2.0.0 Social Media Performance Potential for Business – Basics 3

The topic Social Media Performance Potential for Business provides an initial overview of the performance potential of social media for businesses.

Reading time of the learning unit: approx. 17 minutes. The learning unit has no exercises. After that, you can move on to the next session.

Exercises: Exercises are in the PDF of all exercises of this course. Download it from here.

The learning objective is to

  • Provide the social media performance potential for businesses as one of the foundations of social media strategy development.
  • Learn about the use of social media for business objectives.
  • Get an initial overview of social media usage formats.
  • Getting started in identifying and understanding competitive positions.
  • Identify and understand the business benefits from social media.

The individual social media usage formats and their application will be presented to you more comprehensively in the respective topics. There you will also find the corresponding exercises.


CompanyBenefits in the potential-based strategy model pbsm

Definition of the companyBenefits in pbsm

CorporateBenefit is both a layer in the strategy process and a strategy component.

  • Company benefit level: as part of the strategy process, we define one or more company benefits that the company wants to achieve with its strategy in social media. We define possible benefits for strategy development.
  • Corporate benefit strategy component: as a strategy component, the corporate benefit contains the concrete benefit that the company wants to achieve by means of its social media strategy and describes how this benefit is to be achieved. We record which benefits are targeted in a strategy and how they are achieved.
Significance and role in the potential-based strategy model

In the process module CorporateBenefit, we bring the corporate benefit that can be achieved for the company into the strategy process. The source of the individual possible corporate benefit from the performance potential of social media is the analysis of the business model and the corporate goals.

In the strategy process we define via our strategy which (of the possible company benefits) we want to realize in this strategy.

Meaning Process module CompanyBenefits: The process module EnterpriseBenefits includes all opportunities for the company through social media in its market. Thus, as a first step, it brings all possible benefits from social media into the strategy process and ensures the benefit orientation of this process.

During the strategy process, we then commit to the individual business benefits from our social media strategy. In the strategy process, therefore, it becomes clear what overall benefits are possible for the company and what of these benefits the company is aiming for in its strategy.

Meaning Strategy component Corporate benefit: the strategy component contains the corporate benefit that is to be achieved with the strategy. It describes the company benefits and the measures with which these benefits are to be achieved. This ensures the implementation of the strategy and, in particular, the benefit of the implemented strategy for the company. At the same time, the strategy component CorporateBenefit also ensures the strict benefit orientation of social media activities when implemented consistently.

  • Relationship building: We build relationships with social media users. These can be completely new relationships or relationships that are deepened via social media.
  • Change: we change markets and relationships by changing the knowledge of social media users, their attitudes and evaluations (of services and companies) or by influencing their needs.
  • Knowledge: We create knowledge for the company. For example, about the needs and attitudes of social media users or about feedback on services, products and companies. Knowledge that we process in our services or use to sell our products.
  • Participation: we use the effect of participation of social media users, e.g. in sharing content, in gaining knowledge, in market cultivation or in corporate processes. In doing so, we simultaneously increase our corporate resources in and for social media and change the equilibrium of a market.
Examples of corporate benefits from social media performance potential for companies

Through social media, companies can

  • Disseminating knowledge: Communicate knowledge to social media users and use knowledge to influence their assessments, attitudes, needs, and ultimately their behavior.
  • Gathering knowledge: Companies generate knowledge about the assessments, attitudes, needs and behavior of social media users.
  • Building relationships: Companies can build their own relationships with social media users as well as generate relationships between social media users and use both to influence behavior – via knowledge and its communication. We should take into account that relationships are primarily a level between people. Relationships of people to organizations are limited in nature by the lack of “humanity” on the part of the organization. Emotions between people are generally more complex and intense than between people and organizations, even if in individual cases we recognize a high intensity in this type of relationship (fanatical fans are an example of this).
  • Changing behavior: changing attitudes, attitudes and evaluations can result in changed behavior. Positive feedback on services from a user’s social media environment, for example, can turn them into a prospect. Another, no less valuable performance potential of social media for companies lies in the activation of users. We know this activation, for example, through content that is actively passed on (goes viral), but not least also in a more comprehensive engagement of social media users, for example, the support of user questions within forums on topics related to products and services, from the contributions of users to communities or from the participation of users in corporate services. Wikipedia is a well-known example of a service that is predominantly provided by social media users. Youtube, Facebook, Twitter are examples of very successful social media based companies whose performance is largely dependent on user participation.
  • Reaching and workingmarkets: Social media offers companies the opportunity to establish their own social media channels or to use existing social media channels to reach and work markets. That is, actually having your own social media channel for market cultivation is a corporate benefit in itself. A third-party social media channel that we can use for market cultivation is also a corporate benefit, but a limited one, because the social media channel cannot ultimately be shaped, the scope of the channel’s services is out of our hands, and the company’s dependency is increased. This category also includes prospect generation or customer retention.

Below are some explanations of this performance potential of social media for businesses.

Example relationship building

The aim is to build or deepen relationships via social media, i.e. with social media users. These can be customers with whom the relationship is to be deepened via social media or social media users with whom there has been no previous relationship and who are to be acquired as customers.

function-based: from a function-based perspective, we use social media to build relationships, e.g., we generate relationships with social media users to gain leads/prospects from them, or to intensify relationships with existing customers. Building or deepening relationships serves a corporate function.

potential-based: if we build new relationships in markets from a potential-based perspective, this serves the primary purpose of building up market potential to be exploited in the future. This potential can be used for existing products/services or to market new products/services. The crucial element is the orientation on the potential of the relationships, not on existing services / products.

Example changes

The company uses social media to influence existing attitudes, opinions of users, establish knowledge or get feedback on services and products.

situational: For example, the company leverages existing reach and social media relationships and invites social media users to provide feedback on specific products/services.

permanent: The company offers a fixed channel for feedback on its products and services.

Example Generation of market knowledge through social media

The company improves its knowledge of relevant needs and attitudes of social media users.

situational: the company uses existing social media channels and conducts temporary surveys.

permanent: the company uses its own channels for permanent market research and marketing research and uses appropriate content (content on the topics, surveys, etc.) for this purpose.

Example of using social media for user engagement

situational: the company uses content that is optimized for sharing on the social networks of social media users (content, benefit creation).

permanent: the company offers social media users more permanent forms of participation and co-design – e.g. as part of user support / customer support.

CompanyBenefits and Topics / Subject Areas

TheContext: we define the business benefit for topics and subject areas. This enables us to recognize what we can achieve in a topic for one or more business benefits. This makes the economic significance of the respective topic clear. By identifying the possible corporate benefit and the competitive situation and its requirements for each relevant topic, we directly contrast the benefit and the content required for it in social media. If we want to achieve a specific business benefit in a particularly relevant topic, we need to use appropriate content in our social media strategy.

The way there: in order for a corporate benefit to occur through social media, social media must achieve corresponding impact. This sounds trivial, but it is not. To make an impact with social media, we need attention and reach. That is, we must be able to reach users in social media in order to achieve an impact that pays off as a corporate benefit for the business model / specific corporate goals.

We reach social media users via topics and themes. This means that, in order to achieve our desired corporate benefit, we have to achieve and deploy the greatest possible sustained attention – i.e. reach – in the relevant topics.

In order to achieve and maintain lasting attention, we must become relevant, important, or better yet, a leader for social media users in the respective topics as a source or authority. In digital business models – and thus also in the competition for attention in social media – the lion’s share of attention goes to whoever has the leading position in the competition in a topic. Beyond the leading position in the competition, the remaining providers share the more or less large remainder of remaining attention.

In order to achieve our corporate benefit in social media, we have to achieve the leading competitive position in the respective topics as far as possible.

Competitive positions in the potential-based strategy model pbsm

Definition of competitive positions

Competitive positions are content and structure on topics and themes in a social media strategy that are critical to the success of the strategy. In other words, these positions of a social media strategy must be competitively successful or realized in order for the strategy to be successful to the desired extent. At the same time, they cannot be permanently ignored by the competition. Competitive positions always refer to their own content, their own structure in relation to the competitive situation.

Explanation: We know content as content enough. If we act in social media with an audience – as a form of organization / social media usage format for content – we must try to

  • For all Audience topics per se (that would be the leading competitive position for Audience
  • for specific topics in the audience – this would be the leading competitive position for a topic

to reach. So, in any case, to become the leading source of information of users / by users. The same is transferred to the community.

Example: We sell products for skin care. For the potential users of our products, certain topics are particularly important – and relevant in social media (social media affinity. The competitive position here would be to be the leading or one of the leading sources of information and exchange on these topics.

Example of practical benefit: Social media users find out about the topics relevant to them on our social media presence and also exchange information there. We receive information about what problems the users have, what is important to them and what needs they have. We can participate directly in the communication and, if the social media strategy is designed appropriately, we can also build customer relationships with the users. We use this competitive position to reach our own customers, potential customers/prospects, and competitor customers. Note: the number of suppliers and products can be much higher than the number of possible competitive positions. Users tend to focus on a few – relevant – sources of information and exchange. This results in competition among many for a few competitive positions.

Distinction between competitive position and competitive advantage

The competitive position establishes the competitive advantage. With content and structures, we take a position in the competition from which a competitive advantage can result. We may have achieved an advantageous competitive position, but fail to take appropriate advantage of it.


  • Usage formats: we have successfully established a community in a competition that was previously fought out at the audience level. If we fail to systematically activate users in this competition, we will have failed to exploit a competitive advantage.
  • UserBenefit: our UserBenefit is more social and enables a network effect, can thus enable a considerable competitive advantage over the UserBenefits of competitors without this quality. We have a valuable competitive position via this UserBenefit. If we do not recognize its potential or do not use it, we miss out on a potentially decisive competitive advantage.

In the potential-based strategy model pbsm, competitive positions always relate to subject areas.

Explanation: as a subdivision of markets, subject areas are a more precise and useful working level than complete markets for the evaluation of market and competitive situations and the strategy development based on them. By knowing the competitive positions in the individual subject areas, we can identify opportunities and risks much more clearly, and in particular the weaknesses of competitors and open potential, and take these into account in our strategy development.

Types of competitive positions

We distinguish competitive positions based on how available or accessible they are to our business.

  • open competitive positions: Competitive positions are open if no competitor has occupied that position. That is, we can use this position without encountering competition.
  • Secure competitive positions: Competitive positions are secure if they are used by competitors but, based on their use, can be secured and maintained by us with sufficient probability that we can become and remain the dominant supplier within the subject area. This is most likely to happen if our strategy enables structural competitive advantages.
  • achievable competitive positions: achievable competitive positions are used by competitors but are achievable for us. That is, we can also use this position to achieve relevant effect for our benefit . The prerequisite for this is that we can use appropriate content in our social media strategy that gives us access to this competitive position.
  • occupied competitive positions: Competitive positions are considered to be occupied if it is not possible for us to use this position for our own purposes in such a way that we can achieve a significant effect with economically justifiable effort.
Explanations competitive positions

Competitive position occupiedIf a competitive position is so comprehensively occupied by an attention-grabbing or performance-based competitor that it cannot be attacked by us as a source or provider either structurally – via the level of social media usage formats – or in terms of content – via the level of social media impact – with a serious chance of success, we assume that the competitive position is occupied.

Achievable competitive positions: we can also establish ourselves in this competitive position to the extent that we can achieve an impact in it that is sufficient for our strategy. This means that we will most likely not become the leading provider in this topic area, but we will be perceived in such a way that we will achieve sufficient impact with it.

Secure competitive positions: we can assert ourselves in this competitive position vis-à-vis other competitors to such an extent that we can become and remain the dominant supplier in this subject area. As a rule, this requires not only the company’s own competence and sufficient resources but also, to the same extent, deficits and weaknesses on the part of competitors for this competitive position.

Use of competitive positions in strategy development

We use competitive positions in strategy development in order to develop the competitiveness of a strategy, to make it recognizable or to secure the competitiveness of the strategy.

Based on the competitive positions, we can see whether we have a chance of successful use through social media in a particular topic / subject area.

The competitive situation in a competitive position shows us which competition we must be able to shape to our advantage. That is, it tells us what our strategy must do in this area.

Competitive positions in the potential-based strategy model pbsm

Competitive positions are found in

  • Social media usage formats: if we successfully use a social media usage format that cannot be replicated by the competition or cannot be replicated in the short term, but that cannot be ignored by the competition either, we have a competitive position that enables us to gain a competitive advantage.
  • UserBenefits: UserBenefits that are more attractive, more social in their benefits, or even have a network effect.
  • Participation: Participation offers compared to competitors who do not use attractive participation offers or participation offers with network effect or valuable, structurally justified additional benefits.
  • Motivation: more convincing motivational methods, motivational structures that are more socially based and activating.
  • Social media channels: Social media channels that enable services that cannot be provided by competitors due to the service structure of the latter’s channels, or in the functions of communication or self-presentation.
Definition of competitive positions in the strategy process

Possible competitive positions result from the social media options for action, the possible corporate benefits therein and the competitive situation.

In the course of strategy development, we define the social media options for action in the topics / subject areas (of our business model including its markets and our corporate goals). The competitive positions that we should achieve in order to realize these corporate benefits result from the corporate benefits possible with these options for action (which we want to strive for). Whether and how we can achieve these competitive positions depends not least on the competitive situation of the respective options for action. These steps are part of the strategy definition.

Competitive positions of usage formats

Our social media usage formats are in structural competition with each other and with other usage formats.

The competitive positions of the individual social media usage formats are the content and structures of the usage formats that are relevant to success.

Examples Audience

  • selective content: the ability to selectively provide users with content is a competitive position. If we can do this, our audience is structurally more attractive to users because it is more useful. The possibility of selective content becomes a competitive position if it is a relevant service for users, because it allows us to shape the competition.
  • Direct feedback from users: if we enable users to influence the content of the audience via feedback, our audience can be more closely aligned with the interests of the users. This can become a success-relevant element of our audience, if this possibility does not exist with our competitors and is relevant for the users.
  • Sharing: if users can share content easily and selectively, this is a success-relevant component of our audience. This opportunity becomes a competitive position if it is relevant to users and can become a competitive advantage if we enable better sharing here.

Examples community

  • Active networking: if the networking is relevant to users of the community – which is usually the case – we can shape the competition via the type and extent of networking by users of our community.
  • Profiles: the more important profiles are for the users of the community, the better we can make the competition about the offered profiles. The quality and structure of our profiles thus becomes a competitive position.
Competitive positions and social media impact

The UserBenefit of our social media strategy competes with the UserBenefit enabled by other social media offerings. If a user benefit is relevant to users’ choice of a social media offering, it is a competitive position. The more important a specific user benefit – or a type of user benefit – is for users, the stronger / more secure our competitive position must be for this user benefit. The direct comparison of user benefits – both with performance competitors and with theme competitors – shows the strength of our competitive position.

  • The relevance of UserBenefit to the use of our social media offering makes UserBenefit a competitive position.
  • The attractiveness of the concrete user benefit in comparison defines the strength of our competitive position.

User benefit is per se a particularly success-relevant strategic component in which we can hardly afford a weak competitive position.

Competitive positions in the digital environment

Social media takes place in a digital environment. This also has implications for competitive positions. The number of possible competitive positions is influenced, for example, by the number of possible usage formats: if, for example, only a very limited number of communities are possible for topics or subject areas, which tends to be the case in the digital environment, these become competitive positions. As a consequence, it is relevant for the success of a strategy whether such a competitive position – i.e. a corresponding community – is feasible for the company or is no longer feasible due to the competitive situation.

Competitive positions and strategy development

We test all strategy components in comparison with the offerings of performance and attention competitors for the attractiveness of our offerings (competitive positions) in comparison with the competitive offering. If we find weaknesses, we should correct them before they cause us problems in the market.

From social media performance potential to social media strategy – the strategy process

Social media strategy development in the potential-based strategy model is based on the performance potential of social media with the help of which the information basis for social media strategy development in the form of the social media options for action via the

  • Analysis of the business model topics with their priorities and social media affinity as well as the potential business benefits,
  • Analysis of the competitive situation, the requirements from the competitive situation for our strategy contents (especially about the competitive positions of our competitors)

is worked out.

Based on the company’s goals for the areas of market, competition and business model (and, if applicable, direction of growth), various social media strategy alternatives are worked out and tested for

  • Business benefit: the degree to which the business model is supported
  • Competitiveness: review of the content of our strategy components and the social media impact on their competitiveness (competitive positions).
  • the resource requirements: Defining the requirements from the strategy components for the company resources and their feasibility.


Approaches to problem solving
  • Strategy components: if we identify deficits in the competitiveness of individual strategy components, we need to revise these strategy components once again. In doing so, we should take into account the interactions between the individual strategy components. If the deficits of individual or several strategy components cannot be compensated, the strategy must be completely revised, or the strategy alternative must be removed from the decision.
  • Resources: if the company cannot afford the necessary resources for a strategy design (in the short term), either
    • adjust the strategy – resulting in less benefit from social media.
    • Consider the use of social media resources as compensation.
    • external resources, if necessary.

Practical note: The resource problem more often concerns the professional resources available for specific forms of social media use. If we only have social media expertise for Audiences in the company, using communities based on that expertise is downright tricky.