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Big Picture: The Real Bottom Line

By Bruce Bolger, Publisher 

It may be one of the great ironies of the engagement movement that the tipping point will have come as a result of social networking rather than research. While there are over 15 years of solid data proving the link between an organization’s financial results and the engagement of customers, channel partners, employees and vendors, it’s only recently that social networking has given the movement a definitive nudge toward legitimacy.

Every day, the impact of social networking affects companies big and small, highlighting the incredible connection between engagement and business success. A telling example comes out of a New York-area bicycle chain known as Danny’s, where someone I know witnessed the following incident: This small chain is known to have an honest approach to sales and reliable ongoing service, and continues to grow. While it doesn’t do much advertising, it does appear to pay close attention to its ratings on social-networking sites. As I understand it, the owners make it very clear that no one but the mechanics should ever repair bicycles, no matter how much a salesperson might know about an issue. Apparently, one of the salespeople had a particular knack with cycles and offered to help a customer with a small problem, even though he knew it was against store policy. He meant well, the mechanics and the shop were busy, and the person wanted to get going. It turns out the employee made a mistake and the customer subsequently registered his displeasure on one of the social networking sites the next day. This naturally got the owner’s attention (not necessarily in a good way), as well as that of the employee and everyone else in the shop.

Denting the Brand

On a far bigger scale, the insurance company Progressive recently confronted the power of social networking when it refused the life insurance claim of the husband of a woman killed while jogging. Her husband, Matt Fisher, worked the social-networking sites and it soon became a national story in all of its gory details. Of course, there are two sides to every tale, but a story like this undoubtedly puts a huge dent in the company’s brand. I don’t know how others would feel, but since I initially heard about this the company’s ads with the cute, hipster spokeswoman no longer seem so friendly. Progressive was only the latest in a long list of brands – including Netflix, Verizon and Apple – over the past year whose business decisions or practices came under sharp scrutiny as a result of social networking. In the case of Netflix, the uproar on a change in its pricing strategy may have marked a key turning point in the company’s trajectory. When organizations focus on process or their own internal needs over those of the customer, they now face a kind of payback never envisioned at the dawning of the Internet.

Social networking doesn’t only affect a company’s reputation with customers. Websites like Glassdoor.com and others make it easy for people to praise or sound off against employers. You may think this is of little importance during a severe recession, but there’s still fierce competition for the best engineers, software developers, scientists, salespeople, medical practitioners, skilled technicians and more. People with the ability to choose employers now have powerful tools to make a more informed decision.

The Good Company Index

We’re glad that social networking has brought the issue of people and engagement into the forefront, but we continue to believe it’s good for investors as well. That’s why the Enterprise Engagement Alliance is proud to release the Good Company Stock Index (GCSI), based on exceptional research of McBassi & Company that for the first time tracks companies that build good relationships with customers, employees and communities, not just those that create a good places to work. The GCSI is now live on the EEA portal at www.enterpriseengagement.org. Just go to the Resources box at the upper right of any page.

What’s the bottom line when it comes to engagement? It’s not just reputation; turns out it’s the actual bottom line.

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