Why you need Social Products…Like Now!

On-line social networks, such as Facebook, MySpace and more recently Twitter, have recently burst on to the internet scene attracting hundreds of millions of internet users every month. With such broad appeal, customers of every brand in the world are present on these networks, opening great opportunities for brands to interact with customers in new and unusual ways. Early attempts to benefit from social networks focused on banner advertising. Despite extensive targeting, such campaigns met with limited success. Marketing 101 hits home here: right customer, tick; right product, maybe; right context, fail. People look at pictures of their friends, not at advertising. Then came fan pages, which at their core amount to self-targeted advertising. Firms on Twitter are also by-and-large limited to advertising.

But on-line social networks afford you so much more than the old-and-tired advertising. To see where these opportunities are, take a cue from the on-line social networks themselves and think why so many people use them so much every day. Existing research suggests that people use on-line social networks for activities that are really hard to do in the off-line world. I call these unmet social needs. Though there are many different types of unmet social needs, the strongest ones revolve around strengthening relationships with existing friends, or building new relationships with people. So, for example, peering into other people’s lives in the off-line world is really hard, but very useful for strengthening our relationships with others. On on-line social networks it’s easy to do, and people do a lot of it. Similarly, building a relationship with a new potential employer while currently on the job is hard in reality, but it’s much easier on LinkedIn. Fixing these unmet social needs is at the core of on-line social networks value proposition.

So now imagine your business was like Facebook or LinkedIn and your value proposition was extended to include helping people become better friends or meeting people like themselves. If you do that – you will have Social Products…. They will simultaneously fulfill economic and unmet social needs of your customers. They may be not be the easiest thing to design, but once you do, you will get a lot of engagement, which you will allow you to increase the price of your products or lower customer acquisition costs.

So what are some examples of Social Products? In the realm of strengthening existing relationships with friends, a simple social product allows customers to get a discount if they are referred by a friend. A more sophisticated product will give customers extra bonus points if they and a few of their friends reach a certain number of transactions. Such products will encourage greater use and will help you with customer retention. You can do similar things for products that allow people to meet. Take for example avid golf players and tell them that they can meet and play with other golf players if they meet certain transaction threshold and watch your top line grow. And add Facebook Connect as the technology to make it all happen and you’re on a new path to profitability with Social Products.

Mikolaj Jan Piskorski, who goes by Misiek, leads the Market Platform Dynamics’ social media and social networking projects. Misiek is an Associate Professor and Marvin Bower Fellow in the Strategy Unit at Harvard Business School and has served as a consultant to large corporations in the financial services and computer hardware and software industries, as well as small Web 2.0 companies. His expertise is in harnessing the power of social networks to build sustainable businesses, how and why people use online social networks, both in the US and abroad, and how firms can use them to increase viral product adoption. He has also done extensive research into the role of social networks in the venture capital industry.