Nolan’s recent industry survey revealed that most companies are only dabbling in social media. However, although companies are not quite ready to engage their customers in one-on-one communications, they are in social media anyway because their customers have put them there.

An article published by BBC Business News in October 2010 describes how consumers use social networks like Facebook and Twitter to wield tremendous power by posting comments about their experience with products and service. When an airline failed to compensate a passenger for damage to a $3,500 instrument, he made a music video of his experience. Within three days, the video was watched half a million times, and more than five million times within six weeks. This prompted thousands of other customers to come forward to vent their own frustrations with that airline.

In another example, a major retailer was caught off guard when newspaper reporters called for comment about an internal crisis. Company executives had no knowledge of the fact that half their stores were experiencing a major technical problem, despite the fact it was all over the Internet.

On the positive side, some companies know that social media can be used for them as well as against them. One travel company ran a contest through both its traditional e-mail newsletter and Twitter; both channels generated the same number of responses. The interesting thing is that their newsletter goes to 2.2 million people and their Twitter accounts number just 12,000. Savvy companies are hiring organizations that provide customer intelligence by scanning the “chatter” to identify potential problems for companies before they get out of hand.

There is no question that the power of the relationship is now with the customer. This makes it even more important to find and fix the weaknesses in your customer-service functions and customer-facing technology. With word-of-mouth the primary factor behind as many as 50% of purchases, it is good for sales as well. One thing is for sure: even if you don’t know your weaknesses, your customers do, and they are more than willing to share what they know with thousands of others.