Earlier this week, Dachis Group launched the Social Business Index, an ambitious real-time attempt to rank companies in terms of their social media prowess. The index has already been labelled ‘Klout for companies’, but the wealth of data that Dachis brings to the effort - crunching hundreds of millions of social media signals into usable data - and the focus on social as a business imperative, rather than a marketing tool, marks this new platform out as one to watch.
The Holmes Report caught up with founder/CEO Jeff Dachis (JD) and CTO Erik Huddleston (EH) to discuss why companies should take the Social Business Index seriously, and how they can become more social.
Are you happy with this designation: ‘Klout for companies?’
JD - No. Yet for people who aren’t in this business and don’t understand the value of measuring concrete data and conversations - and tying those to metrics and behaviours and concrete business outcomes - it’s an easy way to designate what the index is. However, the index is exponentially more complex.
EH - One of the value propositions of the index is that ability to quantify the social performance of a company much like Klout quantifies the social performance of an individual. Where Klout is mainly about influencer outreach scores and the like, what the Social Business Index represents is like the consumer price index for social. It represents a baseline for social performance.
Can you turn companies into 'dynamic & socially calibrated' entities even if they don't have the right people in place?
JD - What you’re talking about is the willingness to engage. It’s really a characteristic of an organisation, rather than the right type of person. Most organisations have done a poor job of connecting and engaging with their constituents. What we really like to focus on is setting up programmes and tactical efforts to get companies to have a more willing bias to engage with their constituents.
Let me put it this way. Can companies be socially adept without someone internally to champion social media?
EH - I will say the most successful organisational models are those that have some center of excellence even if it’s not executing social, but acting as the central social strategy hub, acting as that brain trust to help disseminate knowledge throughout the organisation.
What are the risks for a company that isn’t taking social business seriously?
JD - For some industries it’s tougher to be successful at customer engagement than others. If you are a Chinese mining company it’s much harder for you to engage your target consumers in social than if you are managing Justin Bieber’s latest release. The index accounts for that but we think every single company is going to become a social business. The way of doing business is going to give way to a more connected and engaged way of interacting with constituents to create value. It’s early in that effort. That being said, many companies are starting and trying. Others - their ecosystems aren’t as technically evolved yet and they haven’t embraced social as a way of doing business.
EH - Those that are capitalising early are going to be the ones that get the outsized returns from those early investments. One of the fascinating stories is how Red Bull is able to punch above its weight class and perform against Coca-Cola, Pepsi, Dr Pepper, the drinks behemoths.
Does the index factor in, and demonstrate, how well a company is organised internally in terms of social media?
EH - To start with we focused on brand marketing and brand awareness outcomes. That being said, two things are reflected in internal organisation. One, the index analyses the company and breaks down its constituencies between the company’s social presence and employees. The other thing we do is analyse the signals that emanate from a company - we can see that as a proxy of the internal organisation and collaboration. One of the interesting ways you measure the social infrastructure is you analyse how well coordinated all of the disparate messages are coming from all of the brands, geographies and departments - and we analyse those signals for ‘hive-minded coordination’. This gives you very good indication that they have behaviours behind the firewall that are effective.
Jeremiah Owyang noted that “the challenge of the Dachis Social Business Index is it's focused mainly on correlation of marketing engagement metrics - not hard core ROI” How would you respond to that?
EH - This is the curse of brand marketing. About $50bn of marketing spend is spent on performance marketing which is what Jeremiah Owyang is talking about. The other $450bn of marketing spend is on things like Superbowl commercials, where you really have no idea what the impact is, because you have different goals. Part of what we are doing with the index is applying those performance characteristics of hard dollar performance marketing to the softer and fluffier business outcomes of brand marketers. I completely respect [Jeremiah’s] viewpoint, and he’s right - we’re not measuring call avoidance or sales attribution.
Is this just about brand marketing though?
EH - No, but that’s where we are starting, which is a function of market maturity and the best entry point for social business. What you’ll see us do over time is migrate from marketing to support, to IT/HR, line of business manufacturing, to supply chain. Applying those same sorts of approaches.
What’s the biggest mistake companies make when they try to become a more social business?
JD - They immediately focus on tactics without coming up with a strategy that is based on specific business outcomes and enables the business to organise around those outcomes and then deploy resources against a specific set of metrics that they can quantify. We’re beyond a willingness to be blind to unfettered or unmeasured experimentation. Companies want to move to a place where they can apply significant dollars to engaging and they want to know what the specific business outcomes are that they can achieve. The biggest mistake is ticking a box, instead of answering that question ‘why’ first.’