Businesses are trawling Facebook and Twitter to spot subtle changes in consumer behaviour that can open up lucrative business opportunities.
Multinational companies have been able to boost their profits by hundreds of millions of dollars a year by harnessing “micro-trends” from social networking sites, says technology consulting group, PA Consulting.
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Nathan Sage, social media specialist at PA Consulting, said that the group has seen companies analyse intelligence gathered from social media to find new uses for old products, accurately predict consumer demand months in advance, and to cut product development time.
“Companies are realising that social media is not just something for the social media marketing team and is not just there to defend your brand. It integrates into the core business,” he said.
Heart drug found to promote hair growth
In one case, a pharmaceutical group discovered a new use for a heart rate drug after analysing comments about the drug on social media.
“They picked up on patterns from social media – that when people took the drug they grew more hairy – and they found a secondary use for it,” he said. “They made more money from the second use of the drug than the first.”
Social media chatter predicts hotel occupancy rates
Downloadable resources on social media
In another case, Sage helped a multinational hotel group predict the occupancy rates of hotels in major cities three months in advance by monitoring comments about the city on social media.
The technique, which allowed the group to predict occupancy rates to an accuracy of 2%, has added an estimated $200 million to the group’s turnover.
Other companies have turned to social media to assemble consumer panels to review product ideas – cutting development time from months to week
“I have seen the innovation cycle with major UK companies change from six months to market to two weeks, because they can innovate and test ideas so quickly,” said Sage.
The dark side of social media
However, social media can have a dark side, Sage warns. He has seen instances where employees have inadvertently given away company secrets on social media.
“People become so excited about new product designs that they shared them with their friends of Facebook, thinking they were sharing with a closed group” he said.
The power of crowd
- Scientists had been struggling to design a specific drug for HIV/AIDS for 15 years with little success, until they handed the problem to the public in the form a computer game in 1998. Gamers with no experience were able to accurately predict the structure of a key protein needed to develop the drug in only 10 days.
- PA helped a national news agency develop stories of local interest by monitoring local social media comments. The agency is using intelligence from social media to supply high-value stories to local TV and newspapers.
- Car manufacturers, such as Ford and BMW have given away cars on social media services. The buzz created generates a significant uplift in sales.
Source: PA Consulting
“Their friends showed it to their friends and competitors picked it up and came out with a product first.”
Employee chatter exposes company finances
In another case, experts were able to predict financial problems at a major outsourcing company two months before they announced their results, by monitoring employees comments.
“Every month, there were 200 employees talking about leaving the company on social media. After five months, it jumped to 500. Why were they leaving? It was because the company was performing poorly, “ he said.
Dedicated sites have sprung up on the internet that offer to pay employees for intellectual property.
That could attract employees who are disillusioned with their employer or are looking to make money, he said.
How to interpret social media
To harness intelligence from social media, companies need to take a wider view of public discussions, rather than focus on comments about customer service, said Sage.
“Listening in to social media gives you the information, but you have to be quite clever to interpret it. Then you have to think about the commercial value to your business,” he said.