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Consumers have embraced Twitter and other social networking sites, but is that reason enough for companies to follow suit?
Vincent Ryan, CFO Magazine
September 1, 2009
What are you doing? Millions of people worldwide now respond to that question by posting text messages on the social-networking site Twitter. For corporations, though, a more appropriate query might be, "What are you doing here?" That's because Twitter, a free "microblogging" site on which vast numbers of people offer up personal insights such as what coffee they are currently drinking, would seem to be a curious place to look for customers — unless, perhaps, you're Starbucks.
In actuality, though, it's getting hard for businesses to ignore those brief text messages, or "tweets," not to mention their authors. Twitter's astonishing rise — it now has between 18 million and 23 million members, depending on whom you ask — makes it a bona fide cultural force, and while 42% of its members say their top reason for tweeting is to connect with friends, 14% emphasize more access and interaction with their favorite company, while 13% say their first priority is to connect with service providers.
Yet while Paris Hilton is a snap to find on Twitter (@parishilton), most companies are not. Ten of the 100 largest U.S. IT companies, in fact, aren't registered at all, and another 42 have accounts in their name that are occupied by anonymous users, most not connected with the company. ("Twittersquatting," it's called.) If you type in "Goldman Sachs" on Twitter, for example, it's hard to tell which of the four Twitter account names, or "handles," that appear are really the investment bank. The answer? None of them. (Twitter will suspend such accounts on request if they falsely claim to represent the company.)
Beyond absence or confusion, however, a larger problem looms: many of the companies already on Twitter have "no clue" how to capitalize on it, says Lon Safko, a social media strategist. "It's like they're repeating their first experiences with the Web."
A Corporate Megaphone
Should CFOs care? Many don't, because they don't see evidence that Twitter has a direct impact on developing sales leads or generating revenue. "It's not an area that I spend much time on as CFO," says one software company finance chief. However, he adds, "there seems to be little downside to having a positive presence out there," and sometimes he "picks up competitive intelligence from others being a little more forthcoming or simply not conscious of their words."
But some companies say there's more to Twitter than that. Dell claims it has generated $3 million in revenue directly from Twitter since 2007, through posting coupons on the site and spreading the word about new products. While the ROI has yet to be quantified, "it's a low-cost way to make sure the brand is active and recognized," says Lani Hayward, executive vice president, creative strategies, at $8.8 billion (in assets) Umpqua Bank. "Twitter is an amplifier," echoes Mark Yolton, senior vice president, community network, at SAP America. "It extends our reach."
There is a clear dichotomy on Twitter between companies that use it as a corporate megaphone to direct "followers" to Website content and press releases, and companies that stress the personal aspect. There is a similar dichotomy between the frivolous and the serious — sometimes at the same company. Umpqua Bank, for example, sends out "Fun Fact Friday" trivia tweets (Did you know the memory span of a goldfish is three seconds?) but has also trained 40 employees in its customer-care center to respond to complaints via Twitter. "It's saving us money because it's saving customer relationships," Hayward says.
Sprint created a separate handle for a six-member customer-care team that is active on Twitter. "There's no extra budget allocated — it's just something they monitor as part of their day," says Rich Pesce, social media communications manager. Using a third-party tool called CoTweet (in beta testing), Pesce can assign tweets to a customer-care representative via an e-mail and also post tweets to multiple accounts at once.
Placing a customer-service team or person on Twitter creates expectations though — like near-immediate response times. After being unplugged from Twitter during a two-hour plane ride, Pesce turned on his Blackberry to find six tweets from an irate user. The last one: "That's it, if no one is going to talk to me I'm switching."
Loose Tweets Bring Heat
Most companies in early-phase adoption of Twitter are struggling with a more elemental problem: the groundswell of employees who want to tweet about work, a thorny issue in part because the line between work and personal life can be hard to draw.
Some companies, already stung by blowback from blog posts in which an employee slams a rival only to be revealed as anything but a disinterested party, are busy modifying communications policies and codes of conduct. Umpqua Bank created "social media leaders" in such groups as private banking and mortgage lending. Tweeting is limited to those employees and the customer-care team.
In general, however, most companies "haven't gotten their arms around the risks," says Chris Wolf, leader of the privacy and data-security practice group at Hogan & Hartson. An employer could be held liable for the actions of an employee communicating on a social media site, even if the time and place (and computer) is outside work, Wolf says. Defamation, illegal use of trademarked materials, violations of customer or employee privacy — the legal issues are the same as in the offline world.
IBM's social-computing policy states several times that employees must post a disclaimer that the views expressed are not those of the company. "It could go an awful long way to avoiding a lawsuit," says Wolf, "but it also depends on who [the Tweeter] is. If it's the CFO, the disclaimer is not going to have much effect."
Effective policies must clearly state who has authority to speak on behalf of the company, says David Cifrino, a lawyer with McDermott Will & Emery. That's especially important for public companies subject to Regulation FD's restrictions around disclosing material, nonpublic information. Cifrino suggests that there should be a compelling business reason for tweeting that outweighs the potential liability.
Companies are far from sure that tweeting is worth it. Even Twitter recognizes this. In June it unveiled a program to explain Twitter's applicability to businesses. While Twitter was initially going to roll out commercial products this year, it may postpone those, given where companies are on the learning curve.
There's also a crucial question about Twitter yet to be answered, according to Joe McCarthy, senior director of corporate communications at Cypress Semiconductor: Do your key customers use Twitter as a way to make decisions and gather information to support those decisions? CFOs would love to know. But that will be a lot harder to answer than, "What are you doing?"
Vincent Ryan is a senior editor at CFO.