Easy ways to get the answers you need.
Or call us at:
A look ahead to NRF 2011: Farhana Alarakhiya on social media for retail
Delaney Turner 270003RQ8K Delaney.Turner@ca.ibm.com | | Tags:  retail farhana_alarakhiya
0 Comments | 971 Visits |
Farhana Alarakhiya is Director of Analytic Applications for IBM Business Analytics software. Below, in advance of the National Retail Federation's Annual Conference, she discusses the implications of social media for retailers and how they can leverage them within a business analytics or performance management infrastructure.
Social media is being heralded as a new way of engaging customers and a more effective way of communicating. How should our retail customers look at social media from a performance management perspective? Can and should organizations incorporate insights from social media into how they manage their business? Is there a level set needed here?
I believe advertising legend David Ogilvy once said that “I do not regard advertising as entertainment or an art form, but as a medium of information.” The difference here with social media is that the context and ownership of information has shifted away from the advertiser to the consumer. That’s a significant shift in power. And it turns upside down the traditional way organizations have communicated with their stakeholders since the first billboard ads.
Immediacy, volume and influence are the most powerful attributes of social media. Movie studios and restaurants still conduct massive advertising campaigns for their latest and greatest, but most of us rely on our friends' opinions as to what to see or where to eat. Now multiply these conversations by several thousand times, add seconds and scale and you get a real sense of the power of social media to humble even the best marketers. It can be a tidal wave.
Adding to this shift is cost. Social media is the most cost-effective way of getting in front of existing and new customers. This lowers the cost of entry for new competitors, while providing conditions for wildfire-like viral and word-of-mouth marketing that can have a positive or damaging effect on your brand, product or service. And its positive effects enable organizations to achieve this by engaging multiple geographies, segments and brands for 1/100 of the cost – perhaps even less.
All of this places a tremendous onus on marketing professionals to stay attuned to perpetually shifting consumer demands and aggregators of shared interests – what’s the next Facebook, for example?C an I drill down into specific segments?There are plenty of examples of the good, bad and ugly in the December edition of the Harvard Business Review, which focuses on social media’s influence.
What does this mean? Well, it means there’s a sense of urgency. But let’s not lose our shirts over the hype. Your sense of urgency will depend on your industry. Some industries, such as Retail and Consumer Products, will have strong interest in engaging and segmenting customers through social media, whereas others may not – at least not this very instance.
In my mind, it goes back to the three performance management questions: How are we doing? Why? And what should we be doing? If social media is affecting your business – its reputation, revenue or relationship with customers – then you likely have good reason to explore a social media strategy. If it’s demonstrating a better return than traditional marketing channels, then you should embrace a social media strategy. But these are fundamental performance questions that marketing needs to ask itself – questions which encompass traditional and social media marketing tactics.
You’ve answered the first question regarding the starting point. But what about the second question – incorporating social media into business processes, say Social CRM?
The core objective of any organization is to acquire and retain customers, grow share of wallet with profitable customers and optimize related processes. This is an enduring principle that has not changed. Social media simply elevates and heightens the relationship side of this business process. It provides technology for dialogue with customers, to listen and, yes, to promote the growth by marketing stuff through very precise communications channels. A company’s approach should ideally be guided by linking social media marketing strategy and tactics across its web, sales, demand generation, public relations and customer service functions – to name a few. In other words, it represents a growing part of an organization’s marketing tool kit – just like other channels - that needs to be integrated with strategic imperatives, measured for performance and tied to underlying business processes.
The trick is how to do that, while balancing a push and pull engagement approach with your stakeholders using social media. As I mentioned, that’s likely contingent on the pressures and manifold opportunities social media is placing on your organization’s reputation, revenue and customer relationships. What’s key, at least in my mind, is that you don’t have to do it all at once. Phased approaches that star burst out to other marketing functions are perhaps the best approaches – ones that consolidate the measurement and assessment of social media performance into a common analytic repository enterprise-wide. This ensures that analysis is accurate, validated and more transparent across all marketing departments.
I believe what we’ll see in the next year or so is the growing integration of social media into business processes of marketing and sales. Many organizations are already doing this by linking the impact of sales orders and margins to demand generated by social media campaigns. I encourage everyone to take a look at thecmosite.com for additional information. It’s a great site that explores the broader business implications of social media.
The National Retail Federation’s Annual Conference occurs from January 10-12 next year in New York City. What should retailers expect from social media?
Well, I’m not a retail expert. But here are some general thoughts: like all business functions, marketing needs to benchmark the performance of its social media strategy. This may sound like a motherhood statement. But what it does is eliminate the mystery and fog from an emerging media and technologies. In other words, I want to engage social media, so how should I measure my engagement? And how does it ladder up to the underlying performance indicators that shape our contribution to the growth of my organization? That’s step one.
Step two: how can I integrate a social media campaign into the business processes of my organization so that I can further evaluate the relationship between marketing spend, demand and revenue as one simple linear example?
The final step: which social media channel drives the best ROI?
Now, this is grossly simplistic. But these are fundamental questions organizations need to ask themselves. And these are fundamentally performance related questions.We have two presentations on this. But one led by Graham Macintosh is particularly germane to this discussion. The presentation takes place on January 11 at 1:45pm in the exhibitor Big !deas 3D09, Expo Hall. So in short, social media – great, go for it. But for what purpose? And how does marketing intend to measure its social media investment?