Businesses have two ways to communicate with customers: talking or listening.

For a hundred years, talking dominated. Media, including television, magazines and billboards was the business’s mouth; people, including market researchers and customer service representatives, were its ears. The mouth was bigger than the ears.

Enter “social media” — communities built around user-generated content on Twitter, Facebook, YouTube, and Pinterest, unmoderated reviews on Amazon and Yelp, tips for every point on the map on Foursquare, and blogs by the million.

Most businesses use social media for talking. They make announcements.They distribute coupons. They dream of “going viral.” They measure the success of their “campaigns” with media-style metrics such as “views,” “likes,” and “followers” (all of which can be manipulated — see the cautionary tale of Santiago Swallow for an example). And they miss the point. Social media is not a bullhorn for broadcast but a coffee shop for conversation.

Businesses do not do well talking through social media. Coca-Cola, the world’s most valuable brand, according to Interbrand, ranks 1,088 in terms of Twitter followers. This has nothing to do with Coca-Cola: None of Interbrand’s top 100 are in Twitter’s top 100.

The world’s most valuable brands, 1-10 and 90-100, and their relative rank by number of followers on Twitter. The Twitter top 100 consists of celebrities, other social media and news outlets —not businesses selling products and general services. Sources: Interbrand, TwitterCounter

There is little evidence that tweets have anything like the same impact per dollar as television advertising. The @CocaCola Twitter account has 1.2 million followers. Ten times as many people see a television commercial shown during Duck Dynasty on A&E . The price of the commercial is several hundred thousand dollars, not including production, but tweets cannot compete, even though they are almost free. The cliché,“We know half of all advertising works but not which half,” is not true: Big companies measure a commercial’s influence long before it reaches the air. When I was a brand manager at Procter & Gamble, we researched storyboards using “animatics” during screenings of soap operas before spending a dime on production or airtime. Decades of testing shows that properly made television advertising sells products. There are some claims that Twitter helps with “brand enhancement,” but they are weak. A brand only has value if it increases sales.

Apple, the number two global brand, according to Interbrand, advertises on television, in print, and on billboards, but has no Twitter account. Apple sees no need to “enhance” its brand via social media. It is hard to argue that Apple’s sales or brand reputation have suffered as a result.

So, if social media is not good for talking, what is it good for? The answer is obvious: listening.

User-generated reviews are the best possible way to understand how customers use products. At Belkin, I launched a range of simple energy-saving products to understand more about the conservation and home automation markets. For all but the most mass-market products, post-launch research is expensive because users are hard to find. And even if you can recruit participants, focus groups only provide a few dozen opinions. Online user reviews, of which there were hundreds, told me more than I could have possibly discovered from market research, at no cost.

For example, many people wanted to automate Crock-Pots:

This product is great when I make Crock-Pot meals, because I have never seen one with a timer. 6 Hours on high, roast is done. Now it is worry free when I am at work. It will even have had time to cool off to an edible temp by the time I get home.

I did not use a Crock-Pot, nor did anyone on my team. Crock-Pot automation is an application we could have only discovered through social media. But once we discovered it, it led us to new strategies. Eventually, Belkin formed a partnership with Crock-Pot’s manufacturer to automate kitchen appliances.

We also developed a new line of products partly inspired by the insight that people want to be “worry-free when at work,” a sentiment that we frequently saw reflected in social media.

Los Angeles, February 11, 2011. The social media-inspired white board that led to Belkin’s “WeMo” products

We do not limit our social media analysis to our own products. We also use it to identify strengths and weaknesses in competitors and understand unmet needs in product categories of interest. Our entry into home automation was partly informed by YouTube videos showing customer frustration with the complexity of the category. Social media, especially video, has an added benefit: visceral evidence from customers ends internal debates about hypotheticals and speeds up decision-making. A compilation of the YouTube video clips, developed for internal use only, was an essential part of getting company-wide agreement on our home automation strategy.

A user demonstrates a home automation system on YouTube

Negative reviews are even more valuable than positive ones. Bad reviews draw attention to previously unknown bugs, unacceptable trade-offs, or missing features. In the early years of social media, the response to negative reviews, at my company and possibly others, was, regrettably, to try to neutralize them. It is better to fix reviews by fixing the problems they reveal. When one of my products was getting bad reviews on Amazon.com, I posted my e-mail address in the comments so I could talk to my unhappy customers, understand their problems, and fix the product. The changes took the ratings from an average one star out of five, Amazon’s lowest possible score, to nearly four.

A close reading of user reviews, coupled with Twitter and Facebook sentiment analysis, also shows what features matter most. Analysis of reviews and comments led to the simplest product I have ever made: an outlet with an on-off switch. Social media gave us the confidence and focus that helped our industrial designer Michael Wick create a beautiful user experience. The product was so simple that it was ridiculed internally, but so well informed by social media that it was a huge success.

Belkin Conserve Power Switch, designed by Michael Wick after analyzing social media

How would people use this product? We were not sure until we saw the reviews:

“I use it for a hanging light I bought from IKEA that has to be plugged into the wall and does not have an on/off switch. I used to unplug it each time, but now —BLAM!— i just flip the switch. Good stuff!”
“The advantage of this little switch is you do not have cords hanging loose after unplugging them. This makes it very easy to cut the power, just flip the switch on the right hand side of the switch. Good product for cutting power to things you do not want to unplug.”

If we want to see what people do with our products, rather than just read about it, we study “unboxing” videos posted on YouTube, blogs, and user-generated review sites. Watching a customer open, configure, and then use a product is powerful.

Barnacules’ Nerdgasm” — one of many “unboxing videos” available on social media. Barnacules, real name Jerry Berg, shows how to configure the product, and also demonstrates a great application: making sure his Internet connection never crashe

Next, we formed a partnership with user-generated “recipe” sharing service If This, Then That so that our customers could integrate our products with other platforms like Foursquare, Facebook, Twitter, and Instagram, then share the applications. Among other benefits, we get even more product ideas. One popular, if surprising, example: automated cat litter.

Source: If This,Then That

We even use social media to improve our core technology. Forty teams of data scientists from around the world are competing to refine the algorithms in one of our most advanced products via Kaggle, a science crowdsourcing service. The competition started on July 1. By July 20, several teams had already beaten our internal performance benchmark.

The important word in “social media” is not “media,” but “social.” Social media may never revolutionize how products are advertised, but it has already revolutionized how products are designed.