[Viewpoint] New frontiers for social networking

There is no doubt that social networking services are here to stay, as they have become a fixture in not only our personal lives but also in how companies connect with customers. Among the top 100 companies listed by Fortune Global 500, 84 operate at least one SNS account, with usage and customer satisfaction rising fast. As such, companies are trying to broaden the scope of their SNS activity beyond the current methods of marketing and communication to find ways to utilize it effectively in all aspects of management. Three of the methods used in the United States and Europe - Social Funding, Social Supply Chain Management (SCM) and Social Indexing - are now seeping into Korean business strategies.

Social Funding refers to projects in which people donate money or their abilities. Participation and promotion are all done voluntarily via SNS. The process matches businesses on a one-to-one basis and also delivers a sense of goodwill, closeness and familiarity. Some participants gain more satisfaction in sharing in the development of projects rather than raising revenue. Therefore, creative projects, environmental issues and projects that contribute to society are the most popular.

Another aspect of Social Funding is that it has opened a new revenue stream for consulting work on SNS-based projects. Global funding platforms began appearing in 2008 with companies such as Kickstarter in the United States and IndieGoGo in Britain, and now more than 200 compete worldwide. Having arrived earlier this year, this type of work is in its infancy in Korea. But Social Funding is expected to expand exponentially here, given the widespread popularity of SNS and the government’s interest in SNS as a way to promote one-man businesses.

Agents and methods of Social Funding are already diversifying rapidly in Korea. Even public institutions are trying it. The Arts Council Korea set up its own Social Funding site (fund.arko.or.kr) and has had great success in raising money for small arts groups in need.

Social Supply Chain Management reduces the costs related to a supply chain and provides customer satisfaction by sharing information on the problems that can arise within the chain, from production to distribution. Through a channel that is shared by everyone in the supply chain, information is exchanged continuously, thereby raising awareness of emergency situations, providing early warning signs and allowing for solutions to be established. It also meets customer needs by providing both businesses and customers with information on the delivery status of an order and facilitates pre-emptive action when a problem is foreseen.

Best Buy, the largest home appliance retailer in the United States, is improving customer satisfaction by having over 2,600 employees on hand to help with customer inquiries and complaints in real-time via its Twitter account, Twelpforce. Furthermore, customer inquiries and related answers posted on Twelpforce are linked to the information-sharing Web site, BBYFeed.com, allowing people to share their opinions and know-how. After the SNS system debuted in 2009, Best Buy saw a 20 percent reduction in customer complaints. Sales exceeded the annual target, rising 10.4 percent from the previous year despite the sluggish U.S. economy.

Having recently been chosen as one of MIT’s Top 10 Emerging Technologies, Social Indexing collects data on users’ preferences, i.e. social index, via SNS. Prime examples are Facebook’s “Like” button and Google’s “+1” button. By pressing the “Like” button for a product on a retail Web site, the information is automatically relayed to Facebook, where friends can see a person’s preferences. The use and popularity of Social Indexing is rising rapidly, as it allows users to express their preferences quickly and efficiently, giving rise to technologies that accumulate such data. In doing so, product recommendations can go beyond a specific Web site. That, in turn, can facilitate sharing of information about a person’s preferences, from fashion and culture to their interests and hobbies, allowing for tailored information and marketing pitches.

Through these methods, companies can use SNS more effectively in an array of areas. And with the growth of SNS-related markets and the increase in businesses related to social networking analysis, companies will be able to discover newer, even more effective methods in the future.

*The writer is a research associate at Samsung Economic Research Institute.

By Park Sung-min