Kevin Hillstrom: MineThatData

Exploring How Customers Interact With Advertising, Products, Brands, and Channels, using Multichannel Forensics.

July 16, 2007

Multichannel Retailing Week: Social Media

Since starting my own business, about one in three business leaders have asked my advice about what an appropriate "social media" strategy could be for the multichannel retail brand they support.

This tells you there is something to this 'social media' stuff. Or at least there is a 'buzz' in the air, or 'was' a buzz in the air.

One thing we have learned in multichannel retailing is to not listen to the social media punditocracy. They tell you what to do --- they blast you when you try things they don't agree with, they laud executive bloggers who eventually are discovered to have been participating in potentially illegal activities (i.e. Whole Foods). It is hard to please these individuals, individuals who on occasion haven't had the privilege of accountability for driving sales and profit at multichannel organizations.

You can please your customers, however. This is where your interpretation of social media can play a role.

In my final year at Nordstrom, we assigned one of our managers the task of thoroughly understanding how Nordstrom customers interacted with social media. Our Public Relations team, in my opinion one of the best teams in all of multichannel retailing, also monitored the blogosphere for customer commentary about Nordstrom. Our talented online marketing team, PR, and a Database Marketing social media expert combined skills to understand how customers were networking with each other, communicating aspects of brand preference with each other.

Many larger multichannel retailers monitor what is being said about them. Many smaller multichannel retailers actually participate in some way, with blogging representing a tangible communication outlet.

In the old days (i.e. before 2005), we read reports that documented customer complaints at our call center. When things really got challenging, we recruited customers for a survey or focus group to learn what our loyal advocates were thinking.

Today, our customers happily leave a digital paper trail all over the internet. We can easily follow the trail of bread crumbs. Really good Database Marketers are busy organizing these bread crumbs into actionable pieces of information that are stored in the customer data warehouse.

I've observed a handful of multichannel retailers who do this. The insights are interesting. In some cases, visitors with a social media referring URL have lower than average conversion rates. If the objective of social media is to facilitate a conversation, there's no problem with this. If the objective is to monetize social media, this doesn't bode well for this emerging form of media.

In my opinion, we'll see multichannel retailers harness the power of social media over the next decade. How we do this will likely be very different than the tools and techniques the social media punditocracy recommend we implement today, and that's no fault of the social media punditocracy --- technology and consumer sociology are simply moving too fast for us to anticipate or predict. We will find authentic ways to engage our most loyal customers. Our loyal customers will spread the message that television and radio commercials spread for the past sixty years.

If I were in charge of the social media strategy at a multichannel retailer, I'd start first with an internal blog, one for employees to share ideas and communicate with each other. This will provide a fertile laboratory that will pay dividends later when a strategy is crafted for customers. In year two, I would have a blog that I invite only my most loyal customers to participate in --- the blog would allow the most loyal customers to communicate directly with management. During these two years, I'd watch how the landscape changes, and begin experimenting with marketing strategies that partner with consumers in year three.

Of course, these are just my ideas, my opinions. We'll see multichannel retailers try lots of unusual strategies over the next five to ten years. Eventually, a set of 'best practices' will emerge from this 'Wild West of Social Media', just like paid and natural search emerged from the embryonic online marketing wilderness of the late 1990s.

Your turn --- how do you see multichannel retailers interacting with social media over the next decade? What interesting trends are you observing today?

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