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Many companies seem to have legal departments that put up huge barriers to adopting communities and other social media programs that include employees, customers, prospects and even detractors. In fact some put up barriers so high that nobody can do anything in the space. Now, if your competitors cannot find a way to overcome those objections either, you may be ok, but if they do and manage to extend their business processes to leverage the power of the internal and external crowds, it may be “game over.”

Typical legal objections include the issues related to brand protection, engaging hourly workers as part of internal communities, the threat of liability for what employees say in public, having employees socialize online instead of doing work, meeting regulatory compliance requirements, and more. While most legal departments will claim that their situation is very unique, at the end of the day the issues are fairly common among many companies.

I do not think that there is one best practice on how to overcome those objections. Some companies find it easier to get legal involved upfront in the process, while others are asking legal to quantify the risks and then balancing those with the benefits or the risks of doing nothing. One good bit of common sense (as recommended in this BT case study) is to make sure that you do not overhype what you are trying to do and position it as something radically different from other programs. Many companies already have policies in place that cover things like email communications and acceptable behavior in public forums – which could possibly be extended to virtual environments without too much change.

What have you found to be working?

When we conducted the 2008 Tribalization of Business Study, we discovered that those companies that were most satisfied with their community efforts were those that measured the impact of their community programs on their business processes the same way they would measure the impact of any other program on those same business processes.

So if you measure the impact of a certain program by increased store sales, or by improved customer satisfaction – then measure the impact of social media programs on those business processes the same way. Even if you think the current measurements are wrong. If you do not like how customer service is being measured by the average time people spend on the phone – it does not matter. Don’t try to change it when you roll out a social media program. The fact that the current measurements are well understood and often hardwired within the company culture will ensure that people will understand and embrace your social media programs rather than marginalize them as exotic new hype-driven non-mainstream programs.

Taking this a step further – the faster you can get the various departments that benefit from your programs to co-fund them, the faster your programs will become mainstream.

All that being said – how do you measure the impact of your social media programs? What works? What doesn’t work? As we are gearing up for the next iteration of the Tribalization of Business Study, what would you like to find out?

PS – If you prefer discussing the topic instead of just commenting on it, join the Marketing 2.0 community where I started a discussion on the topic.

Yesterday we participated in an online conversation with many of the Society for New Communications Research Fellows (of which I am one) on the Tribalization of Business Study.

We created a slidecast from the experience, which you can view/listen to here:

Note that next week Thursday at 2pm ET , Ed and I will be at it again during a webinar hosted by Awareness. We hope you can join us there and that perhaps we can address your questions directly as well.

As you may recall, I had my share of problems with my last laptop, which culminated in a bad customer service experience. I was sufficiently incensed to blog (see vent) about it here.

What happened next made me stay with Lenovo instead of switching to a Mac. First off, Mark from Lenovo posted a comment on my blog, asking me to contact him. He apologized for the bad experiences I had and scheduled for a technician to come to my house to fix my problem. When I had additional problems with my computer he jumped through hoops to get it fixed. At the end he send me a brand new computer – extending the next business day on-site warranty beyond what I had purchased.

So what happened that made me regain the trust in the company:

• Timely response to my problem with a genuine “I feel your pain” attitude
• No corporate speak – honest and transparent conversation to resolve my issues
• Wow me through customer service by doing unexpected things – in this case send me a newer and better computer without me asking for it.

At the end of the day, most customers know that products cannot be flawless. If they do end up with a lemon, their tolerance to work through the issue with the vendor is usually large – after all they bought the product because they have a certain affinity for the product and/or the company and so their default attitude towards that company is usually positive.

Unfortunately you can squander all that positive social capital in minutes by having a customer service rep with a bad hair day becoming combative with a customer calling to resolve an issue. That too will happen – especially in large companies.

The key is to minimize this negative people-effect by hiring the right people and by building a no-excuse customer-centric culture – much like what Zappos.com has been able to achieve. The other key is to have a swat team of people on staff who can jump in when the inevitable will happen – a complete system breakdown. Because even when that happens, you can and should try to recover that customer.

Lenovo just did it with me…thank you Mark.

In my update on the 2008 Tribalization of Business study on business communities that we are doing with Deloitte and The Society for New Communications Research last week – I pointed out how some companies are totally misaligning their measurements of community effectiveness with their goals.

As you will see from the slides, many companies measure effectiveness by looking at page views and time spent on the site. Yet not one company listed ad revenue as a goal for the community – which is what page views and time spent on the site would be good for. Let’s assume that your goal is to have a support community – one in which people can help one another or get help from some your employees. If you could deliver the support in a way that never required people to come to your site, you would still achieve your goals. In fact, if you build your community so that people do not have to come to it, chances are that you will have more people participating in it. There are only so many destinations that a person will visit on a regular basis, and chances that your business community becomes one of them are fairly slim.

Another interesting wrong-headed metric-related finding from the study is that a majority of respondents found that “getting people to engage” was one of the biggest obstacles to making a community work. Now if you have a small community, chances are that you could get a fairly high engagement rate. The larger your community becomes, however, the more its profile will resemble that of large public communities – 1% of hardcore contributors, 10% of active users and 80-90% of lurkers. Now does that mean that the lurkers do not get value from your community? In the case of the customer support community, lurkers who do not contribute could still find the help they need and feel better about you than if they had not found it and also save you the cost of a call into the call center. So measuring community effectiveness by measuring engagement is just not a representative metric of community success.

Now the real issue with all this is that if you have a community development team who is being measured by those wrong-headed metrics, they will invariably develop bad behaviors in order to maximize these metrics. They could in fact develop community features that will stand in the way of success for your communities, or close down communities that are in fact doing really well.

If you missed it, there is a dynamic conversation on managing communities going on right now…Chris Brogan kicked it off and Nancy White wrote some interesting musings and also kept track of many of the other interesting links.

In interviewing a person in charge of communities at a Fortune 100 company as part of our community effectiveness study that we are doing with Deloitte and the Society for New Communications Research, I learned about a real neat side effect of business communities – the ability to sell products in the long tail.

Large companies typically cannot afford to pay attention to relatively small business opportunities. If your company has billions of dollars in revenue, and a goal of growing that revenue by 5% a year, and you identified a $50M new market opportunity, chances are that you will not be able to justify a business plan to tackle this new opportunity. Some of the more innovative companies have found ways to monetize those opportunities by selling or licensing the IP or partnering with companies for whom a $50M market makes sense.

With large business communities surrounding your company, you could potentially do it yourself, and in a profitable way. Say that you developed a software application that only has a tiny market potential relative to your company’s size. You could make that application available in your community, and rely on the community to deliver support, refine the documentation, etc. So in effect you developed a channel to enable your company to serve the long tail in a cost effective manner and in a way that is not defocussing. In the long run, leveraging business communities to serve the long tail could also increase your share of customer wallet as well as increase your customer switching costs for the bigger applications – all benefits that deliver dollars to the bottom line.

Through a set of experiments desribed in his latest book “Predictably Irrational: The Hidden Forces That Shape Our Decisions“, MIT behavioral economist Dan Ariely shows how we live in two different worlds – one in which social norms prevail and one in which market norms prevail.

The social norms include friendly requests that people make, for example when a neighbor or friend asks you to move a couch or something. You do not expect to get anything in return right away, and they are usually warm and fuzzy. Most of the time they provide pleasure to both parties. Market norms on the other hand are cold and calculated, with exchanges being sharp-edged: wages, prices, rent, etc.

One of the experiments recounted by Ariely involves three groups of people who were asked to do a repeat task for 5 minutes – combining circles and squares on a computer screen. The first group was given $5 for the task, the second 50c and the third was asked to do it as a favor. The group that was paid $5 worked harder by about 50% compared to the group which was paid 50c. The group which was not paid, and which evaluated the request in their social framework instead of their market framework beat both other groups. He then repeated the test, but instead of giving money he gave the first group a gift of chocolates worth about $5, but without telling them that, the second group got a snicker bar and the third group was asked to do it as a favor again. This time all three groups achieved the same results, the same results as the original group which evaluated the request in their social framework. The last test was again with gifts, except that this time people were told the value of those gifts. The results? The same as if they would have paid people.

Another point he makes, supported by more experiments, is that once a person evaluates something within a market framework, they will continue to do so even after payments are no longer given. So it is a very bad idea to create situations in which both frameworks are mixed.

There are a ton of lessons to be learned by this, one related to giving customers incentives to help you. If you have customer support communities or innovation communities and people help you based on non-monetary incentives, like recognition, or a small gift every now and again, you could kill the dynamics of those community by introducing even tiny monetary incentives. Your customers will now switch their mindset to a market framework instead of a social framework. Now if people can be switched into a market framework and not return from that mindset, that also means that others can screw up the landscape for you. Say you have a tech support community and for some reason another vendor starts paying people for helping out – based on some of the experiments described in the book, this could actually change the perception of the value that you are giving your own community members back.

The fact that misplaced rewards and punitive actions can backfire has been a long documented fact. Many kids end up reading less than when they started when parents stop giving them monetary rewards for reading. Many more parents end up being later in day care centers that charge those parents by the minute for being tardy. Plus they no longer feel the guilt of being late because they now evaluate this transaction as a market transaction instead of as a social norms based transaction.

Take the case of the new Poland Spring Eco-Shape bottle. The first reaction to that name is “yeah right – here comes some more marketing speak. How can the shape of a bottle be anything Eco? Does it make it easier for animals to swallow without choking when they end up on the dump?”

In this case the bottle is truly Eco-friendly – it uses 30% less plastic and 30% less paper for the label – all good stuff. But you have to read the marketing blurb to figure that out, and how many people really go through that step when they are on the run drinking a small bottle of Poland Spring?

It would be interesting to see how many people get an initial negative or heavily skeptical reaction to the Poland Spring’s Eco marketing message. I bet you that is not an insignificant portion of the consumer base.

What marketers forget sometimes is that most people no longer trust their companies or the messages coming from them. If you do not run your cutesy marketing message, which may be full of good intentions, through the “I do not trust you” customer filter, you may end up hurting your cause more than helping it.

What would have been wrong with just telling me “Poland Spring – 30% less plastic, 30% less paper”? It is direct and it conveys the message without giving me much room for interpretation. And because it is a quantitative message, I am less inclined to doubt it.

You brand is defined by the consumer, not by you – I think everyone can agree with that. In the same breath, most marketing pundits will add the fact that you can no longer control your brand – an assertion I am not sure goes hand in hand with the first one.

You brand gets defined by the UI (User Interface) of your company, the interface through which your customers and prospects interact with your company. That interface gets determined by pre-sale activities – i.e., advertising, retail layout, retail personnel attitude, telemarketing, sales people’s knowledge of the industry, etc -, as well as immediate post-sale activities – i.e., packaging, ease of use to set up the products, available help options, etc. -, and the long term post sale activities – i.e., telephone support, return policies, warranty policies, on-site support, etc. That makes up a lot of links in the chain that determines your brand in the mind of the consumers which your company controls.

So in effect, you do control the brand in the mind of the consumer. If some link in the chain is broken, meaning not supporting the overall brand promise you are trying to establish for your company, that is when you lose control of your brand. That is when people will start talking with one another about the fact that what you promise and what you deliver is different. Once that starts, you should focus on fixing the overall UI of your company instead of getting into communication fire-fighting mode or crisis communication mode.

One of the most fascinating companies at the BRITE conference was Eli Lilly, represented by Marc Kershisnik, Executive Director of Market Research.

It is one thing to talk about putting the customer at the center of your offering instead of your product or your company – but how do you do that when you are a pharmaceutical giant?

Eli Lilly seems to have figured that out – they no longer look at the drug as a way to fix a discreet biological/physiological problem, but instead at how the drug will fit within a sick patient’s lifestyle – so in effect putting the patient at the center of the offering. And that is not just in marketing, it starts at the time of product conception and product/market requirements, continues throughout the drug development phase, into clinical trials, and all the way to market introduction.

A good example of that is how they started the oncology on canvas community, which enables cancer patients to express how they deal with their disease though stories and art. They did not start this community after launching a new oncology drug – they started it before having any oncology drug offering.

Another example is how they dealt with their osteoporosis offering in France. The drug is for people with severe bone loss – the type who cannot take a child on their lap without causing a fracture. The treatment regenerates the whole bone structure and cures the disease in 18 months. The only problem is that patients need a daily injection of the drug for 18 month – something that many patients would give up or skip frequently enough to bring the outcome of the treatment in jeopardy. So how did they solve the problem? They enlisted an army of paid nurses to help patients with their daily treatment. In doing so they did not disrupt the patient-doctor trust relationship by injecting themselves into the process (which probably would not have worked anyway). They also focused not on the biological problem that the drug was curing, but instead on the patient ‘s lifestyle during the disease treatment process. The success ratio of the treatment in France: 90%.

No wonder then that a company with this amount of foresight would also transform itself from the inside out. Most recently they conducted one of the largest Vision Jams within their company – 6 days of 24 hour online brainstorming among 40,000 employees on the future strategy for the company. The whole strategy for Eli Lilly’s 15 year plan was created from the bottom up and not from the top down.

Now who said that you cannot teach an old dog new tricks? Of course it helps that the company does not think of its main purpose as making money for shareholders, but instead of considering its primary purpose and duty in the marketplace as treating diseases.

Guess what – with a strategy and market attitude like that, long term profits and shareholder returns will probably never be the problem.

PS – also check out my partner Lois Kelly’s post on the same topic…