Technology is changing the way consumers interact, obtain information, and purchase goods and services. Did you know that more than 25% of the world’s population, 1.73 billion people, are online and the number of people is estimated to reach 2.2 billion by 2013? Americans alone have access to:
It’s no wonder we know so much! There are 9 times more mobile phone accounts than cars in the emerging world.3 Approximately 63% of adults research through social networks and blogs, and, 47% of the time, they are influenced by what is read. The consumer voice has never been stronger.
The age of the socially connected consumer is here. A recent consumer survey ranked consumer content as the #1 aid to a buying decision, cited by 91% of respondents (JC Williams Group, 2006). Think about the fact that 78% of consumers trust other consumers for information, versus 13% for mobile text ads and 63% for newspaper ads.4
These facts provide evidence that the world as we knew it has changed in dramatic ways. Retailers need to take notice and change to meet the demands of the smarter consumer.
Defining social media, social networking and social commerce
Let’s start with some basic definitions. According to Wikipedia, social media is online content created by people using highly accessible and scalable publishing technologies. Social networking focuses on building online communities of people who share interests and activities, or who are interested in exploring the interests and activities of others. Social media and social networking are an integral part of our culture. Retailers need to think carefully about both of these as they develop their strategy. They need to decide what social media to create and how to enable and participate effectively in social networking with customers.
How do users participate in social communities? The 90-9-1 Principle (link resides outside of ibm.com) states that:
The take-away from this is by fostering a conversation with 10% of the audience, you are building value for the remaining 90%.
More than four in five US online adults participate in social networking according to the Forrester Research North American Technographics Interactive Marketing Online Survey, Q2 2009. They categorize users as Creators, Critics, Collectors, Joiners, Spectators and Inactives. The survey states that from 2007 to 2009, the percentage of Creators and Collectors grew slowly, while the Joiner and Spectator categories grew significantly. The percentage of Inactives has diminished from 44% in 2007 to 18% in 2009. The trend couldn’t be more evident. Social networking is a growing phenomenon.
Retailers can leverage this opportunity through what is termed social commerce. Social commerce is really about making a brand participatory. It is about engaging customers and getting them involved. It gives them a reason to come back and spend time with a brand. It can bring ‘chatter’ to a retailer’s online site instead of having it happen elsewhere on the Web where the retailer is less likely to participate. Social commerce enables a retailer to provide all the information necessary to research, compare, make a decision and complete the transaction with the retailer. It can help retailers increase cart conversion rate, capitalize on impulse buying and reduce return rates. It’s not about telling customers a story; it’s about enabling them to tell it.
What makes a good online community?
A good online community will . . .
The goal is to create sites that promote active participation and community as part of an integrated shopping experience. Social interaction, community and consumer-driven content need to be incorporated in a way that allows shopping to be enhanced by it, and effectively adds value to the shopper. It’s about leveraging social networking tools in an effective way.
A snapshot of key social networking tools for retailers
Here are some of the more important social networking tools that retailers can use:
Make your brand a destination
Social commerce is about making a retailer’s brand a destination. Retailers need to really listen to what their customers are saying. Customers can provide valuable input and feedback that can be used to make more informed assortment decisions, changes to Web site features and enhancements to the shopping experience. When customers feel that their voices are being heard, they feel a stronger connection to the retailer and are more likely to become advocates.
It is important for Retailers to identify and engage customers who are key influencers. Why?
Monitoring the conversation
Equally, if not more, important is the need to monitor the market conversation to understand what the marketplace is (or isn’t) saying about a retailer (their brand, products, services). Retailers need to understand the tone and impact of the conversation and begin to identity areas of opportunity for helping shape that conversation and gather valuable market intelligence.
Social media metrics include sentiment, activity, share-of-voice, and thematic content of online conversations. Trends and key influencers (“mavens”) and the most active sites/blogs are identified and tracked. By understanding the impact, retailers will have a way of identifying measurable progress, quantifying the return on social media investment, and enabling benchmarking against future efforts.
Companies can use analytics tools to better understand the reputation of their brand on the Web. One example is IBM Corporate Brand and Reputation Analysis (COBRA), an advanced analytics tool for searching, tagging, and indexing topics on the Web. COBRA addresses an important issue: what are your customers thinking? By applying advanced text analytic solutions to internal and external content, COBRA automatically filters thousands of document combinations, finding only relevant brand and reputation alerts. It allows users to apply discovery tools to analyze strategic implications of these alerts.
To survive in today’s changing retail environment, smart retailers are working to optimize their shopping experience. Social media and social commerce are integral to that experience. Integrated retail software platforms, like the IBM Retail Industry Framework and its components, provide the solutions, tools and assets to deliver that smarter shopping experience. Social Retailing, in the Retail Industry Framework, provides a platform and pre-integrated designs for social computing, such as communities, reviews and blogs, plus future integration with social networks – all of which enables the retailer to draw customers to its Web site and interact with other customers to facilitate "social shopping."
By Wendy Neuberger (Endicott, NY). Wendy is an IBM Distinguished Engineer and the Chief Architect responsible for Distribution Sector.
1 http://www.worldwidewebsize.com/ (link resides outside of ibm.com)
2 http://mashable.com/2009/08/05/flurry-iphone-apps/ (link resides outside of ibm.com)
3 http://communities-dominate.blogs.com/brands/2009/11/the-digital-divide-in-numbers.html (link resides outside of ibm.com)
4 http://www.balladinplaine.com/sla-2008-word-of-mouth-marketing-tuesday-june-17/ (link resides outside of ibm.com)