Retailers Better Buy In to Social Media

PHOENIX — The attendance at the eTail West conference, convened here this week, took a noticeable drop compared to last year's West Coast event, falling by 30 percent to just under 850 attendees. Despite rumored concerns that vendors were outnumbering retailers, event planners ensured a relatively even split between the two. Even so, this year's pool of retailers was certainly different, primarily comprising businesses eager to embark on their e-commerce initiatives. (Many of their more-sophisticated counterparts, it seemed, stayed home.) This distinction was certainly evident during a particular panel discussion, "Social Networking Strategies," in which the conversation was tailored toward those just beginning to overcome the initial apprehension around social networking and utilizing social media in the business.

There's no avoiding the topic of social networking and social media in the retail industry -- after all, with more than 175 million active users on Facebook alone, how could your company not be out there? The problem is, businesses have yet to determine a surefire way to enter this space and engage with consumers on such a personal level. "You have to be careful where you draw the line between merchandizing on a community site and keeping it really social-driven," said Meyar Sheik, chief executive officer of marketing-solutions provider Certona. "There's no right/wrong answer yet." As a result, companies are either wallowing in uncertainty or else diving aimlessly into unknown waters -- either way, the brand takes a hit.

"We've definitely been guilty of just jumping in," said Andrew Knight, formerly the director of e-commerce at cosmetics manufacturer Astral Brands and is now director of e-commerce at smartphone accessories provider Case-Mate. Having experimented with Facebook, YouTube, and various other mediums while at Astral, Knight said, each channel was delivering different levels of success.

Without a concrete understanding of how social networking works in a business context, measuring the returns is even more of a mystery. "No one's figured out the formula for it," said Adam Weinroth, director of product marketing at social media solutions provider Pluck. When it comes to associating activity with meaningful metrics, he said, "the industry's kind of chasing its tail."

The amount of consumer information on sites like Facebook is a goldmine for advertisers. But as Facebook can attest to after suffering vehement protests against its automated product recommendation engine Beacon, the struggle to find relevant methods of advertising has yet to come to fruition. "Facebook is hot right now, but we haven't seen success," Knight told the audience. To him, the culprit for Facebook's struggle to successfully monetize is simply because on Facebook, he said, "people are more excited about their friends than they are about my brand." Unlike Google, which targets ads based on each search, Facebook doesn't have the ability to target advertisements with in-the-moment relevancy. Banner ads that line the right side of the page are often based on general assumptions gathered from profile data. When consumers are on Facebook, the shopping experience is not top of mind, Knight rationalized.

A fundamental to all e-commerce businesses -- and pretty much any business selling a product or service -- is the availability for users to communicate with each other, whether it's in the form of ratings and reviews or a discussion board. While Facebook has become the big name in social networking, there are other options when it comes to engaging your customers. Forums, for one, are "highly underrated," Knight says. "Getting a simple fan forum up on your site can do much more than getting them involved in Facebook."

When Edward Batchelor, corporate director of Web and new media at healthcare company Humana, established a social networking environment for consumers, the intent was for education purposes rather than a direct revenue generator. "It's about group support," he said, referring to visitors who come together to learn about and share information on medical issues such as diabetes and obesity. What consumers value most is authenticity, to the extent that, "Social networks have more credibility than doctors or healthcare companies," he said.

Similarly, the rising popularity of product reviews have enhanced consumer confidence when researching or purchasing a product. Although reviews seem like a common practice, many companies are still wary, especially when it comes to moderation. For the most part, companies have accepted the general rule that the good comes with the bad. "You have to take all the pills," Sheik said. "Not just the ones that taste good." In fact, some retailers have embraced this wholeheartedly. Knight cited multimedia retailer QVC's "Q Did What?!" forum topic, which admits to consumers, "Hey, nobody's perfect. Tell us where we've gone wrong."

"I had to fight the battle to start a two-way dialogue," Batchelor said. "If you're in the healthcare industry, what do you expect? We opened the floodgates." But in doing so, the company has gotten feedback and fostered meaningful support groups for a wide-ranging list of diseases by leveraging the knowledge of the community. From the company perspective, panelists added, the challenge here is of course finding the right balance between conversation and control.

[For more on CRM amid the economic downturn, see the February 2009 edition of CRM magazine, The Recession Issue.]

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