Part I of Retail TouchPoints’ multi-part feature exploring trends and developments in social media analytics, the business intelligence it provides, and real-life applications underway at Bonobos; Chico’s; Ice.com; Pacific Sunwear; Room & Board Home Furnishings; Walmart; and Warby Parker. This first installment reviews the importance of, and trends in, social media analytics, as observed by leading retail analysts. Subsequent installments, beginning with the June 5 newsletter, will cover social analytics solutions as well as current applications and their business value, based on input from several retail leaders.
Today’s empowered shoppers want more personalized information and offers that appeal to their emotional needs. To that end, they are relying on social media to research and select personalized products and services. It’s the concept of “Me-Tailing:” the retail industry’s transition from transaction-based commerce to real-time, often one-to-one social network communications and marketing of brand experiences that satisfy consumers’ emotional wants and aspirations.
At the core of Me-Tailing is social media analytics. This process starts with raking blogs, forums, video posts, social media web sites (including visual curation) and other online communities for predetermined Key Performance Indicators (KPIs) revealed in these posts and conversations. Retail organizations analyze the data and use it to profile shoppers to better personalize future social campaigns. Measurable results reveal the business intelligence that will nourish the next best retail strategies for addressing consumers’ needs.
Social media marketing isn’t new, but its sophisticated analytical software is getting more granular every day. While many retailers have been using basic monitoring tools for years to listen to social conversations, the latest news is centered on the new solutions that provide profiling and psychographics that identify key brand influencers/advocates. With this information in hand, merchants can facilitate personalization, crowdsourcing and positive viral marketing.
Retailers can distinguish themselves as leaders in the Me-Tailing movement by implementing solutions that expose and respond to consumers’ needs, preferences, opinions, experiences and shopping behaviors. In fact, as the retail industry advances in parallel with the socially networked consumer, Me-Tailing may become the new way to define retail.
Social Analytics Complete Retail Business Strategies
Leading analysts concur that better insight into consumers’ social behavior is not just a nice to have, but is essential to creating the network of product/brand advocates that retailers desire. The deep business intelligence this social insight provides is stimulating today’s growing interest in, and market for, related analytic solutions.
As many as 42% of retail companies plan to implement a social media analytics tool within the next 12 months, according to a recent research report from Aberdeen Group, titled: Understanding Social Media in Consumer Markets through Advanced Monitoring Tools. This trend indicates that “retailers consider social media and customer analytics as strategic to their businesses,” said Deena Amato-McCoy, Retail Research Analyst, Aberdeen Group, in the report’s Research Brief summary. “Clearly these analytics allow retailers to get a better understanding of customers and their expectations. Insight into how customers interact with their brand and respond to campaign efforts primes retailers to deliver targeted messages and create stronger relationships among shoppers as well as brand advocates.”
While monitoring tools help uncover the impact of customer comments on brands, Amato-McCoy said more in-depth analytics “will put retailers in an even better position to understand their shoppers’ perspectives, the value of social media marketing, and the performance of social media campaigns.”
Measuring the actual impact of social media marketing ― one of the most significant trends in marketing and demand generation today ― is still very challenging, even in the current age of metrics-driven marketing, added Trip Kucera, Aberdeen Group’s Senior Research Analyst, Marketing Effectiveness and Strategy, in the April 2012 report titled: Measuring Social Media Marketing. He noted: "Plenty of tools support the ability to track social followers and click-throughs, but the practice of connecting social media with measurable business results remains elusive for many companies.”
Establishing this connection is what separates Best-in-Class companies, according to Aberdeen. Based on the survey of 500+ companies, Aberdeen found that businesses in its Best-in-Class category are 18% more likely than all other companies (industry average and laggard companies combined) to track and report on "activity-level" social media metrics, such as number of followers, fan, re-tweets and Likes (59% vs. 50%). However, they are 38% more likely to be able to connect social media activities with measureable business results, such as in-bound web site traffic or marketing responses and conversions (47% vs. 34%). Noted Kucera: “The difference in these deltas indicates the challenge many companies have in determining ROI for social media marketing.”
In addition, 33% of companies in the Aberdeen study use social media campaign management and measurement tools that incorporate tracking, analytics and reporting capabilities, including 43% of Best-in-Class, 37% of Industry Average and 28% of Laggard companies.
In an increasingly metrics-driven environment, companies dedicated to the social space will have to leverage their social capital by connecting with solutions that provide measurable business results,” Kucera said, “or risk getting left behind.”
Social Marketing And ROI or The ROI Of Social Marketing
Measuring ROI always is a hot topic today among those controlling IT and marketing budgets. Social media marketing is no different. In response, solution providers are introducing more core business analyses for social media programs, noted Brian Blau, Research Director, Consumer Technology and Markets for Gartner, Inc., in an interview with Retail TouchPoints. “Retailers want to assess actual returns on their social media dollars, and will see fine-grained changes in 2012 as to how well they can analyze and understand the customer data inside social networks, and how that data relates to their social marketing investments.”
Blau added: “Just the fact that the social analytics tool vendors are growing in number and size, diving deeper with every new version, and starting to be acquired, tells me that big brands and retailers are going to embrace social media analytics in many new and exciting ways.”
Additionally, a recent Retail TouchPoints (RTP) report focused on social engagement metrics and analytics found that 73% of respondents currently monitor social media feedback and comments from customers, and another 20% plan to do so in the near future.
Retailers Discover Brand Advocates On Facebook
Many retailers begin the social analysis process by focusing on one channel, typically Facebook, commonly considered the most effective social commerce platform, according to the RTP April 2012 survey results of retailers and their social network activity. Titled The Push Toward Social Commerce, the survey revealed that after Facebook, merchants consider Google+ and Twitter as most effective, and that three up-and-comers ― Instagram, Pinterest and Foursquare ― also hold significant potential for respondents.
Through Facebook, retailers can act upon the wants and needs of their “fans.” In a recent study, Forrester Research polled 10,000 online shoppers to find out “How much more likely are Facebook fans to purchase, consider and recommend brands, compared with non-fans?” Titled The Facebook Factor, the report applied Forrester’s logistic regression modeling to build case studies on four major brands: Coca-Cola, Walmart, Best Buy and BlackBerry.
Results showed that Facebook fans, compared to non-fans, are much more likely to purchase, consider and recommend the brands with which they engage on Facebook. In fact, “Facebook fans of Best Buy are about twice as likely to purchase from and recommend Best Buy as non-fans,” noted Gina Sverdlov, a Forrester analyst, in her blog posted May 6, 2012. She also shared this chart:
“We didn’t just examine the impact of Facebook fans in a silo,” Sverdlov noted. “We compared the impact of engaging with these brands on Facebook with the impact of other driving factors of brand engagement on these metrics. For example, being a Facebook fan has almost double the impact on purchasing from Walmart as having a Walmart near a consumer’s home.”
The 5 Stages of Social Media Analytics Maturity
Measurable business results of Facebook initiatives, and those of other social channels, directly affect a network of functions throughout a retailer’s business, not just IT and marketing. Looking at the roles that exist within a retail organization ― including sales, branding, product development, finance, customer service, CRM and more ― “all are paying attention at different levels of engagement to the data available within social channels, and how it will impact their specific business goals,” Blau reported.
But large and small companies may approach this scenario differently. Blau said that larger companies generating millions of conversations on social channels around the world gravitate to more advanced, full-blown analytics and cyclical participation with consumers, while medium-sized firms are at the early maturity level, and most smaller retailers are not yet participating at all.
As a guideline for companies, Blau pointed to Gartner’s five stages of retailers’ social analytics maturity:
Discovering (analyzing what’s being monitored);
Sharing (from retailer to target audience);
Participating (a bi-directional exchange of viewpoints); and
Co-creating (ongoing wisdom tapped from target audiences).
Sentiment Analysis Monitors Shoppers’ Emotional Reactions To Brands To Retailers
Within Gartner’s Discovery stage, sentiment analysis takes social monitoring a few steps further by evaluating the emotions behind comments, mentions, ratings and reviews. How do people feel about the retailer? Did a specific in-store associate or online situation trigger approval or dissatisfaction? Do people on the East Coast like Product A better than those on the West Coast? Is the price too high for the value obtained? Myriad KPIs surround consumers’ emotional responses.
But the quality of sentiment analysis remains in question for some. “Sentiment analysis still is an arcane science because of the quality of the text analysis behind it,” Blau stated. “Personally I think some text assessment vendors are not as accurate as they purport to be in analyzing every post and assessing true consumer sentiment.”
For example, Blau added, if someone posts that he or she had a terrible flight on Airline X because of a bad oyster consumed before boarding, some text analysis tools conclude that Airline X’s service is terrible, when in reality it may have been stellar. Another consumer might post that new Brand X tire had a dangerous blow-out on a roadway rife with jagged potholes, with vendor results determining that Brand X’s tire, not the roadway, is dangerous.
“Text analysis really needs to advance,” Blau said, “because analyzing the social conversation is a big part of the puzzle when assessing social media’s impact on a brand.
Tapping The Brand Influencer
Social analytics done correctly allows retailers to identify the person (or groups of people) influencing and driving conversations, having certain sentiments about a product or service, and being followed by many like-minded consumers. Retailers then harness this “influencer” or “brand advocate” for their own purposes ― as an information source, to share special deals and more.
For example, Craft Supply Company A knows through its analytics tools that Person B is a craft enthusiast and specialist whose posts are tracked and opinions valued by a strong base of followers. Craft Supply Company A also knows from sentiment analysis of Person B’s recent comments that she is dissatisfied with the scrapbooking equipment she purchased from a craft supply competitor. In response, Company A targets Person B on a one-to-one basis with promotional information and a dollars-off coupon for a related scrapbooking product, which Person B appreciates, comments upon and shares in her social space ― thus “influencing” her many followers.
Retailers at the most mature level of social media analytics are co-creating full-scale dialogue with influencers and other groups and individuals who are posting brand-related comments throughout the social network. Based on positive, negative, competitive and other feedback affecting specific KPIs, these retailers are responding to consumers’ comments about needs, issues and opinions to generate ongoing, two-way conversations between brands and their target audiences. The co-created conversations help satisfy consumers’ emotional wants and aspirations, and effectually transform participating retailers into competent and coveted Me-Tailers.
Part II of the Retail TouchPoints’ Social Media Analytics update will appear in the June 4 newsletter.