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The social customer

Peter Ferdinand Drucker has influenced a great deal of my thinking, particularly about management, about organisation, about organisations, about all of business.

And about the customer.

After all, there is no business without a customer. As Drucker famously said (on page 61 of his seminal work Management: Tasks: Responsibilities: Practices):

There is only one valid definition of business purpose: to create a customer.

His italics, not mine.

The purpose of business is to create a customer.

A customer.

 

According to the Oxford English Dictionary, the noun “customer” has a number of meanings:

  • One who acquires ownership by long use or possession;  a customary holder.
  • An official who collects customs or dues;  a custom-house officer.
  • One who “frequents” any place or sale for the sake of purchasing; one who customarily purchases from a particular tradesman; a buyer, purchaser.

We are not required to guess which meaning Drucker meant to rely on. The OED informs us that the first two usages above are obsolete, and that the “chief current sense” is related to the third and final definition.

So the current and only extant definition of “customer” is fundamentally about a regular, habitual, returning buyer. And this definition is no fad: there are references to this particular meaning in publications going as far back as 1480, 1523 and 1611. Not a fad.

None of this is new. None of this is startling. Everyone knows that businesses don’t exist without customers. Everyone knows that it is much easier to do business with an existing, “repeat” customer.

So why am I saying all this, and why now?

It’s for a simple reason. I’ve spent over a decade trying to make business “social”: writing about it, implementing tools that help businesses become more social, talking at conferences and seminars and workshops about it, engaging one-to-one with organisations keen on starting the journey towards becoming social.

And every now and then, the same question comes up, in one form or the other:

Where’s the payback? Where’s the ROI? Why is it worth doing?

When I started with the use of social tools in enterprises, at Dresdner Kleinwort, Andy McAfee was looking for people engaged in what he later termed “Enterprise 2.0″; the questions he asked, his lines of investigation and his subsequent SLATES framework did much to help me understand where the payoffs were in what we were doing then. We’d been using some of the tools since the late 1990s, and were adding to our toolset as more became available. In those days, many of the tools were open source, so there wasn’t really a significant investment decision to make: in many cases, we allowed multiple pilots to run in parallel before deciding the way forward on the basis of adoption and usage rather than mandate.

To many of us, the payoffs were as plain as proboscides. Not just any proboscides. Prominent proboscides. As prominent as the proboscis on the primate below.

The tools may largely have been free; our investment was nevertheless significant, in terms of the time we spent documenting and sharing what we were doing, what we were learning, what we could re-use. Early payoffs were simple, and were encapsulated in the McAfee SLATES model: improvements in knowledge management as a consequence of the use of Search, Links, Authorship, Tagging, Extensions and Signalling. Communications improved as a result; email traffic went down; meeting agendas became easier to construct, the meetings themselves were easier to run, and documenting the results and decisions was done more effectively. The persistence of the information, and its simple shareability, reduced translation and misinterpretation risk in global projects; version mismatch was minimised, since we tended to be looking at the same document; the ability to learn from mistakes was enhanced quite considerably.

We weren’t really using terms like “social” then within the enterprise, though people had begun to group the tools into this emergent category of “social media”.

Since then “social” is everywhere. We use terms like social business, social enterprise, connected company, and even argue about what they mean. Incidentally, I just love the words the Drucker Institute uses as a description:

We are a social enterprise that makes people more effective, organisations more responsible and work more joyful. We do this by turning Peter Drucker’s ideas and ideals into tools that are both practical and inspiring. We do this because society is only as strong as the organisations within it.

With the explosion of interest in “social”, there is no dearth of evidence on the rationale for investment in companies becoming social. Locke, Levine, Searls and Weinberger gave us The Cluetrain Manifesto to set out the agenda over a decade ago. Hagel, Seely Brown and Davison then provided the business rationale, the move from stocks to flows, in The Big Shift and The Power of Pull. Michael Chui et al at McKinsey Global Institute then gave us the research on how this was affecting corporations by publishing The Social Economy: Unlocking Value and Productivity Through Social Technologies. More recently, IBM, in its regular annual Global CEO Study, majored on how chief executives now regard “social” as where their interests lie and where their investments are going.

There is no dearth of evidence.

And yet.

And yet the questions continue.

So that’s why I wrote a series of posts recently on “The plural of personal is social” to try and go back to the beginning, to the customer. To try and explain that customers expect, even demand, to be treated as people. To try and explain that “social” was actually a way of doing this. Somehow, even after writing those posts, I felt there was more I wanted to say about it. Hence this post.

 

Companies need to become social. Because their customers are becoming social.

Companies are used to deciding to do (or not do) something because it makes “business sense”; now they have to learn to do (or not do) something because it makes “customer sense”.

From a business viewpoint, if something does not make sense in the eyes of the customer, then it is not worth doing. Not if you want customers. Not if you want people who return, and return regularly, to do business with you, people who provide you with their custom. Customers.

That’s what I meant when I said:

“Social” is not a layer. “Social” is not a feature. “Social” isn’t a product.

Social is about bringing being human back into business. About how we conduct business. About why we conduct business.

Social is something in people’s hearts, in people’s beings, in their DNA.

Man is born social.

Many companies were not.

So, every time you do something you believe makes your company more “social”, ask yourself the following question:

Will this help build trust between the customer and the company?

Customers aren’t stupid. There may be a sucker born every minute, but customers are not suckers. Even suckers don’t return.

Ask yourself  “Will the customer get a better product or service as a result of what I’m doing?” Ask yourself  “Will the customer return and trade with me again?” Ask yourself  “Will the customer recommend me to others?” And again and again, ask yourself:

Will this help build trust between the customer and the company?

Sometimes customers don’t know what they want, and may need help in that process of discovery: much has been written about Henry Ford and “faster horses”. Sometimes customers don’t  know what is possible, and may need their imaginations to be given wings: much has been written about Steve Jobs and “a dent in the universe”. Sometimes customers are happy with what they have… until they see something much better: much, too, has been written about (and by) Clayton Christenson and “The Innovator’s Dilemma.”

These are limit cases.

Most of the time, customers know what they want.

They want to be treated like human beings, not account numbers.

They want to know they can trust the people they do business with.

They want to know that the people they give their business to actually value their business.

They want products and services that are fit for purpose, made available at a reasonable price.

If and when something goes wrong, they want to know the facts. Quickly. Without window-dressing.

They’d like to know what is best for them, so they’d like to talk to their friends and relatives about it.

They’d like to know what their friends recommend, and they’d like to recommend things to their friends.

They’d like help when something turns out more complicated than they’d expected, or when they’re trying to do something different.

And they’d like to know that they’re being treated fairly.

In exchange for all this, they are willing to give their custom regularly and loyally. As part of a trusted relationship. Where people buy from people and people sell to people.

In exchange for all this, they are willing to become customers.

In the end, that is the reason why businesses need to become social.

Unless they do, they won’t have any customers.

 

Posted in Four pillars .


9 Responses

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  1. clive boulton says

    I’d posit many companies are not social enterprises because the core design of relational databases underpinning is bereft a social graph capable of enterprise scale. http://en.wikipedia.org/wiki/Graph_database

  2. Arthur says

    Brilliant. As usual. Thank you.

  3. Steve Holcombe says

    JP, First, I’ll second Clive’s posit (but then I do that a lot as he is a valued advisor). It is a great time for real leadership at the CEO level of enterprises. The leadership I am thinking of is more than turning to the CTO and saying “make the company social”. It’s time for the ERP CEO to consider whether their CTO can look past the sales cycles and sales channels of the BigCo ERP software providers. This is a fantastic moment in time for taking one of the increasingly available open source database systems, fashioning it to meet the selective sharing needs of a company’s supply and/or demand chains, positioning it “in the Cloud”, and then making a commitment in terms of human and financial resources to make it work for the long run. It’s not rocket science. If the CTO thinks that it is, then it’s time for the CEO to find another CTO.

  4. Paul Byrne says

    Great insights JP, well done and thanks. Paul

  5. Chris Conder says

    Brilliant. The last points make the case. Its also the reason why the big monopolies have ‘customers’ but don’t enjoy the relationship and would change at the drop of a hat if a reasonable alternative was provided.

  6. Jeff Mowatt says

    A few months ago, writing of the Social Age, a man by the name of Doug Wolfgram posed a question about the fate of those least equipped to compete in the reputation economy. .

    “What if you are truly an expert but just don’t like to talk that much? What if you focused your time developing programming skills not writing skills? How does the non-writer, non-pundit or non-influencer succeed in the Social Age? Is there any hope for the closet genius? Or is that the next age…”

    Empathy, according to Umair Haque, is the next big thing.

    There are two prominent interpretations of social business one is the customer relationship form epitomised by Brian Solis, the other is the social business model advocated by Muhammad Yunus, which makes a social objective it’s primary goal:

    http://economics4humanity.wordpress.com/2012/06/15/the-social-age/

  7. Marni Melrose says

    Great post and absolutely true. I can’t believe the number of our customers who, when they get me on the phone say, am I actually talking to you? With most companies I talk to a computer and get so frustrated. I know how they feel. I am a social being, and I actually want to talk to my clients. Recently we set up an enterprise social network where we bring the members of one of our products inside the fold. Our clients get to make decisions on the product they signed up for. When people can make decisions you get a lot more buy-in. People love to have a say in their world, that’s what liberty is all about. It’s no wonder that business would evolve into social. I am excited for this new world.

Continuing the Discussion

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