Social Marketing & Supply Chain Management: The Next Consumer Data Challenge and Opportunity

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Social Marketing & Supply Chain Management: The Next Consumer Data Challenge and Opportunity

Social marketing tools and Web 2.0 technologies now permeate our everyday lives.

A recent Forrester Research report states that three of four adults who go online in the United States are leveraging social content on a regular basis (The Growth of Social Technology Adoption, Forrester Research, October 20, 2008).Whether it is checking a friends status on Facebook, tweeting about the Super Bowl on Twitter, looking for a job via LinkedIn, receiving text messages from a political candidate or joining a Twilight fan group on Ning, growing numbers of people are participating in technology-based communication, entertainment and socializing activities.

Corporations are also embracing these tools to accomplish a variety of goals. Best Buy has started the social networking site Blue Shirt Nation to allow its employees to communicate and collaborate online. In March 2009, Skittles launched a new web-based marketing campaign that replaced its traditional web site with real-time feeds from a variety of web 2.0 outlets, such as Wikipedia, Twitter and YouTube.

              Benefits of Social Media Marketing   
          (% of Respondents, Multiple Response OK)       

Benefit % Responding
Generated exposure81%
Increased traffic, subscribers, list 61%
New business partners 56%
Increased position in search rankings 52%
Generated qualified leads48%
Reduced overall marketing expenses45%
Helped close sales 35%

  
A March 2009 social media study by Michael Stelzner for the Social Media Success Summit 2009 found that 88 percent of marketers surveyed say they are now using some form of social media to market their business, but 72 percent of those using it say they have only been doing so for a few months or less.

As corporations increasingly integrate social networking tools into their own internal initiatives as well as external marketing campaigns, the question arises: Can retailers and consumer product companies leverage these tools and the demand signals they render to better run their supply chains? The answer is a resounding yes.When these tools will become fully integrated in both retailer and consumer product companies supply chain strategy, however, is not as clear.

What social intelligence means to retailers and consumer goods companies

Retailers and consumer goods companies have always sought to make their supply chains faster, more efficient and more intelligent when it comes to understanding end-consumer demands. Who is buying - and more important, who is not buying - a product is the Holy Grail of information for these companies.

Historically, companies have sought to gather this information via focus groups, credit card purchasing behaviour and the capture of point-of-sale (POS) data at the cash register, as well as other methods. These tools give companies some pieces of the puzzle, but the missing piece is the direct voice of consumers en masse. Social media now gives the consumer the platform and tools to have their voices heard on a scale that is large enough to create real value for retailers and consumer goods companies.

Consumers have been leveraging social tools for years to discuss and comment on retailers products, customer service and brand image, and its only becoming more pervasive.

Smart companies recognize the value inherent in harnessing the power of social intelligence to improve their communications with the end consumer, as well as to better understand demand signals and therefore achieve supply chain efficiencies.

Looking to social intelligence to improve product design, development and marketing

Retailers have the opportunity to leverage social intelligence to assist in the design of their own private-label products, collaborate closely with consumer product companies to ensure proper product development and more important, keep a pulse on what consumers are saying about products. There is tremendous potential for retailers and consumer goods companies to encourage elite online communities to aid in the design and development of new products. How can these companies take this from concept to reality?

First, companies need to survey their existing client base to determine if there are already communities engaging in related discussions. As increasing numbers of companies begin to look for ways to exploit social intelligence, the dynamic will be similar to what occurred in the late 1990s when companies across all industries recognized the need to become part of the internet community, and therefore rushed to develop their own web sites. And as technology evolved and strategies matured, retailers began to add e-commerce capabilities to their sites. Today, a significant portion of consumers are just as comfortable making both small and major purchases online as they are buying the same items in a traditional brick-and-mortar store.

A similar evolution will likely occur with social intelligence and how it is leveraged by companies. For example, companies can leverage tools provided by Facebook to establish a company presence, attract fans, communicate with customers and gather information. Companies such as Old Navy have created Facebook pages that contain their latest videos, allow fans to post comments to their wall, have pictures of stores and products, and even give visitors access to coupons. The Old Navy Facebook page includes a note that states, if you post comments on the Old Navy Wall, you are agreeing that those comments may be used publicly in our stores, and included on audio and visual media, including without limitation videos and DVDs. The retailer has clearly recognized the intrinsic marketing potential of social networking sites. These communities are easy to start and can grow in a very viral manner.

The hard work begins when retailers and consumer goods companies try to harvest the valuable information from these communities to influence their product design and send signals into the supply chain. Retailers can employ traditional promotional tools - such as coupons, private sales, free shipping, and early promotions - to reward consumers that help aid in product design. These communities need to be nurtured because they serve as a focus group on demand. The community can not only assist via providing inputs into product design, but can provide retailers with real-time feedback that will impact their supply chain. How? For example, on the Old Navy Facebook page, there is a discussion about the use of sweat shops in the production of clothing. Old Navys executives can access this candid discussion and learn what their customers feel about sourcing and manufacturing strategies.

Finally, once product is in the marketplace, companies can monitor public opinion via tools such as Twitter or consumer sites such as FatWallet.com to gauge reaction about their products. The potential exists here to both identify demand signals as well as to identify problems with a product, enabling retailers and consumer goods manufacturers to adjust their supply chains accordingly. Rather than waiting for reports to come from various channels or sifting through mounds of POS data, companies can leverage true real-time data. It is easy to see how the information could be gathered. For example, similar to how Twitter monitored comments about the Super Bowl during the game, retailers could encourage consumers to tweet their feelings about certain products within the store and then look at a Twitter map to determine how their promotions are being received. Rather than receiving a delayed signal that consumers in New England were not happy about the colors available in a certain product, a retailer could see the reaction in real time from the tweets.

Additionally, there are sites such as expotv.com that enable consumers to upload their video testimonials of products ranging from the BlackBerry Bold to the latest Dyson vacuum cleaner. While this information may not be real-time data, it is information conveyed in the consumers voice. Retailers and consumer product firms need to monitor these signals and understand how they can better react, adjust and leverage the rich data.

Addressing areas of concern

As with any new technology, social intelligence will raise resistance and concern within the retail and consumer goods industries. Undoubtedly it already is; some of it will be warranted and some will come from laggards fearful of change. There are a few major concerns that companies should be prepared to address.

First is the privacy issue. Within online communities, companies will want to aggregate and access the kind of valuable demographic data that individuals may be hesitant to provide. Retailers and consumer goods manufacturers can overcome this issue by enticing elite consumers to opt in to communities. Members of these communities will be able to enjoy increased perks in exchange for providing more personal data. Those who opt not to provide this data will still be able to comment and provide feedback but will not receive the same rewards or be leaned on as intensively as those in the elite group.

The second potential roadblock is a fear of losing control of proprietary information. This concern has permeated early adopters looking to leverage social media to perform such functions as product development. When done properly, however, companies will see more value in being open with their community rather than worrying about what a competitor might learn from the forum.

In addition, companies may find it daunting to extract the valuable data gained from social media tools from the inherent and invariable noise that will be included. They will need to ensure that they can take the potential mountain of unstructured data that will inundate them and make it useful. The companies that can achieve this will reap significant financial benefits.

Finally, companies may be wary to create an open forum that may allow negative commentary to snowball. To counteract this possibility, companies must create dedicated resources to monitor social channels and attempt to address the issues before they get out of control. The ability to complain in cyberspace already exists, which is the reason why companies such as Comcast have the dedicated resources to monitor these sites and react before the problem gets out of hand.

Leveraging social intelligence to stay ahead of the curve

Good supply chains incorporate a constant feedback loop: plan-do-check-act. Social intelligence strengthens this loop by serving as another critical consumer data source that facilitates more robust and faster planning and checking. Feeding social intelligence signals into the supply chain management process offers vast potential to improve product designs and better plan for demand. Rather than having only static signals, the consumer products supply chain can enjoy the dynamic and rich content afforded by social intelligence.

While social intelligence does not replace traditional means for companies to gain access to end consumer information, it does give them another important signalthe unfiltered voice of the purchaser. Those companies that learn to generate, understand and integrate this signal within their supply chains will achieve improved customer satisfaction, greater market share and increased profit margins.

To take advantage of the power of social intelligence, companies must ensure the proper resources are in place to create and monitor the communities discussing their brands. Just as companies need to have the systems in place to accept demand signals and to infuse them into supply chain planning engines, they will also need to ensure they have similar discipline in incorporating signals from social intelligence into their planning. Companies can pull this data into dashboards that will enable them to understand where and how items are being sold. In aggregate, the signals can provide retailers and consumer products companies with rich data that will ensure better planning and improved response from their supply chain.

Guy Courtin is a contributor to Supply Chain Leader.

Gurdip Singh is vice president of Services for i2s Retail and Consumer Industries business unit. 

INFORMATION: Free information is available from i2 Technologies on the subject in this story. Click here to request a copy

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