Social business has mainly been discussed in terms of what it can do for the company in terms of efficiency of Knowledge Management and Sharing and the impact it has on the organization and culture. One of the aspects of Social Business that so far is under-exposed is the positive (or negative…) impact on the way customers perceive the brand and thus the influence it has on their buying behavior. In this post I will briefly outline how Social Business and Brand Equity are related and help to reframe your thinking about Social Business and why it can be a sound market approach for your organization.

A couple of weeks ago I presented at the Social Business Forum in Milan on the subject of the Customer Journeys and how the experience at each touch-point influences buying behaviour – and how interactions and internal processes impact it (slideshare here). But rather than looking at which tools to put in place and how to optimize the efficiency internally to be effective in the eyes of the customer, I looked at the evolution of branding and why Social Business will play an increasingly important role that goes beyond improving Knowledge Flows.

I’ve discussed Jobs-to-be-Done in previous posts, but I am seeing some limitations in how it explains the effect of branding on customer buying behavior (unless you consider it as part of the Emotional Jobs, or a Job that aims to reduce or minimize risk…). For example, in the simple Job of minimizing the hassle of being able to listen to music when I go running, I could choose between getting a simple MP3 Player or an iPod – both will do fine, so I could just leave it at getting a plain one which is likely far cheaper as well. But there are so many other Jobs (Emotional, Societal, or just simply Functional or other Ancillary – no pun intended with “Jobs” here btw) that would make me choose the iPod, so I would argue that a Brand is actually a package of different Jobs that a customer can conveniently bundle so that it in effect offers a shortcut to his desired outcome – based on previous or the shared experience of others.

Sometimes the journey is not about just the experience but just about getting there with as least friction in the flow as possible (think of trying to avoid information overload as a Job), and a brand reduces the friction as it sets expectations and reduces uncertainty about the experience the customer will encounter.

According to some interesting research on the evolution of branding, we’ve gone through four different eras since the early 1900s We have shifted shift from Goods-Dominant Logic to Service-Dominant Logic and have reassessed the role of the customer from being a passive recipient of our branding messages to and active  participant of brand co-creation.

Customer will make up their own mind about what they think of your brand

Brand Value Co-Creation takes place in the customer’s mind – which simply means that a firm cannot force its desired positioning and associations on a customer, he will make up his own mind based on knowledge of past, present and expected future experiences, be it through personal interactions with the firm’s value proposition or through those or shared by others. With this in mind, it is interesting  to look at the last two eras in particular with regards to the implications on Social Business.

The 1990s-2000s were Relationship-Focused, whereby customers were seen as active contributors to brand value (which in itself is the perception of a brand’s value-in-use).  Another notion that was added was that the brand was seen as a relationship partner, with as a consequence that we need to take a process-oriented approach when dealing with a customer. The third addition that this era brought was that it recognized the role of internal customers (employees) as having an active role in co-creating brand value, which is essential to Social Business

We are now in the Stakeholder-Focus Brand Era, where Brands are now seen as as Dynamic and Social Processes. There is now a realization that not only individual customers but also brand communities and other stakeholders (all stakeholders including the ecosystem in which the firm operates) actively co-create brand value. The network-effect is being taken into account, but insofar as these are dynamics and social processes it will be challenging (to say the least) to devise a magic formula for brand value…

Brand equity, as defined by Aaker (1996), is a set of brand assets and liabilities (i.e., brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary assets) linked—in customers’ minds—to a brand, its name and symbol that add to or subtract from the value provided by a market offering to the firm’s customers. Ultimately, this brand equity contributes to shaping the customers’ preference and choice of one firm’s value proposition over another as it reduces perceived risk of failure to meet desired outcomes.  And the beauty of this is that this brand equity will be asset for the next purchase cycle if you continue to maintain it!

Social Business is not only about making our organisations more dynamic and social – this should be part of the equation but it is not the finality. The benefit is derived not only from collaborating more efficiently internally (and externally) to be more effective in helping customers achieve their desired outcomes. The real benefit it brings is on the net impact Social Business has on the brand equity balance when you account for the brand value co-creation between the customers, the firm and its employees, and other stakeholders.

When you consider reorganizing your firm along the lines of Social Business, do not only look at it along the lines of adding technology to improving Knowledge Flows, but also take into consideration how it will help your employees (and your suppliers and channels) co-create value with your customers. This will have a far greater impact on the results of your company – rather than reducing costs through operational inefficiency, you are influencing customer preference for your value proposition with direct results on your Sales.

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  1. […] "Social business has mainly been discussed in terms of what it can do for the company in terms of efficiency of Knowledge Management and Sharing and the impact it has on the organization and culture. One of the aspects of Social Business that so far is under-exposed is the positive (or negative…) impact on the way customers perceive the brand and thus the influence it has on their buying behavior."  […]

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