![]() ![]() To see how the strategy of reducing costs by helping people strengthen relationships works, consider Zynga, a three-year-old company whose free social games, including FarmVille and CityVille, are on track to generate $1 billion in revenue in 2011. The work people do on a company’s behalf can include customer acquisition, supplying inputs such as R&D and web content, and selling the company’s products or services. Increase willingness to pay by helping people strengthen relationships.Reduce costs by helping people strengthen relationships.Increase willingness to pay by helping people meet.This definition yields four types of successful social strategies that firms can pursue (see the table “Four Ways to Pursue Social Strategies”): To explain successful social strategies, I find it useful to characterize them in a simple statement with three components that all the strategies share: Successful social strategies (1) reduce costs or increase customers’ willingness to pay (2) by helping people establish or strengthen relationships (3) if they do free work on a company’s behalf. A business with a successful social strategy helps people form and strengthen relationships in ways that also benefit the company. Really want to connect-with other people, not with a company. The primary advantage of a social strategy over a purely digital one is in tapping into how people To return to our dinner analogy, a company with a social strategy sits at the table and asks, “May I introduce you to someone or help you develop better friendships?” That approach gets a lot more takers. These work because they’re consistent with users’ expectations and behavior on social platforms. In contrast, the companies that found significant returns devised social strategies that help people create or enhance relationships. Many companies have learned that lesson the hard way. Imagine sitting at a dinner table with friends when a stranger pulls up a chair and says, “Hey! Can I sell you something?” You’d probably say no, preferring your friends’ conversation over corporate advances. Customers reject such overtures because their main goal on the platforms is to connect with other people, not with companies. What the poorly performing companies shared was that they merely imported their digital strategies into social environments by broadcasting commercial messages or seeking customer feedback. To find out why some firms fail while others succeed in these venues, I studied more than 60 companies across industries ranging from manufacturing to consumer packaged goods to financial services as they ventured into online social realms. ![]() But few of those companies succeed in generating profits on social platforms, despite collecting lots of “friends” and “followers.” ![]() Numbers like those attract traditional companies, which have launched Facebook fan pages and Twitter accounts in hopes of finding new customers and engaging existing ones. Facebook, which fortifies friendships, boasts a staggering 750 million users and a valuation in excess of $100 billion. Fee-based dating websites, which collectively grossed $1 billion in 2010 by connecting strangers, now account for an estimated one in six new marriages. What’s the attraction? They satisfy two basic human needs: to meet new people and to strengthen existing relationships. More than a billion people use social platforms such as Facebook, eHarmony, Renren, and LinkedIn. He lays out a systematic way to build a social strategy and shows how a major credit card company he advised used the method to roll out its own strategy. The author defines successful social strategies as those that reduce costs or increase customers’ willingness to pay by helping people establish or strengthen relationships through doing free work on a company’s behalf.Ĭiting successes at Zynga, eBay, American Express, and Yelp, Piskorski shows that social strategies can generate profits by helping people connect in exchange for tasks that benefit the company such as customer acquisition, marketing, and content creation. To succeed on social platforms, says Harvard Business School’s Piskorski, businesses need to devise social strategies that are consistent with users’ expectations and behavior in these venues-namely, people want to connect with other people, not with companies. That’s because they merely port their digital strategies into social environments by broadcasting their commercial messages or seeking customer feedback. Although most companies have collected lots of friends and followers on social platforms such as Facebook, few have succeeded in generating profits there.
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