Online retail sales have grown at a staggering rate—from $5 billion
in the fourth quarter of 2009 to $30 billion in the first quarter of
this year, according to the U.S. Census. And while this growth is
extraordinary, it still represents a relatively small portion of all
retail sales activity—only 3.5% of sales are transacted online.
However, even though retail sales are still dominated by brick and
mortar stores, the influence of the Internet on offline purchasing is
becoming increasingly important. Website visitation, online advertising
and social media all impact offline purchasing. Visibility into online
behavior has become critical across the entire retail enterprise.
| Twitter has seen an increase of almost 1500% |
Mainstream phenomenon
The social media frenzy—also known as consumer-generated media
(CGM)—refers to content being created 24-hours a day online on blogs,
message boards, social networks like Facebook and platforms like
Twitter. CGM has come a long way from the early newsgroup days and
continues to grow rapidly.
Traffic to Facebook is up almost 200% over the last year, and
Twitter has seen an increase of almost 1500%. Social Media is no longer
just for techies or younger generations—it has become a mainstream
phenomenon. Compared to a year ago, not only are more people visiting
these sites, but they are also spending more time there—time spent per
person is up 67% over last year.

So, why is social media so big? The answer is relatively simple: it
taps into a few basic human needs and emotions. Social media satisfies
our need to be heard, it provides us with a platform to reach more
people than ever before and it enables us to advocate for and promote
the brands and topics we feel strongly about.
| Social media provides a platform to advocate for products and stores… |
Amplified advocacy
The purchase consideration process has always been a social endeavor.
Before the advent of social media, a shopper may have consulted with a
limited number of friends and family members before making a purchase.
Today, shoppers’ networks have gone from being composed of just a
handful of people to hundreds—or even thousands—many of which are
likely strangers.
Social media has not only transformed the research and purchase
consideration phase, but it also provides shoppers with a platform to
advocate for the products and stores they love. Advocacy has always
existed, but social media has made this stage even more critical,
amplifying the size of the audience reached.
Listen and engage
CGM provides retailers with a unique opportunity to not only listen to
what consumers have to say, but to actively take part in that
conversation. Through online listening, retailers can observe
conversations that occur naturally to understand consumer attitudes and
needs—and then proactively engage customers transparently to answer key questions or concerns.
Listening to consumers through CGM is complementary to other more
traditional methods of market research, and provides unique value.
Instead of soliciting feedback through a survey or focus group, social
media allows retailers to tap into what consumers are passionate about
and what they proactively discuss.
Below is a
framework for how retailers should think about listening through social
media:
- In-Store Experience—Shoppers actively discuss
their experiences at brick-and-mortar locations online. Find out what
consumers are saying about shopping experience, employees, return
policy, store layout and more.
- Web site—Understand how consumers are using your
website regardless of whether or not you sell products online. Are they
using it as an informational or couponing resource? If it is a
transactional website, what are shoppers saying about the shipping
charges and delivery windows?
- Products—Learn how shoppers feel about your product selection, availability, pricing and quality, as well as private label brands.
- Marketing—From brand health to community relations
to coupons and circulars, listening to social media gives retailers the
opportunity to gauge awareness of corporate initiatives and marketing.
Reaching out
According to Forrester Research, almost two-thirds of retailers have
already invested in CGM in some way, and another 22% plan to get
involved in the next year. Additionally, Internet Retailer reports
that more than 30% of retailers say that social networks perform better as a
marketing vehicle than paid search engine optimization.
| Give shoppers a reason to visit the website and keep them engaged… |
Retailers should give shoppers a reason to visit the Web site and
keep them engaged—know that many shoppers are not going to come
proactively. Because of this, the majority of online effort should be
concentrated on expanding the digital footprint and reaching shoppers
where they are already congregating by participating and encouraging
conversations through third-party tools (blogs, forums, social
networks, Facebook, Twitter). Importantly, all forms of social media
outreach, whether through the retailer website or third party tools,
must be transparent and should support a common goal.
There are a number of retailers who are using best practice principles to successfully engage customers through social media:
- Zappos uses Twitter as a key customer service platform in addition to a 24/7 phone line and email.
- Walmart takes advantage of product review platforms.
- Starbucks’ “My Starbucks Idea” program encourages customers to submit ideas for new products and services.
- Best Buy uses a private social media network for internal
communications with its employees to promote employee satisfaction and
idea-sharing.
Assume that consumer control/power will continue to grow—now is the
time to listen to your customers. When you are ready and adequately
resourced, engage, participate, and respond to customers through CGM.
Nurture and protect brand credibility by being honest, open and
transparent. Do not neglect your website, it is one of your best
marketing vehicles, but focus majority of effort on reaching customers
where they’re already congregating. Think about how you can provide
better customer service through social media and turn your loyal
customers into advocates. And lastly, learn from everyone in your
organization.
--Maya Swedowsky, Associate Research Director, Online Division, Nielsen