SOCIAL MEDIA

MANAGEMENT
Social media strategy is caught between two poles:
proximity to customers and a loss of control
 It is a Monday, sometime in 2023. Peter E., social media manager, is looking at his monitor
and evaluating his company’s social media dashboard. As expected, the market has
responded enthusiastically to the current product launch. A sentiment analysis reveals that
public sentiment is very positive, and the YouTube clip that blogger Lisa had posted six days
ago has already received three million clicks—an excellent result. Thanks to the evaluation
of the previous launch in spring, Peter is aware of the strong correlation between sentiment
development in social media and subsequent revenue development, so the present response
indicates booming sales. However, the product’s tactile properties have been criticized in
some blogs and on Twitter, and Peter decides to keep an eye on this issue. He prepares a
brief update on these insights to pass on to marketing, product development, and the board.
He leans back in his chair and smiles as he remembers how amateurish his company’s
social media attempts had been ten years ago...

2
editorial

Dear Reader,

Social media has had an almost unparalleled impact on the first decade
of the new century. Social networks, blogs, web forums, and more
have become established in almost every sphere of life, and have had
a substantial influence on our society. Smartphones and tablets have
made it easy and cheap for users to create new content and share it with
their contacts, as well as to review and comment on contributions—
anytime and anywhere.

The importance of social media for enterprises is growing steadily—

Denis Burger
and with it, both opportunities and risks. The persons responsible are called
Partner in the
on to professionally explore the social media phenomenon—which involves Communications,
so much more than just establishing a presence in the social web and Media & Technology
collecting fans and followers. If companies want to effectively exploit the Practice of
enormous potential of social media, they need to systematically collect and Oliver Wyman
evaluate a multitude of data and information. Only organizations that are
able to measure the impact of social media will truly benefit from its effects.

On the following pages, we have compiled information about social media

in companies, on measurement of social media activities, and a guideline
for implementing KPI-based social media management. We hope that you
find this publication thought-provoking, and we look forward to entering
into a dialog with you.

Best regards,

Denis Burger

3
 SOCIAL MEDIA

THE VIRTUAL EAR

ON THE STREET

Social media is the collection of digital media and technologies that

enables users to exchange information and individually or jointly design
media content. Essentially, two types of social platforms are relevant
to companies:

– “Internal social media” facilitates communication as well as knowledge-

and experience-sharing between staff and strengthens solidarity within
the company.
– “External social media” comprises third-party platforms that companies
use as a mouthpiece and feedback channel to reach their partners,
and especially their customers.

This article will concentrate on external social media. Typical external social
media platforms are blogs, forums, video and picture portals, microblogs
like Twitter, and social networks such as Facebook. In recent years,
these platforms have experienced rapid growth, and have become firmly
established, heavily used communication platforms—a trend that will
continue in the years to come.

Growth of the number of Companies dedicate a significant share of their social media communication
Internet users worldwide and share to their product and service offerings. Because of the independence and
of social network users
immediacy of the opinions voiced on these platforms, they have become
3.5 70%
a valuable resource for potential consumers. Moreover, impressions,
information, and experiences disseminated in this manner give companies
3.0 60% a direct view into their customers’ minds. Thus, the systematic collection
and structured evaluation of social media content can be likened to keeping
2.5 50% a virtual “ear on the street.” In addition to just passively listening in on what
the social media community has to say, companies can actively participate.
2.0 40% Current studies show that today around half of the companies in developed
countries employ social media in some form, and that 75 percent of social
1.5 30%
media users are aware of their activities. In most cases, organizations use
this medium for PR purposes, advertising, and sales. However, it is not only
1.0 20%
possible but also makes good sense for companies to use social media
0.5 10%
along their entire value chain.

2010 2011 2012 2013 2014

Number of Internet users in billions

Share of social network users in percent

4
The benefits of social media impact a company’s costs and revenue,
either directly or indirectly. If, for example, an enterprise uses the medium
for PR purposes and thus improves its brand awareness, its social media
activities indirectly lead to an increase in revenue. Social media activities
can also have a direct influence on revenue, for example by extending a
media company’s reach. However, these activities need to be very subtle,
because social media users are very sensitive to obvious commercialization.
It is also possible to distinguish between a direct and an indirect influence
on costs. For example, the opinions of the social media community about
a product can be measured by way of so-called sentiment analyses. The
results can subsequently be used as a basis for forecasting the product’s
exact sales volume, and production capacities can be adapted accordingly.
In this way, social media indirectly helps to reduce costs. Direct cost savings
can be achieved by shifting at least some of the customer service activities
to the community. A company could, for example, create a portal on
which users can advise other customers on how to use the company’s
products or services.

Use of social media along the entire value chain

R&D Purchasing Production Marketing & After sales

sales

„The Daimler Blog“ Supplier portal Internal social L‘Oréal video channel “Telekom helps“ on
aid matrix media portal Yammer, on YouTube Twitter and Facebook
e.g. at DHL

Stronger innovation Simplified selling and Higher productivity Lower costs and Growing customer
flow, concrete market buying of products because of time higher sales efficiency commitment, greater
data based on thanks to an integrated savings, less e-mail transparency by
customer wishes, communication platform traffic, and better publicly processing
customers’ opinions for customers and management of teams customer enquiries,
about innovations suppliers scattered across collection of additional
geographies customer data

5
 +
Stylefruits, the German social shopping community, where you can easily create own
outfits, has successfully established a direct connection between social media and
e-commerce. Customers using the company’s website create their own outfits from
different online shops. Other users can then appraise, comment on, or directly purchase
these outfits via partner shops. Stylefruits benefits not only from the revenue generated
on the social shopping platform but also from the page’s “traditional” media elements.
Numerous first-hand data points, opinions, and trends are available for analysis, and the
company can then use the results to adapt its product portfolio. Various activities, such as
outfit competitions, or direct communication with fans, keep both users and Facebook
fans active, which pays off, thanks to the direct link between shop and fan page.
Moreover, Stylefruits achieves cost savings by shifting some of its customer service
activities to the Facebook community.

–
An American airline provides an example of how social media can work to a company’s
disadvantage. When the airline refused to pay compensation to a passenger whose guitar
was damaged on a flight, the passenger recorded a scathing song about the incident.
His video generated 1.4 million views in the first four days alone.

However, besides the many opportunities, new media also carry risks,
which mainly arise from the customers’ direct perception and the implicit
effect on the company’s operating profit. Opinions and experiences voiced
by users are usually published unfiltered. This means that social media
contributions on third-party forums are largely outside a company’s
control—by contrast to those on a company’s own forum. Unfortunately,
it is not possible to avoid mass distribution of a negative image by staying
away from social forums entirely. On the contrary, only companies that
actively participate in the dialog and respond to contributions from
customers are in a position to manage their image and use social media
to their own advantage.

6
SOCIAL MEDIA MANAGEMENT

NAVIGATING
THE DIGITAL JUNGLE

PR manager of a U.S. consumer goods manufacturer

We employ social media to approach our customers systematically

and effectively, and to strengthen our market presence.
Unfortunately, it is difficult to quantitatively measure and interpret
the success of individual activities.

In practice, most companies don’t know how to effectively use social Survey among 186 companies:
media, let alone quantify and optimize such usage. Forty percent of Do you measure your social media
activities?
companies with a social media presence are unable to measure their own
activities, and an additional 14 percent don’t even attempt to do so. All too Yes
often, companies venture into the world of social media without a carefully
considered strategy, thus exposing themselves to avoidable risks. No, but I am interested in doing so

To exploit the enormous potential of social media, companies are well-ad- No, I am not interested

vised to systematically collect and evaluate the multitude of data available

on such platforms—for only companies that are able to measure the impact
of social media activities can optimize them. On the flip side, it is essential
to also identify and monitor social media risks so that they can be avoided.
The totality of measures aimed at maximizing benefits and identifying risks Social media
are subsumed under the term “social media management.”
management covers
The goal of social media management is to improve both efficiency and planning, measuring,
effectiveness of social media activities. Thus, activities include collecting, and managing
filtering, preparing, and evaluating relevant data available on social media
platforms to obtain a transparent information base for discussions and social media activities
decision-making: in order to optimize
– Who is saying what about my product? positive effects and
- What factors influence my brand perception, and how? recognize risks early.
- What is the best way for me to translate positive commitment
into a selling situation?
- How can I achieve maximum virality?
- How are individual players and elements interlinked in Web 2.0?

7
 The tools and processes for answering the above questions differ depending
on a company’s social media sophistication. Today, companies still base
many social media decisions on intuition and implement them by way of
ad-hoc processes. At a higher skill level, social media management involves
carrying out data-based evaluations and structuring social media activities
with the help of guidelines. Best-in-class companies have developed an
explicit social media strategy that they live by. They have access to consistent
data from different sources that is automatically updated, evaluated, and
presented in user-friendly reports and dashboards.

HEAD OF ONLINE MARKETING OF A L ARGE

E-COMMERCE RETAILER

We measure reach, EdgeRank, revenue, number of fashion enquiries,

CPO (cost per order), conversion, clicks, and many more. Our key levers for managing
and optimizing our activities are to record all activities in a database
and systematically evaluate them.

These companies can use their data-driven analyses to identify trends and
forecast the demands that customers will place on the market. Complex
tools for monitoring social media are even able to spot and partially explain
macro-level trends—for example the fact that, and the reason why,
at peak times, more than one percent of the world’s population are playing
“Farmville” on Facebook.

The tools and processes for measuring social activities depend on a company’s skill level

Best-in-class

– Social media activities comply with an

explicit social media strategy
– Relevant data from internal and, if appro-­
priate, external sources are consolidated
– The company has defined guidelines in a consistent data warehouse
on how to use and deal with social media – User-friendly interfaces make data
Basic – Internal and/or external social media warehouse analysis possible
data are available, but not consolidated – Processes and results of social media
– Social media decisions are largely based in a database activities along the entire value chain are
on intuition and experience – Sporadic reports on the success of measured
– Only little data exists on the success of social media activities – Communication channels and reporting
social media activities – Top management is not regularly structures have been defined, ensuring
– There is no underlying plan for communi­- informed about the status of social that all relevant parties are comprehen­-
cations via social media platforms media activities sively informed

Intuitive decisions and Data-based decisions and

weak processes strong processes

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SOCIAL MEDIA MANAGEMENT

IMPLEMENTATION
GUIDE

A prerequisite for carrying out systematic social media controlling is to

correctly record the activities and their impact. The aim of this step—
called detection by Oliver Wyman—is to create a transparent database
for decision making. The next step—termed reaction—is to integrate
social media management into the company’s organizational processes
and structures.

Detection
As a rule, companies draw on the instincts and experience of experts for
their decisions on social media activities. Both are indispensable, but they
should be supplemented by data-based insights. For this, the company
needs to create a consistent and complete data base by consolidating—
ideally, automatically—internal data and external data feeds supplied by
web analytics providers. Once that data is captured in a data warehouse,
it can be analyzed to glean valuable insights about customer reactions
and opinions throughout the social media community.

The data should be evaluated in a structured and systematic manner. One

established method for doing so is to implement a KPI-based framework
that organizes the many success-critical aspects of social media, and thus
lays the foundation for targeted evaluations and analyses. Many companies
find it very challenging to create such a conceptual framework within the
social media context.

Oliver Wyman’s framework can help companies to overcome these

hurdles. It translates the social media strategy into operational measures
and, with the help of KPIs, makes the quality of both process and results
of social media activities clearly visible. Furthermore, it provides a structure
for operational management and optimization, and constitutes a basis for
reporting within the company. Implementation of Oliver Wyman’s
framework is based on a typical value chain and comprises three steps:

9
 1. Definition of the strategic goals of social media activities
2. Derivation of concrete measures for implementing strategic goals
3. Operationalization of social media activities through KPIs

1
The first step of Oliver Wyman’s framework is to define a consistent social
media strategy. This strategy not only ensures that the company’s internal
social media activities focus on the defined goals, but it also specifies the
framework for measuring success. As a rule, development of the social
media strategy is based on an analysis of internal and external factors.
The corporate strategy, which also encompasses the social media strategy,
has the strongest influence of all internal factors. It raises the fundamental
question as to the orientation of corporate social media activities. Should
corporate awareness be enhanced by communicating existing or new
content via social media platforms? Or should a company mainly focus on
generating new ideas and potentials along the value chain through partners
and users of social media forums? The most important external factors, by
contrast, are customers’ and competitors’ social media profiles. What social
media activities can be observed among, or expected from, customers and
customer segments? In what way, and in which forums, are competitors
active, and what are their goals? If a company’s internal goals are matched
with customer and competitor structures, it is possible to compare the status
quo with the target situation. Thus, the strategic analysis is the starting
point for selecting and prioritizing areas for action and for formulating them
as concrete goals along the value chain.

2
Ultimately, the way in which strategic goals are translated into operational
measures always depends on a company’s specific business design.
However, social media activities should always be in line with a company’s
social media strategy. If the strategy calls for dissemination of existing or
new content among the social media community, the company’s social
media activities should target user activities such as reading, downloading,
observing, inviting, and linking. If, on the other hand, the strategy focuses
on generating new content and insights—thus exploiting the full social
media potential—the company should strive to motivate users to evaluate,
comment, write, upload, and invite. It is also possible to merely observe
users, for example by carrying out sentiment analyses to determine
the opinion of the social media community on specific topics.

10
Oliver Wyman’s framework segments the social media strategy into operational measures

1 2 3
Definition Derivation Effect measurement using KPIs of:
of strategic of concrete a) Usage b) Performance c) Impact
goals measures

Generate ideas Conduct Number of Percentage share Revenue generated

R&D for new products competition on participants in of implementable with winning innovation
Facebook competition suggestions

Identify Provoke discussions Number of Resource investment Faster time-to-market

new suppliers in expert blogs active discussion to obtain a ranking thanks to an optimized
Purchasing participants of potential suppliers supply chain

Adapt production Carry out Social media reach Correlation between Savings generated
capacity to social media analysis of platforms used sentiment analysis by adapting production
Production market demand to determine and revenue capacity to
demand market demand

Generate demand Increase product Number of YouTube Average Greater

Marketing for new products reach through clicks generated investment product reach
YouTube video per click

Increase sales Create link between Number of Investment Revenue

Sales figures by launching product and “want“ “wants“ clicks per click generated with
new products button on Facebook “want“ button

Reduce after-sales Establish customer Number of users Average time it takes Cost reduction by
costs of customer service on of customer to answer posts to partially outsourcing
After sales service social media platform service on social customer enquiries customer service
media platform

3
The KPIs help to document both the processes and results of social media
activities. Because the selection and definition of KPIs must always be
oriented on a company’s strategic goals, KPIs will differ from company to
company. Nevertheless, it is possible to assign them to functional groups:
usage, performance, and impact.

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 – KPIs falling into the usage category answer questions as to the extent
of social media platform usage. Which social media platforms does the
company use? How many users are active on a platform? How many
interactions are generated with one user? How many platforms are used
to reach a user?

– Performance KPIs reveal the quality of social media activities. How

quickly do interactions take place? How long does it take to answer a
question? How many resources are needed to answer a question?
Did the interaction lead to a result? How good was the result? How was
the quality of the interaction evaluated?

– KPIs in the impact category record the financial impact of social media
activities on a company. How high were the cost savings thanks to the
use of social media? To what extent (in percent) was it possible to reduce
time-to-market? How has brand awareness changed? What revenue
effect can be traced back to the use of social media?

SOCIAL MEDIA DIRECTOR OF A MEDIA COMPANY

Our company’s heterogeneous business units have very different goals when
using social media. Consequently, our social network strategies must be adapted
to multiple targets.

Collecting data is a fundamental challenge when implementing KPI-based

social media management. The data comes from various sources, some of
which are not freely accessible, and it is often difficult to relate this data
to a company’s existing technologies and processes. Furthermore, the data
supplied by social media analytics providers, who by now number several
hundred, is heterogeneous—standards are few and far between. Because
the industry has been developing at such a fast pace, it is important
to ensure that the company’s data environment is compatible with these
dynamics—an enormous challenge for companies, not least because of
the time it involves. Nevertheless, seamlessly integrating the results of own
big-data analyses with third-party data is an essential element of social
media management if this is to be effective over the long term, and must be
carried out at an early stage. Another important factor is the user-friendli-
ness of the data. Intuitive web tools and analysis platforms make it easy for
decision-makers to view all relevant information, and thus enable them to
immediately include these insights in their decision-making process.

12
Reaction
Social media management only concretely adds value after the generated
information has been incorporated into the organization’s decision-making
process. Doing that usually calls for modifications to be made to both
structures and processes. At the same time, a company must be aware of
the actions that it can take—depending on the success of its social media
activities. Furthermore, it is important to address two typical structural
and process-related issues, namely the clear definition of fields of activities
and responsibilities. Which division is responsible for data collection?
Who reports to whom? At what intervals are evaluations carried out? What
is the setting for discussing the results? Today, the persons responsible
for carrying out social media activities are also in charge of measuring
their performance. However, as social media activities become more and
more professional, the traditional controlling function will probably take
over performance measurement. Consequently, it is important to define
interfaces between IT (data generation), controlling (data analysis) and,
in particular, all those areas of a company where products and services can
be improved by the information generated, such as product development,
marketing, and customer service.

SOCIAL MEDIA DIRECTOR OF A GERMAN MDA X-LISTED COMPANY

Our employees must become aware of the reach and sensitive to the risk
of our social media activities. Our company supports this process by developing
behavioral guidelines and in-house communication forums.

Clearly defined processes and guidelines are needed to ensure that the
data is prepared, interpreted, and used efficiently. In general, it is possible
to set up a central information tool by building on existing reporting
structures. However, two characteristics of social media need to be taken
into account. First, the phenomenal speed of social media calls for compa-
nies to respond almost in real time. Companies need to define escalation
levels so that they can react quickly in exceptional circumstances.
And second, social media information adds the most value by provoking
discussions and analyses. Consequently, it is important to establish
corporate forums promoting the interactive use of social media manage-
ment insights.

Once the company has ensured that the information is available to the
right people at the right time, it must determine what leeway these persons
have to act. How should they respond to the insights gleaned? Here, as well,
the goal is to optimally exploit positive effects and reduce risks.

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 SOCIAL MEDIA MANAGEMENT

If the social media community reacts positively, a company must strive

to exploit this effect. It might, for example, expand its activities by applying
a successful concept to other products or services. In addition, it might
also make sense for the company to extend its social media presence to
other platforms.

If the community’s feedback on a company’s social media activities,

e.g. a competition on Facebook, turns out to be negative, the company
has two options—it can either adapt its activities to the social media
community’s requirements, or discontinue them altogether. In the latter
case, withdrawing from a social media platform is a valid option if a
company wants to reduce its risk. Things become more difficult, however,
if social media reactions are triggered by actions other than the company’s
social media activities themselves. If this is the case, companies must
avoid damage to their image by dealing with such situations openly and
communicating clearly.

For a longer-term learning effect in this new field of social media

management, it is important to comprehensively document and analyze
both the methodology and the community’s reactions.

CONCLUSION
The importance of social media for enterprises is growing steadily—
and along with it both opportunities and risks. Many companies have
already recognized this and are trying to make the most of the emerging
opportunities. However, they often proceed unsystematically and lack
the necessary management and analytical skills to unlock the full potential
of social media. Implementing systematic social media management
that is aligned with the company’s strategy makes it possible to remedy
these deficits. Doing so gives companies a powerful new medium
to leverage.

14
Peter E. still remembers his company’s initial difficulties with building its social media activities.
In the starting phase, his employer had only just begun to develop a suitable communication
strategy for this new medium, and was a far throw from being able to realistically assess or
measure its impact. But he had enlisted professional support and drawn on external know-how
at the right time, making it easier to systematically and sustainably develop the company’s
social media activities. Thanks to this measure, Peter’s company was able to successfully
position itself in the use of social media.

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ABOUT OLIVER WYMAN
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries,
Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations,
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Please contact
Denis Burger
Oliver Wyman, Marstallstraße 11, 80539 Munich
[email protected]
+49 89 939 49 449
+49 16 05 350 350 mobile

Claus Herbolzheimer
Oliver Wyman, Neustädtische Kirchstraße 8, 10117 Berlin
[email protected]
+49 30 399 945 63
+49 171 865 23 56 mobile

E 000 – 13/01 – A 000

© 2013 Oliver Wyman. All rights reserved.

Impressum
Publisher: Oliver Wyman, Marstallstraße 11, 80539 Munich
Editor: [email protected]
Authors: Denis Burger, Claus Herbolzheimer, Sebastian Janssen,
Andreas Sossong, Felix Bevermann
Concept and design: Vogt, Sedlmeir, Reise. GmbH, Munich
Responsible: [email protected]