, website, call center or face-to-face interaction.

·         Companies need to capitalize on new forms of data generated by those social feeds.

·         Establish an IT team to design and pilot cross-functional social media platforms.

·         Move beyond merely “Social listening” to managing social interactions. This can be done by helping individual business units to position their social strategies on top of enterprise wide strategy of social.

·         Monetize on social interactions.

·         Firms need to identify an effective social medium to interact with the customers so that optimal value could be achieved.

Social media is an effective mechanism for co-creation where various business units will interact with the customer to generate value by getting valuable knowledge from the customer. Companies today must adopt social media otherwise a Social Media legacy will culminate businesses in future as these companies will be lacking the useful insights from the customers that they know about them and their businesses will be lured away by the customers.