This Week In Business: Twitter ROI

Last week's discussion about Social Media Snake Oil was the most read blog post of the Fall Season.

Not the most read, of course, by our core audience, but most read due to the viral nature of Twitter.

In my case, I had about 200 new individuals click-through some place in Twitter and read the article. Of the 200 new individuals, about 30 chose to follow me on Twitter, with a third un-following me within a few days. And of the 200 new individuals, about five or six chose to subscribe to my blog, where all of the in-depth discussion and analysis happens.

I need about 75 new subscribers to yield one new consulting project. And each new consulting project is worth, let's assume, an average of $12,000 (some small ones, some whoppers, the average being maybe $12,000).

Therefore, we can calculate the estimated consulting revenue that will be generated by a blockbuster article that is re-tweeted around the globe:

• Value = ($12,000 * (5 blog subs / 75 blog subs per project)) / (200 new visitors via Twitter) = $4.00 consulting revenue per new visitor from Twitter.

Hint #1: I cannot stay in business at $4.00 consulting revenue per new visitor from Twitter.

Hint #2: You have a better chance of making $/tweet if the tweet has a long "life". This doesn't happen in Twitter, with the average tweet having a 15 minute life, while articles that are re-tweeted have a life for maybe six hours.

This is where the Snake Oil aspect of Social Media appears. Retailers and business leaders understand this issue. For a tool like Twitter to be successful, you have to "scale" to a huge number of unique followers (those who don't follow you because you followed them), or you have to write blog content that is so stunningly outstanding that you get a ton of visitors at low monetary values to make it pay off, or you have to find the exact nine people who are highly likely to purchase your services at the exact moment your tweet is released into the ether.

My blog articles get re-tweeted at the levels of last week's most popular article about once every two or three months. So once every two or three months, I am able to achieve a potential windfall of $800 via Twitter. This isn't what the Social Media experts promise you the "conversation economy" will deliver.

In many ways, Social Media is a glorified Pyramid Scheme. My blog sustains my business, but I am one of just a handful of people who can do that. For everybody else, there is a fight for attention. You have to acquire a huge following, and that following must be seeded with influentials who re-tweet your content to large audiences, who then re-tweet your content to their smaller audiences, in order for the whole process to "scale" to a sustainable revenue level.

And as you can see, it takes a lot of "scale" to make that happen.

Given the Pyramid Scheme style of development required by Twitter, it is easy to see why those at the top of the Pyramid Scheme tell you that you, too, can do this, and then belittle you when you don't succeed, saying you "didn't do things the right way", suggesting that somehow it is your fault that you didn't succeed.

It isn't your fault. It is a probabilistic game that only a small number of people/brands can win.

Take Nordstrom's Twitter presence, about 20,000 followers across a customer base of maybe 8,000,000 annual buyers. Just think about that when you consider "scale" ... they have maybe 8,000,000 annual buyers and only 1 in 400 care enough to follow Nordstrom on Twitter ... heck, they have only 14 times as many followers as I have.

If an eight billion dollar brand that is known world-wide for customer service only has 14 times as many followers as I have, what chance of success is there for anybody to make a living on Twitter?

Now, when Nordstrom takes care of a customer issue via Twitter, well, that is 100% consistent with what their brand is about, right? And when you think about using Social Media in that manner, well, then you are defining ROI differently, and then Social Media becomes a great fit.

Twitter. NASCAR. Customers.

For the next two minutes, put aside your thoughts (positive or negative) about NASCAR, and think about how your business interacts with customers.

On Saturday night, NASCAR hosted a 400 mile race in Florida. Most of the three or four million Americans who witnessed the event did so on television.

A small number of individuals, maybe just a few hundred, maybe a few thousand, watched the race on television and interacted with each other on Twitter. Their participation influenced the broadcast.

NASCAR beat reporter Jenna Fryer (@JennaFryer) mentioned to her 1,088 followers that TNT (the cable channel broadcasting the race) was not interviewing drivers who were involved in an accident. Around the same time, NASCAR blogger John Daly (@JohnDaly) asked his 1,062 followers the same question.

It's a good thing they asked their question, because one of the television broadcast announcers is former driver Kyle Petty (@KylePetty). During the race, he monitors what people are saying on Twitter, and during commercials, he interacts with his audience. He told his 10,723 followers that his team was not interviewing the drivers because those cars were being repaired, or because the cars had re-entered the race.

He also told the viewing audience the same information. In fact, several times during the race, he mentioned that folks on Twitter had questions, and he answered their questions on live television.

NASCAR fans followed the action using the #nascar hashtag. In fact, NASCAR was one of the top ten trending topics Saturday evening on Twitter.

So you had the press, bloggers, and fans interacting with the broadcast team, shaping the direction of the broadcast. One broadcaster from another network (driver Kenny Wallace, @Kenny_Wallace) was honest enough to mention on Twitter that the race was boring. He as a vested interest in making the event seem exciting, but willingly shared the feelings many fans had.

Fans could also learn about their favorite drivers during the race.

• Juan Pablo Montoya told what was happening prior to the race, his wife issued a few updates during the event (@jpmontoya).

• Richard Petty Motorsports (@RPMotorsports) gave periodic updates about their drivers during the race, including adjustments that would be made during upcoming pit stops, and informed fans of the safety of its drivers after a terrible accident at the end of the race.
  

• Joe Gibbs Racing (@joegibbsracing) shared information about its drivers during the race.

• DeLana Harvick (@DelanaHarvick) lamented a season of bad luck for her husband, Kevin Harvick.

Fans also got to air their complaints, with numerous tweets about what appeared to be a fake caution flag with 15 laps to go that bunched up the field to create more drama. Fans openly encouraged TNT to show a camera angle that pictured the debris that caused the caution. No camera angles were revealed.

The point of this isn't to make NASCAR and its fans appear to be technological wizards or visionaries, or to tell you to watch the 400 mile race from Chicago next Sunday.

The point is to share how different industries are being changed because of audience participation. NASCAR television ratings are down this year, so you can't make the argument that this level of interaction improves ratings. And with only a few hundred or a few thousand individuals participating, we clearly see that there isn't a groundswell of interest, yet.

It seems to me that individuals benefit greatly from social media. But brands (in my opinion), at best, receive (at best) indirect benefits from a social media presence. You'd be hard pressed to name a business (not an individual) that generates more than 3% of their sales from social media. Use the comments section to list the companies that are generating sales that are a respectable percentage of net sales (and no, Dell doesn't count ... a couple million on a base of $60,000,000,000 is essentially zero).

So if you're trying to figure out how to use this stuff in a unique way, consider this example, courtesy of NASCAR. NASCAR isn't actually managing the social media process. Instead, folks with a vested interest in NASCAR (press, bloggers, drivers, teams, broadcasters, fans) create their own social media ecosystem around weekly events.

We have similar opportunities, opportunities that go beyond offering Twitter followers 20% off, or go beyond telling our Twitter followers what we ate for lunch. From a long-term standpoint, we're going to have to figure out how to acquire new customers outside of list rental and pay-per-click. This represents one long-term opportunity that needs to be tested.

Dell v Acer: Multichannel and Social Media Considerations

Dell is a social media darling. The Twitterati love to talk about Dell's social media strategy, and enthusiastically call out the fact that Dell has sold $3 million of merchandise on Twitter. $3 million is a good thing!

Dell is a multichannel darling, too. They spent the past few years expanding into retail, leaving their direct-to-consumer and direct-to-business roots behind to align with Best Buy, Staples, and Wal-Mart. Direct + Retail is a long-established multichannel marketing gold standard.

Dell takes full advantage of customization and personalization, all good for the customer!

Dell is doing what leading marketing experts tell companies they should do, in order to be successful.

Then there is Acer. They don't leverage Social Media, they don't follow leading Multichannel Marketing strategies, and they don't offer the Customization that Dell offers.

So how is it that Acer is poised to pass Dell later this year for the #2 computer maker spot?

Use the comments section to explain this unique outcome.

Social Media Experts: Would You Accept This Challenge?

A $100,000,000 brand that generates $7,000,000 of pre-tax profit offers you a challenge.

• You will quit whatever job you have, and you will work for free for one year. You will also pay the company a $5,000 non-refundable deposit.
  
• You get to implement whatever social media marketing program you want to implement. No strings, no interference, you're the boss.
  
• At the end of twelve months, you and the company get to split all of the profit generated by your marketing program, 50% / 50%.

Do you quit your job, pay the non-refundable deposit, and accept this challenge?

If you're a social media expert, and you truly believe in your field of study, and you answer "no", please explain your answer. Under what terms would you say "yes"?

2009 Job Title: Multichannel Social Researcher

This position combines social media with database marketing. Hint: You need a person like this.

The Multichannel Social Researcher is an important member of the multichannel retail marketing team. Reporting directly to the Chief Marketing Officer, the Social Researcher is responsible for understanding how current and potential customers view our brand and the brands we compete with.

Qualifications: At least two years of Social Media experience, preferably via blogging, active participation in micro-blogging sites like Twitter or Plurk, and a thorough understanding of the myriad ways that users interact with multiple social media channels like Facebook, LinkedIn, MySpace, and others. At least five years of corporate experience in a marketing or customer service role.

Job Responsibilities:

• Monitor and tabulate daily user sentiment about our brand.
• Identify areas of concern, and actively inform business unit leaders of negative/positive user sentiment.
• Develop a database of negative/positive sentiments, hyperlinks to key commentary, and primary social media users who influence brand perception. Database must be structured in a way that allows the database marketing team to actively query and mine information.
  
• Work with contact center staff to develop a micro-blogging participation program whereby staff interact with customers in real-time to solve complex problems.
  
• Attend and lead a monthly executive forum focusing on consumer behavior as measured by social media activities.
• Actively quantify the impact of social research on brand reputation. Quantify the impact of decisions made because of social research knowledge on net sales, and earnings before taxes, in close partnership with the Web Analytics staff and Database Marketing team.
• Develop a reward structure for customers who actively participate in user reviews, especially those customers who actively influence existing customers and prospects.
• Generate brand profiles for key competitors, based on user sentiment across social media channels.
• Lead organization with an annual assessment of customer interaction between physical channels and social media channels, collaborating with the Web Analytics team and Database Marketing team. Build an annual social media blueprint for the executive team to pursue.
• Closely partner with Marketing Research director on key research initiatives.
• Thoroughly understand leading-edge social media trends and tools.

Salary = $60,000 to $90,000 per year, depending upon experience and credentials. Employee is eligible for a bonus target of 20% per year, based on key social media targets and quantified impact on net sales and earnings before taxes.

Limitation Of Social Media: Online Introverts And Online Extroverts

In the real world, when folks gather in a meeting room, we notice that extroverts voice their opinion, while introverts remain quiet. If we listened only to the extroverts, we'd obtain a biased viewpoint.

Online, we're told to cater to web extroverts, folks who blog and twitter themselves into a froth. We're encouraged to build a community, we're encouraged to cater to a vocal minority.

But what happens when we are successful, when we build a community, only to learn that this segment of customers are online extroverts, and are not representative of the overall customer? What happens when this segment of customers demands free shipping and 30% off, all day, every day? What happens when this small but vocal minority makes demands that aren't in the best interest of the brand we manage? Do we listen? Do we act?

In some ways, the business intelligence analyst and web analytics expert must learn to segment customers into online introverts and online extroverts, catering to each segment in a unique manner.

The CEO gets to have less fun. She needs to remember that her vocal social media community only represents a minority of her customer base, a loud minority that disproportionately communicates their needs. She needs to satisfy the needs of the online extrovert, while protecting the interests of the online introvert who does not communicate needs. The CEO knows that catering to online extroverts may result in alienation of online introverts.

Social Media, Competitive Intelligence, And Web Analytics

Have you ever wondered why I occasionally write obtuse articles like this one on free shipping at Lands' End (check the organic/natural results for Free Shipping Lands' End on Google).

Or this article about Williams Sonoma and Multichannel Growth?

Or an article about Abacus, a popular co-op in the multichannel catalog world?

All are part of a strategy to gain what I call "Competitive Intelligence".

Maybe you noticed that Father's Day is just around the corner? There's a veritable plethora of folks who are interested in getting Dad a lightweight coat from Lands' End. They also want free shipping. Because I wrote the article about Lands' End free shipping, Google sends visitors to my site. In kind, I use Google Analytics and SiteMeter (here are my site statistics) to understand the rhythm around free shipping for Father's Day. I get to see the build-up prior to Father's Day, the days customers are most interested in obtaining Free Shipping, and the drop-off prior to shipping cutoffs.

Now if I can do this with my humble little blog, imagine what L.L. Bean could learn about Lands' End, Eddie Bauer, Orvis, you name the competitor, by hosting comparable content? And imagine how much more effective these brands would be, given their scale, compared to my humble efforts?

Miller Brewing Company accomplishes this style of competitive intelligence with their "Brew Blog", writing about their competitors on a daily basis.

This stuff isn't rocket science.

For me, the Lands' End example is more fun than anything else. More important is the work I do to understand my competitors.

For instance, I frequently write about matchback analysis, especially as it relates to co-ops like Abacus. Because Multichannel Forensics indirectly compete with matchback programs from companies like Abacus, it is a good thing for me to have folks searching for matchback solutions, searching for products from Abacus, to visit my site.

I get to track the evolution of terms that folks use. Catalog marketers use the phrase "Lifetime Value" to understand the long-term potential of customers. Online marketers and E-Mail marketers seem to prefer the term "Return on Investment" or "ROI". If I want to partner with online marketers on long-term customer value studies, I won't attract them to my site by writing about Lifetime Value.

I also have numerous competitors, folks who provide similar products and services to those offered by yours truly. By writing about these folks, or by hosting their RSS feed on my site, I get occasional visitors from Google who are searching for information about my competitors. I assure you, this information is very enlightening!! I get to see who the companies are that want to hire my competitors. I get an idea for the type of service the company has a need for. If necessary, I adjust my content, products, and services accordingly. I get to see the articles you like, ones written by my competitors.

Once, a competing organization fired a long-standing and high-ranking employee. The company announced the firing on a Tuesday. One day earlier, I had numerous visitors who arrived via Google searches that combined the competing brand name and the name of the individual who was fired. If I wanted to, I could have fact-checked the story and "scooped" the mainstream media.

Hosting a blog is so much more than the social media pap spewed by the punditocracy. The competitive intelligence gained from this effort means everything to a small business like mine. And best of all, the tools needed to obtain the competitive intelligence are free. FREE!

Now imagine for a moment what your brand could accomplish with a combination of Social Media, Competitive Intelligence, and Web Analytics?

Bob Bly vs. Robert Scoble: Old School Ideas vs. Newbie Technology

Bly's old-school thoughts on Facebook and Social Media and Direct Mail vs. E-Mail. Scoble's response.

Let's transition some of that discussion into the context of running a multichannel brand. Who's up for a test?

Who would be willing to execute this test within the context of their own brand?

• Customer group #1 is marketed to via direct mail and catalogs.
  
• Customer group #2 is marketed to via e-mail.
• Customer group #3 is marketed to via direct mail and catalogs and e-mail.
  
• Customer group #4 receives no direct mail, catalogs, or e-mail. They are simply left to the seductive wiles of social media.

Place your bets, folks ... which group drives the most sales and the most profit?

Social Media folks ... would you be willing to stand behind customer group #4? Or do you need the help of direct mail, catalogs, and e-mail (and paid search and portal advertising and affiliate advertising and shopping comparison sites) to succeed?

Your thoughts?

ACCM 2008: Social Media

In one session, the speaker asked the audience of about one-hundred catalog/retail/online (aka Multichannel) marketers if they used Google Alerts to tell them when customers or other individuals were speaking about their brand.

Not one person raised their hand.

An attendee told me ... "I just don't understand this viral stuff. I'm supposed to just trust that customers will spread my message via word of mouth?" When we've been raised to push a message to customers, it isn't easy to trust that others will do the work for us, if the message is worthy of spreading.

Another attendee told me ... "We jumped all over e-commerce ten years ago. We're going to be the last to jump on social media."

This theme came up several times ... "Why would I plunge into social media when we can't even get the resources to manage our website properly?"

Monitoring your brand is free and it is easy. Assign one person the job of monitoring what folks are saying about your brand. Oftentimes, it is good to pick a gifted person in your contact center. These folks listen to customers every day. Change the focus of this person --- to listening to customers via social media instead of customer complaints submitted via existing channels.

The attendees who spoke with me suggest social media is down the list of priorities, but is high on the list of things to pay attention to. And that is a shame, given that monitoring social media is free, and participating only requires time.

More than anything else, I sensed that the attendees were so buried under other topics that social media represented another competing priority --- one that isn't guaranteed to generate a positive ROI.

And catalogers love generating positive ROI.

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?

What Does Your Website Look Like In 2017?

Doug Mack at Shop.org talks about the future of multichannel websites. In the article, notice that an individual at Gartner talks about everybody being held hostage by "Googazon". Remind your multichannel retailing co-workers that you heard that concept first on The MineThatData Blog!

The online channel is likely to evolve very differently, depending upon the business model employed by the retailer. Let's review three business models, and the likely evolution of the websites these business models manage.

Catalog + Online Retailer: Multichannel Forensics dictates that catalog customers are transferring loyalty to the online channel. Businesses with an older customer base are experiencing this transition much slower than businesses with a younger customer base. Over the next ten years, this evolution will drive a dramatic transformation of the catalog advertising channel. The catalog becomes a "brand advertising" tactic that drives business to the website, or communicates the general attributes of "the brand". The website must sell merchandise. This will drive website design toward the most efficient layout, one that easily facilitates a customer purchase during any one specific visit.

Direct + Retail Channels: As retailing splits into two niches (low-cost and high-end), websites will evolve accordingly. High-end retailers will see less and less value in e-commerce, and will see more and more value in using the website as the primary tool for customers to interact with a brand. For instance, L.L. Bean reported 73 million annual online visitors during 2006. I imagine that Neiman Marcus had more than 100 million annual online visitors during 2006. What the heck do you think will happen to these websites when brand marketers wrestle control of the website from the clutches of the technology folks? No other marketing activity replaces the experience of a hundred million individuals who volunteer their personal time to spend time on your website. If 100 million customers and prospects volunteer to spend their free time on your website, you have a responsibility to configure the website to facilitate any and all possible retail transactions. The Direct + Retail website will become the entertainment and information arm of a retailer --- e-commerce will be, at best, a secondary function that serves the purpose of meeting a specific customer need at a specific point in time. These businesses, in my opinion, are the most likely to use Social Media in the future --- integrating Social Media with the retail purchasing experience. Maybe most interesting will be the evolution of virtual-reality sites, as either competition to today's websites, or as the logical evolution of today's websites. The experience will be what matters, not e-commerce.

Online Pureplays: Expect online pureplays to compete with catalogers and retailers by hyper-innovation and hyper-price-based competition. These businesses will have to make their sites a destination, a place where people want to spend time. This strategy will be at direct odds with the intense pressure associated with the need to sell merchandise to survive. Darwinian evolution drives these businesses toward the lowest price, fastest shipping, and best merchandise selection. Expect these businesses to develop partnerships with Google and a likely family of search successors, so that traffic is diverted away from multichannel retail sites.

Ok folks, time for you to chime in. How do you think websites will evolve over the next ten years? What trends do you expect to come to the forefront for each business model?