Social Media in Retail
February 2013 1
I. Social Media is not a ‘buzzword’ anymore Consumers are changing and becoming increasingly ‘social’ Globally, there were about 1.1 billion Social Media users at the end of 2012. These users are estimated to grow at a minimum CAGR of 7% between 2013 and 2016, resulting in almost half of worldwide internet users being present on at least one Social Media platform by 2016. This makes Social Media all pervasive, and a very important and promising communication and feedback medium for corporations. Currently, most users use Social Media platforms for connecting with friends and family, thereby sharing photographs, status updates and videos. About a fourth of them, however, have started using these platforms to connect with companies, to access product reviews, to look for retail promotions, to research products/services, etc. as well, which makes it immensely pertinent for the companies to have a presence on disparate Social Media platforms. Total minutes spent on Social Media (US) 5.7 B
40.8 B
74.0 B
APP 121.1 B Total Minutes
July 2012
July 2011 APP YOY CHANGE 4.4 B
23.2 B
59.5 B
Which platform the users flock to and which device they use, however, seems largely governed by the utility of the Social Media platforms. It is no wonder, therefore, that to send short, timely messages on Twitter, users do not mind using mobile phones; however to look through the professional Bios on LinkedIn, they tend to use computers.
Social Media helps connect with all the key stakeholders Most organizations currently cite ‘communicating with customers’ as the most prominent activity that they engage in using Social Media – be it communication before sale, or after sale. For instance, most organizations use Social Media to promote their brand, to advertise their merchandise, or to provide after-sale support. Businesses, however, still appear to be less inclined to use Social Media to capture customer insights, monitor the brand, conduct customer research, or solicit ideas for new products or services, despite these being some of the most important opportunities available from Social Media. Given the mass of population that a Social Media platform can quickly make accessible and addressable, data about customer perspectives, desires and habits can be captured very quickly and for far lesser a cost than that from traditional methods. With time, however, the usage of Social Media may
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change significantly and tilt more in favor of ‘soliciting customer ideas and insights’ from ‘mere customer servicing or information dissemination’. Most visited social network on PC and mobile (US)
How to leverage Social Media: 1. Customer Support Usage of Social Media for Customer Support can be across the following domains: Address issues, complaints or negative feedback Address product-related queries: product order, billing enquiries, shipping order status, etc. Receive accolades about the products or services of the company Over time, there also seems to have been an increasing trend in companies providing solutions to customer problems over Social Media. This is mostly made possible by Twitter and Facebook; but blogs, customer forums also have been seeing traction. Many companies are seen using customized Facebook pages as well as Twitter service-handles to support their customers.
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2. Public Relations and Corporate Communications For disseminating information about their organization, companies create their own Twitter accounts or support handles (such as the Twitter account of the CXO suite) or even their own customized Facebook pages. The communication on these forums could be related to new product launches, regarding accolades received by the company. Companies also use other forums like YouTube, company website, industry forums, Scribd, etc. to showcase their companies or their products/ services, in turn creating goodwill and establishing a stronger web presence.
3. Employee Collaboration and Recruitment: A more inward-looking usage of Social Media is recruitment, new idea generation, process streamlining, employee retention, etc. Companies are slowly deploying private social networks, where employees from different departments across the world can know each other, foster and collaborate. Professional Social Media sites like LinkedIn and Ryze.com, which are more outward looking, give recruiters more insight into candidates’ profiles and backgrounds, and help in making a better recruitment decision. Sites like Yammer which are more inward looking foster internal employee dialogue and keep the employees engaged. 4. Sales – Customer Acquisition, Growth, Retention: The role of Social Media has also evolved over the years to assist companies in Lead generation, Customer penetration and Customer retention. For example, companies may tap: Customers visiting the company’s website or social networking page Customers who have ‘like’d the company’s ‘Fan Page’ on Facebook Customers who subscribe the company’s YouTube channel
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Customers who ‘follow’ the company on the company’s formal ‘LinkedIn’ page, etc.
5. Marketing – Branding, advertising, promotions Companies use Social Media to build and promote their brands through a combination of proactive and reactive steps. Some of the proactive steps could be:
Advertise on popular Social Media forums (Using SEO & SEM effectively) Explain features of products / services on Social Media Tie-up with opinion leaders to help promote a brand Participate in discussion forums, Q&A forums, surveys, etc. or webinars, and upload presentations on websites like Docstoc, Scribd or YouTube Give out discount coupons, deals through Social Media
While some of the mostly-reactive steps could be: Listening to customer complaints and giving customized solutions Clarifying doubts of irate customers and compensating them Launching discounting schemes in response to feedback received
Use of Social Media in marketing: Following exhibit highlights some of the typical activities in each
stage of the Marketing funnel, and how Social Media can enable/support these activities. Marketing Funnel
Typical Activities
Common Customer Experience
Awareness
Consideration
Conversion
Branding
New environment for promoting broader brand
Content Creation
Forum for new social/viral content (often user-generated)
Traffic Generation
Additional ways to drive traffic to own site or social network presence
Engagement
New micro sites/widgets/apps to engage potential customers
Innovation/Ideation
Proactive customer engagement in product/service innovation
Lead Generation
New mechanisms for targeting and incentivizing potential customers
Purchase Decision
Additional e-commerce channel Unique buying propositions Purchases as syndicated social content Deeper connection with customers after sales Activation of brand loyalists to market/sell
Loyalty/Advocacy
Loyalty/Service Measurement
What Social Media Enables
After-sales Service
Additional mechanism for community-based support Rich sociographic data set for effective real-time social targeting
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II. Social Media and Retail have some inherent synergies As a very consumer-oriented and customer-centric business, Retail has certain inherent synergies with Social Media. The reach and impact Social Media can generate for a Retail business is phenomenal and yet, the cost of creating the impact may be relatively low. For instance, reaching a social-media based campaign to millions of Facebook ‘likers’ is relatively quicker than an advertising campaign based on direct mailers. Additionally, social networks also provide retailers with rich information to better direct their product development, planning and promotional communication. For instance, Social Media polls made Macy’s to sell denim jeans in bright neon hues rather than in pastels. Similarly, Wal-Mart knew which category of toys customers wanted discounted for a particular holiday season based on polls they conducted. Many Retail and Social Media experts have displayed reservations, however, with regard to the correlation between Social Media spend and sales; although there is almost no doubt that Social Media can help create a positive sentiment towards a brand. According to American Marketing Association (AMA), word-of-mouth is the best form of advertising, and while the ‘in person word-ofmouth’ spread may certainly take a few days, a ‘virtual word-of-mouth’ spread may take only a few hours. It is thus safe to conclude that though the impact of positive sentiment on a company’s financial statement is tough to quantify, retailers would certainly get the real value from Social Media if they are able to influence the customers’ decision-making process and inspire buying.
“Social media has changed the face of advertising most prominently in that it has almost eradicated the need for print advertising. Social media provides very targeted channels that are much more cost effective.” - Kelly Cutler, CEO, Marcel Media
“We reached even more consumers through even more channels during the holidays, while lowering our overall advertizing expense for the year by 10%.” - Bill Simon, CEO, Wal-Mart US
“Social media is a great way for companies to interact and get to know their customers and consumers. It’s also a really fast and cost-effective way to gather information about new markets." - Stephen Wyss, Partner, BDO USA
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Social Media can influence each stage of purchase decision-making: What makes Social Media even more important for retailers is its ability to impact the decision-making of customers across the entire purchase cycle as can be seen from the infographic below:
Decision-making cycle Pre-Purchase
Purchase
• Generate awareness and create interest • Get the retailer’s brand in customer’s consideration set
Post–Purchase
• Generate purchase • Ease in billing
• Clarify queries with regard to product usage • Provide customer service • Receive customer feedback and work towards customer retention
Given the immense advantage Social Media can bring to the overall goal of customer engagement and association, it is no wonder that many retailers are seen connecting with customers on multiple platforms and are always reinventing and reinvigorating their Social Media strategy.
Ample choice is available for addressing different business needs Multiple Social Media platforms are currently available in the market, making it difficult for retailers to choose only a few from them. Marketing and promotional budgets are always a constraint, and retailers are additionally compelled to keep homogeneous and relevant content on each platform they are present on. Given these constraints, retailers tend to choose only a handful of platforms basis the utility value they have and the need they are likely to meet for a particular retailer. A great number of consumers is already present on Facebook and Twitter, making them the two most important platforms to be present on for most retailers, closely followed by a bunch of other platforms like Pinterest (for its image-based interface and curated content), or YouTube (for its video capabilities). The overall importance of Facebook, Twitter and Pinterest for revenue generation can be seen from the following infographics: 10
Page-views per session, 2012
5%
Sales conversion rate, 2012
250
8
4%
200
6
3%
150
4
2%
100
2
1%
50
0
0% Jan Feb Mar Apr May Jun Jul Aug
Average order value, 2012
0 Jan Feb Mar Apr May Jun Jul Aug
Jan Feb Mar Apr May Jun Jul Aug
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III. Conclusion Social Media is rapidly changing the way people communicate; in fact, it is rapidly transforming into a primary channel of communication used by newer generation of users, most of who are connected to Social Media 24x7 on their mobile devices. These new-age users use Social Media not just to stay connected with friends and family, but also to read reviews of their favourite products, and look out for offers where their chosen products can be bought at a competitive rate. Social Media is important for businesses too, given its ability to connect with a multitude of stakeholders in real-time. However, it is even more important as a channel when it comes to connecting with consumers, thanks to its ability to reach a large number of consumers in a relatively short time. For instance, millions of existing and potential consumers may be influenced using a product promotion tweet by a TV or Sports celebrity. Given its consumer-centric nature, the Retail business cannot ignore the phenomenon called Social Media anymore. Most of the Fortune 500 retail companies already have a wide presence on Social Media through different platforms like Facebook, Twitter, Blogs, Pinterest, YouTube, LinkedIn, etc., and keep reinventing and reinvigorating their social media Social Media strategy to perform better. Retailers have also increasingly started using Social Media for activities that span the entire value chain of Retail sale: be it promoting brand, creating buzz before a new launch, soliciting feedback from customers, giving after-sale support, or launching a promotion scheme, to name a select few. Much of the success of Social Media initiatives depends upon astute planning and judicious implementation of the strategy; not to mention that buy-in of the top management and inclusive support of the operational teams go a long way in making it a success organization wide. Wise business decisions are made when there is clarity in the values and philosophy of the business. If customer satisfaction is the objective of retail companies at large, it is needless to say that being present on Social Media and making it an interesting place for the consumers is going to spell success for retail.
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