Here is an excerpt from an article co-authored by Christopher Vollmer and Karen Premo featured in strategy+business magazine, published by Bain & Company. To read the complete article, check out the wealth of free online resources, sign up for email alerts, and learn more about the firm, please click here.

Illustration by Felix Sockwell

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A survey of senior marketers reveals three capabilities for building better online consumer relationships.

Burberry Group PLC has a rich heritage that would make many other companies envious. For more than 150 years, this luxury apparel company could credit its success to its instantly recognizable brand and timeless yet contemporary designs. But today a new defining element has come to the fore: branded digital and social media experiences. Just look at how dramatically Burberry has reimagined its fashion shows, once effectively off-limits to the brand’s many admirers. Today Burberry streams its shows to its fans on Facebook (12.8 million as of May 2012) and its audience on YouTube (13.3 million unique video views and about 35,000 subscribers to its channel as of May 2012). Partnering with Twitter, the company created the “Tweetwalk,” a real-time feed that showcases new designs just before they hit the runway. This gave Burberry’s Twitter followers (978,000 as of May 2012) unique “see it first” access. By leveraging these platforms, Burberry has turned its fashion shows into content-rich social experiences that engage millions of fans and interested consumers, rather than just a few industry insiders.

With these moves, Burberry has positioned itself on the leading edge of digital and social media. And many other companies are investing similarly in strengthening their social media presence and related capabilities. In the summer and fall of 2011, Booz & Company and Buddy Media, a social enterprise software provider, conducted a quantitative survey of 117 leading companies and a series of in-depth interviews with senior marketing and media executives. The results revealed that strengthening social media is on the CEO’s agenda at 40 percent of responding companies and is a top marketing priority for about 60 percent. Seventy-eight percent believe that social media efforts enhance their marketing effectiveness; 95 percent expect to invest more in social media.

Today, two-thirds of responding companies dedicate 5 percent or less of their digital marketing spending to social media. Within three years, however, 56 percent of responding companies expect to spend 10 percent or more of their digital marketing budgets on social media, and 28 percent expect the figure to exceed 20 percent. (See Exhibit.)

Companies aiming to take full advantage of this expanding social media spending need to scale three important capabilities: community management, content development, and real-time analytics. For innovators like Burberry, these capabilities are most often combined as a mutually reinforcing system operating under the leadership of the marketing function. (In Burberry’s case, the company’s creative and design leadership are involved as well.) Burberry’s deliberate investment in these digitally focused capabilities has enabled the company to develop powerful, direct, and multiplatform relationships with its fans and consumers, creating unprecedented opportunities for brand building, product marketing, and consumer engagement. This strategic focus on digitizing and socializing its brand and the consumer’s experience of it has profoundly changed the company. Says creative director Christopher Bailey, “Burberry is now as much a media-content company as we are a design company.

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To read the complete article, please click here.

Christopher Vollmer is a partner with Booz & Company and leads the firm’s global media and entertainment practice, and is based in New York. Karen Premo is a principal with Booz & Company’s global media and entertainment practice, and is based in New York.