Just 6 quarters in and this space continues to heat up with nearly 30 vendors. We’ve done over four due diligence calls with VCs in this space in last 30 days, and Altimeter are helping a couple of brands short list their vendors for RFP inclusions –brands know they need an enterprise solution.
This scope of this post is for the pure play vendors and does not include the numerous entrants that will explode into this space from the incumbent software category. To help move the industry forward, here’s my perspective on the space, all which I’m telling buyers as well as investors.
Matrix: Challenges and Opportunities Abound for Social Media Management Systems
-VC Funding for Rapid Growth
-Demand increases as brands adopt more accounts
-Overall small space, with 30 vendors, few enterprise incumbents, yet
-Low switching costs: easy to unplug now.
–Lack of market differentiation
-Rapidly changing data sets and APIs, hard to measure
-Commodity feature set
-M&A in incumbents move in, rapid exit.
-Integration yields new value
-Future state is customer intelligence platform or multi communications tool
-New entrant can ramp in 5 quarters, or incumbents can quickly build
-Incumbents will move in from many sectors: CRM, Brand Monitoring, Web Analytics, BI, Support Software, Email Marketing, Community Platform
Buyers Must Understand This Rapidly Changing Market Corporations who are seeking to buy in this space must place their bets carefully, they need to factor in the following three future trends that are starting out now, buyers must:
Expect only a handful of Enterprise class “Pure Plays” to Remain Standing. In most emerging technology categories there’s only enough room for three vendors: First, better, and different, and that will come to be true here as well. In the long run there will only be a handful of true enterprise pure plays that will stand the test of time. Compare to the community platform space where we see dominance from just two players now –the rest have gone into niche verticals, or platform integration strategies. Buyers must be very careful on who they choose now as unplugging these systems will be difficult as the ‘seats’ will roll out across the enterprise, and if your business units don’t like your choice, they will adopt another vendor without your agreement.
Expect Pricing To Remain Low Until Brands Move Into Multiple Hub and Spoke “Dandelion”. Altimeter’s data indicates that the average enterprise company now has 178 corporate social media accounts,Vendors know to keep pricing low in this rapid market, given the number of entrants and VC injections, ‘growth’ is the primary goal. Buyers need to be aware that switching costs increase considerably as the company moves from centralized to hub and spoke to “dandelion”, and the SMMS tool spreads into many business units (see all five org models). Expect pricing strategies to change as your company moves into a higher adoption rate, and check contracts now. Seek packages for ‘all you can eat’ packages as your company moves into this model.
Look Carefully at Partnerships and Investors to See How They Will Integrate. System integration will be a deciding factor for buyers, as most are realizing the need to integrate these systems into legacy support, email, CRM systems. In fact, Altimeter’s data indicates that integration is one of the top spends ($272k annually) for self reported advanced companies indicating that this will be the primary goal as the market integrates social as a horizontal. To understand, ask your vendors to show their roadmap, indicate their partnerships. Look further by understanding who their investors are, who will often broker partnerships and even foster M&A marriages. Lastly, ask about the SMMS’ platform strategy to connecting to existing APIs and how they’ll offer their own for partners to use.
Over the last few months, Susan Etlinger, a former marketing strategist, and most importantly has used brand monitoring tools, has lead Altimeter’s latest research report on analytics. After interviewing nearly 40 experts and working with Charlene Li and a bit of help from myself, she’s found six distinct use cases (see compass below) on how companies are measuring using these new toolsets.
In particular, I’m fond of how the report lays out a measurement strategy based on organizational model and maturity, there are different strategies to deploy depending on the internal structure. You may recognize these five states from the research I’ve been doing over the past few years
How to Organize for Social Media Measurement
Read the report, print it out, and share with others. The more you share it, the easier it is for us to produce more. Read Susan’s post announcing this report. I’ll link to posts that add to the discussion below.
In this continued digest of job changes, I like to salute those that continue to join the industry in roles focused on social media, see the archives, which I’ve been tracking since Q4, 2007.
People on the Move in the Social Business Industry:
Greg Meyer joins Assistly as Director, Customer Wow Delivering customer delight for users of this SaaS Help Desk solution.
Sonal Mehta joins MillerCoors as Digital Media Specialist Developing social media strategy for the company in both internal and external contexts.
Adele McAlear joins Edelman Digital as Director of Operations for Measurement and Analytics I will be heading up the great team in Montréal that specializes in providing social insights and measurement and liaising with other Edelman offices to provide clients with analysis and insights that will help guide their business decisions.
Altimeter hosted our second roundtable lead with our newest hire, Chris Silva (blog/Twitter) who’s our newest analyst at Altimeter focused on Mobile Strategy. Chris also stems from Forrester, and was an analyst there focused on mobile, he was actually one of the trainers in my new hire orientation.
Above: Mobile Proud! Roundtable attendees show off their personal devices at the Altimeter Hangar.
Attendees consisted of representatives from startups, mobile app vendors, large device manufactures, brands, social web companies, and media creator: Almost Savvy, Appconomy, Ascentium, Avere Group, Box, DoubleDutch, FrontRow Antics, Janrain, LiquidSpace, Logitech, Mekanism, MIT/Stanford Venture Lab, Moxie Software, nvidia, Oracle, Pansonic, Quantinto, Ready to Go Information Technologies, Responsys, Retailigence, Rocket Fuel Inc, SAP, Seesmic, Social Guides, Sony Electronics, SPdL Marketing Strategies, Stanford University Dept. of Athletics, Tagwhat, The Estuary, LLC, and [wire]stone.
I kicked off our roundtable series (our last one was on Gamification) to foster a community discussion so we can all learn from each other, and the key findings will be shared in our Open Research reports. I personally learned a lot from the smart attendees about their visions on the future of the space, and we had a few laughs over a few beers along the way.
Groups were divided into three distinct mobile use cases for discussion:
Enrich: I see this as driving leads, sales, and conversion using mobile devices, both for B2C and B2B.
Engage: Lifestyle and contextual related content that isn’t only about transacting revenue but instead about providing greater value
Entrust: Enabling workforces and business partners to use mobile technology to improve their work in a safe, scalable, and secure manner.
We were tasked to define the challenges in each use case, define current state of maturity, and ideate on future use cases. In nearly all cases, the groups came back indicating a host of challenges in this relatively new(er) medium, often stemming from a lack of understanding. Secondly, most groups believed that maturity was low, often stemming from disparate technology, data, and a focus on shiny. We ideated on the future and the “minority report” vision of contextual content where devices fade into the background was a semi-theme.
Here’s some of the key captures with captions:
Groups were anointed to work the Three Mobile Use Cases: Engage, Enrich, Entrust
State of Enrich: “Terrified CMO”
Future of Engage
The WikiWall, where attendees can leave their thoughts, click to see full size
Altimeter Researcher Jon Cifuentes leads a roundtable discussion
Roundtable 3 takes on Enrich
Community sharing in the round
Discussion stirs with Nvidia and Esther Lim, captures highlights via iPad
In the larger round
Culmination of the larger group, partial view
Mobile discussion in the Cloud Nine lounge.
Susan Etlinger, Altimeter and Shawn Myers, Responsys
Responding to Customers In Social Support May Be Hurting Your Brand. Why?
You may be teaching your customers to yell at their friends in order to get your attention. You must develop a social support strategy that involves an escalation process, will scale, and use the right internal processes and software to succeed.
In the above recorded webinar, you can watch the replay and learn about the business case (why many companies have fallen down in social media crises) understand market data on trends on adoption rates and spending, and a five step escalation framework with over a dozen examples.
Above: The 5-Tier Social Support Approach
10 Reasons How Customer Care Has Changed:
There are some significant shifts on how the customer care organization must adopt, here’s what I’ve found talking to these groups:
Responding to Social Customers May Hurt Your Brand. As stated above, any company who haphazardly responds to customers in social channels without a strategy may be encouraging customers to yell at their friends to get your attention. This will only spiral down further and further.
Outbound Strategy –not Inbound: Support groups must go where customers already are, and this means beyond the call center walls into social networks, third party forums, and online review sites. At a minimum, they must monitor and develop a triage system.
Linear Escalation Now Fragmented: Previously, call center and customer care issues were cleanly routed into queues using support software, now, it’s dirty and messy as the social web is filled with unstructured data, multiple instances repeated across social networks, and a rapidly changing discussion in real time.
Customer Woes Escalate in Public in Real Time. In a few of the most extreme cases like Motrin Moms or Dooce vs Whirlpool we saw these issues escalate during a weekend. As a result, corporations must practice their firedrills in the anticipation of a Friday night crises before a three day weekend when executives are away.
Anyone in Company can be in Support. Unlike prior years where support was often routed to trained dedicated customer care professionals, now anyone in the company can participate in online tools and support customers. This poses significant threats and opportunities for scale.
Customers Can Do Your Job For You: Similar to #5, companies now can tap into their customers (yes, those people who give you money) to do your job for you, but you’ll nee to provide them with service, recognition, and access.
Must Factor in Social Influence –But Know When To Draw the Line. While we’ve already documented the many examples of punkings, we also need to curb our instant reaction to catering to influencers as this could cause bad behavior from influencers in future scenarios.
Special Treatment is Shared in Public: Related to #7, assume special treatment to angry customers is now public, as they’ll tell others around them what worked –potentially forgoing your business model.
Support is the New Marketing. As prospects read reviews from your existing customers, they will undoubltly read reviews on ratings sites, blogs, and forums. Since we know customers trust each other often more brands themselves the support group is one of the most important business units in the company, and cannot be ‘swept under the rug’.
Must Seek New Business Models. Many support organizations are now profit centers, they generate revenues through service level agreements or upgrade and upselling. Now, because customers can self-support each other, many support executives must rethink their strategy. Savvy companies like Autodesk and Intuit have already integrate social support communities right into the product experience.
Beyond Facebook, Google+ a Threat to Twitter.
While the most obvious competitive comparison is Facebook, we’re seeing the early adopter tech crowd dominate the top 100 lists, and I’m seeing some similarities to Friendfeed. In reality, I believe that Google+ could actually be more of a threat to Twitter than most realize, as it organizes fragmented conversations on single threads. In any case, we’re seeing some of the early tech adopters port their networks over, and a few celebs indicating some early strides –yet don’t jump in yet, we see this behavior with many tools.
Strength: Finally got basic social networking features right by hiring seasoned staff, mainly cloning what’s worked for other social networks. Legacy of building scalable systems, nearly unlimited amount of resources, existing advertising, analytics, and ad buying network.
Weakness Lack of integration with other Google systems, existing feature set limited and not compelling enough for mainstream users to set up camp on yet another social network. Significantly behind Facebook and Twitter’s global reach.
Opportunity Integrate with all Google features also including search (which would spur on brand adoption, and ‘free’ marketing), email (The first social network) applications platform (they already have a thriving developer community)
Threats Feature war: Facebook has ability to enable search features and can blow out their inbox features since they have the developer chops from Friendfeed, Gmail team. Secondly, Google+’s features are status quo, that enable email platforms to quickly catch up.
Strategy: Five Ways Google+ Can Become Mainstream:
Now, I’d like to give five strategies that Google can deploy to crank up mainstream adoption, here’s how:
1) Comment Management Features
First of all, I’m already seeing their commenting system break with users with a lot of circles, the comments aren’t easily sortable, nor can you drive signal from noise –chronological ordering isn’t sufficient. As they eventually launch brand pages, and attract more heavy users and influencers they will need nested commenting features, ability to see top responses, and other ways to highlight signal from noise. This low hanging fruit is feature upgrades –and should be done quickly. By doing this, they actually continue to compete with Twitter, shifting rapid conversations over to the Google+ platform.
2) Integrate Search Tools
Search features are Google’s core DNA, however the current search tools doesn’t easily search content within the Google+ stream (it’s limited to finding people, images, circles). Because Facebook features lack any significant search abilities and Twitter’s search is limited to a short time duration this is a significant competitive advantage as users can rely on this platform for long term retrieval of information. On Google’s over arching strategy, integrating this data with their existing search tools is obvious –it’s more fodder for their engines.
3) Enable an Applications Platform
Google has an active developer community that already encircles their camp, in fact they should offer developer platforms and integrate opportunity to integrate. Facebook and Twitter developers are frustrated with a ‘one-sided’ relationship and want to spread their eggs into multiple baskets. As a result, they will be glad there’s competition between platforms which will give them new opportunities and improve their relationships. As a result this influx of new use cases will fuel adoption of the platform and we’ll start to see brand sponsored apps that will result in corporate marketing promoting branded Google+ Brand pages (more on that on #4)
4) Launch Brand Pages (no, really) Google suffers from at least one major flop for every social networking flop, and this year it was their closing of brand pages in a very messy way. While there are few early adopter test brands like Ford that are still active, most brands pages have been sunsetted. Expect Google to offer a new set of brand pages and vanity URLs with application features, and coupled with their existing analytics products and web advertising network. If they do this right, the brands will do the marketing for them, here’s how it will go down: brands will jump on, their competitors will say “quick we need a Google+ strategy” and follow suit, then they’ll race to see who gets the most circle members and turn their marketing engines on. The best case scenario for Google is having brands link to their Google+ brand pages from their corporate homepages fueling mass adoption.
5) Integrate Google+ into Search Engine Results Pages
Finally, the Coup de grâce, will be for Google to announce (or prove) that what happens in Google+ will integrate with google SERP pages. Because Twitter and Facebook have limited search tools and their use cases are limited to social networking or social utility they will not have a competitive edge. When they do this, X things will happen: 1) Early adopters and bloggers will immediately invest more to be first of mind, in fact, expect news to break within Google+ from bloggers and press. 2) Brands will heavily invest in their Google+ brand pages, fueling more adoption from corporations and their agency partners (we know social media teams already spend on advertising) 3) Backlash from the industry as anti-trust and anti-competition will occur.
Love to hear your thoughts, leave a comment on what you think Google’s next moves should be.