Tuesday, February 24, 2009

The New Velocity

For years managers worried about the velocity of their business. The measurement of how quickly they could get their products developed, distributed, sold and consumed. The theory being that the faster the rate of velocity the more efficient and profitable their business. In other words, you turn over more widgets in a year you generate more revenue. You develop and sell 25% more units than last year with the same assets you’re conceivably 25% more profitable, and so on.

Today, with the growth of social technologies managers now need to worry about a new type of velocity – the speed in which consumer sentiment towards their brands might change (whether for better or worse). Social networking tools like Facebook, Digg and Twitter have given people the means to instantaneously and virtually gather to discuss, share their views and spread potentially damaging messages or content about a brand. People, in many ways, are in control.

It goes without saying that this new velocity makes it harder to manage brand perception and reputation. There are many cases of how people in a matter of hours have used Web 2.0 technologies to wreak significant havoc on brands that have been around for decades. One of the best examples being the You Tube video of the Comcast technician sleeping on a customer’s couch while on a service call. Or the legions of parents who this past November joined forces on Twitter to rail against a TV ad for children’s Motrin (the spot was promptly pulled by parent company Johnson & Johnson).

The result is a real-time, mass consumer feedback loop. The impact is greater transparency and accountability for both corporations and brands. To be successful in this new environment it’s not enough that companies develop, distribute and market new products quickly to achieve optimum velocity. What also matters is how openly they engage with their consumers, how well they listen to them and how quickly they respond to their concerns.

Brands that neglect to use social technologies to build bridges to their consumers and monitor their brand health do so at their own risk. In a time of increasing commodization and decreasing differentiation this could be among the best strategies brands have for a competitive advantage.

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