Research published by Econsultancy and cScape this month looks at the extent to which companies are gearing up internally to deal with the paradigm shift brought about by social media and increased power of the customer. 

Headline findings from the the 4th annual Online Customer Engagement Report show how the presence of companies on social networks has almost doubled from 23% to 44% since last year, and how the use of Twitter to boost customer engagement has gone up five-fold from 7% to 35%.

The research, based on a survey of more than 1,100 companies and agencies, shows that companies who urge their staff to engage with social media for customer engagement are still in the minority, but this will surely become more commonplace during 2010 and beyond.

Beyond the headline Twitter and social network findings, what is hopefully clear from the report is that social media impact on much more than marketing tactics, with far-reaching implications for organisational structures and processes for customer service, product development and internal communications.  

The louder voice of the customer can be problematic for businesses, especially when they have problems with products or services which they want to hide. Well over half of responding companies (61%) say they expect people to become less tolerant of poor service and this percentage has – tellingly – almost doubled since last year. 

But there are also tremendous opportunities for more enlightened businesses who are tapping into customers to get information to help with product development and innovation, or using superior customer service as a powerful marketing weapon (e.g. Zappos).  

Of course, with these opportunities come headaches especially for giant companies who want to use social media for customer service but have to worry about the logistics of managing this if every man and his dog Tweets about a faulty internet connection.

This hasn’t stopped BT, a company highly commended in the Online Customer Service category of our Innovation Awards. Members of the BTCare team ‘proactively search for customers in distress and respond in real-time’. They are not the first company to do this but it is certainly innovative for an organisation of such size to embark on something like this and embed it within their ‘traditional’ customer service operations.

In his introduction to the report cScape Customer Engagement Director Richard Sedley summarises the challenge facing businesses as follows:

“The re-organisation required to take advantage of social technologies [such as Twitter] should not be underestimated. It is worth recognising that the introduction of these tools is unprecedented. Technologies like fax, email and the telephone had all first established themselves (and their associated behaviours) within business before making their way into society as a whole. 

“Today we are seeing the reverse as enterprises struggle to adjust and embrace the pre-established attitudes and behaviour of customers and employees while trying to bring these social tools ‘in-house’.”

A corollary of this seismic shift is how companies measure and gain insight from what is happening online. A technology race is under way with dozens of online reputation monitoring companies helping brands understand what consumers are saying about them online. It’s still fairly early days for sentiment analysis but the potential is enormous. 

Surely it won’t be long before there are more robust methodologies in place which can directly correlate business performance with what people have been saying about them online. Large companies are continuing to invest heavily on traditional research and insight, but I haven’t seen much evidence yet of traditional research coming together with social media measurement. 

Going back to our Innovation Awards, the winner of the Online Marketing Research and Customer Insight category was a company called InSites Consulting which uses user-generated content on social media to answer research questions.

Highly commended in this category was Somatica Digital, an agency which has developed a compelling methodology based around accessibility of brand, quality of interaction and quality of offering which ‘helps consumer brands to formulate a consumer engagement approach encouraging positive sentiment’.

Econsultancy CEO Ashley Friedlein includes details about this approach in this recent presentation: ‘Emerging Approaches to Getting Better Customer and Brand Insight from Online Data.’ Somatica MD Karl Havard’s recent Econsultancy blog post on social media and customer engagement is also good reading.