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Social Media in Retail

Aparna Gole Ashish Banka

February, 2013 1


Contents I. Social Media is not a ‘buzz-word’ anymore ....................................................................................... 3 Consumers are changing and becoming increasingly ‘social’ ........................................................... 3 Social media helps connect with all the key stakeholders ................................................................ 8 Adoption by Fortune 500 suggests industry-wide acceptance ....................................................... 13 Corporate Blogs ........................................................................................................................... 14 Corporate Twitter Accounts ........................................................................................................ 15 Corporate Facebook Pages.......................................................................................................... 16 YouTube and Pinterest ................................................................................................................ 18 II. Social media and Retail have some inherent synergies .................................................................. 19 Social Media can influence each stage of purchase decision-making ............................................ 20 Ample choice is available for addressing different business needs ................................................ 21 Expert and Industry comments are corroborative .......................................................................... 23 Case examples establish success potential ..................................................................................... 24 Zappos.com ................................................................................................................................. 24 Wal-Mart Stores .......................................................................................................................... 25 III. Implementation Strategy ............................................................................................................... 26 Identification and achievement of Key Success Factors (KSF) ........................................................ 27 Measurement and mitigation of risks ............................................................................................. 28 Continuous measurement of benefits and suitable course-correction .......................................... 29 IV. Conclusion ...................................................................................................................................... 30

List of Charts Chart 1: Worldwide social media and internet users ............................................................................ 4 Chart 2: Use of social media .................................................................................................................. 4 Chart 3: Devices used to connect to social media ................................................................................ 5 Chart 4: Total minutes spent on social media (US) ............................................................................... 5 Chart 5: Use of social media in marketing .......................................................................................... 11 Chart 6: Benefits of social media......................................................................................................... 12 Chart 7: Respondents who spend on social media as a part of their digital strategy ......................... 12 Chart 8: Proportion of Fortune 500 with corporate blogs .................................................................. 14 Chart 9: Industry-wide representation of Fortune 500 with corporate blogs .................................... 14 Chart 10: Industry-wide representation of Fortune 500 with Twitter Accounts ................................ 15 Chart 11: Proportion of Fortune 500 with Twitter Accounts .............................................................. 15 Chart 12: Industry-wide representation of Fortune 500 with Facebook page ................................... 16 Chart 13: Page-views per session ........................................................................................................ 21 Chart 14: Sales conversion rate ........................................................................................................... 21 Chart 15: Average order value ............................................................................................................ 22 Chart 16: Key success factors of successful social media strategy...................................................... 27 Chart 17: Social media risk management survey ................................................................................ 28 Chart 18: Metrics used for measurement of social media .................................................................. 29

List of Tables Table 1: Most visited social network on PC and mobile (US) ................................................................ 6 Table 2: Tally of top 10 Fortune 500 organizations basis their Facebook fans ................................... 17

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I. Social Media is not a ‘buzz-word’ anymore Social media refers to the information and communication technology platforms designed for realtime social interaction, such as wikis, discussion forums and blogs. These platforms are either available on public sites such as Facebook, Linkedin, Twitter and Pinterest or private sites such as Jive, Yammer, Salesforce etc. Social Media Universe Blogs/ Conversations

Customers Service Networks

Blog Communities

Location

Comment Reputation

Documents

Specific to Twitter

Events

SMS/Voice

Social Bookmarks

Video Aggregation

Lifestreams Blog Platforms

Pictures

Video

Micromedia Crowdsourced Content

Livecasting – Video and Audio

Social Networks

Music

Niche Networks

Wiki

Source: Secondary Research; Sutherland Analysis

Social media is used by more than a billion individuals of all ages to communicate on almost everything: personal life, product reviews, shopping experience, recruitment and so on. On an average, social media users spend more than 10 billion minutes on Facebook, watch almost 4 billion videos on YouTube, and send about 340 million tweets everyday. These numbers are projected to increase in future, not just because of the increase in the overall user base but also thanks to the increasing penetration of smart-phones and media tablets that allow users to remain connected to internet even when mobile.

Consumers are changing and becoming increasingly ‘social’ Globally, there were about 1.1 billion social media users at the end of 2012. These users are estimated to grow at a minimum CAGR of 7% between 2013 and 2016, resulting in almost half of worldwide internet users being present on at least one social media platform by 2016. This makes social media all pervasive, and a very important and promising communication and feedback medium for corporations.

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Chart 1: Worldwide social media and internet users

2.63

2.42

2.21

1.09

0.97

2011

2012

1.46

1.34

1.24

2013E

2014E

Total Social Media Users (billions)

3.04

2.96

2.77

1.52

2015E

2016E

Worldwide Internet users (billions)

Source: Gartner

Currently, most users use social media platforms for connecting with friends & family, thereby sharing photographs, status updates and videos. About a fourth of them, however, have started using these platforms to connect with companies, to access product reviews, to look for retail promotions, to research products/services etc. as well, which makes it immensely pertinent for the companies to have a presence on disparate social media platforms. Chart 2: Use of social media To catch up with family and friends

94%

To share photographs or videos

51%

To co-ordinate parties or other shared activities

33%

To get information on news and current events

27%

To find out about entertainment events such as bands

23%

To find out about particular brands or businesses

22%

To follow particular brands/businesses

18%

To play games

18%

To research products/services

16%

To meet new friends

14%

To find people with the same interests

13%

To research holiday destinations or travel offers

13%

Because of pressure from family/friends to use them

11%

To follow celebrities

9%

To engage with Government

7%

To provide reviews/write blogs about products

6%

To find potential dates

3%

Source: Australian interactive Media Industry Association (AIMIA)

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Social media users are increasingly showing a tendency to remain connected 24x7. For instance, a user may want to read reviews of a restaurant he is heading towards, another may want to upload his photograph instantly on the social networking site and yet another may wish to ‘accept’ an invite to connect professionally on a certain site. It is a common sight to see scores of users connected to the web using their smartphones as they commute, eat at their favourite restaurant or wait for their friends at a local hangout spot. Increasingly therefore, while computer still remains as the most adopted device to connect to social media (Nielsen Survey findings below), users’ persistent need to stay connected round the clock has led to exploding usage of smartphones and other portable devices. Chart 3: Devices used to connect to social media 2011 97% 94%

2012

37%

46% 16%

7% 7%

3% 4%

2% 4%

2% 3%

Handheld Music Player

Game Console

Internet Enabled Television

E-Reader

3% Computer

Mobile Phone

Tablet

Source: Nielsen

Other smart devices like internet-enabled TV, Game consoles, e-readers that have web connectivity have also made social media accessible to a user and although the penetration of these devices is relatively sparse at the moment, it is very likely that they too are leading to a proliferation in the usage of social media. Given the accessibility of web via multiple such devices, with a need to stay connected almost all the time has led to an increase on the time spent by an average user on different social media platforms. As of July 2012, users collectively were clocking over 120 Bn minutes in an average month as per the survey conducted by Nielson. Chart 4: Total minutes spent on social media (US) 5.7 B

40.8 B

74.0 B

APP 121.1 B Total Minutes

July 2012

July 2011 APP YOY CHANGE 4.4 B

23.2 B

59.5 B

Source: Nielsen

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Which platform the users flock to and which device they use, however, seems largely governed by the utility of the social media platforms. It is no wonder therefore, that to send short, timely messages on Twitter, users do not mind using mobile phones; however to look through the professional Bio’s on LinkedIn they tend to use computers. Similarly, to look through status updates on facebook, or to view photos, or comment upon posts, computers are preferred over mobile phones; but to write opinion-based or research-driven blog posts, computer is clearly a choice of medium over mobiles. Table 1: Most visited social network on PC and mobile (US)

Utility

Unique PC Visitors, US (Audience in ‘000s)

Unique Mobile Visitors, US (Audience in ‘000s)

Social Networking   

Share life updates Share photos and videos Post interesting content

152,226

74,274

Search people and stay connected Stream Music

19,680

3,501

58,518

42,366

30,945

11,995

28,113

9,671

Blogging    

Share life-events Share opinions, experiences Share product reviews Write movie reviews (most optput will be research or experience based and mostly will not be posted on the spur of the moment)

Professional Networking 

Professional networking

Micro-blogging, Photosharing 

Photo-sharing

27,223

14,316

 

Send short timely messages Send status updates

37,033

42,366

Micro-blogging

25,634

8,512

Knowledge creation and sharing

12,594

5,325

Knowledge Sharing

Source: Nielsen; Sutherland Analysis

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Users’ multiple activities and posts on social media generate a huge quantum of data that has the potential to be used by organizations to generate insight into what customers want in general, and what they want from their particular range of brands in particular. Needless to say, organizations are forced to learn and master the new ball-game called ‘Social Media’.

Source: Go-Globe.com; prdaily.com; iStrategyLabs; Huffington Post; Sutherland Analysis

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Social media helps connect with all the key stakeholders Most organizations currently cite ‘communicating with customers’ as the most prominent activity that they address using social media; be it communication before sale, or after sale. For instance, most organizations use social media for promotion of their brand, to advertise their merchandise or to provide after-sale support. Businesses, however, still appear to be less inclined to use social media to capture customer insights, monitor the brand, conduct customer research, or solicit ideas for new products or services, despite these being some of the most important opportunities available from social media. Given the mass of population that social media platform can quickly make accessible and addressable, data about customer perspectives, desires and habits can be captured very quickly and for far lesser a cost than that from traditional methods. With time, however, the usage of social media may change significantly and tilt more in favour of ‘soliciting customer ideas and insights’ from ‘mere customer servicing or information dissemination’. Interestingly, in addition to communicating with customers, Social media has an ability to touch almost all the key organizational functions and in turn establish relations with multiple stakeholders, as can be seen from the infographic below:

Source: Secondary Research; Sutherland Analysis

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1. Customer Support Usage of social media for Customer Support can be across following domains:  Address issues, complaints or negative feedback  Address product related queries: product order, Billing enquiries, shipping order status etc  Receive accolades about the products or services of the company Over time, there also seems to have been an increasing trend in companies providing solutions to customer problems over social media. This is mostly made possible by Twitter and Facebook; but blogs, Customer forums also have been seeing traction. Many companies are seen using customized facebook pages as well as Twitter Servicehandles to support their customers.

Source: Secondary Research

2. Public Relations and Corporate Communications For disseminating information about their organization, companies create their own Twitter accounts, or twitter support handles (such as the Twitter account of the CXO suite) or even their own customized Facebook pages. The communication on these forums could be related to new product launches, regarding accolades received by the company or even key management changes like retirements. Companies also use other forums like Youtube, company website, industry forums, Scribd, etc. to showcase their companies or their products/ services in turn creating goodwill and establishing a stronger web presence.

Source: Secondary Research

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3. Employee Collaboration and Recruitment: A more of an inward looking usage of Social Media, is to use it for recruitment, new idea generation, process streamlining, employee retention, etc. Companies are slowly deploying private social networks, where employees from different departments across the world can know each other, foster and collaborate. Professional Social Media sites like Linkedin, Ryze.com, that are more outward looking, give recruiters more insight into candidates’ profiles and backgrounds, and help in making a better recruitment decision. Sites like Yammer that are more inward looking Source: Secondary Research foster internal employee dialogue and keep the employees engaged. 4. Sales – Customer Acquisition, Growth, Retention: The role of social media has also evolved over the years to assist companies in Lead Generation, Customer penetration and Customer retention. For example, companies may tap:  Customers visiting company’s website or social networking page  Customers who have ‘like’d the company’s ‘Fan Page’ on Facebook  Customers who subscribe the company’s YouTube channel  Customers who ‘follow’ the company on the company’s formal ‘LinkedIn’ page etc.

Source: Secondary Research

At times companies also solicit some of the ‘celebrity’ tweeters to promote their brand knowing well that the reach of some of these celebrity tweeters could encompass millions of highly influential followers who could be their potential customers.

5. Marketing – Branding, advertising, promotions Companies use social media to build and promote their brands through a combination of proactive and reactive steps. Some of the proactive steps could be:   

Advertise on popular social media forums (Using SEO & SEM effectively) Explain features of products / services on social media Tie-up with opinion leaders to help promote a brand

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 

Participate in discussion forums, Q&A forums, surveys, etc. or give webinars, and upload presentations on websites like Docstoc, Scribd or YouTube as a promotional mechanism Give out discount coupons, deals through social media

While, some of the mostly-reactive steps could be:  Listening to customer complaints and giving customized solutions  Clarifying doubts of irate customers and compensating them  Launching discounting schemes in response to feedback received

Source: Secondary Research

Following exhibit highlights some of the typical activities in each stage of the Marketing funnel, and how social media can enable/support these activities. Companies currently view social media most beneficial in the upper stages of the purchase funnel. Chart 5: Use of social media in marketing

Marketing Funnel

Typical Activities

Common Customer Experience

Awareness

Consideration

Conversion

Branding

New environment for promoting broader brand

Content Creation

Forum for new social/viral content (often user generated)

Traffic Generation

Additional ways to drive traffic to own site or social network presence

Engagement

New microsites/widgets/apps to engage potential customers

Innovation/Ideation

Proactive customer engagement in product/service innovation

Lead Generation

New mechanisms for targeting and incentivizing potential customers

Purchase Decision

Additional e-commerce channel Unique buying propositions Purchases as syndicated social content Deeper connection with customers after sales Activation of brand loyalists to market/sell

Loyalty/Advocacy

Loyalty/Service Measurement

What Social Media Enables

After Sales Service

Additional mechanism for community based support Rich sociographic data set for effective real-time social targeting

Source: Booz & Company

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A supporting survey conducted by Booz & Company revealed that Brand building, interactivity with consumers and creating overall buzz are some of the most prominent marketing benefits from social media. Chart 6: Benefits of social media

(% of respondents) 90%

89%

88%

81%

78%

76%

71%

71%

71%

66%

Generation of sales/leads

Traffic to our sites

Lower cost

Speed of execution

Creativity & innovation

Broad reach

Enhanced marketing effectiveness

Consumer insights

Buzz building

Interactivity

Brand Building

46%

Source: Boost & Company/Buddy Media Campaigns Social Media & Marketing 2011 Survey results

Given the reach and importance of social media, marketers report that social media spend will increase significantly as a percentage of digital spend over next three years. Moreover, overall digital budgets are also growing, suggesting a substantial uptick in social media spend in the coming years. Chart 7: Respondents who spend on social media as a part of their digital strategy

Today

3 Years from Now

7%

13% 28%

5% 22%

32% 66% 27%

<5% spend

5%-10% spend

10%-20% spend

>20% spend

Source: Booz & Company

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Adoption by Fortune 500 suggests industry-wide acceptance Fortune Magazine annually compiles a list of America’s largest companies, the Fortune 500 (F500), based on the size of the companies and wealth they generated. Given the influential role these companies play in the business world at large, it is important to understand about the adoption rates of these companies for social media and understand the opinions of their management about what the future holds. In 2008, the University of Massachusetts Dartmouth (Center for Marketing Research) released one of the first studies on social media adoption among the F500 and has repeated the study every year since. The study has also been expanded by them over the years to include the usage of the fastest growing social media platforms as well as indicators of engagement as highlighted by these corporations. A closer look at the results from the study conducted in 2012 reveals some interesting statistics:    

28% corporations have a corporate blog 67% have an active corporate Facebook account 73% have an active corporate Twitter account and have tweeted from the same during 30 days mentioned by the Research Committees The biggest number of blogs is in Telecom; while Retail finds representation in other channels like Facebook, Pinterest and Twitter

Let us take a look at some of the platforms on social media and see how F500 companies represent themselves on them:

Source: Secondary Research; Sutherland Analysis

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Corporate Blogs 

139 companies (28%) had corporate blogs as of 2012, where engagement on these blogs consisted of frequent posting, encouraging on-going discussions and provision given to the readers to follow the conversation easily through RSS or email subscriptions

Chart 8: Proportion of Fortune 500 with corporate blogs

28% 22%

23%

23%

2009

2010

2011

16%

2008

2012

Source: University of Massachusetts Dartmouth (Center for Marketing Research)

40% of the Telecommunications companies had blogs, as against 30% Commercial Banks and 25% Specialty Retailers. Only one company in the Aerospace industry blogged, as against the industries like Forest and Paper Products, Railroads, Tobacco, Toys/Sporting Goods, Real Estate, Building Materials/Glass, Trucking and Waste Management not blogging at all

Chart 9: Industry-wide representation of Fortune 500 on corporate blogs Telecom

40%

Commercial Banks

30%

Gas & Electric Utilities

27%

Speciality Retailers Food Consumer Products

25% 21%

P&C Insurance

19%

Motor Vehicles & Parts

19%

Chemicals

18%

Source: University of Massachusetts Dartmouth (Center for Marketing Research)

 

Two of the top five corporations (Exxon and Wal-Mart) had the corporate blog, while the other three (Chevron, ConocoPhillips and Berkshire Hathaway) did not have one It was also noted that in 2012, 90% of the F500 blogs took comments, had RSS feeds and allowed subscriptions

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Corporate Twitter Accounts 

73% (an increase of 11% from 2011) of the F500 had corporate Twitter accounts as of 2012 with atleast one tweet being posted from the same during the 30 days that were monitored by the research committee The Twitter representation of 73% was across all the 71 industries that roll-up to F500; however, more consumer-oriented industries like Food Consumer Products, Speciality Retail industry, Commercial Banks, Telecom, P&C Insurance had above 80% representation

Chart 10: Industry-wide representation of Fortune 500 on Twitter Accounts Food Consumer Products

93%

Aeroscape & Defence

86%

Speciality Retailers

86%

P&C Insurance

81%

Telecom

80%

Chemicals

76%

Commercial Banks

75%

Gas & Electric Utilities

73%

Source: University of Massachusetts Dartmouth (Center for Marketing Research)

All of the top 10 F500 companies, viz - Exxon, Wal-Mart, Chevron, ConocoPhillips, General Motors, General Electric, Berkshire Hathaway, Fannie Mae, Ford Motors and HewlettPackard consistently posted on their Twitter accounts Among the list of Top 10 organizations ranked basis their twitter followership, Retail found representation via Whole Foods Market and Starbucks, ranked at no. 2 and 3 respectively. Other top 5 organizations basis twitter followership include Google (no. 1), Southwest Airlines (no. 3) and Walt Disney (no. 5)

Chart 11: Proportion of Fortune 500 with Twitter Accounts

2012

2011

27% 38% 62% 73%

Have Corporate Twitter account

Do not have Corporate Twitter account

Source: University of Massachusetts Dartmouth (Center for Marketing Research)

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Corporate Facebook Pages  

69 of the 71 industries forming part of F500 were present on Facebook Companies in the Specialty Retail industry had 89% of their companies on Facebook, closely followed by Telecommunications and Consumer Food Products, with 80% and 86% of the companies present on Facebook. The industries with no companies on Facebook were Tobacco and Diversified Outsourcing Services

Chart 12: Industry-wide representation of Fortune 500 on Facebook pages Speciality Retailers

89%

Food Consumer Products

86%

Telecom Aeroscape & Defence Commercial Banks P&C Insurance

80% 71% 70% 69%

Source: University of Massachusetts Dartmouth (Center for Marketing Research)

 

At an overall level, Coca-Cola dominated the Facebook ‘Likes’ tally with 42,226,297 fans, followed by Walt Disney with 32,027,185 fans In the Top 10 ranking by Facebook ‘Likes’, Speciality Retail found representation via Starbucks (30,427,600 likes), Wal-Mart (15,770,884 likes), Target (12,641,972 likes) and Kohl’s (6,464,081 likes) suggesting that Facebook clearly is a forum Retail likes to be present on

Source: Secondary Research; Sutherland Analysis

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Table 2: Tally of top 10 Fortune 500 organizations basis their Facebook fans tally

Company

F500 Rank

February 2013 Facebook Fans

2012 Facebook Fans

2011 Facebook Fans

59

58,559,185

42,226,297

32,303,342

66

41,666,199

32,027,185

7,065,639

227

33,563,109

30,427,600

24,102,790

107

27,127,339

20,560,759

9,426,335

2

26,325,824

15,770,884

7,105,159

38

21,638,291

12,641,972

4,919,647

51

16,723,366

10,428,375

2,319,637

73

12,104,898

9,718,582

3,576,442

483

10,540,194*

9,550,245

4,645,713

136

12,059,04*

9,250,588

4,757,335

146

10,125,995*

6,464,081

5,290,702

Source: University of Massachusetts Dartmouth (Center for Marketing Research) (Analysis done on basis of 2012 fans base; * - denotes change in February 2013)

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YouTube and Pinterest 

The survey found 369 (62% representation) corporate YouTube accounts in the 2012 F500 research, suggesting that this platform may also soon gain representation across various social media initiatives Pinterest was also noted to have grown in membership since its debut in 2010 and started to show up in the F500. In 2012, 11 (2%) of the F500 companies were found to have Pinterest accounts. These companies were: General Electric; Lowe’s; Starbucks; Nordstrom; Whole Foods Market; Bed Bath & Beyond; Dollar Tree; Dillard’s; American Family Insurance Group; Eastman Kodak and Live Nation, again establishing widespread retail presence

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II. Social media and Retail have some inherent synergies As a very consumer-oriented and customer-centric business, Retail has certain inherent synergies with Social Media. The reach and impact social media can generate for a Retail business is phenomenal and yet, the cost of creating the impact may be relatively low. For instance, reaching a social-media based campaign to millions of facebook ‘likers’ is relatively quicker than an advertising campaign based on direct mailers. Additionally, social networks also provide retailers with rich information to better direct their product development, planning and promotional communication. For instance, social media polls made Macy’s to sell denim jeans in bright neon hues rather than selling them in pastels. Similarly, Walmart knew which category of toys the customers wanted discounted for a particular holiday season based on social medial polls that they conducted. Many Retail and Social Media experts have displayed reservations, however, with regards to the correlation between Social media spend and sales; although, there is almost no doubt that social media can help create a positive sentiment towards a brand. According to American Marketing Association (AMA), word-of-mouth is the best form of advertising, and while the ‘in person wordof-mouth’ spread may certainly take a few days, a ‘virtual word-of-mouth’ spread may take only a few hours. It is thus safe, to conclude that though the impact of positive sentiment on a company’s financial statement is tough to quantify, retailers would certainly get the real value from social media if they are able to influence the customers’ decision-making process and inspire buying.

“Social media has changed the face of advertising most prominently in that it has almost eradicated the need for print advertising. Social media provides very targeted channels that are much more cost effective.” - Kelly Cutler, CEO, Marcel Media

“We reached even more consumers through even more channels during the holidays, while lowering our overall advertising expense for the year by 10%.” - Bill Simon, CEO, WalMart US

“Social media is a great way for companies to interact and get to know their customers and consumers. It’s also a really fast and cost-effective way to gather information about new markets." - Stephen Wyss, Partner, BDO USA

Source: Secondary Research

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Social Media can influence each stage of purchase decision-making What makes Social Media even more important for retailers is its ability to impact the decision making of customers across the entire purchase-cycle as can be seen from the infographic below:

Decision making cycle Pre-Purchase

Purchase

Post–Purchase

• Generate awareness and create interest • Get the retailer’s brand in customer’s consideration set

• Generate Purchase • Ease in billing

• Clarify queries with regards to product usage • Provide customer service • Receive customer feedback and work towards customer retention

ASOS, an online fashion retailer, allowed fans to play series of games on its Facebook applications

Fans with high points were allowed to access the summer sale first

Steve Madden, a shoe retailer, ran a campaign on Facebook to acquire 100,000 fans by offering ‘fans only discount’

Zappos, an online retailer, is dedicated to delight its customers by providing them excellent customer service

The company made it clear that if any fan leaked the discount code given to him / her, whole promotion would get cancelled, which in turn led to more people becoming fans

The customer service team at Zappos doesn’t have any sales goal, and their ultimate goal is to satisfy customers and make them feel important

Not a single fan leaked the code and the campaign was success for the company. It not only garnered a huge fan base, but also generated USD 200,000 worth of sales within 15 days

This ‘service philosophy’ has resulted in Zappos generating about 75% of revenue from its retained customers

This created quite a lot of stir among the consumers, further leading to higher awareness and an increase of 32% in ASOS’ fan base

Source: Secondary Research; Sutherland Analysis

Given the immense advantage social media can bring to the overall goal of customer engagement and association, it is no wonder that many retailers are seen connecting with customers on multiple platforms and are always reinventing and reinvigorating their social media strategy.

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Ample choice is available for addressing different business needs Multiple social media platforms are currently available in the market and at times Retailers find it difficult to choose only a few from them. Marketing and promotional budgets are always a constraint, and retailers are additionally compelled to keep homogeneous and relevant content on each platform they are present on. Given these constraints, retailers tend to choose only a handful of platforms basis the utility value they have and the need they are likely to meet for a particular retailer. A great number of consumers is already present on Facebook and Twitter making them the two most important platforms to be present on for most retailers, closely followed by a bunch of other platforms like Pinterest (for its image-based interface and curated content), or YouTube (for its video capabilities). The overall importance of Facebook, Twitter and Pinterest for revenue generation can be seen from the following infographics:

Chart 13: Page-views per session, 2012

Facebook users view nearly 2.5 times more pages per session as compared with Twitter

10 8 6 4

2012 AVG 2 0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

7.0

4.1

2.7

Source: Research conducted by Rich Relevance; Sutherland Analysis

Chart 14: Sales conversion rate, 2012

Facebook users registered highest sales conversion rate in 2012. But Pinterest recorded steadily increasing conversion rates in 2012

5% 4% 3% 2% 1%

2012 AVG

0% Jan

Feb

Mar

Apr

May

Jun

Jul

Source: Research conducted by Rich Relevance; Sutherland Analysis

Aug

2.6%

0.9%

1.1%

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Chart 15: Average order value (AOV), 2012 250

Pinterest users delivered the highest AOV in 2012, almost 43% more than Facebook users and almost 58% more than Twitter users

200 150 100 50

2012 AVG 0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Source: Research conducted by Rich Relevance; Sutherland Analysis

$95

$169

$71

In line with the above discussion, following infographic highlights the presence of top US retail companies across various social media platforms:

RETAIL SOCIAL MEDIA

TOP 10

A look at how some of the top U.S. retail brands stack up on social media

Likes 1

followers 1

26,257,040 2

3,499,158 2

24,641,710 3

20,968,410

15,393,314 6

5

10,111,417 7

6

625,968 7

10,086,664 8

518,498 8

7,885,779 9

415,689 9

7,356,805 10

380,339 10

6,549,324

361,443

88 8

12,842 9

31,216 10

66,954

16,275

32,542

133,265

88 7

8

9

10

17,791

41,055

144,917 9

6

7

8

88

21,236

44,685

255,768 8

89 5

6

7

90 4

33,433

66,589

309,101 7

86,532

5

6

91 3

4

91,012

338,741

808,220 6

181,848

140,850

5

96 2

3

4

369,256

1,493,648

898,927

2,821,860

416,617

Score 1

2

3

4

5

3,364,291

1,394,006

1,708,216

Subscribers 1

2

3

4

5

1,503,550

3,116,925

21,466,145

followers 1

2

3

4

followers 1

87 9

11,424 10

24,225

87 10

11,229

86

Source: Retail Customer Experience (Data as of January 04, 2013)

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Expert and Industry comments are corroborative

“ ... Social media gives you a chance to have a conversation with your customer .. Traditional advertising is more like archery — you just aim and shoot ...” - Heidi Reale, Director Marketing and Consumer Insights Price Chopper, USA

“ ... Shopping really has become a social experience these days. One of the most impactful ways we’ve seen social affect the buying process is by increased word-of-mouth marketing. Shoppers are becoming brand advocates by sharing their favorite products through Facebook, Twitter, YouTube ... ” – Margaret Case Little, Senior Director National Retail Federation

Mobile technology is a catalyst for retail growth and is changing the way we shop. Consumers now carry a global showroom in their pocket and are increasingly as inclined to seek recommendations online and shop mobile as visit the high street. At eBay we expect 2012 to be our most successful mobile Christmas ever with around 30% of the most popular Christmas products being brought through a smartphone - Carrie Bienkowski, Head of Buyer Experience at eBay

“... We may think everyone is following the Kardashians on Facebook, but in fact, Walmart is the greater social media ‘celebrity’ with more than double the number of followers as the Kardashian family’s most popular member, Kim ...” - Wendy Liebmann, CEO WSL/Strategic Retail

“ ... Our success is rooted in a heritage of listening and responding to what our consumers want ... ” - Jessica Wells, VP Social Marketing Chico’s FAS

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Case examples establish success potential Some of the early adopters from the retail industries have shown willingness to adopt the social media strategy and are reaping rich dividends from the same. Two of these case examples are covered below: Zappos.com Zappos.com, Inc. (Zappos) is an online retailer which deals in sales of apparel, shoes, handbags, eyewear, watches, electronics, and other products. The company was founded in 1999, by Nick Swinmurn, in the US. The Company was listed as ‘100 Best Companies to Work For’ by Fortune Magazine’s 2009 survey A decade later, in November 2009, Zappos.com was acquired by online giant Amazon.com for USD 1.2 Bn. Other details on Zappos are as below:  Total Revenue: USD 1 Bn (2009)  Stocks over 3 million shoes, handbags, clothing items and accessories from over 1,136 brands globally  Employs over 3,866 people globally (2012)  Headquartered in Henderson, Nevada, US Social Media Initiatives 

   

Twitter: - At Zappos, customer care staff is connected with millions of customer globally for casual communication, generating fun, promotion of brand, or providing customer service. Zappos sees as many as 85 unique conversations per day using Twitter's API - Zappos’ CEO Tony Hsieh has c. 2.7 Mn followers as of February, 2013 Facebook: Used by Zappos as an effective platform to get feedback and initiate discussion on products with customers. Some of the ‘Fans Only’ content is revealed only when Facebook page is ‘like’d and email list has been joined. ‘Fan of the Week’ declaration clearly depicts ‘customers first’ policy adopted by Zappos. Facebook page has over 0.42 Mn Likes You Tube: The platform helps to understand the work culture at Zappos and also helps to identify the various online offers for customers. Zappos currently has over 3015 subscribers Pinterest - PinPointing: launched in order to utilize Pinterest users’ posts about shopping recommendations and suggestions about products sold at Zappos Zappos also uses Google+ and Instagram as a platform to approach customers globally Zappos is developing strategies for 2013 to connect with customers using other platforms such as Tout, Pose, Tumblr, Polyvore, Reddit, Medium, and SocialCam

Benefits 

On average, in a typical month, over 600 tweets talk about Zappos’ products. On some days, Zappos sees as high as 60 Tweets per day. According to the free social media monitoring service SocialMention, Zappos is being referenced every 14 seconds, and positive sentiment runs at 8:1, suggesting phenomenal brand appeal Zappos earns $33.66 on Twitter, $2.08 on Facebook, and $0.75 on Pinterest in incremental revenue

Source: Secondary Research; Sutherland Analysis

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Wal-Mart Stores Wal-Mart Stores Inc., founded in 1962, operates retail stores in various formats (supercenters/hypermarkets, discount stores, neighborhood markets and online) across 26 countries globally. The company also retails online through its website (www.walmart.com) only in the US.   

Net Sales (2012): USD 443.9 Bn (72% from US) Headquarter: Bentonville, Arkansas (US) Employee Count (2012): c.2.2 million

Social Media Initiatives 

Facebook (c.26 million fans):  Wal-Mart mostly uses Facebook page to promote products, however it also uses it to initiate discussions with fans (opinion poll, caption competition, sports chat etc.). It updates its Facebook page with about 2-5 new posts everyday  Wal-Mart actively monitors its Facebook page and removes any customer service related posts from this page. It encourages customers to post their feedback /issue /concerns on its ‘Facebook Feedback’ tab and makes it a point to respond to them within few hours  For the 2012 holiday season, Wal-Mart bought up all the Facebook ad space available in advance and ran two billion ads on Facebook during that time, of which about 50 million Walmart ads were displayed on Black Friday weekend Twitter (c.300,000 followers):  Wal-Mart uses Twitter to post questions with wide range of topics (sports, caption contests, marriage/engagements, products etc.) and encourages its followers to respond to them. Wal-Mart responds to followers’ tweets and requests a re-tweet from time to time  Wal-Mart does not provide any customer support through Twitter  Wal-Mart also operates several other Twitter accounts, some of them are as follows:  @WalmartNewsroom (10,231 followers): Wal-Mart news, corporate information  @WalmartAction (12,347 followers): Wal-Mart’s community action updates  @WalmartGiving (10,801 followers): Wal-Mart foundation updates  @WalmartGreen (9,678 followers): Sustainable initiatives of the Wal-Mart  @WalmartCareers (13,685 followers): Jobs at Wal-Mart Wal-Mart also has social presence on Pinterest, Google+, YouTube, Flickr and Foursquare, however, Facebook is its main social media platform

Benefits 

“When people go to an e-commerce site from a Facebook page, they’re twice as likely to buy something than if they go there some other way.” - Stephen Quinn, Chief Marketing Officer, Wal-Mart “They [Wal-Mart] have seen significant lift in individual items when they put them through the system [social media] they have built.” - Mike Fox, Director of global vertical marketing, Facebook

Source: Secondary Research; Sutherland Analysis

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III. Implementation Strategy

Definition Evaluate • •

Key Activities

Identify overall business objectives Articulate social media objectives and align them with the identified business objectives Assess and evaluate the organization’s current social media initiatives Identify the gap between desired and current state of ‘goal achievement’ from social media efforts Generate awareness in the company and get a management buy-in for framing a social media strategy

Develop •

Key Stake Holders

Social Media core team Top management Finance

Deploy •

Segment the target audience who will be influenced via disparate social media engagement initiatives Articulate key characteristics of the target audience: – social media needs – current and future usage pattern – current penetration and future projections Identify budgetary requirements and highlight goals to be achieved, risks to be mitigated and metrics of performance measurement that will be used Define overall ‘social media strategy roadmap’, and identify individual projects therein Identify ‘talent needs’

• • •

Social Media core team Top management Finance

• • • • •

• • •

Realization

• • • •

Monitor

Implement Project Office and deploy identified human resources and hire where deficit Determine other functional requirements of projects going live and arrange for resources Select and buy vendor based tools Build and configure tools to be developed in-house Develop, Test and Go-Live on individual projects Train key users and get the user buyin. Meet additional training needs where necessary

Social Media core team Key Users Vendors Human Resources Finance

• • • • •

Measure social media activity on the identified metrics Identify ‘successes’ and replicate the same where possible Identify ‘concerns’ and deliver solutions Hand-over the project to the permanent social media team Document learnings Move to the next social media project

Social Media core team

Source: Sutherland Analysis

26


Success in implementation of Social Media strategy hinges on three key factors:

Identification and achievement of Key Success Factors (KSF)

Measurement and mitigation of risks

Continuous measurement of benefits and coursecorrection

Source: Sutherland Analysis

Identification and achievement of Key Success Factors (KSF) For developing and deploying a social media strategy successfully, it is important to identify the KSF. While there are many factors that collectively contribute to a project as complex as a ‘social media implementation project’, some factors like ‘quick adaptation’, ‘designated ownership and answerability’, ‘clear articulation and deployment’ alongwith a supportive organizational structure are cited as the most important factors based on survey conducted by Booz & Company and Buddy Media Campaign. Chart 16: Key success factors for a successful social media strategy 90%

90%

88%

86%

83%

80%

79%

Ability to coordinate & manage multiple service providers

Unique content that is exclusive to the audience

Strong PR capability

Training of staff not accustomed to using social media

Supporting initiatives with an integrated marketing plan

A culture that encourages experimentation

Education on what can be achieved via social media

Clearly communicated support from executive management

Having a clear champion owner

Ability to adapt & react quickly

62%

53%

50%

Head of social media company-wide

93%

Dedicated budget not shared with other digital initiatives

94%

(% of respondents who “strongly agree” or “agree”) Source: Booz & Company/Buddy Media Campaigns to Capabilities Social Media & Marketing 2011 Survey results

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Measurement and mitigation of risks Given the prowess and spread of organizations on social media, it is no surprise that many companies are making themselves subject to certain inherent threats due to over-exposure. These risks can be classified under four broad headings: 1. Brand or reputation related risks 2. Breach of confidentiality 3. Legal, regulatory or compliance violations 4. Identity thefts Based on the survey conducted by Altimeter on ‘Social Media Risk Management’ in 2012, it is believed that organizations consider ‘defamation of the brand’ as the most critical risk, closely followed by loss of confidentiality or that of intellectual property. Employee defamation is considered the least critical among the surveyed; however, it is important to note that the assessment of criticality of this risk is a function of whose identity may be stolen: that of the top management may lead to much more damage to the organization than that of the people working in the middle or junior managerial roles. Chart 17: Proportion of respondents with their risk perception Reputation or damage to the brand Release of other confidential information Loss of intellectual property (IP) Legal, regulatory, or compliance issues Disclosure of personal data

6% 4% 10%

15%

27%

25%

35%

Damage to information infrastructure

15%

No risk

29%

29%

29% Slight risk

Moderate risk

12%

12%

10%

15%

8%

12% 31%

37%

19%

13% 13%

40%

17%

13%

21%

33% 35%

13%

17%

29% 21%

15%

15%

33% 23%

27%

15%

17%

31%

21%

Social engineering attacks

Employee defamation

31%

15%

8%

35%

23%

13%

Interrupted business continuity

Reduced employee productivity

31%

25%

15%

Identity theft and/or hijacking

Malware

23%

31% 27% Significant risk

6% 10% 21%

6% 6% 4% 2%

Critical risk

Source: Altimeter

Needless to say that a successful implementation and post-implementation plan should have a mechanism to address these risks and mitigate them in a timely manner. It is imperative that organizations are proactive than reactive, and commit definite resources, be it human, financial or technical – to address the potential pitfalls that may lead to damage of the organizational repute.

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Continuous measurement of benefits and suitable course-correction It is observed that companies are still striving hard to put a system in place which successfully measures the ROI for corporate social media initiatives. Some of the key metrics companies are often seen using are as per the chart below: Chart 18: Metrics used for measurement of social media

(% of respondents) Reach (uniques, PVs, video views, time spent)

88%

Buzz (trending topics, blog mentions, influentials)

66%

Engagement (forwards, shares, re-tweets, posts,â&#x20AC;Ś

93%

Participation (fans, followers, check-ins, sign-ups) Transaction (sales, leads generated)

92% 38%

Advocacy (comments, feedback, participation inâ&#x20AC;Ś

81%

Source: Booz & Company/Buddy Media Campaigns to Capabilities Social Media & Marketing 2011 Survey results

One can only control what one can measure and therefore, it is increasingly important that factors measuring the success of social media strategy are clearly identified and monitored. In case of a performance non-achievement or aberration an immediate rectification action should be taken.

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IV. Conclusion Social media is rapidly changing the way people communicate; in fact, it is rapidly transforming into being a primary channel of communication by newer generations, most of who are connected to social media 24x7 on their mobile devices. These new-age users use social media not just to stay connected with friends and family, but also to read reviews of their favourite products, and look out for offers where their chosen products can be bought at a competitive rate. Social media is important for businesses too, given its ability to connect with a multitude of stakeholders real-time. However, in order to connect with consumers it is even more important a channel thanks to its ability to reach a large number of consumers in a relatively short time. For instance, millions of existing and potential consumers may be influenced using a product promotion tweet by a TV or Sports celebrity. Given the consumer-centric nature of the Retail business, Retail cannot ignore the phenomenon called Social Media anymore. Most of the Fortune 500 retail companies already have wide presence on social media through different platforms like Facebook, Twitter, Blogs, Pinterest, YouTube, LinkedIn etc. and keep reinventing and reinvigorating their social media strategy to perform better. Retailers have also increasingly started using social media for activities that span the entire value chain of Retail sale: be it brand promotion, creating buzz before a new launch, soliciting feedback from customers, giving after-sale support or launching a promotion scheme, to name a select few. Much of the success of Social Media initiatives depends upon astute planning and judicious implementation of the strategy; not to mention that buy-in of the top management and inclusive support of the operational teams go a long way in making it a success organization-wide. Wise business decisions are made when there is clarity in the values and philosophy of the business. If Customer satisfaction is the motto of the retail companies at large, needless to say that being present on social media and making it an interesting place for the consumers is where the success of retail is going to be.

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