Customer-Centric Social Media: New Frost & Sullivan DataCustomer-Centric Social Media: New Frost & Sullivan Data

Social media is impacting the customer relationship in significant, measurable ways--changing how people interact with the companies with which they do business, and their expectations for those interactions.

Social media is impacting the customer relationship in significant, measurable ways--changing how people interact with the companies with which they do business, and their expectations for those interactions. Consumers and business partners develop closer relationships and deeper loyalty to organizations that have a strong, meaningful social media presence; they also look to interact with their preferred vendors online, getting special deals and recognition in the process. And thought leaders, or online clout holders, can impact the perception of a given business through Twitter feeds, Facebook shares and other online messaging.

Leading companies recognize the value of social engagements with their clients, and they are taking steps to manage the relationship on their terms, and in ways that benefit them and their customers. Individuals still use social media on a personal level more than as part of the organizations for which they work, but enterprises are increasing their use of the technology as they begin to understand--and in some cases even measure--the benefits: Less-expensive marketing alternatives, real-time customer-service opportunities, and the ability to drive collaboration inside and outside the business community.

Organizational use of social media is slowly growing: Frost & Sullivan research shows that slightly more corporate workers in 2012 report that their organization is using social media compared to last year (up three percentage points, to 59%). On the other hand, personal use of social media for professional purposes and for career enhancement are on the decline--perhaps as a result of the increased corporate use.

Today, companies are using social media for external client relations at a higher rate than they are for internal staff relations. But few organizations are integrating their social media efforts with formal marketing efforts, market research, and other traditional customer-acquisition and retention programs. Instead, they rely on social media to informally enhance external client relations and drive "word-of-mouth" marketing. As a result, we continue to see very low uptake of social media engagement tools to help formalize social media strategies.

Not surprisingly, informal approaches to social media are adopted at significantly higher rates by smaller businesses, for which budget constraints tend to limit formal efforts to maximize social media strategies.

Within the enterprise environment, Facebook is the social media giant: more than 80% of organizations use Facebook to drive their external client relations. Even those social media sites that are aimed at business users, such as LinkedIn, still pose no threat to Facebook. Given Facebook's global reach, and its roughly 1 billion monthly users, we don't anticipate the site's importance to diminish any time soon.

But among the remaining providers, the market is highly competitive and volatile, with acquisitions and closures commonplace. LinkedIn, the second-leading social media site in our survey, has seen a slight uptick in business users since last year. This moderate growth comes even after Google+ was launched in the summer of 2011.

Organizations are still wading in the shallow end of the pool when it comes to using social media and leveraging it to its fullest potential. But given the power of the medium, Frost & Sullivan expects more businesses to take the plunge in the coming years.