The Power of Exponentials - The Social Media effect in Retailing - Forbes
November 09, 2012
L.N. Balaji is President of ITC Infotech, an India-based IT services company.
In the pre-Facebook/Twitter era, sales and sell-through numbers were probably the only way of understanding retail customers' opinions. However, with the advent of social networking, the cliché that "the customer is king" has taken on a whole new definition. Customer feedback today not only reaches the companies much faster, but can also spread out to a much broader audience through "friends" of the customer commenting on social media.
Some companies are effectively using their social media presence to differentiate themselves from competition. Not only do they listen to their customers' feedback on existing products but they also work with their customer base to co-create new products.
Riding the curve
Companies in the Retail, Footwear and Apparel industry are faced with the challenge to either lead the charge or follow the trend and lose out to competition. The sheer power of social media is phenomenal, especially when leveraged to source opinion from a global or a targeted customer base.
No other media can be as cost effective and quick in engaging customers either for a positive opinion of a brand or to actually develop products that the customer is looking for. More often than not, we have seen new products and designs fail due to the difference between what product development teams thought would work versus what consumers really want.
Social media is no longer just a platform for communication. It can be used very effectively in combination with sales channels, digital or physical, and be directly linked to revenues. While consumer goods companies have adapted to this change, brands in the RFA industry have some catching up to do. Here are some examples of the amazing things companies are doing with social media.
Coca-Cola KO +0.9%'s Vitamin Water and Diamond Candles are good cases in point (These companies won the Spike Awards 2011 for Social Product Innovation).
• Diamond Candles used crowd sourcing to understand the types of scents customers preferred and generated ideas. Their program received over 250 new product ideas in just one month.
• Vitamin Water, a Coca-Cola unit, used their Facebook fan base to create new flavors. Vitamin Water flavor "Connect" was developed by the company's Facebook fan base of over 2 million.
From Likes to Sales
Out of the millions of "likes," studies show that less than 2 percent are actually involved in active conversation. While companies obsessively compare with 'likes' on the competitors' page, they are not looking at how to actively engage with the audience. Without a positive affinity score between the customer and the company, a like has no meaning. A like must create some visibility by inducing people to post meaningful comments.
The bigger question is: are companies able to convert social media interactions with consumers into actionable insights that significantly impact the success of a new product line or collection? The challenge is whether consumers are able to find a reflection of their comments on social media pages in the new products presented through online and offline sales channels.
To harness the true potential of social media, companies need to establish a closed-loop ecosystem, create interactions, structured conversations and condition responses. These responses, when run through business intelligence engines, will generate sentiment boards to provide product designers with real-time consumer insights. Products developed while keeping these insights in mind would thus bring more and more 'wow' moments for the customers to bring them closer to the brand and create a sustainable competitive advantage.
Customer interaction through social media is a continuous process of listening, engaging and monitoring and so the content continues to be king. Conditioning customer responses and directing conversations which can lead to actionable insights has to be a well thought out strategy - one that would ultimately impact the bottom-line.
Dunelm Mill, a U.K.-based retailer operating in a low-involvement product category - home furnishings - is a great example. Dunelm Mill uses Facebook smartly and successfully to create conversations around "War for the blanket" and "Fighting over the towel on the floor" and other such interesting posts on its page. Their highly visual posts taking consumers' interest into account are not just idle banter, but clever interactions, weaving the conversations around materials, fabrics, colors and patterns.
Integration of Social Media and Product Lifecycle Management: Driving Revenues
Sophisticated social media monitoring and engagement analysis tools such as TipTop, Radian 6, Alterian and Nimble are available in the market today. These tools make it easy to gauge and analyze levels of engagement and create dashboards full of insights on consumer behavior. Insights gathered from these reports can be used to create a social media board akin to mood boards in the retail apparel industry, which would represent preferences of consumers in terms of color, fit, cut, style, pattern, fabric, etc. Indeed, tools like TipTop can also assist in some measure with interesting semantic search capabilities.
Social media boards are particularly powerful tools as they can also have demographic and psychographic information embedded in them.
