One simple word……REVENUE

Typical areas of interest:

Counterfeit product marketing or sales
–product
–coupons
–manuals
Unauthorized agents/sales posing as representatives
Traffic Diversion Schemes and SEO
Document Leakage
Reputation
False Endorsement claims
Identity theft

For consumer products it has been estimated that there is a 1 trillion dollars in the market annually or 10% of GDP of purchased goods that are illegal counterfeit. Let’s put that in terms of your revenue. If 10% a company with a 3.5 billion dollar revenue stream was being stolen by counterfeit activities ($350,000,000), don’t you think management would much prefer to have that stream of revenue go to the company or shareholders?

Some may think that traffic diversion may not cost the company anything, but if you take into account your conversion ratios of how many customers come to your site and actually purchase goods or services, you can relate that back to a revenue number as well.

– Average monthly online visitors to your site 50,000
– Average monthly visitors diverted 10%, 5000
– Conversion rate to offending sites 1.5%
– Average monthly customers lost (5000) * (.015) = 75
– Annual loss of 900 customers
– Value/Customer $125
– Total cost of online diversion to competition $112.5K
If $112,500 in cash was missing, would you investigate?

These are just a couple of examples of how you can quantify the cost of ignoring the risks around social media. Start evaluating your company based on where you have seen your name in social media and what types of products or services you offer. How easily would they be subject to any of the above scams for diverting your companies cash?

1. Data Security – Is the company and internal data vulnerable? Companies must ensure that any software applications that have been developed are secure. Good practice is to have a periodical and consistent review process of the operational security measures to ensure data is safe and secure.

2. Regulatory Climate – All companies must keep abreast of the regulations that affect their type of industry and business. If a company grows too fast without putting the proper compliance standards in place, there is then a reactive, time consuming process to fix mistakes within day-to-day company operations. It is best to take a proactive approach and become an expert in the regulatory changes that affect your industry.

3. Understanding the Human Element – All companies have an interest to protect their brand and confidential, proprietary information. If there is no clear employee conduct code, then there can be room for gray areas when it comes to conduct. With the growth of social media, it is imperative that the use of online mediums is monitored and policy is in place. Employees need to understand with social media comes responsibility, and the policies put in place are there to protect all participants and company integrity.

These are just a few examples of why taking compliance seriously needs to be a priority for any company wanting longevity in the marketplace.

In light of the FTC changes to their guidelines, we have seen an uptick in client inquiries regarding advertising messages and questions about how to stay compliant. Mostly our clients in the medical arena and financial areas are unsure of what they can say especially when it comes to social media. The FTC will continue to send out warning letters to any company that violates the new guidelines. If changes requested are not made, then companies can expect to receive a fine from the regulators. LifeLock is just an example of how companies now have to change their advertising, marketing and social media policies in order to stay compliant. Our company continues to help navigate our clients towards compliant marketing and advertising. Understanding what the regulators are looking for is key.

There has long been controversy about Nestle. The issues started in the 70’s with boycotts surrounding their formula and products for various reasons.  And while boycotts are not new, they are particularly interesting and additionally fueled now with the increasingly widespread use and acceptance of social media.

In recent weeks, Nestle has found themselves in an all out war (although in some cases seemingly a one sided battle) with one of the most potent and well-trained armies in the world: the angry mom blogger. Nestle like many other companies made the decision to jump on the social media bandwagon. And like many of the brands we have come to know and love, they went about it wrong – and really not so socially. What ensued from what many would say was a good intended start is now a reputation and brand issue that goes far beyond what their internal teams and agencies can possibly fix at this point. And sorry, it’s not going away.

So here’s my free my open plea to Nestle: don’t run scared: embrace and PROPERLY use social media for both short and long term consumer management and interaction. And please call in qualified professionals to get you through this crisis. In the interim, here’s my pro-bono counsel:

1. Listen first. When engaging in social media, the first important step is to listen to the conversations. This does not mean just reading Google alerts and tweets about your brand, but instead listening to everything being said about your topics of interest and expertise across multiple mediums and tools.  Your goal is to take a honest look at sentiment and the active participants whom you may want to engage with for some time and begin to formulate (or tailor your existing marketing messaging around) an honest set of dialog with parameters for engagement around your topics.  A note on this: do NOT just listen to influencers. In social media, it’s about way more than “influencers.”
2. Create a master content document.  If you have taken an honest look at the conversations surrounding your brand, industry, and offerings, then you can take the most common conversations that are occurring – good and bad – and formulate, along with your marketing, PR, and IR team. (You can include your attorneys if you must, but be careful of getting to litigious in nature – this is real conversation, not debate.) If Nestle would have done this simple step, they would have already had in place the realities of the boycotts, formula issues, sugar hater sentiment, and the like and would have been prepared to IMMEDIATELY respond with their commentary rather than days later (like the SVP Scott Remy did.)  Sometimes in social media, the immediacy of response is the most important part – so be prepared with real conversation, good and bad. And this should happen 24/7 (more on that later.)
3. Create a solid, integrated social media plan.  A social media plan is really just an extension of your other efforts. Focus less on the technology, and more on the goals of the company. If Nestle’s goals are to extend brand, increase sales, and raise positive sentiment, then their plan should be tailored to just that. It seems though that the only “plan” was to jump into social media blindly and without a plan or assignment of duties. We bring in multiple teams from corporate, communications, and customer service for our clients, as well as experts in the industry. If you are publicly traded, like Nestle, then you should also bring in your investor relations expert and a compliance expert to navigate the laws for these entities. A big part of your plan should also include the parameters of how long, when, and when you are NOT going to respond to something. It is OK not to indulge people in banter that is mindless and has no merit. It is not OK to ignore a series of real complaints. There are sadly times you need to escalate something legally (defamation, illegal RTs, trademark issues and the like.) Put these parameters in your plan so the team knows how to respond.
4. Get a team on board and train them. For many of our clients there are not enough content writers or hours in the day to manage the deluge of social media. And while the tendency for most companies, like Nestle, is to put the SVP of Marketing on the front line, this is not possible unless you are going to actually change their job description and allocation of hours to manage the conversations. Typically, to do social media correctly, you need a team of 5 or more. For Nestle, our approach would have been a model of both internal and external participants.  A note here – the invitation to the bloggers could have been valuable in this instance. When they brought them out to talk AT them (under the guise of talking WITH them) they could have found existing Nestle advocates and offered them positions, much like we do for clients.  Ideally, you find people who are already immersed, already brand zealots, and already great writers. And you man the team 24/7.
5. Set up your profiles and publishing hub for reach. This is where most people start – selecting the tools. And that’s partially why they fail. At first, it doesn’t serve a company well to determine whether Facebook, Twitter, a blog, or CafeMom is the right TOOL. When you’ve listened carefully, you will find where your “influencers” are – and those shouldn’t be the most popular bloggers only, it should be wherever your customers live, period.  Only then can you determine what profiles you should create, etc. and how you should optimize them for the most reach.  One of Nestle’s failures was that they set up just one profile. While the tendency to do this makes sense, you are missing the niche conversations and the coverage.
6. Start talking, about everything. Social media is just like going to a party. You don’t talk to people at a party just about yourself and your interests. Instead, you build relationships through conversation of like interest.  So the team at Nestle should have had a team of people talking. Not talking just about Nestle, but talking about what moms, dads, kids, and chocolate lovers talk about.  You will find natural ways to insert your brand and your messaging (much like the appropriate time to tell someone at a party what you do/sell for a living.) And building those true relationships is how you gain a robust following, and great results.  The Nestle team talks about themselves too much. Take the conversation to something bigger.
7. Constantly monitor, respond, and interact. Use tools that are out there for monitoring – Google Alerts, Radian6, Collective Intellect, Sentiment Metrics, weblogs, etc.  Pay attention, DAILY to what’s going on. And if a conversation sparks – good or bad – jump in. Nestle and other big brands are infamous for taking too long to respond. Talk now. You’ve got your content document to guide you. When in doubt, be real and honest. If you don’t know something, respond as such and find an answer.
8. Embrace the lovers, and the haters. When a group of zealots get on a roll, listen to them and consider engaging them further. Sometimes your best voice is the loudest. If you are going to do an invitation to truly get to know your new audience – like Nestle did with their invitations, make sure it’s well-rounded, and that you are following the new FTC guidelines.  Inviting only top bloggers or “influencers” like Nestle did is ridiculous.  It contributes to the celebrity worship our country is too full of already.  Giving access to only these type of events promotes the close-mindedness that we should get AWAY from and why social media is as strong as it is (gives the little guy a voice.) Remember, access is currency – use it. Inviting excited mommy bloggers is usually no more honest than paying celebs to endorse you – pay attention to the newlaws here.  And think to yourself, how many of these “influencers” ever write negative reviews?

Know when to shut up.

Now, for years now, I have been a huge fan and zealot of Continental Airlines.  I fly them EVERY time – except two occasions: a quick trip to Vegas where I’d have to fly via Houston, or over the water because everyone knows that domestic overseas travel even in first class just doesn’t compare to the luxury of an international carrier heading outside of the country.  I tell my staff to fly Continental or one of their partners (their SkyTeam Alliance allows for travel and mileage accrual on great partners like Delta and Northwest) and that the beauty of travel is being loyal to one airline so that as they travel and collect miles, then one day soon they too will be up in the front of the plane.  Part of the reason I selected Continental was due to direct flights to NYC where I also have an office. The other was the Skyteam Alliance with Malaysian Air who has the most amazing first class experience to China where we also have work. The other is also that for my team or friends that may travel with me, Continental has managed to still serve food (yes, on every flight and even in the back of the plane,) waited the longest to charge for any bags (and are still a bit lower priced on that fee and in first class waive that charge,) and seem to have logical flight patterns, pricing, and amazing customer service.  So, for years now, I’ve been a loyal Continental First Class traveler and for the non-first class traveler could boil the logical choice to be the same due to the nice meal and free drinks alone.

However; this past week I traveled in first class on US Airways and realized that first class among domestic carriers, much like first class on international carriers versus domestic is NOT the same at all.  It seems that the $1000+ tickets for first class on US Airways has been just as diluted as coach tickets.  US Airways didn’t feed the first class passengers on 3 hour flights (you ALWAYS get fed on Continental – first class AND coach.) They served us in plastic cups. The flight attendants were grumpy (ok, so that’s also almost always the case on American Airlines as well.)  Their first class cabin isn’t assigned an attendant for the flight. Instead, they all go to the back of the plane, so once you’ve been handed a basket of chips to choose from (a la Southwest Airlines – which is cool because um, you’re paying like $5 for a plane ticket so you expect nothing) they just scoot to the back of the plane never to be heard from until preparation for landing.  The men had to ask to have their jackets taken for them, and most of the baggage space was taken by both attendants luggage and coach passengers (which is usually stopped by attendants on other airlines.)  The overall experience was just remarkably different and a bit frustrating.

And yes, I can hear everyone thinking “what a snob” – but the point is that when purchasing a ticket in first class which is usually 80% more than coach, there are going to be certain things that you as the buyer expect…and it’s not just a bigger seat and free cheap wine.  It lead me to think deeper about business and cutting costs and while I somewhat see that airlines need to do some cutbacks to help offset an increase in fuel costs and taxes (don’t get me started on how really that is just an easy excuse to move our attention away from just a poorly run business and the like – but hey, most consumers are buying the story and not digging deeper) I don’t think that the same cutbacks should apply to the passengers that feed the potential profit for the whole plane.  (It is assumed that first class tickets are 3 times profit of coach tickets – see more here) and that the first class seats before flight schedules were cut and there were too many free upgrades allowed, used to finance most of any flight.

So, how would that lessening of service to your first class clients look or play out?  What would happen if you or me as a business owner decided that we had to cut costs/services in order to save money and relegated those changes across the board?  Would we really ever as an agency stop delivering first class perks to our biggest clients who have retainers that are 80% higher than our start up clients?  Now, don’t get me wrong – we have never believed that a client should get less service, a substandard product, or go to a newbie account executive (which we have none) because they have smaller retainers. But certainly, the clients paying say $2,000/month versus $30,000 month probably don’t get as many extra perks such as really expensive dinners and show tickets in Manhattan (our $2K clients get a great dinner and an off broadway show, let’s say) and that’s only because you’d end up perking more than you are getting paid.  But if you equate this to the airline – my first class ticket has remained the same cost (as have the coach tickets) yet the service, it seems, on some airlines, has basically gone away completely for everyone.  If we or any of our competitors in the social media or public relations space completely cut out the perks or the benefits of having us work with them, then why come to us in the first place?  Interesting thought, I think…

My assumption is that first class travelers will eventually find a way to drive down costs through increasing need of private jet leases and sharing of such.  I took a ride with someone who had a Flexjet contract and it cost me $500 more than the first class ticket would have – however; I also gained 2+ hours of my time back.  To me, that wasn’t much of an increase – and really, some would say it evened out in cost/benefit analysis.

And, if I owned the airlines – my answer would be simple: raise the prices. Period.  When I was a kid, flying was a luxury – and ALL tickets, even in coach, cost well over $1,000.  (And, BTW, for my young readers, you NEVER traveled in your PJs carrying a pillow – you dressed proper for your flight..)  So, if the airlines have to find a way to be profitable I’d say one, address your business model and do a complete analysis of everything from the top down – because quite frankly fuel can’t be the ONLY reason you are having problems. And second, raise the prices overall.  It doesn’t have to be much – say 20% across the board. People, especially in first class HATE to be “nickel and dimed.”  Don’t charge the coach passengers $5 for water and a $3 for a cookie – raise the price of the ticket by $10 and call it a day!

And let the competition begin. Fly Continental whenever you can. They seem to be doing a LOT right – especially in first class.  It’s NOT all the same. Be discriminative…especially with luxury items.

What do you guys think? Aside from my snotty rant – would your business be OK if you cut out all services to your best clients? Would they go elsewhere, or would they just understand?  Most companies are having to look at cutbacks and ways to save money -but is everyone also killing the service? I doubt it. We push for more web meetings and conference calls, but still take calls 24/7 and give incredible service.  Where have you cut costs without cutting service? And have costs been the same for the small fries as the big guys in your customer list?

http://financialservices.house.gov/essa/essabill.pdf

I have combed through much of the bill and will post more if asked. But in general here’s where you can find the nuances and pork stuffing that most are upset about.  Keep in mind, this legislation also altered the legislation of 5 other bills. You have to read this bill and track back the changes made and reference the original documentation in order to truly understand the bills.  (Thank goodness for my Ivy education that I know how to do this…)

Sec. 308 – Increase on limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands

Sec. 309 – Extension of economic development credit for American Samoa
Sec. 310 – Extension of mine rescue team training credit
Sec. 314 – Indian employment credit
Sec. 316 – Railroad track maintenance
Sec. 317 – Seven year cost recovery period for motorsports racing track facility
Sec. 319 – Extension of work opportunity tax credit for Hurricane Katrina employees
Sec. 322 – Tax incentives for investment in the District of Columbia
Sec. 325 – Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds
Title IV

Sec. 401 – Permanent authority for undercover operations
Sec. 402 – Permanent authority for disclosure of information relating to terrorist activities
Title V

Subtitle A – General Provisions

Sec. 502 – Provisions related to film and television productions
Sec. 503 – Exemption from excise tax for certain wooden arrows designed for use by children
Sec. 504 – Income averaging for amounts received in connection with the Exxon Valdez litigation
Subtitle B – Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Act of 2008

Sec. 512 – Mental Health parity

Title VI

Sec. 601 – Secure rural schools and community self-determination program
Sec. 602 – Transfer to abandoned mine reclamation fund

For the first time this week I encountered someone that started following me on Twitter  who had their account set to “private.”  While I’ve seen this in mySpace, which I also think is silly for anyone over the age of 18, I never once thought anyone would have the audacity to privatize a FREE micro-blogging and uber connector service. Call me crazy, but somehow the words “blogging” and “social networking” doesn’t lend itself to privacy. It actually kinda defeats the whole point.

I guess I’m just confused as to why you would even sign up for a Twitter account if you are shy, or have things to say that you’re sure your husband or boss shouldn’t find.  I ask these users why they don’t instead use one of the many instant messenger services and create groups or chat rooms if they need to communicate in snippets with subsets of people.  

This goes back to a question that inevitably always gets asked when I’m speaking for groups and conferences – what do you do about privacy concerns on the Internet. My answer is typically some version of “if you are really concerned about privacy, then stay off the internet…” Again, the very definition of the Internet was to connect people and give access to information. It was kinda the whole point.

Anyway, my take is that if you have a Twitter account, or a mySpace or a Facebook…if you use social bookmarking tools, or do commenting on blogs, etc. then do so openly.  If you want privacy, then use email. Better yet, send a letter. But be careful – someone could go through your mail.  

The bottom line is that the information superhighway was never meant to be a private country road.

I had a wonderful interview with Tim and we talked about a bazilion things that center around social media and where it’s going. Some of my other points I shared were that (a) companies are now trying to embark on a social media plan, but most do not have a clear strategy that ties into their overall business plan, and (b) many companies want the cool “blogs” and “podcasts” but don’t want to do the work involved to maintain them (nor do they want to pay companies like ours to do it for them, and (c) companies come to agencies like mine and others that offer social media as a service, but immediately want to know how they are going to generate revenue off of it…and really don’t like the answer in most cases…there isn’t any to be had, but social media participation is an insurance policy you can’t afford not to carry.

Great stuff, Tim! I can’t wait for the article on the YouTube lawsuit!

There are so many things to discuss over the coming week with regard to this conference, but a specific highlight of course was finally meeting Chris Heuer, the founder of the Social Media Clubwho truly has grasped not only a vision of social media and it’s impact on business, but more exciting to me personally, the once again realization that this “new media” or “internet world” has completely changed the rules of business, entreprenuership, and the economy.

I was joined by many esteemed panelists including Allan Sabo, Pamela Slim, Max Fose, Celia Blackwood, Kevin Donnellan, and
Ben Gordon.

Last, but not least, Robert Scoble closed out the day with many quips from a blogging fanatic – most importantly, a point that I think many missed but really need to remember is to simply pay attention to your customers. Acknowledge them. Period.

I’ll have more in the coming days to chat about, such as a warning not to dislike ice cream or you may be sued, how companies should see blogs as insurance rather than cost centers, and of course why old schoolers tick me off.

We work with many small businesess in the retail and small service sector. And I know of two examples of times that clients recieved a great deal of foot and phone and email traffic to their establishments, and were completely lost because of one simple step: the client didn’t respond in a timely manner. Clue in, people – you have to respond to the customers. Duh.

You think it’s a rare example? It’s really not. This whole week, for example, I have been trying to reach maid and carpet cleaning services. Out of five companies contacted both by phone and email (cleaning servcies) on Monday with a follow-up call on Tuesday, I have recieved exactly ZERO responses. Sadly, I got the information for the services from online Pay Per Click ads, a direct mail insert, and a billboard. So, some poor agency somewhere is being brow beaten for sure about how they aren’t earning their keep, when really, the business is hurting themselves.

So, if there’s one piece of magic in advertising, marketing, and public relations today, it’s simply this: ANSWER YOUR PHONE!