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Benefits of Social Media in Business-to-Business Customer Interface in Innovation


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Presentation at 15th International Academic MindTrek Conference: Envisioning Future Media Environments. Co-authors Hannu Kärkkäinen and Maija Leino

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Benefits of Social Media in Business-to-Business Customer Interface in Innovation

  1. 1. 1Benefits of Social Media in Business-to-Business Customer Interface in InnovationJari Jussila Tampere University of TechnologyHannu Kärkkäinen Tampere University of TechnologyMaija Leino Tampere University of Technology Jari Jussila, Hannu Kärkkäinen, Maija Leino
  2. 2. 2Definition of social media and web 2.0• Web 2.0 means technologies that enable users to communicate, create content and share it with each other via communities, social networks and virtual worlds, making it easier than before.• They also make it easier to have real life experiences in virtual worlds and to organize content on the internet with content aggregators. (Lehtimäki et al., 2009)• Such tools and technologies emphasize the power of users to select, filter, publish and edit information (Tredinnick, 2006), as well as to participate in the creation of content in social media.• According to Constantinides and Fountain (2008), "Web 2.0 is a collection of open-source, interactive and user-controlled online applications expanding the experiences, knowledge and market power of the users as participants in business and social processes. “• “Web 2.0 applications support the creation of informal users’ networks facilitating the flow of ideas and knowledge by allowing the efficient generation, dissemination, sharing and editing / refining of informational content." Jari Jussila, Hannu Kärkkäinen, Maija Leino
  3. 3. 3 Goals, objectives and limitations• To study and analyse the role, benefits and pragmatic company examples of social media from business-to-business innovation and related customer interface perspective, and to create a more comprehensive picture of the possibilities of social media for the business-to-business sector• More specifically, we want to understand • what is the status of social media research in business-to-business innovation and related customer interface • which type of benefits can social media bring for business-to-business innovation in the different phases of the innovation process? • what broader classes of innovation –related benefits social media can provide for B2B companies Customers B2B Employees Company Customer interface Partners Jari Jussila, Hannu Kärkkäinen, Maija Leino
  4. 4. 4 Focus on B2B (Business-to-Business) sector• Important starting points: large part of B2B’s consider social media as “something that is out there but is not for us” (Finnish and international studies; conferences, seminars, etc.); lack of suitable cases major factor hindering adoption in B2B’s• B2C (Business-to-consumer) social media already has much research; e.g. crowdsourcing (outsourcing to crowds) approaches well applicable and useful when large masses of users, or crowds, can be engaged• However, B2B social media research is scarce; B2B differs significantly from B2C context considering the use and usefulness of social media, and “huge masses” of customers seldom exist that would allow crowdsourcing types of approaches• Key factors (both challenges and opportunities for social media) affecting B2B interaction • fewer customers and more in depth customer relationships in B2B’s • gatekeeper persons between customers and B2B’s • IPR and information security issues also affect B2B interaction between customers, etc.• Since the above issues have to be taken into consideration, customer interactions often take very different shapes in B2B’s than in B2C’s. Jari Jussila, Hannu Kärkkäinen, Maija Leino
  5. 5. 5 Customer roles in innovation – more than buyer?• In the first innovation process phase customers can be regarded as a Resource • i.e. the source of ideas or need –related information• In the second phase customers can be regarded as Co-creators • Co-creation can include for example validation of product architectural choices, design and prioritization of product features, specification of product interface requirements and establishment of development process priorities and metrics with customers• In the final phase customers can be regarded as Buyers and/or (End)Users or as Product • the focus of Buyer role is on converting potential customers into actual customers • Users role suggests that companies can receive valuable contributions in product testing and product support from customers • customer as Product means that the ultimate outcome of the innovation process or the following transformation process is change in behavior or condition of the customer, i.e. the customer both experiences transformation activities and becomes the final stage of the transformation process Jari Jussila, Hannu Kärkkäinen, Maija Leino 22.5.2012
  6. 6. 6 MethodIn order to get a larger picture => a systematic literature review:• Databases Scirus, ABI, Emerald, ScienceDirect and EBSCO• Main search term combinations: impact and social media, impact and social media and B2B, value and social media, value and social media and B2B, measurement and social media and B2B, measurement of social media, ROI and social media, ROI and social media and B2B, ROI of social media• In addition to the above, we made searches concerning individual web 2.0 - related tools, such as wikis, blogs, Twitter, LinkedIn, etc. in the specific context of B2B, using various combinations of search terms and above research databases• A total of 414 were first received as a result, and then skimmed for relevance and 43 reviewed in more detail• We searched and discovered some additional references by searching forward and backward referencing of the most relevant discovered articles.• In addition, authoritative blogs and books used as additional sources to extend the literature review to cover more business-to-business examples (shown in results) Jari Jussila, Hannu Kärkkäinen, Maija Leino
  7. 7. 7 Results• We were able to find more than twenty studies or cases that reported benefits of using social media in the customer interface of innovation in business-to- business companies [Table 1]• Eight were journal articles (1), five authorative books, one research report and three blog articles (2)• We were able to find social media –related benefits for four customer roles: resource (R), co-creator (C), user (U), buyer (B)• In some cases, it was not fully clear in which innovation process phases and exact tasks the tools and approaches had been utilized *• The type and the explicitness of reporting in found references for social media benefits in innovation: shown in superscript in references [(1),(2),(R),(C),(U),(B)*,]• Despite the mentioned challenges, we were able find a relatively large variety of different approaches and following benefits for social media use in B2B’s and their customer interface. Jari Jussila, Hannu Kärkkäinen, Maija Leino
  8. 8. Applications Front end Development phase CommercializationBlogs Obtaining customer feedback and customer need data more Cisco achieved 75 % cost savings and increased 8 favorably than by traditional marketing methods, also in the case customer interaction by virtual product launches through of anonymous blogs it is possible to receive unfiltered (candid blogs [6] (2) (B). Real time user feedback concerning and uncensored) information from customers [62] (1) [5] (1) (R) products [62] (1) (U), Hinda Incentives blog has increased traffic to the company website by about 15 %, in addition 1 000 visits a month with subscribers from at least 30 different customers to the blog. [13] (2) (B)Microblogs Obtaining real time and honest feedback [28] (2) (R) Faster communications with customers [42] (1)* (U), Twitter increased brand exposure as cost effectively as newsletter and more effectively than other media, Think Big event marketing campaign on Twitter resulted in increase of Twitter followers from 0 to 1540 in 1 day, 15 % of traffic to the blog and promotional pages from social media, with an effect of nearly 5 % to ticket sales (B), Twitter in CorePurpose marketing resulted in converting contacts to customers at a higher rate in 1 year than traditional marketing strategies in first 7 years of operation [61] (2) (B)Wikis Quicker capture of ideas, also enable asynchronous GoodWater Inc achieved 85 % ROI in investing blogging, Wiki Sharing ideas on commercialization and obtaining distributed brainstorming [63] (1) (R) and social networking platform for internal collaboration. By feedback from customer [63] (1) (U), OSIsoft improved means of the wikis, over 400 product features were described the solving time of customer problems by 22 % by as a response to customers’ requests [51] (1) (R) sharing customer service info using Wikis [37] (2) (U)Mashups Mashups in improving customer enhancement requests. Mashups in improving, customer service and product [56] (2) (R) trials. Significant savings in product deployment. [56] (2) (U)Social / Gaining more detailed information about prospects [42]professional (1) (B), enhanced B2B prospecting [31] (2) (B), Over 300networking customers have joined the GoodWater social network,tools over 1 000 employee-customer interactions being recorded, with more than 50 % of the customers started interacting with each other [51] (1) (U)Online Dell: IdeaStorm box gathered more than 14 000 ideas Reducing time-to-market and NPD budgets by engaging Better customer care through peer support and feedbackcommunities from customers, with more than 89 000 comments, of customers as innovation agents [16] (1), LabVIEW Idea [42] (1) (U). RidgidForum community’s value to which Dell has implemented over 400 ideas [31] [58] (2) Exchange helped R&D to prioritize product ideas submitted by customers has lead to measurable benefits in customer (R). RidgidForum community’s product ideas lead to customers [31] (2) (C). TechSmith received hundreds of product loyalty. [31] (2) (B) (U) product enhancements for RIDGID Branding [31] (2) (R). development ideas with over 700 actively engaged users [65] (2) (C), The SAP Community Network has more than 2 million users participating in sharing and co-creating knowledge on SAP’s products and services. [19] (1) (C), Innovation contest by Bombardier aimed at identifying new interior designs for trains resulted in 2 232 participants, 4 298 designs, 26 617 ratings and 8 562 comments. [32] (1) (R) (C) 22.5.2012
  9. 9. 9 Some key findings• Majority of the reported benefits were qualitative, non-quantified benefits of using social media, such as • better feedback, • increased customer service, • gaining more detailed information about prospects, • and increased knowledge transparency• However, in almost half of the cases, the benefits were tried to be quantified at least on the general level (as outputs), such as • Dell: more than 14 000 ideas from customers, and with more than 89 000 comments on the created product ideas, over 400 implemented in practice (R) • Bombardier: 2 232 participants for innovation contests, 4 298 new interior designs, 26 617 ratings and 8 562 comments (R)(C) • over 1 000 employee-customer interactions being recorded, and more than 50% of the customers starting interaction with each other (U) Jari Jussila, Hannu Kärkkäinen, Maija Leino
  10. 10. 10 Conclusions• We have demonstrated in our study that B2B environment does differ significantly from B2C environment in several ways, especially when the contexts of innovation management, customer interaction and creation of customer knowledge and understanding are in the focal interest• We demonstrate that not only B2C’s but also B2B’s really can use and benefit from social media in their innovation process and customer interface• We also demonstrate that there are a multitude of very different types of ways for using social media in innovation and customer interface which B2B’s can utilize.• Furthermore, a large variety of tools and approaches from blogs and wikis to online communities have been and can be applied in B2B context.• Broader classes of innovation-related benefits: • Increased customer focus and understanding • Increased level of customer service • Decreased time-to-market• In addition, the benefitting B2B companies were from different types of industries, e.g. software, ICT, pharmaceuticals, consulting and various B2B services (from small to large companies) Jari Jussila, Hannu Kärkkäinen, Maija Leino
  11. 11. 11Conclusively, we can say that despite the rather generalskepticism towards the use of social media in B2B sector showedby many practitioners and some academics, the results of thisstudy demonstrate that social media offers significant possibilitiesand benefits to B2B sector, concerning both the innovationprocess and the related customer information and knowledgemanagement Jari Jussila, Hannu Kärkkäinen, Maija Leino
  12. 12. 12Access Full Text download full text Hannu Kärkkäinen, Jari Jussila, Johanna Janhonen 22.5.2012
  13. 13. 13 see more research on social media“SOITA- Social Media in Innovation Process in the Customer Interface” – is a research project whichstudies and experiments the ways of using social media in innovation process with b-to-b companies.The goal is to support business-to-business sector companies’ innovation process and especially thecreation of new customer knowledge and understanding for innovation with the help of social media andcommunities. Project is led by Tampere University of Technology / Novi Research Center and ÅboAkademi University / MediaCity with co-operation of project companies, Beckhoff Automation Oy,Brandstairs Oy, Intosome Oy, and Simosol Oy, together with Intelligent Machines & Digibusiness –Competence ClustersProject is funded by Tekes, Tampere University of Technology, Åbo Akademi University , TechnologyCentre Innopark Ltd and project companies.