German firms seek social improvement

22 June 2012

BERLIN: Less than 10% of German brand owners believe they are utilising social media to its "full potential", according to a report.

McKinsey, the consultancy, polled 200 companies, over 70% of which agreed social media is becoming more important. But just 5%, however, thought they were using this channel to its "full potential".

Currently, 69% of the panel use this medium for marketing, as did 50% for external communications and 38% for innovation. Roughly 30% did so for recruitment and internal applications, reaching 26% for social commerce and customer service.

More specifically, 27% of firms were "social media pioneers", generally boasting at least two years experience and leveraging a broad range of platforms, compared with 41% of "newcomers".

"Pioneering social media efforts come at a price. It takes time, money and dedicated to build a prominent presence across value chain steps and social media applications," the study said. "Those who make the effort are often richly rewarded."

According to McKinsey, the firms most effectively using social media can yield sales growth of 16%, increase communications efficiency by up to 80% and reduce innovation expenses by up to 50%.

Some 94% of the best-performing organisations had full time staff working on social media, measured against 66% of "newcomers". These figures hit 77% and 24% in turn for having a comprehensive strategy in this area.

Another 64% of top enterprises used rigorous criteria to select specific platforms to leverage, versus 22% elsewhere. Totals here stood at 67% and 22% for this channel achieving company-wide importance, similar to the scores for securing senior management buy-in.

Only 5% of leading firms had integrated social media into all aspects of the value chain – marketing, external communications, sales, human resources, R&D, service, and internal applications. This declined to 2% of other operators.

When looking at these activities individually, uptake among the premier players - peaking at 89% for marketing, and falling to 47% for human resources and internal apps - typically doubled that for newcomers.

More broadly, 72% of pioneers tailored their strategies for each platform, and 67% both aligned their social tactics with business processes and set guidelines. Ratings fell to less than a third for newcomers in the same fields.

The corporations generating the best results from this medium tended to have embedded teams coordinated centrally, on 48%, ahead of a central team on 31% and standalone units for business functions on 21%.

Data sourced from McKinsey; additional content by Warc staff