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Social media is the new frontier for digital marketing

Retailers are thinking carefully about social media and the importance it holds for their customers. By David Hogg


Social media is the new frontier for digital marketing

Retailers are thinking carefully about social media and the importance it holds for their customers. By David Hogg

Digital marketing is an advanced practice, with several vendors delivering tangible returns on investment to their users. Through the use of databases, and integration between sales and communication channels, technology makes it easy to track and even predict a customer’s purchases, preferences, behaviours and buying patterns. From e-mail marketing to single-view, technology systems can provide valuable information that helps companies plan, target and deploy their marketing campaigns and product developments.

Today’s consumer shopping experience tends to start with the internet. This year, in our annual consumer survey, over half of consumers say that their shopping experiences start online at least 50% of the time, while 20 % of UK consumers say social networks have an important influence on shopping decisions. However, only 15% of consumers ‘follow’ their favourite retailers via social media.

The information exchanged across social networks and online forums is becoming increasingly more meaningful to customers than the information received from brands and companies themselves.  The consumer data shared across these networks is also highly valuable to retailers in terms of understanding their own customers. For example positive customer product reviews and recommendations carry real significance as they may influence buying decisions more than retail advertising and promotions. Smart retailers may look to build momentum by creating promotions on the back of good product reviews to further boost sales. Alternatively, a negative review may be still be useful, perhaps highlighting a genuine product problem that should be investigated urgently.  

Data from retailer sanctioned and unofficial social networking sites is difficult to manage, especially for a company trying to extrapolate sales and marketing research from it. Unless direct links are made from the sites, no tracking is possible. Grappling with these new information channels requires retailers to adopt a new approach to information management.

This is where the real quandary lies for retailers. They cannot control or directly influence third party websites, and tracking and analysing them also poses a problem. Customers may have less appetite for the online marketing resources the retailers have set up themselves. Yet, retailers cannot sit back and just watch the online world develop its own marketing dynamic, without taking part. If retailers are to understand and analyse the consumer data available from social media networks, they will require a system that helps them to identify customer touchpoints, wherever they may be and respond to the customer queries, feedback and interaction, in whatever format that may be.

Social networks require retailers to establish a new way of thinking

Retailers need to figure out a method of enabling one-to-one interaction with customers using social marketing. This requires linking the customer service desk, usually operated via email or telephone, to social media communication systems, such as Twitter, in order to capture and encourage the dialogue with customer through the medium customers want to have the dialogue.

A good example of this is the interactive dialogue team set up by Carphone Warehouse, that looks at questions arising online and reaches out to attempt to engage customers into one-to-one dialogue.

In order to satisfactorily answer customer complaints and respond to enquiries, the dialogue teams, call centre staff or any other customer facing roles tasked with engaging online communities, will need access to comprehensive customer history, as well as product catalogue information. A customer data management system that complements existing call centre systems, but can open up more complex order information.

Businesses can set-up their own social network presence, taking steps such as editing their own Wikipedia entry, or setting-up a Facebook page or LinkedIn community, depending on their audience. But in order to engage in dialogue, tools to understand customer history are required. Tools that help to understand how important a person is to a particular business, detailed information about this customer’s expectations and preferences. And on the other, inventory side of the customer transaction, anybody operating a chat function on a branded site will need access to detailed product information, accessible quickly, with real-time stock-level updates, to be able to answer questions.

Social networking strategies for retailers, are very unlikely to come out of corporate strategy. They will be driven by IT or marketing. These are the departments that understand the mediums, and how important they have become to consumers. The board may be aware of the existence of social networks, but will not necessarily plan for how the business will interact with them. The medium in essence constitutes an additional channel, which retailers need tools to manage their interaction with.  Outsourcing social networking strategy is not an option. The social media world can be too complex, fragile and  emotional an environment to entrust a brand’s reputation  to a third party.
Retailers with wide product and complex order processes are better off dealing with the personal customer interaction that arises from social networking themselves.

Retailers have come to terms with social networking as far as providing mobile channels or decent websites. They now need to reach out and engage, and start answering questions directly. Services that provide the tools for real-time communication with customers and detailed access to catalogue and customer information to support this interaction. Giant order management databases can be updated to include information harvested from social networks, based up on the same existing customer history and order profiles.

In particular, there are two aspects that retailers will need to apply their integration and customer management systems to, when integrating social networks as an additional consumer channel:
- Real-time interaction
-  Analytics - to find out about what customer is thinking outside the four walls of the company, and learn from it

Retail companies are very operationally focused, which sometimes makes it hard for a middle aged  management team to take social networks into account. But people who are under 30 now expect to interact with companies in a way that is different from previous generations of consumers. This in effect calls for a radical restructure of many retail businesses. Once the social network strategy is in place, however, this will allow companies to have better interaction and better levels of service with their customers (whether dealing with someone thinking of buying, or with an unhappy customer).

Social networks also provide a function for marketing teams to take their knowledge of the customer beyond existing analytic levels. Marketing teams often spend their whole life analysing buying customers, but too little time analysing companies that have qualified out from purchases. Information crawling  outside the retailer’s four walls will not only help manage and understand the company’s reputations value, but can also provide valuable data in cases, for example, where recently launched  product lines have failed. Causes and reasons for product and purchase failures are often to be found outside the enterprise. The consumer and market feedback required is unlikely to be found within the marketing analytics or CRM systems of the organisation, but social networks can provide invaluable, candid, and relevant feedback - on why products failed, and on what a brand may be doing wrong. This of course requires a new way of thinking for retailers.

Retailers that have a strategy to create a more expansive social network presence will find that their ability to interact with the outside world via these new communication mediums is an important mechanism when it comes to launching new product lines or when promotions are not going as expected. Social networks provide an avenue to find and seek opinions - what it is about products that people liked or disliked, and enables retailers to tap into this market reaction instantaneously. Ultimately, through systematic trawls and intelligent interaction, retailers will find that social networks can provide a rich source of free and accurate information, not only about a company and its products, but also competitive information.

David Hogg is Retail/CPG executive at Sterling Commerce, an IBM company.

Sterling Commerce is a Networking Partner at the Retail Bulletin's Multichannel Summit 2011, February 2nd. For more information about the event, click here.

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