Keith Nichols, senior analyst at Cambashi, explores the promise of social media for manufacturers.
Experts at industry analyst and market consulting firm Cambashi contribute a regular blog to TM titled Silos Changing exploring how new software applications enable manufacturers to implement business initiatives for the new economy.
The days when manufacturers knew best what customers wanted from products have long gone. It became clear that unless products were based on customer needs, they wouldn’t sell.
In response to this realisation, numerous techniques to systematically capture these needs were applied to shape each new development. Manufacturers assumed if they got this part of the development process right, customers would be more likely to buy and strong profits would follow. Repeated product success altered minds so that consideration of customer needs became a central part of development.
This voice of the customer approach has now become standard practice but what has changed is the market. Many products are sold globally to gain higher returns to offset increasing development costs.
This means that manufacturers have to consider more regions, each with its own local variations. Within regions, culture, age profile and living styles can provide even more variation. All of this is driving product requirements exponentially up. And to make it even worse, customer needs are frequently changing.
Launching products on time into the appropriate market sectors is creating a dilemma for manufacturers. It takes time, money and resources to capture the mountain of different requirements and analyse it. By the time this has been done, the market may well have moved on. Getting it wrong in the first place can also be an expensive lesson.
What developers need are data sources that are easily accessible, interactive and reflect changes in real time. Enter Facebook, Twitter, Google+ and LinkedIn.
Today, the top eight social media sites have over two billion global members who are publically exchanging comments at a rate of 50 billion per day and growing.
Several million of these exchanges can contain views about new products or services, ideas that can direct new innovations, its negative or positive sentiment, and product experiences. Before members can exchange comments, they must have an on-line public profile which provides demographic, age, income, and other details. From this public information, comments made on social media sites can be linked to the personal details of the sender which, in turn, enables them to be grouped into the appropriate market segment and topic.
Social media undoubtedly contains a rich source of the latest product requirements on a global scale but this information is generally unstructured and contains abbreviations, slang, acronyms, spelling errors and poor grammar.It takes time to find this information and even more time to work out what it means.
One positive trend is the increasing availability of IT tools that can automatically scan this mountain of publicly accessible and unstructured data from around the world. By training these tools to understand slang and abbreviations and to deduce the meaning of on-line comments and combining this information with the corresponding user profiles, it is possible to group and prioritise similar comments into their appropriate market sectors. All of this can be done automatically in a fraction of a working day.
Using classified groups of requirements, manufacturers can identify the most frequent customer needs from which they can shape their standard products. Other less frequent requirement groupings can be assessed as to their commercial potential if added to the product and its impact on competitiveness in the main market sectors.
Capturing the voice of the customer on this scale in order to shape new products is only one benefit of social media. Information can help to structure basic products and options in the development phase, to focus market plans and to increase sales readiness in local sales forces. Once a product has been launched, social media data can be used to identify early customer reaction and to guide companies in making timely product retirement decisions.
Social media is established as a form of communication in many of our lives.
But it is also becoming a valuable source of information for many businesses who need to quickly capture the voice of the customer within highly segmented markets.