If I knew exactly how to monetize social networks I wouldn’t be writing this column. I would probably be strumming my vintage Gibson Hummingbird on the deck, and wondering if the family and I would be touring Europe for the summer, or just visiting the Caribbean.
Nobody knows how to monetize social networks at this point. Not even the companies that are betting their business models on it. Retailers know that social network and review sites cannot be ignored. They are a clear window into what customers love and hate, spoken without prejudice. Spoken as if you , the retailer, are not in the room. That is invaluable information but it doesn’t translate into currency. Yet.
Social networking needs a new look from retailers. It will become a revenue center when retailers have attracted their most valuable customers into networks that add value to their customer lives. If I’m a supplier that values your most valuable customers, I’ll advertise on your social network all day. But I won’t call it a social network. I’ll call it your “community of influence” and it will be a line item in the marketing budget just like print, TV, FSIs, search, and the internet. There is a reason Yahoo just agreed to sell advertising on Wal-Mart’s website. That website has become valuable real estate, and now Wal-Mart can take a cut from it without hiring its own sales staff. An April 2008 study for eMarketer and Collective Media showed that 73.2% of agency executives surveyed plan to advertise on social media networks.
Retailers then must start the journey toward building their communities of influence. Wal-Mart has launched a back to school promotion with Facebook (see related story) that definitely hits the right audience with the right products. Cabela’s doesn’t play it’s blog up very much but last time I checked there were 45,353 posts on the subject of “shooting.” Now if I’m a rifle manufacturer, I want a piece of that. On the opposite end of the spectrum Victoria Secret’s youth line, Pink, has a downloadable music widget for use on MySpace or Facebook.
Any retailer that has a strong multi-channel brand should find a touchpoint for customers to engage in communities. Sporting Goods retailers have their extreme athletes. Grocery retailers have their organic customers and the portion of their customers that want to discuss the reasons prices have shot up for some goods. Issues forge a link between customers and retailers. Issues need communities.
I think retailers should establish the following practices for a retail community of influence, with an eye toward building a quality and quantity that drives revenue for the long term.
• Differentiate it: Let Facebook and LinkedIn be who they are. Find the reason that consumers want to engage with your brand and your unique experience. If you’re a high-end fashion retailer, be a high end fashion community.
• Brand it: Maybe the brand for the community is not exactly the same as the retail brand. A local bookseller could appeal to local book clubs, for example. Don’t knock off the best seller list opinion blogs that dominate the bigger book retailers.
• Niche it: Take a page here from consumer products companies. The best customer feedback came from some of the earliest blogs that connected with the most esoteric customer groups. GMs small-block engine blog served up access to key GM execs like Bob Lutz and the car geeks flocked to it.
Communities come back to the reason a customer does business with you. If you don’t know that save your time and effort building social media networks. I would argue though that the same reason different customers do business with you are the same reasons they will engage in a community. Create and support the community now; monetize it later.