Friday, October 12, 2012

Understanding Social Network Impacts to Organizational Performance

Nowadays the world was booming with the series of social networking site that's taken place in mainly of human life and give an impact regardless of positive or negative.

As the world becomes more vibrant and volatile, social media networking such as Facebook, YouTube, Twitter and much more become virally induced into human life as well as give an impact to the businesses and entrepreneurs.

In fact, without all of these social media human will not progress and moving like today and will cause any of major problems in communications and management strategies of particulars organisations and country as well.

This social networking come out with an outstanding number of active users since the very first medium exists. This type of communications medium seems to develop and expand rapidly year by year. This situation makes not only the effect on human but also affecting the business performance.

As reported by eBiz, Facebook and Twitter become the most popular and high-rank in the world for social networking regarding profits and registered users. The facts that each of entrepreneurs should take great consideration is, according to Forbes 50% of the population currently use Facebook and more than 37% use Twitter. [1]

So to questions the capability of social networking impact towards organisational and business performance should be considered as a nonsense attempt.

Facebook Influence of Marketing

According to World Resources SIM Center, Malaysia was in 2nd rank for the number of Facebook users, and the statistic show Facebook became the most popular site for Malaysian till December 2011. [2]

This statistic proved the need for detail study to be done on the effect of social networking towards business profits and performances.

The formula is very easy; the market is about conservations. It consists human being, not just about the demographic sector. The internet and for sure, on time being a social networking, enabling conversations among human being faster and the market getting smarter, more informed and organised.

A lot of studies proved successful CEO is the one who takes a progressive step in the manipulating social network, especially in a large company. They finally realise that to produce progressive companies is by using social technologies to engage with customers, suppliers, and even their own employees enable organisations to be more adaptive and agile. [3]

The study by BRANDFog 2012 CEO Survey state more than 82% of respondents are likely or much more liable to trust a company whose CEO and team engage in social media.

And an incredible 77% of respondents are likely or much more willing to buy from a company whose mission and values are defined through their leadership's involvement in social media. [4]

In Malaysia, some of the social networking-based companies have non-stop development day by day. The companies like PETRONAS and Shell, and a lot more companies seem like they are easily used these social networking-based company to advertising their products.

The company like which mainly used Twitter and Facebook to advertise a product of their client and which used a blog platform to gain profits by hiring a famous blogger to write an advertorial  the article to promote a particular product of client  and earn thousands of readers per day.

How Startup Should Use Social Network?

The successful company will try their best to listen, engage and monitor their client’s need and feedback. Without all these factors, the conservation that linked human being to each other and making networking stronger and directly affected by marketing progress will not happen.

Steven R. Covey once wrote in his greatest book The 7 Habits of Highly Effective People, in the 5th habit, he states, persons to seek first to understand, then to be understood. [5]

This should apply to business companies too in due to listening and engage with their customers and clients. The rule of customers always right should really understand. They have right to criticise. The jobs for each of the company to do is understand them and make an improvement. Period.

Nowadays, Facebook itself offers new functions that are “Group” which easily can be used by companies to engage and monitor the feedback directly from the client and customers without having a problem of the overlook of some feedback.

And through the Twitter, the company is permitted to use their own hashtags  #  to get client’s feedback towards their product and services directly without interfering with other conservations. [6]

Marketing is about building a trust between products and customers. The conservations and networking between customers and manufacturers are the only windows to realise the day to day improvement of each company’s profits.

Social Media ROI

All the CEOs used to look at Return On Investment (ROI) for each of the investment made by their companies regarding training, building and equipment to preserve the “gains from investment”. ROI will help businesses to evaluate the performance of an investment and compare it to the performance of their other investment. [7]

In social media investment too, the company wants to look up how long the investment in social media will sustain their profits in the market.

This is called Social Media ROI. According to the research done by InventHelp, a lot of companies gain the profits in significant amount after making an investment through the social media network. spent USD200 acquiring Facebook fans and resulting in USD1000 in revenue.

93% of business for Foiled Cupcakes comes from Facebook fans and Twitter followers.

Joie de Vivre Hotels booked 1000 rooms for its USD79 per promotion to its 10000 Twitter followers. Jimmy Choo saw a 33% increase in sneaker sales with its Twitter campaign. Edible Arrangements ran a Facebook promotion which resulted in double-digit sales increase. [8]

For the records, thousands of companies used to invest in social networking and already gain revenue from that. The social networking regardless their types of medium used to always give a positive ROI to investors.

This will directly give a massive impact on company and business performance and the chance for them to sustain their marketability among the users or customers.

Conclusion: A Gen-Z Era of Business

If in the current political environment, all political parties used to endorse their approach and re-evaluate their stand on each issue just because of the fever of new generation called as Gen-Z which their life surrounds with high-end technologies and information, all entrepreneurs and businessman should do the same.

Revaluation on the marketing approach used before must be done in due to avoid a dismiss risk faced by their company from the market arena. Social networking media are the smart choice unconditionally and unquestionable. For the time being, the smart will keep going, and conservative seem like quickly jump into their own grave.


[1] Forbes: Why CEOs Should Care: How Social Media Drives Business by David K. Williams, CEO of Fishbowl and writer for HBR and Forbes.
[2] World Map of Social Networks.
[3] Social Networking for Your Business by Paolo Massa, a researcher at Fondazione Bruno Kessler, Centre for Scientific and Technological Research.
[4] Small Business Trends: Small Business Leaders: How Social Should You Be? on the study of BRANDFog 2012 CEO Survey.
[5] QuickMBA: Management according to 7 Habits of Highly Effective People
[6] What Are Hashtags (“#” Symbols)?
[7] Investopedia: Definition of ‘Return On Investment – ROI.'
[8] InventHelp: Measure Social Media Return on Investment (ROI). Infographic