Posts tagged: retail

Forget Facebook, Pshaw Pinterest, Toodaloo Twitter: Bringing Social In-house

social media thinkingDespite the pithy title of this post, I’m not actually anti social media. Nor am I in any way predicting its demise. And while I’m disclaiming, let me also say that I don’t consider myself a social commerce expert. But I have been doing retail for almost 28 years and have been involved in e-commerce for about 15 years, and I’ve learned a lot along the way.

And I don’t think we’ve been looking at social in the right way.

The numbers bandied about are spectacular and tantalizing. If Facebook was a country, it would be the third biggest in the world! Over a billion users! But if you think a little deeper about them, they don’t hold up as well. You hear over a billion users and you think that’s Super Bowl audience type numbers. But it’s really not. It’s actually more like 1 billion niche cable channels. You can’t really put a single message out and connect to all of those people in one shot.

There’s lots of talk about the average of 230+ friends each person has and an assumption that our customers will share their shopping experiences with their friends. And they do at times. But those  friends are not all equally influenced by those shares. A number of my Facebook friends are old friends from high school that I connected with once but am otherwise not highly connected. So how open are these types of friends to anything I might share?

Another of my favorites is “time on site.” The average time on Facebook exceeds Google. But what does that mean? And is that a reasonable comparison point? Google is actively trying to get people to click away from their site. That’s how they get paid.

Yet, still, there’s something there. Governments are being toppled with the aid of social media. That’s pretty powerful. So what can we do with it?

social revolution

Well, we retailers tend to be like hammers that see everything as a nail. So we want to figure out how to put a cash register on it. And we’ve seen some highly publicized Facebook stores like 1-800-Flowers and Best Buy’s various attempts. But so many of these have seemed to result in no sales.

OK. Maybe not a store. Then what?

We’ve been flailing about some trying to figure something out. We’ve asked silly questions, and people respond. We’ve tried to amp up our customer service in these channels, and that has been good for PR. We’ve tweeted lots of fun facts and tips. But Twitter is like a river, really. So much is flying past so often, I really have to wonder how much anyone really sees. We have videos on YouTube with some great content that’s fun to watch, and now we’re seeing decent action around shopping on Pinterest.

So some of the stuff we’re doing seems to have some branding value, but I’m not sure we’re making the most of it. For most retailers, orders attributed to social media as a last touch are basically non-existent. But maybe, you might say, click tracking might not really tell you about influence. OK, we asked our customers at Sur La Table. Their self-reported answers say they’re a little more influenced than click tracking would suggest, but it’s nothing to write home about.

Still, I can’t help thinking there’s a lot of power in the idea of bringing people together with the help of some social technologies.

I’m always thinking about what I call the customer engagement cycle. The last step, Referral, is really the Holy Grail. If we can get our best customers to be our best marketers and merchants, we can make that cycle much more efficient and effective. And our customers are WAY more credible than we are. A recent Gallup Honesty poll ranked Advertising practitioners BARELY higher than Members of Congress! Yikes!

Seth Godin gave an amazing speech to the music industry several years ago as the record labels were seeing their businesses tuned upside down by digital downloads – legal and illegal. People were freaking out. But he provided another avenue (one not really taken, but that’s another story) that was largely about the underlying principles of “social.”

He said, and I paraphrase:

“People don’t listen to companies, they listen to people. And, there is something magical about the connection between one person and another person.

There is a large number of people who want to be led…who want to connect…who want to join a tribe.

And you have the ability, from where you stand, to make some of those connections happen.”

So maybe the idea of social is right, but we’re just doing it wrong. Or at least we’re doing it for the wrong reasons. If we want to use social to get cash flowing into the registers, I think we need to look at the opportunity differently.

context mindset purposeI think there are three specific conditions we need to be successful: context, purpose and mindset.

I think context becomes incredibly important. All the social media channels out there have plenty of value for branding, messaging, etc. We run into trouble when we try to make them transactional. Maybe that’s not the best way to use Facebook, Twitter, Pinterest, etc. But that doesn’t mean the idea of “social” can’t benefit transactions. I think it just means we have to implement social capabilities in the right place with the right context. And our sites are different from our Facebook pages, which are different from our stores.

And that’s because each of these environments were constructed for different purposes and as a result customers have different purposes in mind when they visit each. On Facebook, it’s more about seeing what friends are up to and maybe also engaging with some favorite brands. So while people may see our new products or promotions, at the same time they’re also looking at cute babies, political rants, and embarrassing drunken photos that never should have seen the light of day. Our messages can get obscured pretty quickly.

Whereas people coming to our stores and our sites are purposely looking for products, whether to research or buy. They’re pretty open to learning about new products and they’d love to hear about promotions. They have a completely different mindset. And that attitude and inclination can make all the difference.

The mindset when using Facebook and other social media is largely about entertainment. Keeping track of friends, seeing photos, etc. is fun and entertaining. But there’s a lot going on there, and nothing really holds your attention for too terribly long. And even though there is interactivity, it’s still largely passive. But going to a retail store or site is all about shopping and checking out the products! When customers come to our stores, they are clearly much closer to a buying mode than we could expect when they’re just being entertained by social media.

So it’s that sweet spot where that the right context, purpose and mindset meet that we might have the best opportunity to unleash the power of social media. And really, we’ve already proven that some of our best conversion tactics are rooted in concepts of social. For example, customer reviews are a very effective way for people to connect to each other. According to a Nielsen study last year, 70% of people trust customer reviews, and that trust factor is on the rise. Even recommendations are basically a form of social since they’re based on what other people have done. They’re especially social and effective when we frame them as “People who viewed this also viewed” or something similar.

So how do we take these ideas to the next level?

How can we take Seth Godin’s sage advice and find ways to connect our passionate customers from across the country with each other under our brand umbrella?

At Sur La Table, we think we can do that with something we’re calling “My Collections.” The idea is that customers will be able to create – and share on SurLaTable.com – collections of our products. In a sense, it’s a bit like Pinterest on our site. We worked with our partner, 8th Bridge, to create this fun new feature that combines the credibility of customer reviews with the discovery elements of recommendations to take the power of social on our sites to a new level. And it’s really taking off. Customers have quickly created tons of collections to share with other customers, and they’re already demanding new features like the ability to comment more on their collections and the ability to more easily find other collection creators like them. Luckily, these are features we’re already working on!

We’ve also gotten our staff involved. We employ chefs in a lot of stores, and we certainly have them creating and sharing collections. We’re going to work to involve big name chefs we have relationships with. Certainly our store associates are participating. And not only do they create content, but they also benefit from the content created by others. It’s useful for them to learn how customers are putting our products together, and it helps them create ideas for their customers.

We’re really excited about where all of this is going, and I hope you are, too.

What do you think? How are your social programs generating value for your company? Have you tried anything that worked well? Did context, purpose and mindset play a role?

 

Defending the status quo kills companies

“Defending the status quo is what kills companies.” That line comes from the excellent book More Than a Motorcycle: The Leadership Journey at Harley-Davidson written by former Harley CEO  Rich Teerlink and his organizational consultant partner Lee Ozley. The book chronicles Teerlink’s and Ozley’s process to change the culture at Harley-Davidson to ensure the company was ready for the challenges to come. What I found most remarkable, though, was that they didn’t initiate this massive change when the company was troubled — they initiated massive change when the company had just completed a successful financial turnaround and the press was actively singing their praises.

They changed when conventional wisdom would have said to keep doing what they were doing.

Bankruptcy courts are littered with companies who kept doing what they were doing and failed to adapt to changing marketplaces and changing customer needs and expectations.

I spent 20 years in the music industry with Tower Records, so I’ve see one of the best examples in recent years of an entire industry that desperately clung to the past rather than embrace the future. The music industry didn’t suffer because of Napster and illegal downloads; it suffered because it turned its back on its customers in favor of short term profits.

The music industry failed to recognize the opportunity that came with the advent of the Internet and digital music formats. Rather than see their industry from their customers’ perspective, the industry fell pray to the elitism I’ve discussed previously. So a computer company took their business from them. Apple‘s iPod and iTunes took the music retailers’ business and substantially wrestled control away from the music labels.

The retailers could have created digital music stores if they weren’t so worried about protecting their current businesses. And there were other opportunities available. Seth Godin spoke to the industry last year and gave some excellent examples of opportunities to change the business model.

Now other traditional industries like newspapers, video stores and bookstores, among others, are also losing substantial market share to new, technology based upstarts. Others, like travel agencies, are mostly gone.

But some companies are embracing change even during the height of success.
A recent Forbes interview with Xerox’s retiring CEO Anne Mulcahy highlighted her strategy to focus Xerox on “paperless printing” even though the entire organization was basically built on paper-producing technology. Rather than focus on paper, Mulcahy instead said the company’s value was always about the creation, management and dispensing of information, “Democratization of information, however it happened.”


Threats to existing business models aren’t only coming in the form of digitization.
Look at the shoe business. In ten years, Zappos.com went from a germ of an idea to a $1 billion company. Their model? “In March of 2003, we made a decision to be about customer service,” say their CEO, Tony Hsieh, in a recent Fast  Company profile. “We view any expense that enhances the customer experience as a marketing cost because it generates more repeat customers through word of mouth.”

Customer experience as a marketing cost. It’s a whole new way of looking at the shoe business (or retail in general), and it’s a hit worth a cool billion in a short amount of time.

I can’t believe that billion dollars was incremental business to the overall market. That share came out of somebody’s  hide. And that means an existing shoe business could have done it first if the thought process and the courage to act  was there. If the Zappos model works, it can be applied to anything, and it appears that’s exactly what Zappos intends  to do.

And the radical ideas keep coming. Chris Anderson has a controversial new book, Free, that describes a future he believes will be centered largely around business models that give away 95% of their offerings and make money on the remaining 5%. Are Anderson’s ideas open for debate? Sure, but they and other seemingly nutty ideas should be regularly and honestlydiscussed. One of them may well be the next billion dollar idea.


It doesn’t take wholesale change in the marketplace to significantly disrupt a business model.

A drop in business of 10-15% can have massive impact, as many have clearly seen in the current economic downturn. But the economic downturn has not sunk all boats. Amazon.com reported a sales increase of 18% and a net income increase of 24% for their first quarter this year.

As e-commerce continues to be the growth vehicle in retail, and as Amazon continues to dominate e-commerce, I wonder how brick and mortar retail models will adapt. I believe there are many opportunities today to leverage both the growth and value of e-commerce and existing physical real estate.

Certainly, tying the web experience and the store experience together via cross-channel capabilities is a must. In the industry, we talk a lot today about capabilities like order online and pick up in store, and I think those are good.

But how can we take it further?
For example, I know from my experience with in-store kiosks at Borders that a lot more people than I expected still aren’t comfortable shopping online. They want someone to help them use the kiosks, and then they want to pay with cash at the register. Why not use our store POS systems to take cash payments for online orders? What if we took it a step further and took cash payments for other sites’ orders. What if the physical store essentially became an affiliate for a pure play e-commerce site and took the cash along with a commission? What type of opportunities might that open for both the pure play and the brick and mortar store? What other reasons should customers continue to shop physical stores well into the future as technology and delivery systems continue to improve?

What challenges does your business face in the coming years, or what businesses in general do you see most at risk? How could your business model change — maybe radically — to address those challenges? Or, do you think this is all hogwash? Let’s discuss.



Retail: Shaken Not Stirred by Kevin Ertell


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