Social media today is everywhere and proven to be the new form of communication, information and opinion. Understanding the impact social media can have on your business is no longer only for Marketing or Public Relations.
A CFO today must not only understand but embrace the power and impact of social media. Why? Quite simply, no matter what business you are in, you can reach your customers directly through social media. And if you don’t reach them then your competitors will. And today’s CFO’s must understand how this impacts corporate strategy for growth and profitability.
Many CFO’s will say they use social media because at best they have a modest profile on LinkedIn. They have little time to scope out the value and impact of Twitter, Pinterest, and Google+ just to name a few of the exponentially growing number of social media sites and applications. That is understandable due to time constraints, and yet, having a modest profile on LinkedIn is not embracing social media.
Although now a small percentage of CEO’s use social media, the trend shows more and more CEO’s are signing on to social media, especially Twitter, thereby engaging directly with customers. This is a good news/bad news scenario: the good news is the CEO is talking directly with customer; the bad news is the CEO is talking directly with customers. How many CEO’s are in the news in the past couple of months for making comments potentially creating a PR nightmare? If you are a CFO, it is vital to know what your boss is “Tweeting” on Twitter to customers. And today, it is not just a PR nightmare. Investors, lawyers and government agencies read those posts or blogs as well.
Every day companies are applauded or criticized in social media by the information, opinions, pictures and advice they post. Lululemon, Home Depot and Kellogg’s are a few that have been hit for inappropriate posts and comments in the last few weeks. It went so far as the LuLulemon CEO resigned. Oreos on the other hand continues to hit home runs with its Twitter posts.
One bad post, one inappropriate picture, one bad review by a customer, one unclear message can spread like wildfire through social media. As CFO, it is imperative to understand the potential impact on your company and stock price. What is the company’s response to negative tweets and postings in social media? Investors are watching, which is why a CFO being aware of what is occurring in social media is so vital today.
Social media is not just a tool or toy for Marketing. Rather it is a significant part of an overall strategic business approach for your business. It is stated that by 2015 over 50% of companies’ marketing budget will be for social media, and not traditional forms of media such as TV, magazine or newspaper.
Social media impacts every part of the organization, from Legal, to Marketing, Customer Service, IT and even Accounting. Social media is the method to not only reach out and connect with customers, but how customers connect with each other to talk about your products and service.
Another example of the need for today’s CFO to understand the impact of social media is that the SEC has now ruled that U.S. companies will now be able to post their earnings on Twitter or update their status on Facebook as long as investors have been told in advance where to look. Again, consider how quickly information can go viral and how far reaching good and bad news can reach millions of customers and potential investors. Stock prices can be instantly impacted by what news is spread via social media.
Social media is not just a marketing tool. Rather, when fully understood, it is a method of direct connection with your customers of strategic importance. At my last company, as a finance person heading both Investor and Public Relations, it became readily apparent that customers and investors were not receiving a full understanding of the efficacy of our products, the value of our service and new trends in our industry.
Seeing this gap, I led a team to create a separate web site whose purpose was to provide product and health information. The site contained articles by our chief science officer, direct messages from our CEO and other officers, and extensive information on our industry. Our customers loved it and in turned they directed their friends and more potential customers to our site. In addition, investors learned more about our industry, the site helped counter negative press and supported our stock price. 5 years later the site is still be used at that company and greatly expanded.
As Finance leaders it is extremely valuable we understand the impact of social media as it becomes the main form of interaction and communication in our society and worldwide. As a CFO understanding the impact of social media on your business, allows you to provide better insight, perspective and analysis on the direction of your company as well as how it is viewed by investors, vendors and customers.
When fully understood, social media is no longer simply a Marketing or PR tool. Rather, social media is now woven in to the fundamentals of how all companies do business, and as CFO it is vital to be aware of its impact.
Gary Spinell has extensive Finance, Treasury, Analysis, Investor and Public Relations, Risk Management, Human Resources and Financial Reporting experience having worked at companies from $400 million to $13 billion. He has also published 2 books on Amazon relating to self-help and personal development and success.