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View from the business school: The challenge is how we use social media for commercial benefit

By Professor Jim Saker, director of the Centre for Automotive Management at Loughborough University’s Business School

While Barack Obama has secured a second term in the White House, it was the previous election in 2008 which was a watershed for a number of reasons.

For many it was the final outworking of the civil rights movement and the campaigning speeches of Martin Luther King. For some of us involved in the study of marketing, it was the moment that social media became a serious part of the marketing mix.

The Obama camp in 2008 saw the massive potential of using social media as a means of communicating and building a political brand. Social media was grasped and exploited in a way that had not been seen before, its interactive nature allowing for a new form of relationship building.

Obama’s social media presence far outweighed that of McCain. On Facebook, Obama had 2,379,102 friends by comparison to McCain who had only 620,359. On the less popular MySpace, Obama had 833,161 friends compared to McCain’s 217,811.

In 2008, Twitter was less developed than today but even then Obama had 112,474 followers against McCain’s 4,603.
One of the most significant developments was the launch of YouTube in 2005. Nearly 2,000 official Obama YouTube videos were watched more than 80 million times, with 135,000 subscribers producing 442,000 user-generated videos. Obama had 403% more subscribers than McCain and 905% more viewers than his opponent.
The figures showed that he took this process seriously. In the 2012 election, both camps attempted to exploit this particular form of communication.
The real question is whether social media can be effective in developing business. Nobody is currently sure of the extent of the impact either positive or negative.

A number of manufacturers and dealer groups now have Facebook pages and Twitter feeds while others attempt to blog or interact through Linkedin. The growth in this activity seems to be fairly random with an almost ‘me too’ approach taking place. The social media activity often seems divorced from what else is going on in the business.

At Loughborough we have been trying to look at the development of social media, how it fits in with a company’s marketing strategy and how effective is it in driving sales revenue. Some of the most interesting examples are coming from the world of sport:

A father living in Ascot has twins sons, one called Oscar who supports Manchester United, while the other, Louie, supports a well-known team that plays in blue.

At the end of last year, the father looked at his spending on football-related items and discovered that he had spent £1,361 on Louie while he had only spent £86 on Oscar. The father argued that he loved each son equally and was puzzled by the major disparity and what he saw as his own poor parenting. Looking back, the club in blue had at that time a much more developed social media presence than Manchester United. The continued and more sophisticated form of communication had persuaded the father to spend far more on one son than the other.

In reality this is only one example and you can argue that sport is different to business. The level of fan engagement in sport is largely higher than customer engagement in business, with the possible exception of Harley Davidson owners. The issue is that having Facebook or Twitter in operation is fine as long as you have something interesting to say. The football fan craves information and seems to want open discussion about the team’s performance or lack of it. Radio phone-ins go on for hours. This is reflected in the number of sport-generated blogs and websites that have sprung up.

In the retail automotive sector, the challenge is in generating social media content that it both interesting and relevant to the consumer.

The challenge is how we harness social media for our commercial benefit. One thing is for sure, our customers will use it either for our benefit or detriment.

It used to be the maxim that if you offered good service then the customer would tell eight people and if you offered bad service would tell up to 23 people.
Now if you offer bad service via the medium of social media they can tell millions.

In the world of football there have been considerable problems with players tweeting inappropriately. The same thing can be applied in our sector.

I came across a sales person who had just come back from the product training attached to a new car launch. The manufacturer had spent millions on developing the product and thousands in laying on the training. On returning home the person on their Facebook page said: “Have just been on the training for latest product, nice car, would I spend £20K on it? – I don’t think so!”

Maybe a case of anti-social media?

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