SOCIAL MEDIA& ECOMMERCE4/27/09

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I’d like to start this morning by doing something dangerous and unwise. I’m going to shred any credibility I may have as a social media expert by suggesting it is possible to use social media to sell.

I know that’s an heretical statement. We all know that the social media priesthood has decreed that social media is about relationships and conversations and all that warm fuzzy crap. And we also know that selling through social media is particularly odious social media sin.

NOBODY

EXPECTSTHE SOCIAL MEDIA

INQUISITION!

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No doubt, elite members of the social media inquisition are galloping here even as we speak to force me to recant. But in the little time I have left before they put me on the rack, or at least ridicule me on Twitter, I’d like to explore this heretical notion with you.

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Now, I don’t deny that using social media to sell requires a delicate balance. And I’m not really suggesting that social media isn’t about relationships and conversations.

But, I believe that there are brands out there who have done a good job of using social media to grown their ecommerce businesses, and in some cases their brick-and-mortar businesses too.

So, I’d like to take you through a quick survey of five brands who excel in social media and see just how they’ve been able to use social media to grow their business.In the interests of transparency, I’ll tell you that the only one of these brands that is a client of mine is Build-a-Bear. I’ve spoken to people, etc. but as far as the others go, I’m just an observer and fan.

SERVICECULTURE

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Let’s start with Zappos. Probably no retail brand has received more accolades for its use of social media. And it isn’t hard to divine their strategic approach. It really boils down to two things—Service and Culture. And for Zappos, those two things are one thing, because service IS their culture.

“The primary purpose of the blogs and Twitter is so that outsiderscan get a glimpse into ourcompany culture.”

– Tony HsiehCEO, Zappos

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Zappos is very clear about how and why it uses Social Media. They believe they have a strategic advantage in their culture, and they use social media as a way to project that culture out into the world.

That strategic intent is clear from the top and it’s consistent with every person I’ve talked to at Zappos. They all believe that their culture and hiring processes are so strong, that all they have to do is put their people in contact with customers, and those contacts will breed loyalty.

So most of their social media initiatives aren’t about talking about the company or about product, it’s about exposing the people who work at Zappos.

"Success isn't the key to happiness.Happiness is the key to success. If u love what u do, you will be successful."– A. Schweitzer

9:21 AM Apr 29th from web

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You can see that in the Tweets of CEO Tony Hsieh, for example, where he’s more apt to talk about his personal passions and philosophies than about the business.

And this is a key point. It’s a common trait across all of the successful brands I’ve looked at to have leaders at the C-level who are personally invested in social media. Whether it’s Tony Hsieh at Zappos, Maxine Clark at Buildabear or Barry Judge at Best Buy, leading by example is a critical success factor.

“Anyone can do what we do, but nobody can be who we are.”

– Jo CaseyZappos Help Desk Coordinator

And you see it in other forms of social media content. Their blogs for example, have more content about day-in the life things and fun, quirky, life at Zapposvignettes than they do product news.

And as you can see from this quote from a Help Desk Coordinator, everyone really buys into the idea that simply by openly being themselves, they can benefit the company.

The social media channel that Zappos is best known for is Twitter. Not only does the CEO tweet, but every Zappos employee is encouraged to tweet. There are over 400 Zappos employees on Twitter now, and the company conducts employee training on how to use Twitter.

In fact, Tony Hsieh wrote a Beginners guide to Twitter, which you can see here.

“...we feel that if you hire correctly,you don't need to worry about stuff like monitoring employee use of social media.”

– AaronZappos Insights moderator

Now some brands might be worried about so directly embracing employee’s personal Twittering. But when I asked about this, I consistently got this kind of response:

And of course, as you would expect, Zappos uses Twitter (and social media in general) as a forum for customer service. They have a dedicated Twitter account to handle service issues.

•Uncover service opportunities

•Initiate response

•Amplify praise, reinforce service reputation

And it works.

“How many conversations can we have in a day? Let’s have more of them.”

– Brian KalmaDirector of User Experience

PERSONAL INTERACTIONS LEAD TO LOYALTY

I also asked what Zappos measures in the social media space and how they track success and impact on ecommerce. And I was told very clearly that they do measure, but they don’t treat social media like a traditional marketing channel. So they explicitly do NOT look at ROI from sales.

So, in this respect, Zappos is fairly safe in terms of the social media orthodoxy, but given that service is their primary business strategy, I think it is fair to say that they believe that if you hire the right people and let them interact with customers, you’ll breed more loyal customers and increase sales and profit.

SHOPSUPPORTPARTICIPATE

Dell is another brand that receives frequent accolades for its social media acumen. And they’ve taken a slightly different approach than Zappos. Whereas Zappos uses social media to project culture and deliver service, Dell uses social media to invite customers to participate in shaping the brand, and even it’s products.

You can see this approach spelled out explicitly in Dell’s website navigation –Shop, Support, Participate. These are three separate but complementary pillars. Good website navigation reflects a combination of user priorities and business objectives. So it’s pretty clear that Dell views the three most important things its website has to accomplish as helping people shop, gain support or participate in the community. That’s a strong statement.

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There are several interesting aspects of Dell’s story. For starters, this is a brand turnaround story. If you go back to 2005, Dell was roundly criticized in the social media space. Their online sentiment measures showed negative mentions running at 48% of all online mentions. Today, that number has been lowered to the low 20s.

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And it’s only one measure of Dell’s investment in social media. Dell has a Conversations and Communities team of 40 people. They have an active presence in nearly every major social media channel, they have their own direct-to-consumer blog, and several special interest blogs.

There are over 65 Twitter accounts managed by Dell, and the Dell Outlet Twitter account is followed by nearly 400,000 Twitterers, or Twits. And they use it not only externally, but internally as well.

They’re also one of the few brands to have released information publicly about sales through social media. As of last year, Dell had sold over $1 million through sales alerts on Twitter alone. So, someone has figured out how to monetize Twitter, it’s just not Twitter.

Dell IdeaStorm – 10,000 ideas, 200 implemented, sales results?

Implemented in 6 wks, btw.

Launched in 2007

August of 2008, Dell launched 9 new laptops “designed” by ideastorm community

SOCIALSHOPPING

In contrast to the previous two retailers, WetSeal has tied its social media strategy directly to ecommerce. They launched a community area of their site last Spring, where Wet Seal fans can build ensembles and publish them to the community for reviews.

So what you’re seeing here are outfits that Wet Seal shoppers have put together on the Wet Seal site and published to the community for reviews.

It’s obviously an ensemble sales strategy, and it does a couple of things:

-It leverages the wisdom and creativity of crowds to market the product

-It provides social validation of fashion choices to enhance selling.

This is a step beyond user reviews. You can think of it as user-generated merchandising.

-It leverages the wisdom and creativity of crowds to market the product

-It provides social validation of fashion choices to enhance selling.

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10So what are the results of this particularly obvious bit of heresy? Within a couple of months of launch, WetSeal saw sales increases of 10% on its’ site, and they have seen a 10% increase in average ticket for purchases where people visit the community section of the site. So, both in total revenue and in avg. order, the integration of social media directly into the shopping process has proven beneficial.

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Another interesting aspect of this story is that Wet Seal is now running a pilot program to take the concept in store. They are testing kiosks that will allow you to scan an item in store and see all of the online ensembles that have been created with that item. It’s a way of bringing the online social experience into real-world retail.

RADICALTRANSPARENCY

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The next brand I want to take a look at has really gone beyond conversations and has opened up their brand and business functions to consumers. I think it’s the brand that has really pushed the boundaries of social media to something you could call radical transparency.

We’ll start with Best Buy CMO, Barry Judge. I talked earlier about leaders diving in, here’s another example. Barry is the most followed CMO on Twitter with over 5000 followers. Not quite Aston Kutcher territory, but not bad for a CMO.

* Used blog to post rough cuts of creative and solicit input, which CDs hated, btw.

And they’re one of the brands participating in MO Film contest, UGC advertising contest with brief.

So, in terms of marketing, they’re already engaging consumers to help shape the brand.

But I think the most groundbreaking stuff is coming out of their technology group.

This year, they launched ReMix. It’s an open API, or applicatoin programming interface that allows developers to use the BestBuy catalog data from their ecommerce site to create applications.

3 Simple Stipulations:-Don’t claim to be Best Buy-Acknowledge the data came from them-If you offer ecommerce, Best Buy has to be ONE of the options

So we’re seeing the first wave of applications come out, like CamelBuy, which sends alerts to you on price drops at Best Buy, and . . .

Consumers Price, which is sort of like Priceline for electronics. It’s a site that lets you set a price for an item, and it will let you know when the item reaches that price.

And now that they have the platform, they’re leveraging it to engage the community further, launching an idea contest recently to generate application concepts, and community adjudicated application contests seem to be in the works.

At the end of the day, what Best Buy gets out of this is two things:

- they get broader distribution for their content and commerce applications, more touchpoints with more consumers, and

- they get a bunch of free R&D on the interface layer. Successful applications will yield revenue AND guidance on features that can be incorporated into the Best Buy site interface.

So, they get the chance to increase revenue and improve the customer experience in the same stroke.

The last brand I want to talk about is Build-a-Bear Workshop. This is one I know personally. And the project I want to talk about has been one of the most interesting and gratifying in my 17-year interactive career.

Online has always had a few unique wrinkles for BABW. It’s one thing for an electronics retailer or apparel retailer to conduct business online, but when you’re an experience retailer, how do you take your brand online without losing your experience and commoditizing your product?

Well, the tidal wave of kids virtual worlds has helped us answer that question. In 2007, we launched buildabearville.com.

this is what a kids’ virtual world entails. There are spaces where kids can gather and chat.

There are games they can play. That electric eel is a beast, btw. And as you play games, you earn virtual currency, Bear Bills in our world.

And you can spend that currency on items in the world, like clothing . . .

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. . . or furniture for your cub condo, . . .

. . . or even a virtual makeover

One thing to understand about these kids virtual worlds is that they’re very social spaces. Kids can chat, share emotions and trade virtual items. This is in essence, training for Facebook.

Now as I mentioned, BABW didn’t create the concept of a kids virtual world, but it has some unique twists when it comes to retail.

1- Fundamental change in value proposition for guests. Extends the instore exp. To online.2 Frequency of interaction - Occasional engagement to weekly/daily interaction3 - Of course, our premise here is that engagement leads to repeat retail or ecommerce purchases, and we’re seeing that BABV is influencing 10% of sales.

But the impact of BABV on the business is only just beginning to be realized. It’s also opened up the door to a whole new category of product – Virtual Goods.We have a dual currency model in BABV. Not only can you earn and spend the in-world currency, Bear Bills, but you can also get Store Credits using real world dollars, either as a gift with purchase when you buy at BABW or, you can pay cash and buy store credits directly.

We’re selling these items in store, in the form of cards . . .

. . . and also online.Since initiating this program late last year, we’ve sold over 60,000 units of virtual goods and reached nearly a half million dollars in revenue, just from virtual goods.

Montage of Maxine being swamped in BABVMontage of Maxine being swamped in BABV

And one last point I’d like to make about BABV, this is yet another example of a CEO, or Chief Executive Bear in this case, who is actively involved in her brands’social media efforts. Maxine Clark is an absolute dynamo. She has leaped into the social media space with both feet. She makes appearances in world and is absolutely mobbed, she also is an active blogger, and I can testify that she is on Facebook at the oddest hours of the day. We have probably the longest running series of Lexulous games in the history of Facebook. She usually plays at 2:00 AM, and I usually respond at 6:00 AM.

SERVICECULTURE

SOCIALSHOPPING

SHOPSUPPORTPARTICIPATE

RADICALTRANSPARENCY

EXPERIENCERETAIL

So, in the end, we have five different brands, five different approaches to social media ranging from fairly orthodox to outright heresy, but all delivering an impact to the bottom line.

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MARK LOGANVP – INTERACTIVE

mlogan@barkleyus.com

@mlogan on Twitter