This Week In Business: Zappos Twitter Strategy

Well, you can't throw a Pottery Barn catalog without hitting somebody who promises business success on Twitter.

I find the whole Twitter thing vexing. My own presence (follow me here) finally found a groove ... more than 1,000 followers discussing various questions I ask on a daily basis.

But enough about me. You frequently ask me how you might use Twitter to increase sales.

So why don't we look to the leader, Zappos, to see how their folks use Twitter.

As you may already know, Zappos gives considerable flexibility to employees using social media, and allows you to see what all employees are currently talking about. So let's take a brief look at a few employee comments.


Customer Service --- Click Here For More: @Zappos_Service

• @jefframone Thank you for shopping with us! I hope you enjoy your shoes =)
• @hevipetter Did you know that we also carry handbags to go with your cute boots? http://www.zappos.com/bags
• @trappedinabay Please let us know if you need any assistance! We are here for you 24/7 by calling 1-800-927-7671.
• @kooskoos Did you know that we also sell clothing to go along with your shoes? http://www.zappos.com/clothing
• @Delirium7 I'm sorry the heels didn't work out for you. Please give us a call at 1-800-927-7671 if you need further assistance.
• @kastner We apologize for any inconvenience. That site was just a test and we decided not to go forward with it at this time.
• @drudy We love you too! Thanks for shopping with us!
• @_cyndi I love these shoes! I have the same ones in the White/Carbon/Orchid. Enjoy!
• @denimmafia Actually here is the real link to our sale section :-) http://www.zappos.com/sale
• @marysam I'm sorry that we are currently out of stock in your size. Please DM (direct message) me your email address and I will be happy to help!
• @tenaciouscb We apologize for any inconvenience. Please DM me if you are still experiencing any problems with your account or the site.
• This is Josh signing off and wishing you all a good night! We'll be back here to WoW tomorrow morning!
• Goodmorning Everyone! Tasha here, ready to WoW you this am!

Learn anything from the thirteen tweets outlined here?

Honestly, read the comments. There is nothing magical here. This isn't about Twitter. This isn't about Social Media. This is 100% about human beings offering customer service, about human beings being humble, about human beings selling merchandise. Remember selling? That's our job, as marketers. We are supposed to sell stuff.

And yet, it is the human element of this, it's the service element that may be judged by some to be magical --- not the social media marketing channel. How many of the businesses we work for would be willing to publicly apologize for being out of stock on an item? How many of the businesses we work for would be willing to publicly apologize for testing a new site out and disappointing a customer in the process?

The human element will cause some problems, too. Read a few of the tweets from Zappos employees, tweets that take on a different tone:

• @bassred says "Hey T-Mobile. Now on day five without data service. your live chat is unavailable. thinking customer service is not very important to you."
• @seanyboysp says "At tropical smoothie cafe with the wifey and baby boy.. maverick just loves smoothies haha"
• @graves says "Note to self... don't try to buy Rolo's again from the vending machine"

Oh, you'll read about politics and boyfriends and kids soccer photos and Brett Favre and wars while going through employee tweets. Maybe you are more than happy to allow your employees to share their lives with your customers. Maybe this is shocking to you, and represents the absolute last thing you'd ever do, maybe you think this represents a branding catastrophe.

Remember what we talked about on Monday? When I run Multichannel Forensics and OMS analyses for clients, I continually see that interaction with humans leads to customers with increased long-term value.

Clearly, we focus on channels, like Twitter. But this has nothing to do with Twitter or Social Media or marketing channels. It has everything to do with human beings pleasing customers. What can we learn from their style of human interaction that we might be able to leverage?

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.

Twitter KPIs, Including The Twitter Quality Score (TQS)

We hear an awful lot about Twitter, don't we? @Oprah is on Twitter, with more than a million followers. CNN Breaking News has 1.4 million followers. It seems like you can solve all of your marketing woes by simply having a presence on Twitter. And then, you're reminded that customers buy from you because they like the merchandise you sell.

Of course, there's the rest of us, the 3% of the United States population that have a Twitter presence, and have somewhere south of a million followers.

@minethatdata is a tad north of 500 followers. But even with a modest audience like mine, there are many interesting metrics / KPIs that can be derived from the profile of those who follow me. Let's see what the faithful 500 look like:

Median Number Following = 281.
Median Number Followers = 273.
Median Number Updates = 158.

These are humble numbers, folks. And there's nothing wrong with humble numbers. Few people publish numbers like this, nobody would pay any attention to Twitter if this were the published promise of the tool. The numbers reflect the reality of the Twittersphere, not the reality of the Twitterati. And it's just fine, isn't it?

Let's put the number of people my audience follows into decile cutpoints.

• 1st Cutpoint = 39.
• 2nd Cutpoint = 73.
• 3rd Cutpoint = 123.
• 4th Cutpoint = 190.
• 5th Cutpoint = 281.
• 6th Cutpoint = 406.
• 7th Cutpoint = 624.
• 8th Cutpoint = 993.
• 9th Cutpoint = 1844.

Similarly, let's put the number of followers my audience has into decile cutpoints.

• 1st Cutpoint = 33.
• 2nd Cutpoint = 67.
• 3rd Cutpoint = 114.
• 4th Cutpoint = 186.
• 5th Cutpoint = 273.
• 6th Cutpoint = 386.
• 7th Cutpoint = 544.
• 8th Cutpoint = 888.
• 9th Cutpoint = 1321.

At the 7th cutpoint, the number of followers and the number of those followed begin to diverge. It's darn hard to encourage large numbers of people to follow you! Also notice that the top decile for followers has at least 1,321 followers ... a credible number, but not what the Twitterati might have you believe (the top user had more than 600,000 followers ... @zappos).

Here are the decile cutpoints for the number of updates:

• 1st Cutpoint = 8.
• 2nd Cutpoint = 25.
• 3rd Cutpoint = 54.
• 4th Cutpoint = 91.
• 5th Cutpoint = 158.
• 6th Cutpoint = 254.
• 7th Cutpoint = 370.
• 8th Cutpoint = 687.
• 9th Cutpoint = 1,111.

There's a lot of diversity here. We have folks who update infrequently, we have folks updating daily, and we have folks updating ten times a day.

Let's see if we can draw inferences from the metrics / KPIs.

I created a very simple model, trying to predict the number of followers based on how many people others follow, how many updates a person has, and the order in which the individual chose to follow me (1 = 1st, 500 = 500th). Here's the equation:

• Followers = 55.5 + 0.788*#Following + 0.161*#Updates - 0.128*Order.

Let's discuss the business intelligence embedded in this equation. Remember, one key reason we build models is to gain business intelligence, not necessarily to predict the future.

• For every 100 individuals you follow on Twitter, you'll earn 79 followers.
  
• For every 100 updates you have on Twitter, you'll earn 16 followers.
• Each additional follower you earn tends to have fewer and fewer followers ... to be expected as a social media tool grows in popularity.
  

Your mileage may vary ... just do the work and see what the data tells you!

I was very interested in the relationship between updates and followers ... each blog post I write results in 1.5 followers. Each Twitter update results in 1.1 followers. For my audience, each update results in 0.16 followers. No numbers are good or bad ... they're just interesting to track and to think about, and they are representative of the objective of the user.

The relationship between followers and following folks is interesting. The data strongly suggest that if you want to build an audience, you follow other individuals, the current "best practice". I do not execute this strategy, simply because I want to "test" alternate strategies.

Let's create a new KPI, called Twitter Quality Score (TQS), calculated as (#Followers / #Following). The "best" Twitterers, in terms of content, should have more Followers than those Following them, leading to a Twitter Quality Score (TQS) of 1.01 or greater. Here are the decile cutpoints for the TQS:

• 1st Cutpoint = 0.49.
  
• 2nd Cutpoint = 0.60.
  
• 3rd Cutpoint = 0.67.
  
• 4th Cutpoint = 0.77.
  
• 5th Cutpoint = 0.84.
  
• 6th Cutpoint = 0.93.
  
• 7th Cutpoint = 1.03.
  
• 8th Cutpoint = 1.21.
  
• 9th Cutpoint = 1.64.

Clearly, it is hard to build an audience ... 70% of my followers follow more people than follow them.

The data suggest that if you want to look for quality, look for a Twitter Quality Score of at least 1.50, if not greater. If you see a TQS value of this magnitude, then the author is probably publishing quality content that is appreciated by the Twitterati. Pay close attention to a TQS of 6.00 or greater, these values are in the top 2% of my following.

Finally, I look at every individual who follows me on Twitter. Here's what is interesting:

• Those who hire me are Catalog CEOs, then Retail CEOs, then Online Marketing CEOs.
• Those who follow me include Entrepreneurs, Web Analysts, Members of the Vendor Community, Online Marketers, Data Miners & Business Intelligence Analysts, Retail Marketers, E-Mail Marketers, and last = Catalog Marketers. The relationship is nearly opposite of the folks who I am purposely speaking to, in order to make a living.
  

Twitter may be a flash in the pan, it may be a valuable marketing tool, it may be a place where folks chat. Regardless, Twitter is a wonderful laboratory to experiment in. Build the KPIs for your own following, or do this type of study with your favorite Twitterer to see what the data tells you. No Twitter metrics are good or bad. Simply explore the data, folks!

ACCM / Twitter

I'll be posting a few updates over on Twitter, either visit my page (http://twitter.com/minethatdata), or look for the #accm tag for updates from all attendees using Twitter to share their thoughts.

And folks, if you want to prove that Twitter is a valuable communications tool, use it to spread the word, so that we can fill the room for my 11:15am Wednesday presentation on the role of geography in catalog shopping. How's that for a self-serving message?!

Twitter And Multichannel Forensics And Nielsen!

This article absolutely warms my heart ... a great way to analyze Twitter using Multichannel Forensics. LOVE IT! David Martin at Nielsen uses the 40% level (Acquisition Mode) to make a point. LOVE IT!

http://blog.nielsen.com/nielsenwire/online_mobile/twitter-quitters-post-roadblock-to-long-term-growth/.

Psychographics

Up until about two years ago, I was not a proponent of demographics / psychographics.

Times have changed. The "multichannel era" and the era of "best practices" have made understanding demographics / psychographics more important than ever.

Take the folks at comScore. They are suggesting that Twitter users skew older than average.
And guess what? Twitter users are likely to live in urban areas (thanks Don Libey of Libey's DailyDM and Multichannel Advisor). That's a micro-channel, folks --- urban baby-boomers communicating in passionate 140 character bursts.

If you were forced to fill in the demographic and psychographic profile of users of the following channels, could you do it?

• Catalogs, Especially Customers Coming From Co-Ops.
  
• E-Mail Marketing.
• Mobile Marketing.
• Twitter.
• Facebook.
• MySpace.
• Paid Search.
• Retail.

The future of micro-channel marketing demands that we thoroughly know the following about the user of each micro-channel:

• Age.
• Income.
• Gender.
  
• Urban / Suburban / Exurban / Rural.
• Merchandise Preferences.
• Price Point Preferences.
  
• Physical Channel Preferences.
  
• Online Visitation Preferences.
• Advertising Preferences.
  
• Lifestyle Preferences.
• Opt-In And Pull Marketing Preferences.
  

Modern micro-channel marketing demands a thorough understanding of these characteristics. You're already using Multichannel Forensics to understand the linkages.

Channel Shift And Online Marketing

These are absolutely delicious times in the world of multiple channels.

Sure, I focus a disproportionate amount of time on catalogers and retailers, because that's what I know. But the most interesting stories are over in the online marketing world.

You know those online marketers. They're the folks that just stare at you when you mention anything that cannot be immediately quantified with a conversion rate metric. They're the folks who organically benefited from all of your offline marketing. They're good people, learning their craft on the fly --- something offline marketers have a much harder time doing.

And in the course of just six months, the world shifted out from under them.

Aaron asks us, "How Much Of Your Pagerank Are You Wasting On Twitter?" Catalogers/Retailers, read this carefully, but as you read the article, make the appropriate substitutions:

1. When you see the word "Google", put in the word "Catalog", or the word "Retail".
2. When you see the word "Twitter", put in the word "Internet" or the phrase "Online Marketing".

Aaron speaks about the exact sort of thing that was announced at Get Elastic today. These folks are reducing blogging frequency, and eliminating Friday link-love, instead spending time on Twitter forwarding readers to good articles. Just like that, a brand that utilized a fruitful combination of social media and Google elects to slowly de-tether from the beast, choosing to spend more time on Twitter.

Too much hype was made over Web 2.0. What is happening now, however, doesn't have a label. It is a fusion of online marketing and offline marketing and Web 2.0 and, most importantly, demand creation, that is threatening to anybody in the online marketing camp.

Demand creation is sorely missing from online marketing and Web 2.0. Improving conversion rates and managing search and placing a shopping cart in the upper right hand corner of the screen is all about capturing as much demand as possible --- a good thing. But it is a fundamentally different process than what one goes through to create demand.

Demand creation results in new channels. New channels, as we have learned over and over again, cannibalize old channels. Search, all of a sudden, is an old channel. Old channels go after the money. New channels go after romance --- and are always criticized in the early going for not delivering ROI.

For my loyal catalog and retail readers out there, this is a time of huge opportunity. You can ignore the pap about selling on Twitter. You can ignore the stories about improving conversion rates by 394%. You can, instead, find new and innovative ways to use combinations of micro-channels in ways others haven't envisioned. Test! Try things. The mighty online marketing empire probably peaked last September, and is now being nibbled all around the edges by the very micro-channels it enabled.

Twitter Update: Two Weeks In

Thought you might like to know a little bit about the audience following my posts on Twitter.

• About 10% are big company CEOs, EVPs, or VPs, most at multichannel (catalog + online & maybe retail) companies.
  
• About 25% are Entrepreneurs, running their own startup businesses, and they represent a very diverse set of business models!
  
• About 30% are Consultants or members of the Vendor community.
  
• About 25% are either Web Analytics experts or Business Intelligence experts.
• About 10% are difficult to classify, or are in the Social Media field.

• About 20% of the audience is from Europe.
• The audience is concentrated in NY/NJ/PA, the Midwest, and Seattle/Portland.

• The audience has few members of the multichannel/catalog industry, or the e-mail marketing industry. Wow. Wow.
  

Remember, I am doing this different than the social media elite suggest Twitter needs to be done. My goal is to link to thought provoking articles, those I agree with, and those I disagree with. The goal is to get you, the loyal reader, to consider different concepts.

Twitter Page: @minethatdata, or the old-school http://twitter.com/minethatdata.

Follow along, or subscribe to the Twitter MineThatData RSS feed.

Kevin Hillstrom / MineThatData Is On Twitter

We're going to try a micro-channel marketing experiment, folks. I set up an account on Twitter.

• http://twitter.com/minethatdata
• RSS Feed: http://twitter.com/statuses/user_timeline/18271581.rss
• All of my posts on Twitter will appear on the sidebar of my blog.
• If you're already on Twitter, follow each post!
  

Completely ignoring all of the advice given by the social media punditocracy, here's how I am going to use this micro-channel.

The content on this blog will not change. This blog is still all about Multichannel Forensics, about analyzing how customers interact with advertising, products, brands, and channels. I'll continue to write essays about what I observe in retailing, cataloging, online marketing, business intelligence, web analytics, e-mail marketing ... you get the picture.

On Twitter, I will point you to well-written, thoughtful, thought-provoking, or vapid marketing articles and links, stuff written by others.

In other words, my blog will focus on my perspective on the multichannel retail industry. On Twitter, I'll point you to others who are thinking about our industry.

I will not be using Twitter to discuss how my dog threw up on the deck this morning, or for any other personal issues. I'll be using Twitter to continue our discussion about multichannel marketing.

I'll keep you updated on what I learn about using two different channels (blogging and micro-blogging) in different ways. The theme will always the same --- a discussion about multichannel marketing. You get to pick and choose how you digest the information.

Your thoughts?

Dell And Twitter Revenue: Keeping Perspective

There's no doubt that Dell's $1,000,000 of Twitter revenue is good ... something that points to Twitter as a possible sales channel (from Venturebeat via SmartBrief).

Now for the bad news. Dell generated $63,000,000,000 last year. This means that Twitter sales represent 0.0016% of annual revenue.

Let's say you are as successful as Dell is, but you manage a $50,000,000 business. 0.0016% of $50,000,000 is $794.

Somebody might blast me for this analysis, suggesting that something like 80% of volume is B2B, therefore excluded from Twitter. Let's go with your assumption. Now the comparison results in $4,000 for your average $50,000,000 business.

I am not criticizing marketing via Twitter, nor am I criticizing Dell, who is clearly innovating. About twenty percent of recent visitors to this blog come from Twitter, so I understand how the micro-channel can be used in a beneficial way.

I am simply asking you to carefully study the magnitude of the numbers the media share with us. Be willing to consider any bias in the information, and how that bias benefits those who write the articles.

Micro-Channels: How Dell Arrived At Their Twitter Strategy

Dell responded to the post on their Outlet/Twitter strategy --- they point us to this article in New Communications Review that outlines the genesis of the strategy and early results.

Thanks, Dell!!

Micro-Channels: Dell Outlet on Twitter

Have you ever had the challenge of having to clear out six pair of shoes, or a single couch, or a handful of sundresses?

Social media guru Shel Israel points us to Dell Outlet, who is using Twitter to clear out various items.

Think about the contrast in this style of marketing, and traditional direct marketing.

• Direct mailers identify an audience, send direct mail at a cost of $0.25 to $1.00 per piece, and generally do a good enough job to make money targeting a list of "x" likely buyers.

• E-Mail marketers identify an audience, send an e-mail campaign that is virtually free, then sit back and enjoy as 1 in 700 customers purchase something.
  

• Micro-channel marketing combines an advertising channel (Twitter) with an e-commerce sub-channel (Dell Outlet) and a community (subscribers to Dell Outlet via Twitter). Those who wish to participate actually participate, those who don't want to don't have to. You're marketing to avid fans on their terms.
  

Given the cost of this marketing platform (hint, it is nearly zero), it is almost embarrassing to consider how few catalog/multichannel brands are willing to test micro-channel strategies.

We're in the very early days of micro-channels. Clearance strategies are a logical place to start testing micro-channels.

Now go give the strategy a try!!!

Retailers Using Social Technology, Community, And RSS

In addition to the Saks Video Catalog, many retailers are using social technology, community, and RSS feeds in interesting ways. Many in our catalog audience are looking for new ways to have a relationship with customers. Let's review a small sample of brands using social technology in one way or another.

Urban Outfitters has an interesting site that features articles, videos, an RSS feed and a MySpace page.

Neiman Marcus communicates fashion via their InSite Blog.

Ice.com's Just Ask Leslie Blog combines customer questions and short features.

eBags uses bookmarks to tag items you are interested in.

Mac Cosmetics, a $274 million division of Estee Lauder, has customers who are literally inventing products for the brand, sharing the ideas on YouTube. Their product development folks should take a peek at this! My wife found the video when searching for ideas on how to store Mac products. Take a peek at YouTube to see how other folks are doing marketing and product demonstrations for you ... heck, this young lady has almost 14,000 views.

Nordstrom has a MySpace page for their BP division.

Paperspine, an online book rental brand, hosts a blog about books.

Zappos is using Twitter to allow folks to communicate about the venerable online shoe brand.

Patagonia hosts The Cleanest Line, a blog for employees, friends, and customers.

Overstock.com offers a diverse array of community-based options.

Crutchfield has a community section on their website.

Burpee Seeds features their RSS feed on the homepage.

Hallmark has an interesting blog for their Shoebox division.

Here's the Shutterfly community.

Use the comments section to share other ways that retailers are using social technology, community and RSS feeds to partner with consumers.