This case study investigates recent trends in social media from a business and consumer standpoint. It also provides specific examples of how businesses have altered their marketing activities because of social media.
Social Media’s Effects on Marketing In this case study, we will investigate how social media is being used by businesses and consumers. We will consider how the relationship be-tween businesses and consumers is being transformed by the instant, two-way communication social media affords both large corporations and web-savvy consumers. Selected articles will demonstrate recent trends in social media from a business and consumer standpoint, plus provide specific examples of how businesses have altered their mar-keting activities by using social media.
Ads mobilize for social media
By Jon Swartz 5-6
Are retailers going too far tracking our Web habits?
By Jayne O’Donnell 13-15
Twitter helps customer ser-vice but some companies are still getting a handle on social media
SAN FRANCISCO — Ford Motor has high hopes for Fiesta, a popular model abroad launching in the U.S. next year.
So how does it introduce the sub-compact car to Americans? A mas-sive ad blitz on TV? In-house pro-motions at dealers nationwide? Nope.
In April, Ford tapped 100 top blog-gers and gave them a Fiesta for six months. The catch: Once a month, they’re required to upload a vid-eo on YouTube about the car, and they’re encouraged to talk — no
holds barred — about the Fiesta on their blogs, Facebook and Twitter.
“It’s extremely important to this company’s history,” says Scott Monty, whose job as head of social media at Ford was created about a year ago to take advantage of the growing social-networking wave. “It’s about culture change and adapting to this ongoing way of communicating. The bloggers are fully free to say what they want.” Social-media services, such as Facebook, Twitter, YouTube and countless other websites, have had a profound effect on how millions of Americans — especially those under 35 — interact with others
More marketers sign on to social mediaThey’re going where many of their customers hang out
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Critical inquiry
Discussion and future implications 16-20
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As seen in USA TODAY MONEY Section, Friday, August 28, 2009, Page 1B(or don’t), shop and view brands. It’s a real-time digi-tal lifestyle, powered by smartphones and netbooks, that often colors what products they purchase, how they view brands and where they spend most of their waking hours.
Marketers have noticed. Social-networking services increasingly are indispensable business tools, says Forrester Research. According to its survey of 1,217 business decision makers worldwide late last year, 95% use social networks to some extent.
And 53% of more than 300 marketers planned to in-crease social-media marketing spending this year, ac-cording to a Forrester presentation in April.
Some of the biggest companies — Ford, Levi Strauss and Chevron, to name a few — are reengineering marketing operations to embrace digital tools to more nimbly brand products, support customers and cash in on the social-media wave. In doing so, they are creating online communities and aggressive out-reach programs, and being brutally honest in talking directly to their customers/followers/fans/friends.
“It was an easy call. This is where our customers are,” says Megan O’Connor, director of digital marketing at Levi’s. The more-than-150-year-old company last month launched a social-media program on Face-book and Twitter along with a larger “Go Forth” tra-ditional marketing campaign. Its goal is to burnish its brand name among young men. Grown up digital
At their core, social networks are fostering a blistering number of personal connections and chatter online. The share of Americans 18 and over online who use a social-networking service more than quadrupled to 35% in 2008 from 8% in 2005, according to Pew Inter-net & American Life Project.
“It’s the modern-day version of knitting — to kill downtime,” says Kaitlin Villanova, 26, a social-media strategist in Brooklyn who is an avid iPhone user. “I
use social networking to communicate, bank, com-parison shop, everything.”
Facebook is up to 250 million members, 50 million of whom joined in the past three months. In April, they spent 13.9 billion minutes on Facebook, up 700% from April 2008, says Nielsen NetView.
More than 300,000 businesses — one-third of them small businesses — have a presence on Facebook. Members of its fastest-growing demographic -- those 35 and older — have enormous purchasing power, a powerful incentive to marketers.
Twitter has about 40 million users who each day pro-duce a staggering amount of tweets, Twitter’s quaint word to describe short messages. Its users spent nearly 300 million minutes on the site in April, 3,712% more than in April 2008, Nielsen says.
Increasingly, consumers don’t search for products and services. Rather, services come to their attention via social media, says Erik Qualman, author of Social-nomics, a new book that explains how social media have changed how companies do business.
Social-networking-savvy businesses have appointed social-media directors to help:
uAdd customers quickly. When software maker In-tuit built a site for small businesses in late January, it integrated elements of Facebook, Twitter and Linke-dIn, the social network for business professionals. Af-ter 12 weeks, it generated more than 1 million visits and helped spike QuickBooks unit shipments 57% in June, year-over-year.
“Social (media) is one of the key trends driving our business,” says Kira Wampler, social-media market-ing leader at Intuit. “It’s more than pure marketing. It’s about fast connections with customers and build-ing an ongoing relationship.”
National pizza chain Papa John’s added 148,000 fans on Nov. 17 through a guerrilla marketing campaign
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on Facebook. It offered a free medium pizza to any-one who signed up to be its fan on Facebook. The promotion gained it thousands of customers and drove its Web traffic up 253%. It now has more than 300,000 fans and hopes to top 1 million by the end of the year.
uWord-of-mouth marketing. Sometimes a compa-ny’s best advocates are its customers. Just ask Best Buy and MyFICO, the consumer division of Fair Isaac, which invented the FICO credit-risk score used by lenders. They’ve built specialized online communi-ties where their customers freely evaluate products and services.
Those who visit MyFICO’s community website are spending 41% more than other customers, says Lyle Fong, CEO of software Lithium, which helps build online communities for more than 150 companies, including MyFICO.
Nine in 10 consumers trust their peers more than marketers, according to a recent survey of 25,000 by Nielsen.
The Federal Trade Commission is in the process of amending guidelines that would require bloggers to disclose their relationships with marketers whose products they endorse, says Mary Engle, associate director of advertising practices for the FTC.
uEnhance customer service. For more than a year, Comcast has pioneered the use of Twitter to talk di-rectly to customers. Its Twitter page, @comcastcares, has 28,000 followers.
Comcast’s blueprint for unfettered customer sup-port — no more waiting on hold on the phone — fo-mented a movement. Software maker Sage North America, to cite another example, routinely receives instant feedback from hundreds of people within an hour on specific products and services. “It is a living, breathing, 24/7 think tank of users and employees,” says Ryan Zuk, a company spokesman.
Besides being instant, such feedback is cheap. Typi-cally, companies have relied on third-party focus groups that let them observe the reactions of cus-tomers during a two-hour session that can cost $10,000 to $15,000, says Natalie L. Petouhoff, an ana-lyst at Forrester Research.
Lenovo has seen a 20% reduction in call-center activ-ity in the U.S. over six months because nearly 50,000 customers go to its community website for informa-tion about laptops.
uSpeak directly to customers. Blogs, Twitter or Fa-cebook can be an ideal forum for CEOs to offer cus-tomers a candid viewpoint.
When a hack attack disabled Twitter’s service for hours this month, co-founder Biz Stone gave up-to-the-minute updates on the company’s blog.
The Carphone Warehouse, Europe’s leading inde-pendent retailer of mobile phones and services, has a simple credo: It says, “I’m sorry” when necessary on its Twitter page for customer support.
“There is no gap between the CEO and customer. They now talk directly to each other,” says Promise Phelon, CEO of UpMo, a career-management web-site. “The network is so connected, there’s no need for a middleman.”
“These customers want honesty, and quickly,” says Shiv Singh, who wrote a report on social-media mar-keting for ad agency Razorfish.
Challenges ahead
But with rewards come risks.
Reaching out to millions of consumers who thrive online around the clock requires an investment, a different type of thinking and some courage, says Petouhoff. She spent six months on a just-released report on monetization of social-media tools at 20 companies, including Lenovo and Intuit.
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Many companies — reflecting the general public’s sentiment toward social media — fall into two camps: Those who embrace it and those who eschew it. “Those that don’t know how to get their arms around it seem to be held back by worrying about the le-gal implications of customers helping customers, and about being too honest with customers,” Petouhoff says.
Most corporations are still wedded to a traditional marketing approach, based on TV, radio and print ads, says Charlene Li, partner at technology consult-ing firm Altimeter Group. “Ford and Levi’s are at the avant-garde of social-media use, but they are not typ-ical,” she says.
A social-media plan is hardly a guarantee of success, Li and others say. While some companies — especially market leaders such as Starbucks and Nike with con-sumer products — are predisposed to the medium, others aren’t. Tightly regulated health care provid-ers, for example, may think twice about making the public’s comments readily available on Facebook or Twitter.
“Social media is not the messiah,” says Michael Brito, social-media strategist at Intel. “It is one of several tools.”
Still, a growing number of marketers can’t afford to ignore millions of potential customers who are con-suming media in new ways.
Three-fourths of men ages 18 to 34 say they spend most of their time in front of a computer screen vs. 18% in front of a TV screen, according to a survey of 50,000 by AskMen.com, a lifestyle website. Those who don’t have a social-media plan don’t at their own risk, say marketing experts.
“Companies have no choice. This is where their cus-tomers are going,” says Shel Israel, author of the forthcoming Twitterville: How Businesses Can Thrive in the New Global Neighborhoods. “Companies have no choice. This is where their customers are going.”
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Facebook
uMore than 10,000 websites use Facebook Con-nect, a service that lets Facebook users log in to affiliated sites using their Facebook account and share information from those sites with their Face-book friends.
uAbout 30 million Facebook members access it through mobile devices.
Twitter
uTwitter users spend 66% more dollars on the Internet than non-Twitter users, says market re-searcher ComScore.
LinkedIn
uLinkedIn has more than 365,000 company pro-files. More than 12 million small-business profes-sionals are members of LinkedIn.
MySpace
uMore than 1 million small businesses and in-dividuals promote their goods and services on MySpace.
Many use social media
Marketers who closely follow social media can find some enticing statistics to justify their online strategies:
By Jon SwartzUSA TODAY
SAN FRANCISCO — Jeff Smith is a diligent social-net-working user, but he doesn’t own a PC.
“I prefer a cellphone and a service for a cellphone,” says Smith, 40, a postal worker in Detroit who served as an Army Ranger in Desert Storm and Somalia.
For about a year, Smith has used MocoSpace (for “mobile community space”) to chat, meet people, search the Web and play games. “Anything else feels like too much.”
The majority of people who participate on social net-works do so from their PCs. Yet a growing number — many of whom can’t afford a PC or would rather not use one — are using mobile devices to tell their friends where they are and what they’re up to and for sharing pictures.
Mobile users are an important part of the mix for be-hemoths Facebook, Twitter and MySpace. But many folks are migrating to a new crop of mobile-only so-cial networks such as MocoSpace, Mig33 and Pep-eronity. MocoSpace has emerged as a favorite in the U.S., where it is available in 22 cities, including New York, Seattle and Los Angeles. It offers chat, instant messaging, photo- and video-sharing, and games.
The number of people who use social networks from their smartphones skyrocketed 187%, to 18.3 mil-lion unique users, in July, compared with the same month a year earlier, says Nielsen. Social networking is among the fastest-growing activities on mobile de-vices, along with search and checking news, says Jon Stewart, Nielsen’s research director for technology and search.
With so many eyeballs increasingly fixated on mo-bile devices, opportunities for advertisers abound. Visiongain Research predicts mobile-social-network-related revenue will reach about $60 billion in 2012. Gobs of money is to be made from consumers buying virtual gifts when playing mobile games, for example, says Doug Bewsher, Mig33’s chief marketing officer.
A potentially fertile opportunity is with users of iP-hones and Google Android-enabled devices, who have shown an affinity to view ads from large screens.
“There is an enormous opportunity” for display and banner ads promoting movies, TV shows, autos and restaurants in specific areas, says Jason Spero, gen-eral manager of North America for AdMob, a mobile-advertising network.
Advertisers are smitten by the prospect of reach-ing millions of twentysomethings worldwide who are Smartphone devotees. Many of those users have shown a willingness to view online ads.
These users tend to be more tech savvy and younger, says David Berkowitz, senior director of emerging media and innovation at digital-marketing agency 360i. He predicts that as all-you-can-eat data plans become more widespread and affordable, mobile Internet use will explode, especially for social net-working.
“It’s more convenient: My cellphone is always with me. It’s part of my lifestyle,” says Courtney Collins, a 23-year-old hair stylist who lives near Detroit. She does not own a PC but is a religious user of Mo-coSpace and Facebook from her cellphone.
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Ads mobilize for social mediaMarketers salivate over Smartphone potential’
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Social games
About 65 million of Facebook’s 300 million members are mobile users. Eight months ago, it was 20 million. Of MySpace’s estimated 125 million members world-wide, about 25 million use mobile devices. A year ago, it was 6 million.
A significant slice of the growth is taking place in ur-ban settings and developing countries, among young people who cannot afford PCs. “Mobile social net-works have become a way of life for young people, especially for those who like to play social games,” says Mig33’s Bewsher. He says Mig33 is adding more than 500,000 users a month in Asia, Africa and the Middle East. The international service, with 25 mil-lion members, blends free and low-cost services, in-cluding VoIP calls, chat and instant messaging, e-mail, text messaging, photo sharing and social-networking features.
Forrester Research analyst Charles Golvin predicts that the next huge wave of Internet users — poten-tially billions of people in developing countries — will predominately use smartphones instead of PCs. In the USA, younger, economically challenged people in urban areas will “follow the same pattern,” he says.
“This might be the best way to bridge the digital di-vide,” says Justin Siegel, CEO of MocoSpace, a 4-year-old start-up that has a large following of young, non-white city dwellers who cannot afford PCs and use
mobile devices instead. The free service is also popu-lar among military members.
Often, it is a lifestyle choice. According to a Sprint survey, 80% of young adults (18-34) cite their wire-less phone as their “lifeline” to others.
“Lots of people, particularly younger ones, don’t want to be tethered to a desktop or even a netbook,” says Michael Osterman, an independent analyst.
Kevin Lomax, a 29-year-old singer/songwriter/pro-ducer in New York, notes, “These days, who carries a laptop unless you are a businessman?” He uses an iPhone and Palm Pre to post songs on his MocoSpace page, where he has 4,000 fans.
But with any nascent technology, promise doesn’t necessarily guarantee profitability, venture capital-ists and executives caution.
Actual ad revenue has been fleeting, says Tim Chang, a partner at venture-capital firm Norwest Venture Partners: “It has been a failure until now.”
“Ads on small cellphone screens can be a turnoff,” says Frank Meehan, CEO of INQ, a London-based maker of handsets for social-networking use in Europe and Asia. He thinks search-related ads hold more prom-ise.
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Penny-pinching shoppers look for coupons onlineSmartphones and social media add to the trend
By Jon SwartzUSA TODAY
The wobbly economy is contributing to a rush by mil-lions of online shoppers to a decidedly low-tech busi-ness: coupons.
The number of people scouring the Internet in search of coupons that they can print and present to retail-ers, or codes that provide them with discounts on re-tail sites such as Amazon.com, is up sharply.
Leading coupon websites reported record traffic on Cyber Monday. RetailMeNot had 1.1 million visitors, up 57% from a year ago. CouponCabin was visited 400,000 times, up 65% from a year ago. And Brads-Deals.com said traffic was up 174%, to 16,000 visitors per hour.
The growth has picked up since summer, when 44.1 million adults printed coupons they found on web-sites. That’s a 21% increase from the same period last year, says market researcher Experian Simmons.
What’s driving coupon use is not surprising: 42% of consumers intend to spend less online this Christ-mas than they did in 2008, says Nielsen analyst Maya Swedowsky, who surveys shopper attitudes.
“Any merchant without an aggressive coupon strat-egy is at a clear disadvantage,” says Loren Bendele, CEO of Savings.com, which works with more than 4,000 major retailers, including Apple, Gap and Home Depot. Coupon-related purchases at his site have doubled to $136 million this year vs. the same period in 2008.
One-third of all U.S. Internet users in October visited a deal-oriented site such as RetailMeNot and Cool-Savings.com.
It’s not just the recession driving the growth of on-line coupons. Internet use continues to grow. Smart-phones in particular are booming and adding a high-tech dimension to the phenomenon.
Shoppers can use their phone cameras to scan a product’s bar code and instantly find and retrieve a coupon to lower the price.
And social-networking sites including Facebook and Twitter are joining the ranks of destinations that offer coupons.
Coupons.com, the largest Internet coupon distribu-tor, is available on Facebook and Twitter, as well as 5,000 sites — most of them for grocers and manufac-turers — and through iPhone apps.
The confluence of trends raises the possibility that shoppers will continue to depend on coupons after the economy recovers.
“It’s like those who lived through the Depression and always saved after that,” says Darren Waddell, vice president of marketing at MerchantCircle, a social network for more than 1 million local business own-ers in the U.S. “People will be counting their pennies for a long time.”
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Businesses get cheap help from a little birdieTwitter bridges the gap with consumers quickly and inexpensivelyBy Jon SwartzUSA TODAY
When a Stanley Cup broadcast suddenly went black in late April, many Comcast subscribers simply scoot-ed to Twitter to find out why.
It was there — not on a phone system with multiple options — they discovered that a lightning storm in Atlanta had caused a power outage during the Phila-delphia Flyers-Pittsburgh Penguins hockey playoff game, and that the transmission would be restored soon.
“I did a search on Twitter as soon as the game went off the air,” says Dave Decker, 31, a Web developer in Pittsburgh who regularly tweets while watching sporting events. “The mystery was resolved in min-utes. Before Twitter, it would have been a nightmare trying to find out what happened on the phone.”
Comcast’s deft use of Twitter underscores what is be-coming a staple in modern-day customer service. In-creasingly, corporate giants such as Comcast, PepsiCo, JetBlue Airways, Whole Foods Market and others are beefing up direct communications with customers through social-media tools such as Twitter, Facebook and YouTube.
The popular communications technology has helped companies quickly and inexpensively respond to cus-tomer complaints, answer questions and tailor prod-ucts and services. It has supplemented current cus-tomer services, easing the load on call centers and expensive mailers that most consumers abhor. Twit-ter, Facebook, YouTube and online software services such as LiveOps, Salesforce.com and RightNow Tech-nologies are all are being used to improve customer
service, retain users and gain a competitive advan-tage.
“If you’re trying to hide from your customers, don’t use Twitter,” says Demian Sellfors, CEO of Media Tem-ple, a Web-hosting service. “We want to know what our customers think, both good and bad. That’s a good thing.”
As more companies effectively use social-media tools for customer care, it also is becoming easier to shift customer-relations resources to the U.S. and feed into the fledgling “homeshoring” trend. Home-based workers have become de rigueur among employers to take advantage of better technology, gain produc-tivity from employees no longer tied to long com-mutes and leverage the expertise of local workers.
There are about 200,000 so-called homeshored jobs — most of them in the U.S. — and more than 300,000 are expected by 2012, says Stephen Loynd, program manager for contact center services research at mar-ket researcher IDC.
“The competitive landscape for customer care is subtly changing because of technology like Twitter,” Loynd says.
Changing with their users
As Americans — especially younger ones — flock to Twitter, the companies that sell them goods and services are following them. Those companies view social-media services as the ideal vehicle to air com-ments, gripes and suggestions.
“It’s where a lot of our younger customers are,” says Bonin Bough, PepsiCo’s global director of digital and
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social media. His position and title changed eight months ago, reflecting the changing face of customer service.
In this emerging world, Frank Eliason is something of a legend. For more than a year, he has helped pioneer the use of Twitter as a customer-service resource at Comcast. “We can see in real time what our custom-ers think, and learn from them,” says Eliason, direc-tor of digital care at Comcast. He leads a team of 10 people for @comcastcares, which has nearly 24,000 followers.
“Social media is a natural extension of customer ser-vice,” says Bill Tolany, global coordinator of integrated media at Whole Foods Market. It has more than 50 Twitter accounts, tweeting on topics as specialized as cheese.
“The more ways you provide customers to contact you, you’re more likely to satisfy them,” says Elissa Fink, vice president of marketing at Tableau Software, a business-software maker that began using Twitter to improve customer service. “It shows you’re listen-ing to them.”
For many, call centers are out of the question — too frustrating, with long waits — and e-mail is too slow in an era of instantaneous online communications.
In some cases, Twitter is nurturing relationships be-tween retailers and customers. Consider Shelley Risk, a 29-year-old public-relations rep in San Francisco. When she ordered a designer sweater that proved to be defective, she tried to contact ideeli, the online re-tailer from whom she bought it. But she couldn’t find a phone number on the company’s website, and an e-mail message was not answered immediately. So she reached out to ideeli’s Twitter profile. Within 24 hours, the problem was resolved.
Social-media tools are fostering customer service through:
uDirect sales. Dell says it has sold more than $2 mil-lion worth of PCs through its @DellOutlet account
(over 710,000 followers) on Twitter since 2007.
uUp-to-the-minute service details. Twitter can func-tion like a real-time search for airlines and others. For example, JetBlue (@jetBlue; over 730,000 followers) assiduously answers traveler queries about flight times, delays and weather updates. “It’s like an early-warning system,” says spokesman Morgan Johnston. uCustomer feedback that leads to enhanced servic-es. Starbucks is using a blend of social media via Twit-ter (@Starbucks; over 230,000 followers), Facebook (3.2 million fans) and its own social-networking site (MyStarbucksIdea.com) for product ideas and feed-back. Splash sticks, the company’s new plastic plugs for sip holes, were created in part through feedback. Through social-media forums on Facebook and Ya-hoo, PepsiCo asked customers to visit its DEWmoc-racy website and vote on one of three choices for a new Mountain Dew flavor. More than 350,000 voted last year.
uOnline communities to exchange comments. Fa-cebook and MySpace, through their respective ser-vices, offer massive bulletin boards for consumers to weigh in on major brands.
Dunkin’ Donuts actively manages a fan page on Face-book with more than 825,000 fans. It used the page extensively to complement advertising and e-mail to inform customers on a new line of healthy foods and an iced coffee day event in April.
Harley-Davidson’s corporate profiles on MySpace (36,000 friends) and Facebook (175,000 fans) let it solicit comments from fiercely loyal customers. Har-ley also uses Twitter (@harleydavidson; 4,000 follow-ers) and produces videos of its motorcycles on You-Tube.
The creation of online communities extends to sophis-ticated software programs. Salesforce.com is helping 6,800 companies — including Comcast, Dell and Star-bucks — build online communities to solicit customer suggestions on how to improve operations.
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RightNow Technologies has created a social-media tracking service, dubbed Cloud Monitor, to monitor what customers are saying about brands and their products on Twitter and YouTube; a later version, scheduled for August, will add Facebook, MySpace and LinkedIn.
Whither call centers?
With so many social-media tools available, and con-sumers increasingly using them, this raises the ques-tion: Are call centers, direct mailers — even e-mail — things of the past for customer care? Hardly, say marketing experts and companies.
Though invaluable, social media is just a fraction of a company’s customer-service arsenal, says Peter Kim, a blogger who covers the topic.
For perspective, consider the size of call-center oper-ations for major brands. Comcast says it is unlikely to uproot its operations, which employ 25,000 — most of them in the U.S. — in favor of Twitter. “A majority of our customers prefer to contact us by phone,” Eliason says.
JetBlue has more than 1,500 call-center employees in the Salt Lake City area, most of whom work at home. “Twitter is for basic troubleshooting,” says Zsolt Ka-tona, a marketing professor at the University of Cali-fornia-Berkeley’s Haas School of Business. “Be careful not to ignore those who rely on the phone for cus-tomer support.”
That hasn’t stopped some companies, however, from exploring new ways to ease their dependence on off-shore call centers. New technology could usher in specialized customer service.
Several companies with vast call-center operations overseas plan to shift some jobs back to U.S. soil be-cause of advances in technology, says LiveOps Presi-dent Wes Hayden. LiveOps manages home-based contract workers who staff virtual call centers. The remote workforce approach is similar to eBay’s army of specialized sellers — most of whom work at home and are graded on their performance. Among its cus-tomers are Kodak and Colonial Penn Life Insurance.
“I am my own boss, and I have the flexibility to work my schedule around my farm and family,” says Lisa Hammond, 41, a home-based agent who takes sales calls for infomercials at a 20-acre farm in Goessel, Kan.
New technology also lets some companies plop cus-tomer-service reps at special facilities in the U.S. to handle calls. Contact Centers of America is readying a 32,000-square-foot facility with 270 workstations in Orlando that will mostly hire veterans, the unem-ployed, college graduates and retirees, says CCA CEO Joe Jacoboni.
“Brands aren’t about ‘messages’ anymore,” says Sales-force.com CEO Marc Benioff. “Brands today are con-versations — and today the most important conver-sations are happening ... through social media such as Twitter, Facebook and MySpace.”
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Twitter helps customer service but some com-panies are still getting a handle on social mediaBy Jon SwartzUSA TODAY
SAN FRANCISCO — When Wes Harper’s high-defini-tion cable service went on the fritz a few months ago, he hopped on Twitter and tried to reach Comcast’s customer service reps.
At the time, it seemed the best course of action, giv-en Comcast’s sterling reputation on the social-media service.
But Comcast ignored him, pushing Harper, a 26-year-old digital-media strategist in Naples, Fla., to take ex-treme measures. He began a campaign of “flaming” Comcast with withering tweets.
Eventually, he got Comcast’s attention, and the issue was resolved.
Leyl Master Black had quite a different experience. Instead of looking for a Dell rep after her PC’s hard drive died, Black got the rep to come to her.
After Black griped on Twitter, a blogger friend put Black in touch with a Dell expert. Problem solved. “It was so quick,” says Black, 39, of San Francisco.
Such are the vagaries of customer support on Twit-ter. Hailed as the Next Big Thing, customer service through tweets is a work in progress, says Pete Black-shaw, executive vice president of digital strategic ser-vices at Nielsen. The performance of many compa-nies has been uneven as they try to handle a crush of customer queries, integrate Twitter into their overall strategy and manage the heightened expectations of consumers.
“Social media is not a panacea,” says Blackshaw. “It is a catalyst for fresh thinking on how companies can
improve customer service in the digital age.”
More than half of the Fortune 100 companies are using Twitter for customer service, recruiting em-ployees, blasting news and announcing promotions, according to the study by public relations firm Bur-son-Marsteller and its digital-media unit, Proof. Yet a recent Deloitte survey concludes that organizations continue to struggle to harness social media’s full po-tential.
The “instant gratification” trap
“Companies go in with expectations too high, and they risk disappointing customers who don’t get prompt replies,” says Lloyd Trufelman, president of Trylon SMR, a public relations firm for media com-panies.
Twitter should augment customer service, not be some magic bullet, he says. “If a company’s DNA is not truly dedicated to listening and responding to customers in a genuine and timely manner, no tech-nology will provide a solution.”
Michael Brito, who left Intel as director of social me-dia this month to take a similar job at Edelman Digi-tal, acknowledges it is “impossible to respond to ev-eryone on the social Web unless you have an army of thousands of people on your staff.”
There is also the misperception among many Twitter users that they have higher priority for help.
“Twitter is like a tragically hip New York night club,” says Bob Warfield, CEO of Helpstream, which pro-vides customer service technology to companies. “It is a cool, easy way for companies to engage custom-ers in social media. But the experience can be loud and crowded.”
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Companies are spending millions of dollars on their Twitter operations, a fraction of the multibillion-dol-lar customer service industry.
Consumers certainly are looking for help on Twitter. In one recent survey, 58% of respondents said if they had tweeted about a bad experience, they would like the company to respond to their comment.
Easier said than done, customer service experts say. There are simply not enough resources to handle the avalanche of tweets, says Jason Mittelstaedt, chief marketing officer at RightNow Technologies, a pro-vider of customer service software that oversaw the survey.
That’s especially true, he and others say, when so many consumers use the Internet day and night, ex-pecting immediate results. “They want instant grati-fication,” Mittelstaedt says.
Often, results depend on the scope of the problem, the availability of support staff online and the time of day. Getting a prompt answer at 3 a.m. isn’t likely.
“Twitter is not perfect, but there are a lot of benefits that outweigh some of these hiccups,” says Frank Eliason, director of digital care at Comcast. Above all, Twitter has made Comcast “more transparent and showed the benefits of listening to our customers through all communications channels.”
He has 11 people working under him to handle que-ries from 33,500 followers. He points out that Com-cast uses Facebook, YouTube, blogs and help forums in addition to Twitter.
“Solving a technical issue in 140 characters is hard,” says Toby Richards, head of Microsoft’s community and online support. Its @MicrosoftHelps, devoted to Windows 7, has 3,500 followers. There are plans to beef up support for non-Windows 7 products as well.
“It’s like being a high-tech concierge,” he says of @MicrosoftHelps’ seven full-time employees and much larger support staff. “Our tweets have links to solu-tions. The essence is for followers to help one anoth-er.”
Ideally, Twitter should be one of several solutions. A small and manageable operation smartly augments strong phone, e-mail and online chat support, says Rich Buchanan, chief marketing officer at home phone service Ooma. Its five-person team serves about 1,000 followers.
With such a large ratio of Twitter followers to com-pany reps, it is likely the customer service experienc-es of consumers will continue to run hot and cold, Nielsen’s Blackshaw says.
“Twitter is raising the bar, but anyone who oversells it is succumbing to digital hype.”
As seen in USA TODAY MONEY Section, Wednesday, November 18, 2009, Page 3B
Reprinted with permission. All rights reserved. Page 13
As seen in USA TODAY MONEY Section, Monday, October 26, 2009, Page 1B
Are retailers going too far tracking our Web habits?By Jayne O-DonnellUSA TODAY
Sherry Natoli is followed everywhere she goes while shopping online, but she doesn’t mind at all.
Natoli, who owns a seashell business in Tampa, does all but her grocery shopping on the Internet and even opts in whenever she’s asked whether she’s willing to have her online movements tracked by Web sites.
Companies have been monitoring our online behav-ior for almost as long as there’s been an Internet, of-ten using our online footsteps (cookies) whenever we search, browse or buy online. Tracking technol-ogy has advanced so much that everything from how long we linger over a product description to whether we are searching for sexual-dysfunction drugs can be collected and stored on individual profiles. Our pro-files are numeric descriptions, not our real names, but in some cases, it’s not hard to determine personal information behind the numbers.
Privacy concerns abound, and several privacy and consumer groups are urging Congress to enact laws on what can and can’t be collected and for how long. But the tracking continues in earnest, in few places more avidly than among retailers. With the approach of a holiday season that even the most hopeful of in-dustry analysts think will see only a 1 percent sales increase, retailers are increasingly turning to the Web for answers - and sales. Even retailers beating the odds, such as thriving teen retailer Aeropostale, find their online growth far surpasses that in their brick-and-mortar stores.
Aeropostale has been among the few chains to post monthly sales increases, typically less than 15 per-cent, but online-only sales were up 85 percent last year.
Macy’s CEO Terry Lundgren said recently that for every dollar its customers spend online, they spend an additional $5.77 in its Macy’s and Bloomingdale’s stores. Online sales made up only 6 percent of all re-tail commerce last year, but store operators believe that if their Web sites help capture customers’ wants and needs, they will do better on and offline.
By monitoring the browsing and buying behavior of consumers who visit their Web sites, stores are able to better target online and e-mailed promotions to what consumers are most likely to buy. They occa-sionally adapt their home pages to the shopper. And as Amazon has been doing for years, they also can use what products other shoppers have purchased to knowledgeably recommend additional purchases. The e-commerce marketing company Coremetrics says consumers are 50 percent more likely to open and click through a targeted e-mail than a generic one. And targeted e-mails generate 50 percent more revenue than generic e-mails, the company has found.
So it’s all very successful but still controversial.
“It’s a very touchy subject,” says Joseph Davis, CEO of Coremetrics, which counts Macy’s, Petco and REI among its clients. “It’s a double-edged sword: The more granular data you can get about the person, the more successful you will be, (but) some don’t want the data to be used.”
Tracking can help
Jessica Rich, the Federal Trade Commission’s act-ing director of privacy and identity protection, says the agency recognizes behavioral tracking can help consumers when promotions are tailored to different shoppers. The agency has been studying the issue for years and issued voluntary guidelines for marketers
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in February. But if Congress were to act on the issue as they are being urged to, the FTC could make its guidelines mandatory.
“Our concern here isn’t so much that you’ll be served an ad based on where you are on the site,” says Rich. “It’s that profiles are developed that will follow you around on the Web and potentially could fall into the wrong hands.”
Jeff Chester, executive director of the Center for Digital Democracy, hesitates before noting there are some benefits to consumers when stores send adver-tisements for products they might want - as long as “individuals have more control.” But Chester says it’s all part of a slippery slope.
“We don’t know what data is being shared or sold,” he says. Retailers and the consultants who work on their online marketing insist most use the informa-tion they collect on their sites - or their Facebook fan pages - only for advertising and other pitches for the site it was gathered from. That’s unlike the net-works of advertisers and other marketers that share data across sites. Under pressure from government officials and privacy groups, retailers are also increas-ingly disclosing what they are doing and letting con-sumers opt in or out.
A survey of 1,000 consumers released last month by professors from the University of Pennsylvania and the University of California-Berkeley found almost 70 percent were opposed to online behavioral tracking by advertisers, and even more were opposed after they were told how the tracking was done.
But the National Retail Federation says that whatever concerns shoppers may have, they’re not avoiding online shopping because of them. In a survey of 2,600 consumers released last week, NRF asked for the pri-mary reasons why shoppers might not be increasing their online spending this year. Privacy concerns and
worries about “online tracking” were named by only 0.1 percent of shoppers, the smallest factor. The cost of shipping, on the other hand, was the biggest con-cern, with almost 23 percent citing it.
Critics argue that people aren’t more worried be-cause they don’t understand how sweeping the tracking can be, while industry officials argue those who worry often don’t recognize the upside.
“Retailers could do a better job explaining the ben-efits of letting them capture some information about you,” says Davis. “If people say, ‘I just want to opt out,’ they don’t find out about the sale and don’t get cou-pons for discounts.”
Victoria Thornton of Dayton, Ohio, says she appre-ciates getting ads based on what she’s searched for online, but she is concerned about “personal infor-mation being stored and rerouted.” Her mother feels even more strongly, she says: “The thought of some-thing documenting and then anticipating her inter-ests unnerves her.”
Natoli, who has an eBay store, isn’t worried.
She likes it when Ann Taylor and Victoria’s Secret suggest other things she might like to buy and has bought more from both stores because of the feature. She gets e-mail only from Ann Taylor when it has a sale, which is the only time she buys, so she appreci-ates that, too.
And the targeted promotions she gets from book-sellers Barnes & Noble and Borders really can reso-nate. She says one of them recently sent her an e-mail saying, “What’s the matter? You don’t like books anymore?” It included an offer for $20 off her next purchase.
“So of course, I had to order,” she says, laughing.
As seen in USA TODAY MONEY Section, Monday, October 26, 2009, Page 1B
Reprinted with permission. All rights reserved. Page 15
How retailers will shop for customers
Ways behavioral research will be used more often this holiday season:
E-mail promotions. Despite the increasing interest by marketers in social media, e-mail pitches remain a favorite. But how to stand out amid all the clutter? By targeting promotions to what people have bought or are likely to buy. “What doesn’t work is to send lots and lots of e-mails to people, and they click the ‘report spam’ and weld their mailboxes shut,” says Stephen Webster, co-founder of the e-mail marketing company iPost. “But when you send the right thing at the right time, they are absolutely delighted to get it.” What’s wrong is typically deals that aren’t customer-specific, Webster says.
Product recommendations. L’Occitane, the French skin care and home products retailer, has found its customer information is far more helpful in honing in on what its customers are likely to buy than the sug-gestions its internal buyers come up with. Matt Kritzer, L’Occitane’s e-commerce director, says its buyers tend to recommend only the products that they are most familiar with, while its customers tend to scour the site for just the right items. It’s changed the creams and lotions that the site suggests with certain pur-chases.
Cathy Haustein of Pella, Iowa, says she realizes there isn’t much privacy online and enjoys getting “these tailored-to-me offers.” Like gift givers themselves, however, the programs are hardly infallible. “Sometimes what the computer programs think I might like amuses me,” she says.
Targeted home pages. When Joseph Davis, CEO of the e-commerce marketing company Coremetrics, drives to a shopping mall, he always parks outside the store and department he wants to enter. He thinks retailers should offer online shoppers the same. A few, including Orvis, do. Behavioral tracking allows retail-ers to provide home pages that let consumers start the shopping process, say, in children’s apparel or even kids’ jeans if that’s all they ever buy on a site. It can save several click thoughts to children’s clothing and then the gender, age and type of clothes they’re looking for.
Gift cards. Along with possible counterfeiting, one of the challenges plastic gift cards have presented to retailers is that they know little if anything about the people they are purchased for. But online gift cards hold benefits: The “cards” come with identifiable information about the buyer and the receiver, says David Stone, CEO of the online gift card company CashStar, which helps retailers and restaurants “remarket” to both.’
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Discussion Questions
1. Marketers are using social media to engage consumers directly in the process of building a brand’s image. From the perspective of marketers, consider the pros and cons of giving consumers more control to de-velop a brand’s image.
•Ifyouwereconsultingwithamarketer,whatwouldyourecommendarethemostimportantdiffer-ences between building a brand using only traditional one-way communication channels (e.g., print newspaper, broadcast television commercials) versus relying heavily on social media?
2. Ads mobilize for social media; Marketers salivate over Smartphone potential (Swartz, Oct. 21, 2009) dis-cusses advertising using social media for mobile devices. Compare and contrast social media mobile ad-vertising to other traditional forms of advertising. In particular, compare social media advertising and traditional advertising in terms of:
3. Penny-pinching shoppers look for coupons online; Smartphones and social media add to the trend (Swartz, Dec. 2, 2009) discusses using social media to deliver online coupons and promotions.
•Promotions,discounts,andcouponsareafundamentalmarketingtool–howhavetheybeenchangedby social media?
•Someconsumersusemainlytraditionalcoupons,whileothersusemostlycouponsaccessedthroughsocial media. Others avoid coupons entirely. How are the characteristics and behaviors of these consumer groups different (aside from coupon usage)? What sort of implications might that have for businesses that are considering launching social media coupons?
4. Some brand managers have characterized brand management prior to social media as a process of “selling & telling” or “telling your story.” However, many brand managers today have voiced the opinion that brand management in today’s world is about “creating a conversation.”
What is the new role of consumers? Where does social media fit into this new branding paradigm?
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5. Several of the articles discuss how consumers are using social media technologies to circumvent traditional forms of customer service (such as call centers).
product, service, or company? Does it depend on the type of customer? •Considerboththeshort-termconsequencesandlong-termconsequencesofcustomersusingsocial
media as their first choice for resolving service issues. What are the implications from the stand-point of (1) the companies’ costs for providing customer service, (2) the companies’ revenue stream, and (3) customer satisfaction?
6. Based on these articles, do you believe social media technologies will eventually replace traditional adver-tising, or do you think social media will be used to compliment traditional advertising? What businesses are likely to replace their advertising with social media? What businesses may be better suited to using traditional media?
7. Fast forward to ten years into the future. Consider how current social media technologies will be used in the future, and speculate on what sort of social media technologies will emerge and be used by marketers and consumers. How do you think the use of social media in marketing will stay the same ten years in the future, and how do you think it will be different?
8. One of the most important areas of marketing innovation has been in the monitoring and measurement of customer response to advertising efforts. Based on your readings, consider how different social media technologies can be used to track important marketing performance variables like:
In many cases, social media is an imperfect tool at measuring these types of marketing variables. Discuss the advantages, and the weaknesses, of using various social media technologies to monitor these different variables. You may want to conduct additional research to understand the way marketers define terms like satisfaction, loyalty, brand image, etc. compared to common-language definitions of these terms. The American Marketing Association’s website (see Additional Resources) has a dictionary of many marketing terms.
9. Think about the last time you researched a product or service before you made your purchase. •Didyouuseanysocialmediacontenttoinformyourchoice? •Ifso,whatkindofsocialmediadidyouuseandhowdidyouuseit? •Ifyoudidn’tusesocialmedia,whatotherinformationsourcesdidyouuse?
Reprinted with permission. All rights reserved. Page 18
10. Think about Are retailers going too far tracking our Web habits? ( O’Donnell, Oct. 25, 2009).
has in regards to managing online personal information? •Thinkaboutchildrenborntodaywhohavebeenexposedtosocialmediasincetheirbirth.Doyou
think their attitude toward managing online privacy will be different than adult consumers today?
Critical Inquiry
1. Many of these articles emphasize how medium to large businesses are using social media, but social media is being used extensively by small and local businesses as well. Get into a small group and identify a small local business that you think could utilize social media as part of their promotions, advertising, branding, and/or customer service. Provide specific recommendations, and explain why your social media sugges-tions are appropriate considering the type of business (e.g. credit union, restaurant, auto repair, etc.) and the needs of current or potential customers. Develop a brief (three to five minute) presentation that de-scribes the business, your social media recommendations, and why you believe your recommendations are appropriate.
Alternatively, identify a local business that is interested in developing a social media presence based on your analysis and guidance. Meet with the local business manager or owner to understand the business, their customers, competitors, and current advertising practices. Then, build a social media marketing plan for the business, and develop a brief three- to five-page report of your recommendations and rationale.
2. Some of the articles mention how consumers used social media to spread their dissatisfaction with a par-ticular business. Do you think that such activities really have an influence on other consumers’ decisions? Design a brief survey (using an online tool or a paper-based survey) to assess if consumers have been influenced to not make a purchase or to avoid a brand based on information spread across a social media platform like Facebook, Yelp, etc. As a basis of comparison, also survey if consumers have been influenced to avoid a product or brand based on: (1) their own personal experience, (2) reviews from professional sources (such as Consumer Reports), and (3) recommendations of close friends or relatives. You may want to select a particular type of product or service (such as digital cameras or high speed internet service), and be sure to also capture critical consumer characteristics (gender, age, etc.). After collecting the data, tabulate the results and interpret your findings. Based on your research, how important of an issue do you think it is for businesses to monitor negative consumer sentiment on social media platforms?
3. Identify two major brands that compete against one another (for example, Apple and Microsoft), and con-duct an audit of the brands’ social media presence. By searching news articles and various social media sites, create a list of the different social media used by each brand. Then, compare and contrast the two brands’ social media presence. Imagine you were hired as a business consultant for one of the companies, and create either a brief report or presentation with your research process, findings, and recommenda-tions. The website www.engagementdb.com (by strategy consultants The Altimeter Group) illustrates one way brands are being evaluated by social media presence.
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4. Imagine you own a local, independent book store in your neighborhood. You plan on using a promotional coupon to entice brand new customers to experience your store and make a purchase. First, design a coupon that will be used in local newspapers. Then, design a coupon that you will place on a social media website and be easily accessible with a mobile device. For each coupon, think carefully how to: (a) reach the intended audience, (b) motivate the intended audience to make a purchase, and (c) track the performance of your pro-motional coupon. In what ways would the promotional coupons be similar or different?
With a small team, design a brief presentation or report than illustrates (1) the two promotional coupons, (2) where the promotions will be placed (exactly which newspaper and social media site), (3) the target audi-ence for each coupon, (4) your budget for each coupon, and (5) how you will track the relative performance of each coupon.
5. Several articles suggest that the challenging economic climate for many American consumers is changing their expectations for businesses, products, and brands. Do you agree with this? Search USATODAY.com for evidence that either supports or challenges the effect the current economic climate has on consumer expec-tations and behaviors.
these new consumer expectations? Provide specific examples of how you think a business could adapt to changing consumer sentiment.
Additional Resources
u�Word of Mouth Marketing Association
http://womma.org/main
Word-of-mouth marketing frequently uses social media technologies as part or all of a marketing cam-paign. Best practices, case studies, webinars and other research about word-of-mouth marketing and social media are available through the WOMMA. WOMMA is a non-profit association formed in 2004.
uBrandweek Magazine
http://www.brandweek.com
Brandweek Magazine is published by Nielsen Business Media and covers a wide array of marketing issues. The online edition regularly provides news articles covering how business are utilizing social media, the challenges facing marketers with social media, and innovations in social media technologies.
uAmerican Marketing Association
http://www.marketingpower.com
The American Marketing Association (AMA) was created in 1937 and is the largest marketing association in North America. The AMA provides numerous seminars (both virtual and real) about social media best practices. In addition, the AMA publishes industry and academic literature on the topic of social media. A great deal of social media information is freely available from marketingpower.com or the AMA’s print
Reprinted with permission. All rights reserved. Page 20
publications, while some is only available to registered members (highly discounted annual memberships are available to students).
u�Groundswell: Winning in a World Transformed by Social Technologies (2008) by Charlene Li and Josh Bernoff
http://blogs.forrester.com/groundswell/
Considered to be one of the most important books (among other honors, winning a 2008 Strategy+Business Best Marketing Book honor) about social media and its impact from a business standpoint. The accompa-nying blogs compliments and extends the material discussed in Groundswell.
uThe Altimeter Group
www.engagementdb.com
Case study expert: Andrew M. Baker
Andrew Baker is a Ph.D. candidate in the department of marketing in the J. Mack Rob-inson College of Business at Georgia State University in Atlanta, Georgia. His disserta-tion investigates how social media and word-of-mouth communications affect the marketing performance of brands and firms.
Andrew earned his MBA and graduated Magna cum Laude from Oakland University in Rochester, Michigan.
