Ajay Tejwani, Social Media Strategist, USAA

This blog post is guest-written by Ajay Tejwani, Social Media Strategist for USAA. Check out his blog and find him on Twitter.

Professor Andreas Kaplan, a noted authority on marketing, described social media as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content.”

The key word in this definition is user-generated content. As social media becomes an increasingly important part of the web experience, consumers are increasingly creating and exchanging UGC. For business, this begs the question, “What can we do with it?”

Here’s how to integrate UGC into different aspects of your organization.

UGC in Marketing

The basic 4Ps of marketing – Product, Price, Promotion and Place – are collectively known as the “marketing mix.” There are many ways to integrate UGC into one or more of the Ps.

Enable UGC on your product pages using ratings and reviews. Pass this information, along with what your customers are saying on external social media sites about your products and prices, along to product managers to use in planning product mixes.

The use of customer voice in traditional marketing isn’t an entirely new idea. Weight loss and muscle building commercials on TV show “actual people” talking about their experiences with the “magic pill.” People believe other people more than companies. Recognizing this, encourage this kind of feedback. Open your site to UGC, and engage customers in other social media channels. NakedPizza, for example, engages their customers on Twitter, and promoted their Twitter handle using a billboard – connecting offline advertising with online conversations.

Source: Techcrunch.com

Not only will you help shoppers online, but you’ll gather tons of actual experiences to use in other advertising efforts. Just think how you could use UGC in emails campaigns, radio ads, magazines, etc. Whenever there is customer touch point, there is an opportunity to engage the customers in a conversation.

UGC in Innovation

You can also use UGC as a tool for innovating and improving products and processes. Include your customers as part of the innovation process and use their opinions to improve the capabilities of your products.

Dell’s IdeaStorm allowed the brand to talk to their customers directly, letting customers post their own ideas and rate others’. Over 400 new ideas begun in this forum have already been implemented in new Dell products. Starbucks started a similar discussion at mystarbucksidea.com to connect and share ideas with their customers. In the first year, customers submitted over 70,000 new ideas to this site.

Fidelity Labs also encourages co-development of applications on the internet, using fidelitylabs.com as a platform. Customers can also try out their latest applications, which are usually in the testing phase. This gives customers a chance to make suggestions to Fidelity before the product launches. Wells Fargo has a similar site called Wells Fargo Labs.

By adopting social media in ways that support innovation, you can ensure that not all online talk is chatter; it can be converted into ideas that drive business.

UGC in Customer Service

To listen well is as powerful a means of influence as to talk well, and is as essential to all true conversation. — Chinese Proverb

As my wife tells me, the key difference between listening and hearing is that when I listen, I take some action; otherwise I am just hearing her. When you listen to your customers, you have to take action and close the loop with them.

People love to talk, and social media tools have become their mouthpiece to reach a much wider audience. Gone are the days when there was no interaction between the seller and the customer, post purchase. Customers’ perspectives are changing as they become used to – and begin to expect – real-time response from companies. A successful customer service plan involves listening and acting on what your heard.

Source: Forrester Research, Inc.

Comcast, Dell, Southwest Airlines, Ford, Starbucks, and many more have been successful in promoting a positive brand image and solving customer problems through social commerce. And the online channel can be much less costly than other traditional customer service channels.

Your customers are talking. You can participate in and facilitate these conversations to your advantage, or ignore their valuable feedback. Just don’t assume your competitors are ignoring it as well.

Original cartoon by Ajay Tejwani

]]> http://www.bazaarvoice.com/blog/2010/04/29/capitalizing-on-customer-conversation/feed/ 5 http://www.bazaarvoice.com/blog/2009/05/31/ghost-town-brand-community/ http://www.bazaarvoice.com/blog/2009/05/31/ghost-town-brand-community/#comments Sun, 31 May 2009 14:42:51 +0000 Sam Decker http://www.bazaarvoice.com/blog/?p=1023 Have you ever been exploring online and found yourself in a virtual community where crickets chirped and tumbleweeds drifted by? Message board tallies show the last comment was made in 2007 and any newer threads got a couple of views and zero responses. Welcome to the ghost town, a languishing community where there are few signs of life. Perhaps it was once a brand community launched with high hopes, a substantial budget and ambitious marketing objectives, but it was later abandoned, both by its inhabitants and its founders. The once-promising gold rush moved on.

Gartner reports that 50% of brand communities will fail. And by "fail," I believe they mean "shut down." That leaves the other 50% still live. But are they successful? How many “ghost town” communities are out there? Over the past couple years many progressive brands have explored social media and community marketing initiatives — Twitter, Facebook, blogs, viral videos, forums or fully-fledged online communities. With the comeback of the term "community" and the hype and buzz of Facebook, many other brands are likely contemplating everything from establishing a Twitter account to launching a Facebook-like community within their site. The promise is high customer engagement — which the CFO could care less about, but marketers often believe drives sales and loyalty.

I applaud exploration, experimentation and “fail fast” initiatives. But now we’re entering into a time where the key phrase is "show me the results." The focus on measurability is leading many brands to take a hard look at what they launched, and step away from things that didn’t work. It's a critical time for these brands, and for any others considering a move into social media. These failures don't mean that online community-building is a waste of time, or that it can't be done. But it's complex, and the appropriate strategy could be markedly different from one brand to the next. Before beginning the virtual barn-raising in a new community initiative, tread carefully and consider what success means to you.

Jake McKee, chief strategy officer at Ant's Eye View, likens the whole process to personal relationship building. "We date many more people than we marry — i.e. There’s bound to be plenty of failures in our question to create something grand," he says.

The Community Concept Isn't to Blame

You should know I’m not anti-community. I’ve been involved in “community” my entire career. In 1995 wrote a book on marketing with computer user groups (the analog to today’s online communities). In 1997 I launched and managed the ThirdAge.com community (chat and forums for baby boomers), I led product management for Dell Support Forums, and I’ve been a participant in Compuserve, eWorld, AOL, blogs, Facebook, Twitter, etc. From these experiences I’ve concluded that communities succeed if they solve a need, share an interest/passion and/or connect me with people I care about. Facebook works because most of your and my friends are there — it solves the need to connect and stay up to date, thus carrying more weight as a "social resume." Dell support forums work because they allow asynchronous conversations to solve a technical problem for a frustrated computer user. The ThirdAge community (chat and forums) worked in certain topics where there was passion and birds of a feather could discuss that passion.

From a marketer’s perspective, the idea of a brand community sounds great. The expectation is that it will be a petri dish which will virally grow customer engagement, and this type of engagement will lead to sales. The problem is, few customers jump into that petri dish, fewer still will stick around, and the community interaction usually has no contextual bridge to purchasing. That's three strikes. Most brand communities serve a very, very small set of customers (in relation to their customer base or market size) with either a lot of passion or a lot of time on their hands. And let's face it, not every brand has the potential to inspire lasting passion and sustain a Facebook-type community. Exceptions are cult brands that have passion and community built into their product ethos, such as Harley Davidson or Apple. But you can’t create that by putting up a community. That starts way upstream, with the product and the brand.

What's a Community For?

Brand communities are configured to create social interactions between customers, allowing them to share opinions and interact via blogs, wikis, polls, forums and private messages. There are a lot of technological bells and whistles that the product manager can get excited about, but let’s look at it from the customer’s point of view. I'll repeat what I wrote earlier…the reason people participate in communities is to:

1. Solve a problem / need (or help others do so)
2. Share an interest or passion
3. Connect with people of interest (develop social capital)

#1 is the reason support forums exist, and these reduce support costs, but don't drive sales. #2 and #3 are usually what Brands are looking for, expecting community to drive engagement and sales. But when visitors are not passionate about the topic, they are less likely to jump in. If the community audience is small and unfamiliar with one another, a prospective visitor's motivation to build social capital or help others dissolves. In both cases, the vibrance and participation in the community are next to go. This causes the next visitor not to join, which in turn decreases the passion and audience size of the community. This domino effect leads most brand communities to turn into a ghost town.

A study from Deloitte reports that two of the top three obstacles to making communities work have to do with getting people to engage or visit — and the remaining issue doesn’t help solve this problem:

1. Getting people to engage
2. Finding enough time to manage
3. Attracting people to the community

The solution may lie in reframing the objective. A fully-developed Facebook-like community with thousands of regular participants is probably an unachievable — and in some cases undesirable — goal for many brands. I say undesirable because the resources required to build and maintain such a community may not be in line with the returns that they produce. Something smaller scale may not be as glamorous or provide as many opportunities to brag to your digirati friends on Twitter, but it may be just right for your brand and your customer base.

There are a few potential ways to go small. Ask yourself some questions. If you have a million customers and there are 100 community members posting occasionally, is that success? Or is it a ghost town? Gartner may be reporting that the community sticks around, but how much impact can those 100 people, or the few thousand that "watch" the interactions, have on your business? And even if those few thousand are more engaged, is the conversation related to your product or service leading to sales influence? Or is it unrelated?

Research from Communities

There's nothing wrong with creating a community with the purpose of interacting with the few. A hundred or a thousand participants in a community may not make a sizeable impact on your sales, but they can provide valuable insight. If your objectives are for research or product co-creation, then a community that facilitates that interaction between your brand team and your customers can be very successful. Customers are much more engaged when they know the purpose of the community is for the company to listen to their ideas. A very focused version of this is Dell IdeaStorm or MyStarbuckIdea.com, where customers post an idea and others vote it up or down. Simple. The measures of success there are insights gathered in a much more scaleable and frequent way than traditional market research.

Communities like this have their place, but they don't necessarily have a direct impact on sales. At least until that product co-creation happens — and most marketers probably have a shorter time-horizon to show ROI, especially in the current economy.

Sales from Social Commerce

To build a boom town — community features with a direct impact on sales — marketers need to pursue a strategy that creates interactions and contributions around the product or service they're trying to sell. This Social Commerce model fosters opportunities for the creation of content that helps others make purchasing decisions, driving more sales and resulting in a quicker ROI. This type of strategy needn't require a person to register or become a full-fledged member — they should be able to write a product review, ask or answer a question, or write a story without feeling like they have to make a commitment. Whether that contributor feels like they’ve joined a community by participating is not the point. Their contribution is useful for the visitors to the site, who came to learn more about the brand and get their questions answered — not to "friend" people or help others. And yet, once a critical mass of content is shared, a community of shared interest will start to form. People will write the 101st review because there's a community around a product! This "accidental community" starts to form, which amplifies the engagement to the content and profiles.

It's a challenging time in the social media world. Marketer interest — fueled by hype over Facebook and Twitter — in community-building is rising, just as consumers begin to tire of joining yet another social network. Rather than spending time and energy developing something that's destined to be the next brand ghost town, consider smaller ways to use social media techniques on behalf of your brand. Perhaps you want to build a community of brand loyalists to act as a focus group for product development. If you're looking to drive immediate sales, incorporating a user contribution system — reviews, Q&As, and storytelling – around products on your own Web site is the path to success (especially in the eyes of your CFO!). The trendy Facebook-clone route, however initially exciting and attention-getting, may lead to crickets and tumbleweeds, while a more measured approach may result in a thriving little settlement.

Two years ago, we were honored to win ClickZ's Marketing Excellence award for Ratings & Reviews, and last year we were recognized by Austin Business Journal for most innovative software award for Ask & Answer. And this morning I was greeted with a pleasant Google alert that Ask &  Answer just won ClickZ's 2008 Marketing Excellence Award for Social Media Marketing!

We pride ourselves on building innovative social software and services that drive measureable results, and are honored to receive recognition like this. The judge's comment reads: "User-generated content is the killer app for all Web sites, and Bazaarvoice is the hands-down leader in driving innovation in this space. Social networking is only viable for the few. Rating, reviews, and comments are there for all to capitalize on, and Bazaarvoice has made it easy for all to get in the game."

We've wrapped ourselves under the term "Social Commerce" because social media marketing programs should impact the P&L (now, more than ever). Whether through measurable client case studies or awards, we're thrilled to see Ask & Answer recognized for making a difference.

Usually the CFO has a louder voice during tough times. Investments and expenses are scrutinized. They’re looking for cost-cutting programs and investments that grow revenue scaling against operating expenses.

So what marketing investments do you make when planning for difficult times?

When marketers talk in terms of opex scaling, the finance department perks up like you served them a double latte. With scaling, costs either decrease over time as revenue stays flat or increases, or costs don’t increase as quickly as revenue does. Therefore, revenue may grow year over year at 20%, but operating expenses grow only at 15%…thus netting 5% higher net profits.

CFOs like revenues, but they’re even more interested in profit and margin dollars. PE ratios and most methods of valuation are based on EBITDA and cash flow. Your goal is to show them how you can impact those numbers.

Unfortunately, there’s a problem with most marketing campaigns and site functionality investments during tough economic times. Traditional marketing campaigns aren’t as efficient because the purchasing bar is higher for the consumer. Consumers must have strong reasons to buy. The natural reaction of marketers is to discount products, but this has bigger implications for the brand.

There are also problems with introducing new site functionality during tough times. As employees get stretched thin, they don’t have time to use or optimize the new functionality, so the new, cool function doesn’t end up being the competitive advantage everyone hoped for, and its value depreciates over time.

So, you and the CFO are looking for investments that scale opex (growing revenue and impact while maintaining costs), don’t damage the brand and margins, and don’t require a lot of resources to get up and running.

These are all great reasons to implement user-generated content (UGC) on your site. In fact, consider proposing UGC as both a positive career move and a win for the company, as the ROI will get the thumbs-up from the CFO and the CEO.

Word of mouth: an excuse to buy

We all know that a “dirt cheap” deal can get people to click and check out. The CFO will like the revenue but hate the short-term margins, not to mention the impact to your brand.

But when customers are persuaded by the relevant and credible word of mouth by people like them, they have a new excuse to buy. Discounts aren’t as important when they find a product, service or experience that is a “must-have” based on the reviews they read. Customers feel confident making a purchase when they read reviews, answers and experiences from others.

What’s more, UGC brings new customers to your site while converting the ones who are already there. And promotions that include UGC increase average order value – no mean feat in hard times.
User-generated content is a marketing annuity.

At Bazaarvoice, we have published several case studies proving that more user-generated content – in reviews and questions answered by the community – equals higher conversion, average order value, traffic from SEO, lower returns and new opportunities for merchandising and marketing. We’ve seen conversion rates increase anywhere from 10% to 100%. Return rates (high cost) can drop as much as 67%.

So from day one, every new piece of user-generated content, whether it is a story, Q&A or a review, adds incremental impact (revenue) over time. The CFO can appreciate the concept of net present value and annuity revenue!

UGC (can) require very little effort

Bazaarvoice clients can immediately see the impact of UGC and start to leverage it. UGC is a highly leveraged investment because your customers are creating the content that helps sell products, so with a small percentage of one person’s time, you have a program that grows in impact (scaling!).

UGC costs stay relatively flat

Traditional marketing programs and campaigns only scale moderately, and that’s only if the costs per impression decreases or the advertising effectiveness increases. There is room to optimize campaigns; however, to bring in more customers, you typically need to increase costs proportionately.

With a hosted UGC solution, companies can predict their monthly costs and yet the potential revenue impact actually grows over time – the more UGC you accumulate, the better your revenue results get. You can then multiply the scaling by using UGC in more marketing tactics such as email campaigns. So, UGC offers a one-two punch: it scales itself and fuels your existing marketing programs!

There are two responses to tough times – retreat and cut costs or be intelligently aggressive. When you’re intelligently aggressive, you choose effective marketing investments that hit the “marketing bulls-eye,” driving long-term, sustainable P&L impact.

Investing in a scaling word of mouth program is the best investment you’ll make – before, during and after a recession.

Now, go make friends with the CFO!

So why not take it a step further and utilize customer generated content in the form of product reviews in advertising?

Advertising has become so ubiquitous that it is mostly ignored and consumers don’t trust the messages that companies send them. But the customer’s voice is as powerful offline as it is online, so why not take advantage of it?

Best Buy recently featured their customers’ voices – actual snippets from online product reviews along with product ratings – in their nationwide Sunday newspaper circular. They utilized a clear call to action to drive consumers directly to their “Top Rated Cameras” page, giving shoppers quick and easy access to top rated cameras. This not only provides a great way for Best Buy to advertise their top cameras, but it allows them to easily measure the success of this advertisement by measuring traffic to this page and sales conversion of these products.

This is another example of a Bazaarvoice best practice developed by our team of Community Managers – use your customers’ words to fuel your entire marketing mix. We strongly encourage our clients to use their customer reviews (along with other valuable user generated content such as from our Ask & Answer, BrandVoice and Stories products) in all forms of advertising: email marketing, online ads, store signage, print ads, Facebook groups, etc.

There is no more effective way to get customers to listen than to let them hear from other customers just like them. This is the future of advertising or should I say “effective" advertising!
 

Forrester reports that 71% of online shoppers seek out ratings and reviews. It is the most widely read user generated content on the Web. Why limit this to the product page? We have worked with clients implementing the power of customer voice in email, navigation, and merchandising. Recently we released Holiday Tips for Merchandising via a press release.

As a reader / subscriber of our blog you get better than 3X the value of that release! Here are 18 ideas and tips for leveraging online word of mouth in marketing and merchandising:

Product Merchandising Selection (Use ratings to select what products get merchandised or for merchandising rules engine)

Top Seller + Top Rated
Choose brands or product popular last year, but also have high ratings this year (validates their reputation).

Margin X Rating
Choose products appropriate for gifting or have high margin, but also have top ratings. Could integrate into merchandising rules engine with Bazaarvoice feed.

Top Rated by Product Attributes
Feature cross-sell or upsell products with high rating in a particular product attribute. (ex: high rated battery life camcorders).

Rating Velocity X Avg. Rating
Choose hot products, changed out every week. Hot products = highest rating velocity in category X average rating

Home Page / Site Merchandising Ideas

Sweepstakes to Write Reviews
Create a sweepstakes for writing reviews before XX date.

Top Rated Products
Merchandise ‘Top Rated Products” as feature on home page. Could be all categories or within a specific category.

Discounts on Top Rated
Feature a special, limited time offer of % off or free shipping off top rated products for a week.

Top Rated Holiday Gifts
Feature a holiday gift guide of gift-worthy products that are top rated, by category and/or by price.

Top Reviewer Recommendations
Feature the products reviewed by your most prolific reviewer.

Most Talked About Products
Create a “Most Talked About Products” feature, which are products that have the most positive reviews (similar to Hot Products, different spin).

Online Marketing — Advertising and Email

Email Sweepstakes Offer
Email your customer base or recent purchasers with sweepstakes offer, reminding them to write a review before XX date.

Top Rated SEM Campaigns
Create an SEM / AdWords campaign for Top Rated Products by category, or a special offer on specific top rated products.

Rating Icon in Banners
Put rating icons with any product featured in a banner ad or micro-site.

Discount off Top Rated Campaign
Feature % off top rated products. Make it home page, email and SEM campaigns

Review Text as Copy
Feature customer reviews text as copy in holiday emails

Product Ratings in Emails
Put rating icons next to every product you put in email. Do an A/B Split test!

Promote Top Rated Products in all Emails
Merchandise 'top rated products' path in email and home page

Gift Guide Campaign
Create gift guide advertising campaign of Top 10 Top Rated Products by category.

"Your company might choose to embrace advocacy by becoming a faithful representative of your customers' interests. Under this approach, you provide customers and prospects with open, honest, and complete information. You give them advice so they can find the best products, even if those products are not your company's products?"

For many companies, the marketing strategy is staid and straightforward. The bottom-line goal is to align products on the showroom floor to potential customers. For the most part, it's that simple. If you have products that need to be sold, figure out a way to build intrigue, value, and emotional connections around your brand.

But what happens when a company is selfless and responsible about the advice it gives? Can a company focused on recommending the right products rather than their own products stay afloat?

According to Urban they can. And they won't just survive; they will flourish!

With the incorporation of customer-centric values, a company begins "a mutual dialogue that assumes that if you advocate for your customers, those customers will reciprocate with their trust, purchases, and an enduring loyalty"?