CRM magazine explains technology that will understand and leverage your relationship capital.
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Networking. Usually, the phrase that comes up when you discuss it is, it's not what you know, it's whom you know. That hackneyed characterization can be pejorative, but extending your reach through social contacts is an important part of business. It's why we have conferences, trade shows, mixers, and even business cards: to put the word out about who you are and how you can be useful to others.
Today social networking is more than just glad-handing people at conventions or asking a friend to move your job application to the top of the pile. There are technologies designed specifically to quantify, codify, and leverage your relationships. When you really need to reach out and touch someone, social networking applications are the way to go.
More than contact management
If social networking were about keeping track of whom you know and what you know about them, there wouldn't be any hype associated with it beyond what some good contact management software can do for you. But there's more to it than simply making a list. A social network allows you to easily search your contacts to match individuals to your needs, true, but that's just the beginning. How many people do you know? How many people know them? How do you get access to that other group in the most efficient, least intrusive way possible? Answering those questions and automating the laborious process of acquiring contacts are among the advantages of social networking. Social networks are search engines, introduction brokers, and more. Denis Pombriant, managing principal for Beagle Research, sums up the difference between contact management and social networking: "Contact management is an extension of your memory; with good contact management, you always know what you know. With a social network, there's always a chance to find something new."
Frank Vaculin, CEO of Spoke Software, has a lot of experience in this area--Spoke delivers on-demand social networking. "The definition of social networking is 'technology in search of a problem,'" Vaculin jokes. "Trying to sell social networking as a technology has always been tough because the advantage of the tech approach isn't always immediately clear." The issue, Vaculin says, is that the concept is too broad to grasp in business terms. Making a clear case for social networking's value is best done in terms of--and often directly to--the people who can get the most use out of it. "Apply the tech to sales enablement and lead generation, focus on the need to give sales and marketing people access," he says, and it's a clear winner.
The core of social networking is simple logic: If Amy knows Bruce, and Bruce knows Carla, then Amy can get to Carla through Bruce. Software analyzes each person's contacts to see if there's a match, and facilitates Amy's asking Bruce for an introduction. More than a list of names, a social network adds relevance by allowing users to search for a contact in a particular industry, or at a certain company, or who is interested in topic X.
According to Vaculin, contact data on a social network comes from three sources. First is manually published data, which you might find on services like OneSource, Barron's, or Hoovers. Next is the Web, including search engines like Google or Yahoo!, as well as Web spiders that sift through the morass of Internet traffic to find information that meets your criteria. Third is member-contributed data, where participants opt in and choose to share their contact information and other data; Plaxo and LinkedIn are well-known examples of this sort of social network.
But this approach to empowering business must be married with functionality and usability of information, or you have achieved nothing. "It's like a refrigerator with no food," Vaculin says. "Or a spreadsheet with no formulas. Time and effort must be spent on the information, or the system is empty."
Vaculin extends his refrigerator metaphor, noting that contacts can go bad. "Freshness is important; contacts are perishable," he says. Anybody who has ever looked up a phone number and dialed it correctly, only to find out that the person isn't there anymore, knows the truth of this. Spoke Software has over 30 million contacts from half a million organizations in its network, so constant refreshing of the information is all that prevents a fridge full of moldy contact data.
Getting the data is a different problem from providing it, so there needs to be a technological answer. Antony Brydon, CEO of Visible Path, explains: "When we build social networking, it uses a lot of the same technology as search engines." The very same Web spiders that collect the information in the first place, at least in some cases, can be focused inward to search the social network for relevant contacts. "How [Visible Path] behaves has a lot more in common with Google than with Siebel," Brydon says.
"We use weighting to provide contact relevance. In Google, a page is relevant if other sites point to it. In Visible Path, a person is important--we say 'prestigious'--if other prestigious contacts point to them, or if the path to your goal is short," Brydon explains. Visible Path determines prestige and connection strength in a number of ways. With email, for instance, weighting is applied according to volume and frequency of contact; reciprocity ratio, or how evenly balanced messages sent are with messages received; timeliness of response; BCC usage, which indicates the level of trust; span or duration of the relationship; and whether it extends both online and offline.
Putting it into practice
Social networking has grown beyond giving sales and marketing a new way to develop leads, and has found a comfortable niche serving as an adjunct to CRM and partner relationship management, as well as allowing other business functions to flourish. "Focusing on sales opportunities is the thin end of the wedge for social networking," Brydon says. "CRM is fairly mature, and vendors aren't rolling out new services at the same rate as previously, so the market for extending via third parties is huge. We show companies their relationship capital, the aggregate value of relationships in the company network, and enable them to leverage it."
Social networking considers both the length of the path to reach a contact, and the strength of that path. Each factor is more or less relevant depending on the application. "For things like recruiting or job leads, the length of the path is irrelevant," Brydon says. "But the last link's relevance and trust are huge." Conversely, Brydon says, length is very important in a sales setting. "If you're six degrees away from somebody, you are essentially making a cold call."
In addition to recruiting, social networks are a tremendous boon for venture capitalists, whose business involves knowing a lot of people in the right places and putting them in touch. Research firms, where wide-ranging expertise and capabilities are as hard to keep track of as they are important, can use social networks as an internal tool. One company that Pombriant has looked at is Interface Software, makers of InterAction. "Interface is used most by accountants, lawyers, and consultants--people whose business relies on the ability to capitalize on relationships."
"We've had a lot of customer success in the legal and high technology sectors," Brydon says. "Legal, for example, is very relationship driven. Say you're marketing or sending out invitations to some function. The success rate of a blind send might be 0.2 to 0.5 percent acceptances. Using social networking like Visible Path, we've shown clients 10 to 15 times higher levels."
Esther Dyson, renowned technology expert and editor of Release 1.0 for CNET, knows her way around social networking and other information sharing systems: In addition to being an investor in Visible Path, she is on the board of directors for event planning exchange company Meetup and for the photo sharing community provider Flickr. "Different kinds of businesses need different kinds of social networking," Dyson says. "Traditional sales forces and corporate networks in general will be primarily concerned with choosing the right targets. For hiring, casting roles, or finding potential partners and investors, however, you need something that will cast a wider net yet maintain relevance."
Working the room
Social networking works best in business when there's a clear usage case; companies like nTAG are specializing the concept beyond the office and bringing it to events--the settings where networking traditionally happened. The nTAG's system is wearable technology developed by Rick Borovoy, the company's CTO and cofounder. "[nTag] grew out of my Ph.D. research at MIT, discovering how technology can improve face-to-face communication," Borovoy recalls. Working for Apple Computer's Advanced Technology Group, he saw conferences with worldwide attendees, "but the Intel people would all wind up talking to other Intel people, for instance."
Borovoy's initial research in 1995 yielded three prototypes of interactive nametags for use at conferences and other gatherings. "The goal was to support all the major goals of an event, and be able to quantify them," he says. Those goals include preregistration, qualifying who should meet with whom (either by choice or necessity), what activities and booths would be most valuable to the individual, and more. Badges with this technology could be preprogrammed with information before the start of a trade show to alert wearers when a selected session was about to begin, or they were in physical proximity to somebody they wanted to meet or a booth they intended to visit. The data could be analyzed after the show to see how successfully the goals were met. "It was a much different approach from the assumption that tech was destroying face to face," Borovoy says.
The next generation of the system, due in early 2006, will have a lighter and more comfortable design, a dynamic screen, the ability to accept new input from the user or the event server, and more. "The story might start a week or two before the event, when you decide who you want to meet or what you want to do," Borovoy says. The tag would also be useful for last-minute attendees who need a guide to take the place of that planning. "Flip the screen toward yourself, and [the system] acts like a PDA. You can check or update your agenda, send messages, or take contact info from people you meet," Borovoy relates. "The new tags can automatically recognize which conference session you walk into, and can send you an invitation to a special session if one occurs." The invitation feature can be used for secure digital ticketing, serving as an electronic concierge or bouncer. The tag can also push a survey to wearers after a session.
All of this sounds nice, but is it compelling? If you don't think so, consider that it all adds up to nTAG allowing event planners and attendees to combine contact data with behavioral data to have insight (pun intended) into concrete benefits received from attendance. "We're starting to pull out analysis of sales velocity," Borovoy reveals. "There are common behavioral features that show whether people you meet are moving from the discovery phase, through prospect, to closing."
Social networking is the best solution to the problem of gaining access, but it's not magic. The software will take you only so far, and there are mistakes that can be made. Privacy is a big issue, as is the related problem of not bothering valued contacts too often to ask them for introductions to others. Visible Path prevents fatigue and abuse of contacts, and is smart enough to know when you don't want to be bothered. "If you don't respond to requests for introductions, the system will route around you," Brydon says.
"With member-contributed data, you have to be sensitive to the importance of privacy," Vaculin says. "For membership in our opt-in system, we only require the ability to validate a user's name, title, and company," information that can generally be found in public documents. Most forward thinkers agree that personal information should always be under the final control of the user who opts to share it. The birth of a new C-level title, chief privacy officer, is proof of this.
It's also important to remember that the technology reinforces good technique, but isn't a substitute. "A social networking application doesn't make poor salespeople good, but it does make the good ones more effective," Dyson says. "Networking can help remind you to follow up on the things you might normally not do, like remembering birthdays; it can provide a means of introduction to a valued prospect; it can help you form communities with people you've never met. But you still have to pick up the phone or write the email."
Pombriant echoes and amplifies Dyson's position, suggesting that the sales benefit to social networking should come before the sales team starts working. "Social networking should not be used in a sales setting," Pombriant says. "It's a high powered, sophisticated tool to contact hard-to-reach individuals. As such, it should be reserved for helping people with real solutions find people with real needs."
"Whatever you do, you absolutely don't want to reach out to the end target through the networking system," Brydon cautions. The value, he says, is in getting the system to point you to the right person so that you can make the phone call yourself. Pombriant emphasizes the need for people skills. "There's a book on personal relationships, What Do You Say After You Say Hello?, and that concept is applicable here," he says. "A social network can get you the introduction, but everything after that is up to you."
So, when all is said and done, social networking doesn't take the place of research, strategy, and good old-fashioned shmoozing. "The most common misstep is the belief that you can depend entirely on relationships to get you what you want," Vaculin says. So maybe it's what you know, after all.
COUNTING ON RELATIONSHIPS
Sagent Advisors, an independent, privately held boutique investment bank, had a need. "This is primarily a relationship-driven business," says Scott Kaplan, senior vice president and CFO. "Without personal introductions and referrals, an investment bank can't survive." Early on, the founders all knew each other's areas of expertise, but as the business grew, now employing 30 to 40 bankers, it became harder to keep track of who had contacts where. "We had to solve for the two main routes of figuring out who knows whom: walking down the hall and asking a colleague if they know anybody you can use, or sending a blanket email around the organization, asking all the bankers for contacts and waiting for a response," Kaplan says.
Geoff Hyatt, founder and CEO of Contact Networks, had a solution. "We started in 2000, coming from a large consultancy. We were trying to solve the typical business relationship problem: 'Somebody I know must know somebody who works for such-and-such company.'" Contact Networks provides a relationship search engine that resides behind the company firewall and analyzes data from the CRM system, Outlook, resume documents, and communication patterns in email and messaging apps.
The company enables Sagent to quantify its relationships and act on them. "We discovered we had more than 37,700 unique contacts in 3,300 different organizations," Kaplan says. All those contacts mean a lot of opportunities for the company, but each one is also precious to the investment banker who developed the relationship. Hyatt explains, "Contact Networks gives user companies the ability to keep sources confidential. The system can tell you, 'Someone has a contact at Boeing,' or it can be set to reveal, 'Scott Kaplan has a contact at Boeing.'" Kaplan adds, "The owner of the contact is the gatekeeper. This lets each person retain ownership of his or her Rolodex, but it's also a tool to foster cooperation. The water cooler does not count as a tool."
By the way: Kaplan and Hyatt met through social networking, introduced sometime in 2001 through mutual contacts. --M.L.
Contact Senior Writer Marshall Lager at mlager@destinationCRM.com
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