It seems fitting in a week when Facebook reportedly overtook Google as the most visited site on the Internet to try to revisit exactly why social networks are rapidly becoming the transforming force for business created by the new era of technology (whatever we define that technology era to be based on, or to include; i.e cloud, web 2.0, mobility, collaboration, etc). But first back to the report by HitWise who analyse numbers of web visits and have, by the narrowest of margins, positioned Facebook in the lead with 7.07 % over Google at 7.03%. This also means that just these two sites - Facebook and Google - account for more than 14% of all visits on the web today. Put another way, 1 in 8 online activities is concerned with either finding content, or interacting with people, around a shared topic. In the external context of consumers deciding what to buy, the impact of how we decide what to buy from any business is reflected by the growing focus in how that business’s products and services appear in an online world. We all know that it is wise to research any significant purchase to find what is on offer, and where to buy at the best price, hence why we refer to ‘googling’, but why did Facebook grow an astonishing 185% in the year? One explanation is that we have learnt that the simple search for and finding the lowest price supplier is all too often a trade off on the service front. I have never heard this expressed better than the business slogan of Linssen, a Dutch Boat Builder; the bitterness of poor quality (service) remains long after the sweetness of low price is forgotten. Increasingly we seek the personal experiences of others for insight into the satisfaction rating of the product and service aspects, recognising all too well the truth of the Linssen statement. Actually, I suspect that we also increasingly recognise that time, and frustration, are more important elements than the tiny margin of cost saving that will otherwise be achieved. We talk about ‘the service economy’, we also recognise a shift towards ‘services’ as an enhancer of revenues and margins over simple product distribution, but here it is laid out clearly if we take some time to look more carefully at exactly what goes on in discussions on Facebook. But the way I laid out the argument about ‘googling’ for a significant purchase suggests a premeditated act of planning that would only cover a limited number of purchases in the year and would be based on sitting at our home PC. This recognisable activity has driven a series of business ‘go to market’ actions from making the site and content easier to find, to advertising, to…. Well quite a long list of responses. Now look more deeply at how and when people are accessing Facebook and add the huge growth in Twitter (now up to 50 million tweets a day) to see the impact of wireless, or mobility and the use of ‘smart phones’ and other devices. What this has done is add, or extend, the what and when of purchasing decisions into a new dimension of spontaneity. An increasing number of consumers are in a flow of consciousness in terms of what might affect their decisions and purchases. The positive sides of how and when you position your product and service through ‘Social CRM’ is captured in the phrase ‘people like you bought this’.. And because it is a planned exercise for a business to increase its sales around definable objectives and recognisable elements, it is understandable, and fits with current models. It’s the less obvious negative side that looks to be the make or break in this. I.e. at the moment of frustration in real time we can launch a spontaneous tirade that may result in echoes from others and produce a noticeable revenue drop that is creating the real change factor. There are quite a number of well documented cases of 10 to 20 per cent revenue drops from this, but this is very difficult for a business to respond to. Why? Because it’s neither planned nor process oriented and therefore responses will need to be rapidly constructed around the specific event and person’s problem as opposed to going through the existing complaints or support procedures. It’s this point that introduces a need to manage the finding and focussing of internal expertise by the same tool of social networks, but I want to go into that in more detail on a next post. What I wanted to do was isolate the non obvious change factor that is as much capable of breaking sales, as it is of making sales, and the need to have both a positive planned use of the technology to create opportunities online AND an ability to react to negativity by proactive management of events. BTW one thing that this does illustrate is the challenge to find and make money in the Facebook and Twitter models versus the Google model. In Google search there is a positive parameter that can be linked to leading and influencing by well targeted advertising whereas with Facebook and Twitter activity it’s hard for advertising to be so targeted. The challenge is to find a new value model probably associated with consumers’ ability to want to pay for value. The question is how they recognise that value!