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Live Business: Live Customer Experiences for the Digital Economy

Pressure is building for companies to respond to – and create – moments that matter to customers, anytime and anywhere.

It’s a moment that flyers experience all too frequently these days: waves of flight cancellations roll through an airport and customers find themselves stranded for the night.

Hotel chain Red Roof Inn has found a way to make the most of such cancellations and win customers.1 Using flight data from FlightAware, an aviation software company, Red Roof tuned Google’s ad search system to automatically raise its bid to win ad space when desperate passengers tapped queries like “hotels near O’Hare” into their smartphones. Room bookings increased 60% thanks to those ads.

With its targeted ad campaign designed to reach customers in their moment of need, Red Roof Inn recognized what many companies have yet to see:

Companies that can respond in the moments that matter most to customers will win their business.

This can be seen in two metrics:

  • Customers’ rising expectations for responsiveness. Seventy-two percent of people surveyed by Millward Brown Digital say that when they tweet a complaint about a brand, they expect an answer within an hour.2
  • Diminishing brand loyalty. This is according to 66% of executives surveyed by consulting firm Bain & Company.3

Indeed, the walls protecting brand allegiances have come down, thanks to the rise of digital. It’s easy to switch to a competitor if a company doesn’t have what customers want in the moment they want it.

sap_core_narrative_customer_image_1That’s why companies need to become Live Businesses. In a Live Business, the entire organization is focused on sensing and reacting to customers in the right moments. Companies that do this consistently are both more responsive and more predictive than their competitors. Automating steps along the customer journey brings more responsiveness and a better ability to interact live with customers across all channels. Big Data analytics enables companies to anticipate – even create – moments that matter to customers and that drive demand.

To deliver a live customer experience, companies need a technology infrastructure that can respond in real time, such as having continuously refreshed customer data that allows for a relevant, personalized interaction at any moment. More broadly, the organization, including its people, processes, and structure, must be tuned to act in the moments that matter most to customers. That includes areas that normally aren’t considered part of the customer experience but that feed it, such as supply chain and inventory management. To enable live customer experiences, all areas of the company must follow one key performance indicator: satisfying customers in their moments of need.

Creating a more agile customer experience is a major challenge. In many companies, the customer data that is critical to creating the live experience is spread across many different systems. That data must be integrated or contained in one place to enable live interactions. Companies also must be able to glean insights from that data to be able to predict, respond to, and create moments that matter. Perhaps most challenging of all, companies must have complete integration across all aspects of the customer experience, not just from a technology perspective but also from the viewpoint of process and organizational integration. That requires breaking down the proverbial silos and getting leaders of each of those silos – and their people – to cooperate and rethink organizational structures and processes to enable the live customer experience.

Going live is not for the faint of heart. Nor is it optional. Many companies are already going down the path of digital transformation. The logical endpoint of that transformation is Live Business. Given the sorry state of many customer experiences today, those that get there first will enjoy the fruits of competitive advantage for some time.

Identify the Digital Paths of Customers and Design New Experiences Around ThemThe first step to a live customer experience is to gain a deep understanding of who customers are and how they behave. Your customers are buying at the mall or at the storefront less and less and are spending more time on social media. To understand how to craft the right customer experience, you first need to find where they are making decisions about your products and services.

Even in B2B, where the customer experience has traditionally been dominated by the personal relationship between seller and buyer, more of the process is moving online. According to Google, B2B buyers are 57% of the way through the purchase journey before they go to brand Web sites.4 And just like consumers, they are spending more time on social media: 86% of B2B buyers use social during the purchase process.5

Increasing use of digital and social have turned the customer experience into a game of hide and seek. Even when customers do engage with brands, they drop in and out of the journey as they continue to research on the Web, seek opinions from peers on social media, and talk with family and friends. All of these factors make following along difficult for companies, which often leads to gaps and breakdowns in customer experience processes that frustrate customers.

Too often, companies try to bridge gaps and restart breakdowns in the experience through a passive exercise. They develop profiles, or personas, of their different customers and research how those personas discover and purchase products and services. Using that information, companies then try to match internal processes to the different journeys that customers take.

Take Control of the JourneyBy simply following customers on their journeys, companies miss the opportunity to actively shape those journeys and create moments that matter to customers. When companies take control of the journey, they can move toward a live customer experience because they are better able to predict where the customer will go next.

Sungevity, a supplier of residential solar panels, has taken the active approach to its customers’ journey.6 The journey begins when the company sends potential customers a personalized letter telling them how much they could save by installing solar panels on their houses (Sungevity researches each house individually). The letter contains a URL where customers can see a Google Earth image of their house with solar panels superimposed on the roof. While on the page, customers can click through to a custom report that shows how Sungevity calculated their savings.

Another link takes prospects to sales associates who are viewing the savings page and can answer questions. The employees then e-mail links to videos that explain installation and payment options. Next, Sungevity e-mails contact information of neighbors who have installed the panels and have agreed to talk about their experiences.

When they return to the Web site, prospects are greeted by a rep that has purchase or lease documents ready to sign electronically. After purchase, the Web landing page becomes a progress report, showing the status of installation and permits and sending alerts as the project advances.

A Closed-Loop ExperienceSungevity has essentially created a closed-loop experience in which customers can interact live with sales associates in the moment of their choosing. Sungevity also anticipates all the needs that customers will have along the journey and proactively creates moments of interaction that customers often aren’t aware they even need. Sungevity’s tightly scripted customer journey leaves no gaps that could alienate customers and cause them to seek other providers. The journey is simply too easy and convenient for customers to want to drop out.

David Edelman, a global leader of marketing and sales for consulting firm McKinsey, traveled (and completed) Sungevity’s customer journey. In an article for Harvard Business Review, Edelman shows how Sungevity’s seamless customer journey is working: the company’s sales doubled last year.

Disrupting Through DesignTo create journeys that attract and hold customers, companies need a good sense of design beyond the look, feel, and functionality of the digital tools and environments that are becoming staples of the customer journey. They need it in the elements that hold the journey together, such as organizational and process design. Rarely will one person have all these skills, but there is a single methodology for designing a unified, holistic customer experience: design thinking.

In design thinking, product designers question the underpinnings of the challenge put in front of them. “If you asked me to design a toaster, my response would be ‘What is a toaster? Where does it sit in the kitchen? What is toast? What is breakfast?’ so we could find a new way to solve the problem,” says Innovationship partner Scott Underwood. “Design thinking asks you to question the parameters of the problem you’re trying to solve before you try to solve it.”7

In other words, design thinking is about redefining problems in order to generate solutions a company might not otherwise give serious thought to – or think of at all. As a methodology, it’s highly collaborative. It focuses on brainstorming, prototyping, and multiple iterations. And it’s dedicated to the idea that it’s OK to experiment and even fail spectacularly along the path to a compelling customer journey.

Can Dynamic Pricing Be Part of the Live Business Journey?Dynamic pricing is another way that companies can bring a live advantage to the customer journey. But in this case, the companies, not the customers, have the upper hand in the relationship. At its simplest, dynamic pricing smooths demand (which lowers the need for extra inventory) or maximizes value by raising prices when customers are eager to buy and lowering them when sales are slow. Companies have been doing this for decades. Think happy hours at a bar or matinee tickets for the theater.

What’s changed recently is the speed at which companies can vary prices and the amount of digital information available to feed pricing engines. Online, where there’s no need for blue lights in the store or sale posters in the window, it’s possible to make changes in real time, using a vast number of variables, such as the behavior and demographics of individual customers. This creates a virtual feedback loop: the more constant price changes lower customer expectations of price stability, the easier it is to introduce price changes behaviorally. More importantly, it gives pricing engines more price points at which to test demand, making actions more precise. Amazon changes its prices roughly every 10 minutes, according to Econsultancy, a research and consulting company.8 Online companies can monitor competitors and change prices instantly to match or beat them.Dynamic Pricing Moves Offline

The trend is even spreading offline, thanks to Big Data. For example, Kohl’s department store has sales that span hours, not days, thanks to its ability to analyze customer data and determine specific times when discounts will work most to its benefit.9

Yet for all its advantages, dynamic pricing also comes with risk. If you tread upon customers’ sense of fairness, it can cause a backlash. Customers erupted with outrage on social media when Uber instituted surge pricing that raised fares eight times the norm during storms in New York in 2013.10 The price increases made some sense: who wants to drive in the middle of a storm? But researchers at Northeastern University found that while Uber’s surges drove down demand (riders), they didn’t create a uniform increase in supply (drivers). Customers decided that by surging its prices, Uber had crossed the invisible line that separates a dynamic price from a rip-off.

Indeed, customers can quickly get wise to dynamic pricing strategies and become so mistrustful that they avoid the company altogether. In general, they prefer static prices. A research study found that dynamic pricing held an advantage over static pricing only when the dynamic prices always went down.11 That can be dangerous in highly competitive industries, where beating competitors’ prices in the moment can lead everyone in a race to the bottom.

However, using dynamic pricing in a way that doesn’t convey a sense of risk to customers and doesn’t lead to drawn-out price wars among competitors can make doing business in the moment more beneficial for everyone.

The Customer Experience Needs a DisrupterTo make large-scale improvements to the customer experience, you need a leader. Many times, designing digital customer experiences cuts across organizational boundaries in profound ways that require a C-level executive to generate support for change and ensure high quality.

These executives are leading the drive to live awareness by focusing on the customer relationship and customer strategy. And they are ensuring that companies create true insights out of the mountains of data they gather about customers but rarely use.

The CCO is the conscience of the customer in the C-suite and fights to prove the business case for investing more in the customer experience.12 Given that in most companies the customer experience is parsed out among different silos, all of which have their own independent processes, technologies, and leadership, the CCO must have persuasion and negotiating skills in equal measure with leadership skills. The CCO must be able to work with and persuade other areas of the company that are involved in the customer experience, such as IT, R&D, supply chain, and procurement. All of them will need to cooperate and potentially make investments of their own to create a live experience.

CDOs Take on the Entire Transformation

Meanwhile, a similar digital transformation is happening across the rest of the company, which has led to another new C-level position: the chief digital officer (CDO). Unlike CCOs, CDOs lead digital transformation for the entire company, not just for the customer experience. They are in charge of matching digital changes to overall company strategy and act as executive sponsors of digital innovation projects.13 In some companies, the two leaders co-exist peacefully. In others, the CDO role is swallowing up responsibility for the customer experience.

The ranks of CDOs are swelling rapidly, doubling every year from 2013 to 2015, according to the CDO Club.14 The club now estimates there are 2,000 CDOs roaming corporate hallways, preaching change.

Indeed, the profile of the typical CDO suggests a disruptive soul. CDOs are 34% more likely to be innovative and 32% more disruptive than their C-suite mates, according to a survey by Russell Reynolds Associates.15 The survey also found that CDOs are 23% more likely to be bold in leadership and are 21% more socially adept.

A CDO’s social ease and firm handshake come in handy. Some CDOs estimate that they spend 80% of their time building relationships.16 The rest of the time, when they’re digitally disrupting the place, CDOs need all the charm and empathy they can muster to heal the bruised egos of people affected by their work.

Regardless of the title used, companies need a leader who is focused specifically on digital, organizational, and process transformation in order to create live experiences. Without this person, the effort will splinter off into various silos, killing the possibility of a unified strategy for change.

Omnichannel Personalization Creates Moments of OpportunityConsidering that 71% of people sleep with or near their smartphones, these cherished devices have become a test of companies’ ability to coordinate a consistent, contextual, and relevant experience across channels in the moment.17 For example, customers can quickly check whether an in-store offer matches the one in the app or on the Web site. They can also see whether the company adds a personalized touch to these interactions to entice them into a closer (and thus more loyal) relationship.

Omnichannel coordination and personalization are the ultimate expression of a company’s live awareness of their customers. Customers have been spoiled by digital-native companies like Uber that offer seamless, personalized experiences in the moment, and they are applying those expectations to all the companies they deal with. Companies must respond in the moment and in a consistent way so that if customers switch from a mobile app to the Web site to the call center, for example, they will be able to pick up where they left off in each channel. Ninety-one percent of customers say they want companies to deliver on this live promise.18

Unfortunately, the various channels inside most companies are silos with their own technologies, processes, and leadership. Bringing all those channels together is not easy. It requires technology integration, cross-silo coordination, and new business processes.

Another complicating factor is that while most customers say they want personalized treatment, the main ingredient of personalization – in-depth customer data – raises the specter of Big Brother. Some 80% of consumers have updated their privacy settings recently, VentureBeat reports.19 Companies need to give customers easy ways to turn off or modify the messages they receive from a company. They also need to give customers more control over data collection and be transparent about how that data is being used.

From Cool to Creepy

It’s easy for personalization tactics to cross the line separating cool from creepy. For example, facial recognition technology that identifies age and gender to target advertisements on digital screens is considered creepy by 73% of people surveyed by RichRelevance.20 Yet consumers were happy about scanning a product on their mobile device to see product reviews and recommendations for other items they might like, the survey revealed.

The most important factor in reducing the creepy quotient is control. If companies aren’t transparent about their use of data and don’t give customers adequate control over that data, they risk destroying the foundation of the customer relationship: trust. Without trust, there is no relationship.

Despite integration difficulties and privacy concerns, companies must push forward simultaneously on omnichannel integration and live personalization. Customer expectations have risen too high for them not to. And the pressure will only get worse as the digital economy continues to move toward Live Business.

Unfortunately, few companies are anywhere near having these capabilities. Many aren’t even thinking about developing an omnichannel customer experience strategy; 52% say they are “too distracted” to do it.21

It’s time to focus. As with any transformation effort, companies must start with creating a strategy and finding the right people to carry it out. Marketing rarely has full control over the omnichannel experience, yet it is the undisputed leader in understanding customer behavior. Data science is part of that understanding but has traditionally played a background role. Marketers must rescue the data nerds from their cubicles and let them lead efforts to sort through the different options for digitizing the omnichannel experience. The data scientists must be experts who can understand not only how to use the tools but also how to apply the data to make accurate decisions and follow customers from channel to channel with personalized offers.

Walgreens’ Technology Approach to Personalization

Walgreens is a leader in building the kind of technology base that can enable live, omnichannel personalization. Its digital transformation is 16 years in the making, according to Jason Fei, senior director of architecture for digital engineering at Walgreens. At the heart of its infrastructure is a Big Data engine that feeds many customer interaction and omnichannel processes, including customer segmentation. The company adds third-party systems in areas such as predictive analytics and marketing software. It also has a cloud-first strategy for all new applications, such as its image-processing and print-ordering applications.22

Other elements of the drug store chain’s technology platform include:

  • Application programming interface (API)-driven architecture. Walgreens’ APIs enable more than 50 partners to connect with its applications and systems to drive customer-facing processes, including integrations with consumer wearables to drive reward points for healthy habits, as well as content partnerships with companies like WebMD. “With APIs, we can be an extensible business, allowing other companies to connect to us easily and help in the digital enablement of our physical stores,” Fei says.23
  • Responsive Web sites. The company’s Web site is built using responsive and adaptive design practices so that the site automatically adapts to the consumer’s device, be it a mobile phone, tablet, or desktop computer. “We have a single code base that runs anywhere and delivers a consistent, optimized experience to all of our customers,” Fei says.24

Making the Most of the Technology BaseThis technology foundation has allowed Walgreens to push forward in personalization. For example, the company has developed its own segmentation and personalization engines to drive outbound e-mail and text campaigns to customers based on purchase history and profile, according to Fei. “We don’t blast out messages to customers but use our personalization recommendations to be relevant,” says Fei.25

The next phase of this strategy is to develop inbound, live personalization tactics, such as recognizing customers when they come back to the Web site and tailoring their experience accordingly. These highly automated, self-learning systems improve over time, becoming more relevant at the moment a customer logs back on.26

“When you search for a product, the Web site will take a good guess of what you might actually want, or if you always print greeting cards at the same time of year, the system would automatically deliver content around that,” Fei says. “Everyone comes to Walgreens with a mission, so we can be very targeted with our communications.”27

Walgreens’ mobile app combines live personalization with convenience. You can scan a pill bottle to refill a prescription, access coupons, print photos from your phone for pickup in a store, track rewards, and find the exact location of a product on the shelf.28

Walgreens recently deployed a new integrated, interactive voice-response system that includes a personalization engine that recognizes the individual, according to Troy Mills, vice president of customer care at Walgreens. The system can then predict the most probable reason for the customer’s call and quickly send them to the right individual for further help.29

Strike the Right Balance

Trust is a moving target. Sales tactics that used to be acceptable decades ago, such as door-to-door salespeople, are unwelcome today. Conversely, consumers’ expectations are unpredictable. At the dawn of social media, many people were anxious about their photos unexpectedly showing up online. Now our identities are tagged, and our posts and photos distributed and commented on regularly. This is the new normal.

However, while consumers are getting more comfortable with online technology and its tradeoffs, they won’t put up with personalization efforts that make use of their data without their knowledge or permission. That data has value, and customers want to decide for themselves when it’s worth giving it away. Marketers need to strike the right balance with customers between personalization and a healthy respect for the unique needs and concerns of individuals.

Use Emotion to Create Moments That Drive LoyaltyWhen he started his online business in 2012, Michael Dubin, the CEO of Dollar Shave Club, decided to make a video of himself pitching his razors. Dubin, who had been an improvisational comedian in his spare time, made great use of those skills in the video.30 It shows him striding around the company warehouse, each fast-paced turn revealing a comedic surprise and an irreverent comment from Dubin. The video, which times in at just over a minute and a half, immediately went viral.

Dubin had to enlist friends and contractors to help him fulfill the 12,000 orders that arrived in the first 48 hours.31 Since then, the video been viewed 22 million times and has played a major role in gaining the company a 13% market share in the extremely competitive razor industry.32, 33

How does a video inspire 12,000 customers to buy products from a company they’ve never heard of? By creating a positive emotional connection. Besides being funny, the video hits positive emotional buttons such as curiosity, interest, and astonishment. And emotions compel us to take action (think fight or flight) – in this case, to buy razors in the moment after watching a video.

Emotions are a crucial component of Live Business because they form in an instant and, once formed, can be difficult to change. There’s no going back in a live interaction with customers if the technology tools are poor or if employees haven’t been trained in how to set the right emotional tone from the beginning. And the effects of negative emotions can be powerful. Some 89% of customers started doing business with a competitor after a negative customer experience.34

Meanwhile, companies that create positive emotional bonds with customers have a powerful advantage. They outperform competitors by 26% in gross margin and 85% in sales growth.35 And emotionally engaged customers are three times more likely to recommend the company to others, three times more likely to repurchase, less likely to shop around, and much less price sensitive.36

Technology Kills Emotion

sap_core_narrative_customer_image_2Unfortunately, most companies have difficulty creating moments that inspire the same kind of digital emotional affinity as Dubin’s video. Digital technology revolutionized the way companies interact with customers by making the research and purchasing process much more convenient. Yet research shows that companies have a long way to go in effectively using digital technologies to engage with their customers.

Just 49% of consumers say their experiences using Web sites on desktop and laptop computers are excellent, while a mere 18% of consumers say the same for shopping with mobile sites or apps.37

How does a company move from technology’s robotic, unfeeling interface to an experience where the customer can sense the people and brand behind it? There’s no single method here. Improving emotional affinity in digital requires a culture that’s hyper about monitoring and pleasing customers. It also begs for a hybrid approach of merging human and digital experiences.

Create Trust

sap_core_narrative_customer_image_3The foundation for digital emotional affinity is trust. Customers won’t feel anything but suspicion if companies can’t handle the basics: quality products and services delivered in a consistent and reliable way. Customers also want the sense that the company puts their interests above its own and conducts business in a transparent way. Otherwise, customers will perceive the company as risky – not a pleasant feeling.

Deliver Simplicity

sap_core_narrative_customer_image_4In any relationship with a company, customers expect – or at least hope – that their interactions will require as little effort as possible to get what they want. Companies need to evaluate processes for simplicity, not just efficiency. That means removing impediments in processes that cause customers to expend extra effort. Research by the Corporate Executive Board outlined in the book The Effortless Experience revealed that moving customers from rating the experience “below expectations” to “meets expectations” gave companies as much economic value as customers who said their expectations were exceeded.38

So just fixing the existing potholes in the experience will go a long way. To do this, companies need to survey customers about their experiences. They also need to survey employees, partners, and external providers about the frustrations they encounter in trying to accomplish their roles in the customer experience.

Create an Empathetic Employee Culture

sap_core_narrative_customer_image_5Research says that extroverts do better in customer experience roles because they are more naturally inclined to want to interact with others. But these extroverts should also have the ability to regulate their inner emotions, tolerate ambiguity, and enjoy helping others. In combination, these abilities give employees extra endurance when it comes to dealing with people and more capability to suppress inappropriate behavior – even when customers deserve it.

Companies need to empower employees at the point of interaction by giving them access to the best possible information on customers: profiles, order history, customer service history, feedback, and preferences. Employees should be measured on customer outcomes – the problem was resolved quickly and to the customer’s satisfaction – not on shortsighted, cost-centric metrics like call time. Train workers, survey customers, and then refine the strategy. Then start the cycle again. After all, customers change over time; so too must customer service and customer experience strategies.

Use Humans to Connect the Experience TogetherDigital brings the ability to react to customers in real time, but humans are important intermediaries in keeping customers happy in the moments that matter most. Companies need to bring in a human element so customers can get answers to questions faster or interact with an agent live while they’re browsing or conducting a transaction online. That hybrid experience can pay off when e-commerce fails to deliver the satisfaction it once did. Most e-commerce sites offer a static, overwhelming experience. Particularly frustrating is when customers seek a specific item but receive thousands of results. Bringing in a human being – at exactly the right moment – is the key to preventing negative emotions from sabotaging the overall experience.

Here are two ways to do it:

  • Start a conversation at the right time – and keep it going. Click-tracking technology can sense when a customer can’t find something and then initiate a click-to-call-me or chat box.
  • Put a face to the conversation. Amazon Mayday is an innovative video tech-support service available for Kindle Fire tablet customers. Users click the Mayday button from their tablet, and within 15 seconds, Amazon initiates a video chat to help resolve the issue.

Offer Justice

When customers have a problem, they are looking for a solution that feels fair and just. Employees must get on the same wavelength as the customer to determine what would constitute a just outcome for the experience, weigh that against the limits the company has set on the experience, and then come to a mutually agreed-upon resolution.

In part, this depends on the degree to which employees are allowed to exercise their own independence and judgment. But it also depends on the preset outcomes that the company builds around the experience. For example, are customer service representatives given the freedom to send a replacement product for one that is one month – or one year – past warranty? Companies must constantly revisit these outcomes to maintain a good balance between giving employees the power to give customers experiences that lead to positive emotions and not breaking the bank.

Use the Brain’s Hardwiring to Keep Things Positive

All of us exhibit behaviors that, when viewed objectively, seem a little crazy. For example, we would rather lose $10 and then win $5 at the gaming table than win $5 and then lose $10. The outcomes are the same but we don’t perceive them that way because we are hardwired to want to end things with a positive experience.

Fortunately for companies, our collective craziness, when identified and parsed out into discrete behaviors, gives companies a tremendous advantage in designing customer journeys that elicit positive emotions, according to Richard B. Chase and Sriram Dasu in a Harvard Business Review article.39

Here are some examples from that article.

  • Give the bad news first. When designing customer journeys, sequence is everything. People like experiences to improve as they go, not get worse. We don’t like feeling dread.
  • Compress the bad, spread out the good. Increasing the number of steps in an encounter will make it seem longer. For example, four steps to checkout will seem longer than two over the same duration of time. Spread out the positive aspects of the experience into multiple segments and combine the painful parts into as few as possible.
  • Create a happy ending. A positive ending, even if things haven’t gone so well to that point, can rescue an experience because it tends to linger in a customer’s mind longer.
  • It doesn’t take too long – until it does. Customers don’t really notice how long an encounter lasts because they usually don’t have a frame of reference to work from. But if it lasts far longer than their vague perception tells them it should, they will become angry.
  • Give away control and power. If customers feel like they’re running things, they are less likely to complain when there’s a problem. Give them choices rather than dictating the process.
  • Create rituals. Waiters always introduce themselves. It’s kind of silly but we’ve become so accustomed to it that we notice if they don’t do it. Come up with some digital rituals (personalization is extremely useful here), such as an introduction and a few thank-yous along the path of the experience.

Use Social Business Techniques as an Integral Part of a Live Business StrategySocial media gives us a glimpse into the future of the digital economy. It offers companies valuable practice in live awareness and responding in the moment.

Brands that don’t respond quickly to problems voiced in social media risk experiencing a viral nightmare in which thousands of people, including customers, berate them for their silence, creating a PR disaster. Most companies have seen the potential harm of being late on social media – or have experienced it themselves – and have put people on the case. Large corporations with at least 100,000 people now have an average of 50 full-time employees supporting social media.40

Those 50 people spend much of their time reacting to messages, sending out promotional messages, or helping with social-media marketing campaigns. In many organizations, these people are relegated to a social department, isolated from the rest of the company. It’s no wonder, because most companies’ social media strategy doesn’t extend beyond marketing and communications.

Yet social media can’t be a department; it must become part of how the entire company does business. Deploying social media across the company puts employees on the path to Live Business in all the work they do. The result will be a faster response time to customer problems on social media (because the experts that the social media team relied on for answers are now online), better cross-silo communications, smarter hiring, and more innovation, as companies begin to use social data and internal knowledge sharing to inform their product and service strategies.

Unfortunately, leaders at most companies still don’t see the business value of social. They view it either as something that their kids do or as part of marketing. In a survey by research and consulting firm Altimeter, only 27% of respondents said that VPs and directors were active on social, while just 9% of C-suite executives had ever hit the send button on a tweet.41 Educating company leaders on the value of internal social participation is becoming a priority for social media teams, which, until recently, have focused mostly on looking outward, according to Altimeter.

Integrate Social with Business Systems

Social media begins to deliver real business value when the data is available for use by a company’s core systems. For example, integrating social data into CRM systems gives companies the ability to recognize customers on social media and communicate with them in a more informed and insightful way. It also gives sales a better ability to spot and prioritize potential leads.

Other areas of the business can benefit from social data as well. According to a 2014 survey, 67% of respondents integrate it into systems and processes to improve business decisions.42 For example, the Red Cross uses social data to identify disasters and develop responses for the victims.

Give Leaders an Opportunity to Learn

Getting the company to engage in social media is not just a grassroots phenomenon. Leaders can demonstrate that there’s value in having employees participate by participating themselves. But they must learn how. Leaders learn best when they’re among their peers. Create a workshop or a committee for them and teach them the business value of social.

BASF’s leaders bought into that value.43 They began by actively encouraging social media experiments inside the company. When some of those efforts began to look promising, the leaders mandated the creation of a global collaboration platform. An internal committee of employees developed the platform that became connect.BASF. The platform has 4,500 communities working together on a wide range of business topics.

Focus on Cross-Functional Coordination

Employees outside the marketing or sales function also need to be educated on how their participation will benefit them and the company. Create education programs that employees can access at any time and give them a place where they can engage with others across the company. An internal social media network is the perfect place for employees to begin engaging with less fear of embarrassing themselves or the brand. Internal social helps employees get beyond their own silos and participate in the broader discussion of overall company goals.

Demonstrate Business Results

Getting employees on social can’t just be about improving communications or getting to know one another better. Social media can help cut transaction costs and improve innovation when employees share useful knowledge and information. Social also helps companies react faster to changes in the external business environment. Studies have shown that companies where employees collaborate through social media improve the productivity of knowledge workers by 20% to 25%.44

BASF is seeing those kinds of results from its connect.BASF community, including project collaboration. By facilitating easier communications and sharing among team members scattered across the globe, the company estimates that connect.BASF increases project efficiency by up to 25%.45

Create Opportunities for Innovation

The protected space of an internal social community gives people the opportunity to share information and knowledge from widely divergent perspectives without worrying about competitors seeing it. Combining these bits of knowledge can help nurture the development of a new product or service.

AT&T has a community devoted specifically to innovation called The Innovation Pipeline, where employees can submit ideas, discuss them, and vote for their favorites.46 Every three months, the top ideas are presented to AT&T executives, who decide whether to fund further development. The community has developed dozens of projects that eventually became products or services.

Give Employees Incentives to Participate

One of the major motivations for employees to participate in social is to raise their individual status. Most social media communities offer badges or use gamification to encourage employees. But often that’s not enough. For information-intensive companies, making social part of knowledge workers’ performance goals will add a sure-fire incentive.

Technology Is Not the ProblemTechnology is not the primary issue in developing Live Business. Advances in predictive analytics, in-memory databases, cloud computing, and the Internet of Things have made sure of that. Rather, the problems lie in the silos that companies have created within the customer experience. Lack of communication, coordination, unified leadership, and budget to replace antiquated systems are holding companies back.

Unfortunately, digital business and the consequential Live Business opportunity wait for no one. According to research by the MIT Center for Information Systems Research, companies that understand their customers better than an average competitor and generate 50% or more of their revenues from digital have 32% higher revenue growth and 27% higher profit margins than average.47 Moreover, board members at large companies estimate that 32% of their company’s revenue will be under threat from digital disruption in the next five years and 60% feel that their boards should spend significantly more time on this issue.

Clearly, CEOs are seeing the importance of Live Business and are hiring C-level leaders to make it happen. Customer experience is at the core of the transition to Live Business and is the latest frontier for creating competitive advantage. Given that many companies have plenty of room to improve their customers’ experience, now is the moment to begin.

Christopher Koch is the director of the SAP Center for Business Insight.
Thanks to Polly Traylor and Fawn Fitter for their contributions to this report.
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