Social media’s risk and reward

[By Gisèle Wertheim Aymés]

When United Airlines refused to compensate Son of Maxwell band member Dave Caroll for damage caused to his US$3 500 guitar during a 2008 flight, he took his frustration online.

He used YouTube to air a video depicting his mistreatment by the airline. His posting inflicted enormous reputational damage, well beyond anything United Airlines could have imagined — damage that could easily have been avoided.

The company lost 10 % of its share value, or $180m, during the period its brand was under attack.

This is a real story of how the little guy took on the indifferent corporate giant and won. It also points to the indifferent corporate giant being ill-equipped to deal with the resulting social media onslaught.

Today, two years later, people are still watching Carroll’s YouTube video — 8,4m people having seen it so far. Caroll has had many thousands respond to him online, most of them offering their sympathy or sharing their own United Airlines horror stories.

This is a quantifiable example of how a company’s reputation — and indeed its stock value — can be hit by social media.

Though SA has not seen an online reputation case of this scale, the reality is every hour of every day South Africans are sharing their experiences — good and bad — on social media services for the entire world to read. One day soon we too will have our own United Airlines example.

The Web has amplified the voice of consumers.

Also, audiences are increasingly relying on social media for their information. According to the Edelman Trust barometer of 2009, 51% of people trust information coming from their peers more than they do information from companies (28%).

When it comes brands, 66% of all touch points are now consumer generated (McKinsey Quarterly 2009). As 70% of the global Internet audience is actively engaged on social networks, they could be talking about your brand or organisation at any given time.

It’s transparent, fast, furious and highly influential. It can work for you, or, as in the case of United Airlines, it can work very much against you. Worse still, it doesn’t go away. Unlike other media types, the Web records information forever and anyone doing a search on United Airlines will be exposed to their poor customer service record.

Over the past two years, I had the privilege of being able to pioneer some online reputational guidelines for a large, forward-thinking financial institution. We cut our teeth on some pretty hard lessons along the way, from accusations of reverse racism, to online banking meltdowns, and news leaks on highly sensitive launches.

We learnt that you can’t manage what you don’t measure. Whether you are a corporate or small business, you have to set up informal and formal online reputation management systems, which crawl the Web and allow you to know what your customers are saying about you. Then you need to engage, but only where appropriate.

We found that when we were not engaging with the audience, the noise just amplified and got really negative.

Sometimes, and frustratingly so, our team found itself in situations where it wasn’t able to respond to issues given corporate sensitivities. People often responded to our negatively. But we learned that even when we were constrained, it was always better to acknowledge the conversation, than say nothing at all.

It’s often shocking to read what customers say about your organisation. However, it’s better to understand the sentiment so you can do something about it. Working in a bank — people inherently don’t like banks — you can be sure we dealt with more detractors than supporters.  We learned pretty quickly to separate the “attention seekers”, who just wanted to cause trouble for the sake of it, from those with genuine complaints that needed to be handled professionally and speedily.

We also had to respond quickly, within minutes, to acknowledge the issue, and then get resolution soon thereafter.

Importantly, companies have to be clear on who can respond officially online. You need to have people who are Web savvy but also able to get the right answers from the organisation — and fast! Even with systems in place, on the odd occasion staff enthusiasm to engage online got the better of our reputation management framework and we had to control misinformation that was put into the market.

Social media is prolific and is forcing organisations to become more human in their customer interface. It’s great for consumers, but, as shown in the United Airlines example, there are many companies that still don’t get it and the damage can be long term and irrevocable.

SA companies have a great opportunity to be early adopters and, in so doing, protect their online reputations, brand and share value. They cannot hesitate and must get online and social media savvy. Change is coming at a rapid rate.

  • Gisèle Wertheim Aymés was head of media for First National Bank. She recently left the bank to join a family business
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  • Ken Goldstein, Worldwide Media Liability Manager, Chubb Group of Insurance Companies

    Great post, Gisele. While many marketers see social media as a useful way for companies to form more personal connections with their customers/clients, there are risks involved, especially where reputation is concerned. Dave Carroll’s video is a perfect example of the power of social media and a reminder that companies in all fields need to think before they tweet, post, etc.

    My company, the Chubb Group of Insurance Companies, is hosting an online crowdsourcing event next week to discuss the business risks associated with social media. Any professional with an interest in contributing to a dialogue about managing these risks can learn more and register here: http://bit.ly/b8XvyL

    P.S. I think you will recognize the musician featured in the video invite!

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