By Zach Hofer-Shall, Analyst, Forrester Research

March 12, 2010

Social media has forced companies into reactive mode. Brands suddenly want — or think they need — to know two things:

• “Who’s saying something bad about me?” and
• “How do I track the negative fall-out?”

But the real power of social media is that your customers voluntarily share a wealth of data that can drive improvements to your business strategy. Right now, your customers, without any prompting, openly share information that would have taken months of surveys — and lots of money — to collect. As social data continues to pile up, it’s time to start taking these online conversations seriously and use them to inform your customer intelligence.

The concept of monitoring social media might sound obvious, because most data-hungry marketers understand the value of their customers’ social data. But based on my research, even though most marketers may collect this data, far fewer actually use it to inform an enterprisewide view of their customers. As any analytical mind knows: collecting data is only the first step.

[The subsequent steps revealed after the jump...]

Over the last few months I’ve talked to dozens of marketers about how they manage data generated from online discussion — the best practices they use, the pitfalls they’ve encountered, and the very cool applications they have for using social media data. In my latest research, I outline the processes and use cases for harnessing social media data to inform your business strategy — a process we call “Social Intelligence.”

To answer the obvious question, here’s our definition of Social Intelligence:

“The management and analysis of customer data from social sources, used to activate and recalibrate marketing or business programs.”

Social Intelligence involves three steps:

• monitoring social media;
• collecting and analyzing the content; and
• using the insights to inform your strategy.

Social media is so rich in insight, that the varied use cases for Social Intelligence span the organization. Businesses must be sure to share the data, so that all teams can benefit.

What can businesses achieve with a Social Intelligence strategy? The applications are limitless. I spoke with one savvy marketer at an entertainment company who explained to me that the value in social media data is “being able to combine rich qualitative verbatims from tweets and blogposts, to the qualitative metrics of brand mentions and share of voice.” By joining the two metrics you get both the “what” and the “why.” This marketer’s company uses social media data to test the success of its interactive campaigns. The company’s able to see how customers are reacting to its messaging — in real time.

I also spoke to the manager of a customer support team at a retail brand. His team tracks online conversations for dissatisfied customers, reaches out to offer help, and then uses this information to adjust products and avoid future problems. He said that social media has helped his team because it’s an instant and open channel for communication — and his team’s able to learn about the company’s products in ways they couldn’t gather through existing research. Through social media, customers offer feedback to the unasked questions. There are already dozens of functions within Social Intelligence — and more will pop up as marketers mature their use of social channels and individuals share more throughout these channels.

But with an ever-growing number of social channels — and millions of new messages a day spread across those fragmented channels — how can we possibly track and monitor the social Web?

This is where social media monitoring tools and listening platforms come in. These solutions help speed up the process of tracking customer actions across the social Web and aim to boil it down to actionable insight. Listening platforms are the technology that enables Social Intelligence strategies. Marketers trying to do this alone will spend countless hours digging through spam-filled search results. Of course, technology is just one piece of the Social Intelligence puzzle — but that’s a blogpost for another day.

As I see it, Social Intelligence is a relatively simple idea, but with complex and broad applications. It’s an idea that will have a huge impact across enterprises in the coming years and I plan to dedicate much of my research agenda to this topic. So help generate some more social media data and let me know what you think below in the comments section. We can all gain from the insight you generate.

Zach Hofer-Shall (@znh on Twitter) is a Forrester Research analyst serving Customer Intelligence professionals. This post first appeared on his blog at http://blogs.forrester.com/zachariah_hofer_shall. At Forrester’s Marketing Forum in April, Hofer-Shall will lead a session on how to adapt to customers’ online discussions through Social Intelligence — providing a much-deeper dive into the concept.