At a recent roundtable event hosted by BT, experts debated how businesses could use Web 2.0 technologies to “humanise” their operations, form better customer relationships and improve marketing efforts. Social networking was identified as a major way in which firms can reach their customers more effectively as traditional channels become clogged.

The event was used to promote BT Tradespace, a Web 2.0 platform aimed at small and medium-sized businesses that enables them to reach out to customers via blogs, photo sharing, podcasts and other tools. But large corporations could also benefit from this type of technology, according to experts at the event.

The man in charge of BT’s Tradespace operation, Ivan Croxford, argued that Web 2.0 tools enable firms to differentiate themselves and “create a distinct message online”. But he added that this requires a certain amount of co-ordination internally between key stakeholders.

“It almost represents a new kind of online marketing, enabling businesses to have a really open engagement [with customers],” Croxford explained, adding that to do this successfully firms need to have open conversations internally.

Blogging was highlighted as one way to reach customers and build brand image more effectively than traditional methods.

Analyst and blogging expert Kate Bulkley argued that we are witnessing “the end of hierarchy, which is changing the way we do business”. But firms need to understand that blogging is a different art to maintaining their web sites, and that blogs need to be updated more regularly, both to keep customers interested and to boost search rankings, she added.

Bulkley also highlighted that traditional marketing channels, such as email, are becoming less effective as spam and customer apathy grows. However, Will Wynne, ex-senior manager for marketing at eBay, argued that there is still a role for email in marketing, and that new technology could reduce the amount of unwanted messages in users’ inboxes.

Wynne added that diversification is key to ensuring online marketing efforts are not wholly dependent on Google. “If you’re a slave to Google they can turn you off and change your business overnight, so [diversifying] de-risks your business model,” he said.

Jahangir Ahmed, e-commerce manager of industry organisation the British Chambers of Commerce (BCC), argued that an online presence is a vital part of any firm’s commercial efforts.

“It’s essential in today’s global marketplace – the global village is very small,” Ahmed said. “You have to have a site to be a member of the BCC and this has been the case for four or five years, but every business is different and [not all Web 2.0 tools] will be relevant.”

Others agreed that firms should not rush into using Web 2.0 technologies unless they provide real value and fit with the messages they are trying to articulate.

“[Web 2.0] will take over some verticals and some it won’t – there is no one way the internet will be used,” argued Ovum senior analyst, Richard Mahony. “Blogging is effective for some businesses but completely ineffective for others.”

Social networking sites also represent an increasingly attractive way for corporates to market themselves to customers and build brand awareness, according to many of those at the event.

“It enables you to plug into hyper-relevant communities. Topshop gets five to 10 percent of its traffic from its MySpace profile, and Apple is on Facebook,” pointed out Croxford. “Companies have to think where their customers are.”

Mahony said social networking was moving up the corporate IT agenda. But he urged IT decision-makers to ignore the hype around Web 2.0 and focus solely on investing in the best and most appropriate technology for their business.

“It’s more than just a sales and marketing function though,” Mahony explained. “There’s also a business development and networking element – these web changes offer the ability to deliver services in new ways and make operational efficiencies.”

Firms should also be aware that social networking sites can be targeted by scammers who can quickly undo all the good these sites do in terms of brand reputation. “Social networks will allow firms to [get close to their customers] and reduce marketing costs, but it could all be screwed up if someone works out a way of gaming them, like they did with spam blogs. Then it stops becoming useful,” Wynne cautioned.

Web 2.0 solutions suit some firms more than others

Transversal develops multi-channel solutions for customer-facing sites and contact centres. The firm’s chief executive, Davin Yap, believes Web 2.0 tools can dramatically improve customer service levels and boost sales, but warned that there are potential pitfalls, and that in some industries certain technologies are not appropriate.

User forums and blogs offer little value to financial services organisations, for example, because their customers need to make decisions based on more authoritative information, Yap argued.

“There is a limit to Web 2.0. You shouldn’t rely on it for any information that could help you make a potentially life-changing decision,” Yap explained. “The problems with blogging in particular are that it’s attractive because it’s inexpensive, but the danger is in giving one person quite a lot of power.”

Yap also advised firms to give their customers the option of having human interaction rather than keeping everything web-based. “You have to have a policy for interaction that gives people a choice in how they get information and how they deal with you,” he added.

Transversal has released a guide to key technologies that could help businesses to improve customer service, including RSS feeds to keep customers and partners updated with changes to areas of interest, and wikis for sharing information quickly.