social commerce trends report - europe 2012

8/3/2019 Social Commerce Trends Report - Europe 2012

1/17

SocialCommerceTrends

ReportEUROPE 2012


2/17

Social Commerce Trends Report 2012

Table of Contents

Overview .......................................................... 1Key themes for 2012

Social is a paradigm shift .............................2

Social data reveals the why behind the buy ....4

Becoming customer-centric demandscultural and organisational transformation ....8

Context is king in social data ...................... 13

Conclusion ...................................................... 14


3/17

Thought leaders share trends shapingsocial business.

Every year, thought leaders fromtop global brands come to SocialCommerce Summit Europe to sharethe ideas and trends that will shapethe future of customer centricity.

Tese four trends represent thethemes driving social today.

Social is a paradigm shift.Weve moved from channeledexperiences and brand-controlledmessages to empowered consumersin a channel-agnostic marketplace.Companies should recognise andaccept the enormity of this change.

Social data reveals the why behindthe buy. Customer conversations

create an insight-rich gold mine forbusinesses. Te awesome power ofconversation will be felt in the insightsgained and the actions inspired.

Becoming customer-centric demandsorganisational transformation.Capturing the full value of social datatakes place across the entire organisation,often requiring cultural changes. Socialdata can drive change beyond marketing,impacting sales, customer service, andproduct development.

Context is king in social data.To be successful, internal and externalsocial efforts must be designed andevaluated in relation to the larger contextof business goals and historical shifts.

Tis report explores each of thesethemes, with input from the thoughtleaders featured at Social Commerce

Summit Europe 2011.

Whats Next. Now.


1


4/17

Social is a paradigm shi

Todays market and the ways we shop,buy, and sell, are fundamentally andirreversibly dierent than the marketof yesterday. Digital has unleashed afount of media choice for consumers,fragmenting the once-captive consumeraudience. Digital has demolished thewalls between channels, blendingthe physical world with the digital

world through smart phones, in-storekiosks, tablets, and increased internetaccess. Meanwhile, social has givenconsumers a voice a voice theyvecome to expect and demand from themedia and brands they interact with.

Tis new marketplace brings new rulesand metrics for acquiring, retaining,and interacting with customers. Withthese changes come both challengesand opportunities for brands.

Were living an empowered consumerrenaissance. JP Rangaswami, ChiefScientist for Salesforce.com, calls thecurrent era a consumer renaissance,a return to the pre-broadcast ageof empowered consumers. In the

broadcast age, brands told customersto Come into my parlour interruptingbroadcast media whether the audiencewanted it to or not.

But social and the ubiquity of mediahave fractured the collective audience,giving more power to consumers.And where once brands talked and

consumers had no choice but listen,consumers now have voices as

well often louder than brands.Rangaswami explains: Te powerof selling has been with the sellerbecause of the broadcast modeland advertising culture. Over thelast few years, technology haschanged. Te customer is nowexercising this power.

Were witnessing a return to attractionrather than interruption todays brands

must instead ask, May I come intoyour parlour? Reach and impressionsbecome less important as companiesfocus more on ongoing engagement,relationships, and lifetime customervalue. A year ago, the number of fansyou had on Facebook would have beena great metric. But today, not so much,says Sue MacMillan, Head of Direct

for Hobbs.

Te web will be rebuilt around people.

Tis renaissance applies to the web,too. A new, social web is beingrebuilt this time around people,says Facebooks Head of CommercePartnerships, Gavin Sathianathan.We moved from browsing portals

in the 90s to the search era in theearly 2000s. Search is still a criticalmechanism for the web, but time spenton search is up just 1%, compared to a50% increase in time spent on socialnetworks, says Sathianathan.


2


5/17

Facebooks Gavin Sathianathan encourages brandsto bake in social throughout the organisation.

Today, Facebook alone matches thesize of the web in 2004, and timespent on social networks surpassedtime spent on email two years ago.As Delphine Remy-Boutang, WWDigital, Social Media MarketingManager at IBM, reveals: Fifteenyears ago we had email, and onlya few people had social tools.Now, thats all we do. Social mediawill replace email, and the socialinteraction will take over.

Tis new online era demands newbusiness strategies. Social is notabout a specic social network,product, or channel its aboutpeople, their conversations, andthe insights these reveal.

Te walls between channels havecrumbled. Over the next two years,more than half of all retail transactionswill be inuenced by the web.1

Consumers oat between channelswhile researching and buying: tryingon clothing in a department store beforebuying later online, reading reviewson a smart phone while strolling a

shopping aisle, liking a friends newcar on Facebook then searching for itshighway mileage on Google.

Customers do not silo their experienceswith a brand into online, in-store,mobile, etc. Tey expect a consistentcustomer experience with that brandacross channels. To achieve this,

brands must un-silo just as consumershave. Rather than pigeon-hole social asa marketing eort, companies shouldmake social a part of every aspectof the business, and strive to delivera consistent customer experienceacross channels. Make sure thatsocial is baked in, so that its just there like electricity or plumbing, saysFacebooks Sathianathan.


3


6/17

Ogilvys Rory Sutherland says insights from socialcant be gained through traditional research.

Social data reveals the

why behind the buySince the beginning of commerce,humans have relied on word of mouthto make decisions. Today, opinionsfrom peers are still the most trustedinformation for purchase decisions.Ninety percent of consumers now trustpeer recommendations, compared toonly 14% who trust advertising.2

Now that word of mouth is online,weve given it massive scale. Indeed,3,000 pieces of user-generated contentare served per second across all sitesthat use Bazaarvoice technology.Within this massive online conversationare data points about customerscontaining tremendous insights

businesses have never before been ableto access. Tis newly-available datagives companies an opportunity andan imperative to align more closely tothe needs of customers.

Social is the new focus group. Beforesocial, indirect metrics attempted toexplain what customers were thinkingand feeling. Time-on-site may have

indicated willingness to buy. High returnrates may have agged a product aw.Flawed methods like traditional focusgroups and market research attemptedto gauge customer sentiment.

But these attempted indicators andproxies are far from reliable. As RorySutherland, Vice Chairman of Ogilvy

Group says, Market research is de-contextualised: it takes place far from

the point in time and the environmentwhere decisions are made. Listeningto people in social media is fantasticbecause the comment is made at themoment of high engagement. Whatyou learn through this kind of mediumcannot be gathered through research.

Christian Kraus, Head of Social Mediafor Conrad Electronic, agrees. In the

past companies were working inside

out: we create the experience andproducts, and thats what customersget. Now, customer intelligence istry ing to change that.

Social data eliminates the guesswork.Te social web is where customersare expressing freely what they feelabout your products and services,

says Salesforce.coms Rangaswami.Companies that encourage this


4


7/17

Customers freely express what they feel on the social web,says Salesforce.coms Rangaswami.

conversation nd customers willinglyexplain what they like and dislike aboutproducts and services; how they usethem in their lives; how the product,service, or brand makes them feel; andother actionable information businessesare hungry for. Analytics told usthe what, explains Brett Hurt, CEO,Bazaarvoice. Social nally tells usthe why.

Raj Rao, Global Director for DigitalMarketing and eCommerce at 3M,concurs. Virtual consumer panelscan give you an early opportunityto connect with your customers.Te feedback you get is an opportunityto understand ROI.

Tis deeper customer understanding

helps companies like nancial servicerm ING become more customercentric. Before [social data], we hadendless presentations of customersatisfaction by charts and diagrams,says Gabor Dani, Global Head ofStrategy, Research and Advertisingfor ING Group. Now we continuouslygather customer quotes and put these

around our oces, showing whatour customers actually think. Tishelps change the whole culture to ahumanised one, and we can become apeoples business.

Data is only as good as the actionit drives. Social is generating anexplosive amount of customer data.Tis data is like a new alternativeenergy a ubiquitous resource we

can extract and use to power futureinnovation. But like oil, data has tobe rened. Its no longer enough tosimply aggregate what customers aresaying. Businesses should rene datainto insights and trends that driveaction. What story is the data tell ing?How should that story aect decisionsacross the business?

As the quantity of available datagrows exponentially, parsing it into

these insights is an increasinglyimportant challenge. Te challenge,in a retail world driven by data, isntto get more data; it is to nd out whatto do with it, says Ian Jindal, Editor inChief, Internet Retailing.


5


8/17


9/17

Data pulled from5 million+ customerconversations showsthat poor customerservice leads to lowerproduct ratings.Companies can acton information foundin reviews to deliverbetter customerexperiences.

For more ndings like

these, download the freeConversation Index.

14%

16%

18%

Average

Rating for

Reviews with

CS Mentions

Average

Rating

Percent of

Reviews with

CS Mentions

91% Lower average rating whentagged with customer service.

12%

10%

8%

6%

4%

2%

0%

ALLClients

Retail

Manufacturing

FinancialServices

Apparel

ConsumerElectronics

HomeImprovement

Housewares

MassMerchant

SportingGoods

3.0

2.0

1.0

5.0

4.0

1.5

2.5

3.5

4.5

Miika Malinen, Director of E-Commerceat Hong Kong Express, reects on howcustomer feedback has elevated hisbusiness. We launched reviews thesame day we opened our online store,and right from the start they had anamazing impact on our online business.

Many companies nd that engagingtheir customers makes them moreloyal, and helps identify their best

advocates. Promoters are not justtelling family and friends how goodwe are, but they buy more from us,repeat purchases, and are less pricesensitive, says INGs Dani. As therms biggest fans, promoters alsoleave high ratings and actionablesuggestions for improvement.

Even negative feedback helps cutcosts. Sentiment trends quicklyidentify products that need attention.White-good retailer Conrad noticeda top-selling product had very lowratings. Mining the reviews revealed

that the product would often arrivebroken, but customers didnt return itor contact customer service becausethe product was so inexpensive.Reviews uncovered this issue whenother metrics wouldnt have, helpingConrad save future customers frompotentially negative experiences.

INGs Dani reects on the futility offearing what customers are saying.

To be honest, our industry has beenliving in an ivory tower. We didnt wantto hear any outside comments. But thereality is that even if we dont check,the word is out there no matter what.

Rebecca Leng, Customer CommunicationsManager at John Lewis, explains thatnegative feedback is an opportunity, not

a nuisance. If we dont let a customermake a negative review on our site, theywill do it somewhere else. We believein the quality of our products. Welltake the negative feedback and dosomething with it.

Poor service kills ratings: reviews mentioning customer servicecarry a 91% lower average rating.


7


10/17

To become truly customer-

centric, companies must

recognise that social is a

paradigm shi in the way

business is done.

Becoming customer-

centric demands culturaland organisationaltransformationA decade ago, some businessesbegan experimenting in ecommerce,selling for the rst time through theirwebsites. Eventually, the web storebecame the biggest store for mostbusinesses. In other words, online

business helped the physical businessreach its full potential, explainsMike Svatek, Chief Product Ocer,Bazaarvoice. Today, the same ishappening with social data.

Most importantly, social bringscompanies closer to their customers,the real people who shop for, buy,

and use their products and services.By deepening customer intelligence,social enables companies to innovateat the speed of the market, powered bythe real needs of the people they serve.

But customer centricity cant bereached overnight. To become trulycustomer-centric, companies mustrecognise that social is a paradigmshift in the way business is done.

Customer centricity requires anorganisation-wide culture shift.Te shifts in power from broadcastto fragmented media, from brand toconsumer, from paid media to earnedmedia, collectively require a newfocus for businesses: an obsessive

devotion to understanding anddelighting customers. Tis calls foran organisation-wide culture shift atevery level.

Ab Polspoel, Brand Manager atTouring, explains: Opening up to thevoice of the customer and letting goof control is dicult. But [customer

feedback] will happen anyway,so you better get involved in theconversation. What worked for uswas to start small and have dierentdepartments involved a multi-

faceted, slow-moving approach.

Its like being on a date, says ClintFischerstrom, Web Manager at PhoneHouse Sweden. You need to listenand not just talk if you want the girlto hang around! Te same happenswith ecommerce: you listen rst, youlearn, then you change.


8


11/17

Jenny Ashmore, Global MarketingCapability Ocer at Mars (and nowChief Marketing Ocer at Yell Group),recounts her former role at Pampers.She was surprised to learn that on her25-person team, only one had a babyand most of the rest had never actuallychanged a babys diaper. She senteveryone on her team out to changediapers and share their experiences.From then on, the team moved fromrelying solely on market researchto actually living and experiencingthings their customers are living andexperiencing. Te Italian CEO at thetime even began wearing a pregnancyempathy belly to get closer to theconsumer experience.

INGs Dani recounts a similar shockat discovering his team hadnt visiteda bank branch in over three months.When they did visit a branch to buya new product, they werent subjectedto the same application forms andprocesses customers followed they were disconnected from thecustomer experience. Today, INGgives employees weekly customercentricity targets, and have modiedtheir compensation structures aroundcustomer centricity.


9


12/17

Dell is recognised worldwide as an

early mover and a thought leader

in social. The brand has used

social data since 2006, both from

Bazaarvoice tools and their internal

crowd-sourcing engine, Idea Storm.

Michael Buck, Executive Director,

Global CSMB Online Marketing andMarketing Strategy for Dell, shares a

few of the companys learnings over

the years.

1. Learn to accept feedback.

Customer words are a powerful

tool to improve, but only if

companies internalise them.

2. Make the tough decisions.If a product shows low customer

sentiment, act fast improve

it or kill it.

3. Educate teams to join

the conversation.Social isa dialogue, so teach internal

teams how to interact

comfortably with customers.

4. Measure success. Set targetstied to real business goals,

and measure progress. Share

successes with internal teams

and customers alike.

5. Create a cultural focus on the

customer.Drive organisationalbehavioural change by aligning

performance metrics and

compensation with customer

sentiment.

6. Unsilo social eforts.

Be consistently open to feedbackat every customer touch point.

Build social into marketing, sales,

customer services everywhere

customers interact with the brand.

7. Be patient and persistent.

Becoming truly customer-centric

takes time to realign the business,

especially for a large brand like Dell.

Michael Buck shares Dell's seven tipsfor customer centricity.

Dells seven tips for customer centricity


10


13/17

Industry analyst Jeremiah Owyang shares tipsfor restructuring organisations for social.

Building a social enterprisetakes reorganisation. Newsocial media requires new typesof organisations and they usuallycross departmental borders. AsINGs Dani puts it: Corporations aredesigned for internal eciency, notnecessarily for customer eciency.

Jeremiah Owyang, Industry Analystat Altimeter Group, points out that,

while social media initiativescan start out being owned by onedepartment, this one-to-one modelcannot scale. He recommends thatorganisations who wish to pursuesocial move as quickly as possibleto the hub and spoke model, wherea core team gives guidance and setsparameters that allow multiple areas

of the organisation to participatein social.

Jeremiah presented Building YourSocial Strategy: Prioritising theComing Year at Social CommerceSummit Europe 2011; you can read hisrecommendations on his blog atbv-url.com/Owyang.

He also recommends:

Get ready internally. Focus rston governance and process,then on education to emerge asa centre of excellence.

1:1 wil l never scale. Leveragethe crowd for the rstresponse, then interact inescalation.

Integrate social to increaserelevancy and reduce costson creating content. Useother peoples content, suchas customer reviews, tobuild credibility.

Standardise with social mediamanagement systems, which

help manage potentiallythousands of accounts across

brands. Invest in this nowbefore individual businessunits roll out their own sites.

Remember the future is morethan social marketing; itcascades to support, productinnovation, and then to thesupply chain (with partners).


11


14/17

Owyang lists the organisational

types that evolve with a brands

social media eorts.

1. Decentralised. Anyone can do

anything in the company in social,

with no organisation.

2. Centralised. Typically run by

corporate communications;

most companies start here.

3. Hub and spoke. The majorityof the companies Owyang

has interviewed fall into this

group. There is a hub in the

organisation that sets guidelines

and gives direction, but actual

participation takes place across

the organisation. This is the most

common type of successful social

organisation today.

4. Multiple hub and spoke

or dandelion.Large, usuallytech, socially-advanced brands

reach this organisational level.

Owyang recommends this

model for most brands.

5. Holistic or honeycomb. Only 1.5%

of companies are here, where the

entire organisation uses social

media in an organised way. This

is the model with the highest

level of maturity, and its dicult

to achieve. A few brands thatexemplify this include Best Buy,

Dell, and Zappos.

How social organisations evolve

Decentralized

Centralized

Multiple Hub and Spokeor Dandelion

Holistic or HoneycombHub and Spoke


12


15/17

Context is king

in social dataIts impossible to build an eectivesocial enterprise, or design winningsocial eorts in the long term, withoutunderstanding the enormity ofchanges were seeing in the world.Placing social in the right context iscritical to successful outcomes. Tetrends previously discussed in this

report emphasise the overarchingtheme that companies cant aord tobe myopic about socials impact onnearly every aspect of business.

Similarly, companies must determinethe right contexts for social in theirbusinesses. Tis not only meansconsidering social eorts in the

context of broader business goals,but also considering the context inwhich to present social data so thatit is useful across the enterprise.Its bigger than a business strategy,bigger than a social strategy, saysErin Nelson, Chief Marketing Ocerat Bazaarvoice. Tis is a strategyfundamentally about people and

customers. And one of the ideasaround social is that it is a meansto an end.

Evaluate social eorts in the context

of real business goals. What does thecompany hope to achieve throughsocial? I do really believe that youget what you measure, says JennyAshmore of Mars. If success is merely

measured by likes, comments, and

retweets, then reevaluate. How aresocial eorts impacting existing keyperformance indicators? How arethey enabling teams to better meetcustomers needs?

Companies should tie social eortsto existing business goals, and keepthat obsessive focus on furtherunderstanding and delightingcustomers. Rather than What is my

social strategy? businesses shouldask, How does social t acrossmy business? says FacebooksSathianathan.

Easily digestible context around socialdata drives action. If data is only aspowerful as the action it drives, thenputting social data in a context that

can truly drive change is critical. Teaverage employee cant skim all ofa brands Facebook posts, customerreviews, and Twitter mentions, andcome out with an aggregated insightto act on.

Companies can make this data easilyconsumable by communicatinginsights in a visual and intuitive

context. Data visualisation is aprocess of putting data in a visualcontext people can understand. DavidMcCandless, writer and visual datajournalist, explains: Data itselfis powerless. But by making datainto images, we enable anyone tounderstand it. We can even revealsomething interesting, so that it tellsa story.


13


16/17

For data journalist David McCandless, data visualisation is like owers in bloom.

Visualising data makes it useful indecisions by uncovering and helpingpeople understand overall trends.People say data is the new oil, saysMcCandless. For me, data is the newsoil: a fertile medium that you canmold and shape and creatively exploreuntil you get amazing results. To me,visualisation is like owers in bloom.

Te impact of social will be bigger

than we can predict. Social, for allits importance in our lives today,is still brand new. In less than adecade, social technologies haveirreversibly changed our marketsfor businesses and consumers alike.Te trends discussed here will shapethe future of business and consumerinteraction everywhere. And this isjust the beginning.

Footnotes1 Forrester. What Every Exec Needs to Know About the Future of eCommerce Technology. August 2010.

2 Socialnomics. Social Media Revolution 2011. June 2011.


14


17/17

Bazaarvoice

t: +44 (0)208 080 1100e: [email protected]

www.bazaarvoice.co.uk

Tis document is provided as-is. Information and views expressed in this document, including URL and otherInternet Web site or company name references, may change without notice. Some examples depicted herein areprovided for illustration only and are not guarantees of a specic result. You bear the risk of using this document.

Tis document does not provide you with any legal rights to any intellectual property in any Bazaarvoice serviceor product. You may copy and use this document for your internal, reference purposes only.

2011 Bazaarvoice, Inc. All rights reserved. Bazaarvoice and any Bazaarvoice service or product name or logoused herein are trademarks of Bazaarvoice, Inc. All other company or product names may be trademarks of therespective companies with which they are associated.

social commerce trends report - europe 2012

Documents