Ecmod special report: Social media can provide multiple benefits but not necessarily direct sales
Incorporating social media into their marketing activities can provide retailers with a significant boost to their levels of customer engagement and also drive increased revenues across their various channels.By Glynn Davis
Speaking at the ECMOD Conference 2012 in London this week Gary Kibble, group brand director at Shop Direct Group, highlighted how the combination of social media aligned with celebrity endorsement had delivered myriad benefits to Shop Direct – particularly for its Littlewoods brand.
Harnessing social media
“We’d learnt to our peril last Christmas the power of social media when we said Santa did not exist and there was a backlash. We saw how potentially destructive it could be for our brand. So we thought about how to make social media a positive thing for us,” he says.
The answer has been to link social media to its Littlewoods Live broadcasts, of which three have been aired over the past six months. Each involves a one hour interactive broadcast featuring a combination of Laurence Llewellyn-Bowen, Suzi Perry and Myleene Klass.
When this is then tied to the group’s growing e-commerce and mobile commerce activities then Kibble says it has collectively had a big effect on: boosting the group’s fan base on Facebook; delivering positive PR; and generating revenues from both supplier funding in the form of advertisements, and improved conversion rates on product ranges featured within the broadcasts.
The returns have led to the broadcasts becoming a feature of the group’s marketing strategy for the year ahead: “We’ll be running Littlewoods Live through 2013, starting with a fitness special in January.”
Engagement through social media
Martin Newman, founder and CEO of Practicology, agrees that engagement with customers is becoming an increasingly important element of retailing as business is now undertaken over multiple channels and the use of social media continues to grow.
He cites Burberry as an exemplar in engaging with its customers through the use of digital channels – including social media. “They’ve worked out how to get the most out of digital. More than 60% of Burberry’s marketing budget is now spent on digital, which is three times the average,” says Newman.
An example of its use of social media was its distribution of free samples of its new Body perfume that was sent to 250,000 people via a Facebook promotion, which Newman says created great engagement and added value for Burberry fans and customers.
He adds that this highlights how the company is using Facebook positively to engage with its customers having recognised that the “jury is still out” on the potential for Facebook to be used as a channel for directly selling goods.
Social business models
Naked Wines has possibly gone one further, with Eamon Fitzgerald, chief operating officer of Naked Wines, suggesting it is a wholly social business – whereby it takes money from its members who then invest collectively in small winemakers. These customers then take delivery of exclusive bottlings of wine.
“We’ve gone far beyond Facebook and Twitter. We’re a business where people come together and fund independent winemakers. It is how we are taking on Tesco,” he says, adding that this model is also in operation within other retail categories.
Fitzgerald cites Made.com in the furniture sector and Unbound in the book industry as retailers who are also using a social model to rock the boat in long-established product categories.
Each of the company’s also benefits from the use of social media as their satisfied customers use it to promote the businesses. Fitzgerald says the Naked website also “lives and breathes social media”.
He explains: “It allows comments to be made and for ratings to be given on the wines. And all the wine makers have their own ‘wall’ where everything goes – it’s naked, we don’t hide any comments.”
Improving home delivery
Ratings are also an important part of the revolutionary home delivery business Shutl that offers 90 minute delivery – typically delivering goods between retailers’ stores and the customer’s home/office.
Because the model relies on around 3,000 courier companies, who typically deliver goods less than 10 miles for Shutl’s customers that include Argos, Aurora Fashions and wine business Laithwaites, it is important to gain feedback on their individual service levels.
Tom Allason, founder of Shutl, says: “The quality of the ratings determines the volumes of business they receive and they can also demand higher prices.”He says 25% of customers respond to questions relating to feedback on the service and the satisfaction level to date across the whole business is 93.5%.
This is helping Shutl win new business, especially when another of its key advantages is that it helps multi-channel leverage their stores bases. “They can leverage what Amazon has not got. It’s about convenience, not just price and range,” adds Allason.
Leveraging the store base
One of the new customers is toy chain The Entertainer that has 78 shops and an aggressive opening programme of 12 to 15 new outlets per year. Duncan Grant, director of multi-channel at The Entertainer, says the company is two years into a five-year multi-channel strategy that involves around 10% of the work relating to those things that are visible to the customer – the “easy bits” such as the website.
In contrast, he says 90% of the project is on behind the scenes activities and centres on having real-time company-wide visibility of stock. Only then does Grant say that the company will be able to tell the customer exactly what delivery options are available.
This will include Shutl, which will enable The Entertainer to be able to provide fast home delivery to a growing base of online customers without having to build a larger distribution warehouse in the future.
It also “piggy-backs” on top of the company’s existing click & collect service that is presently able to provide a 30-minute service compared with the much lengthier two days before the business embarked on its multi-channel project.
Simplifying delivery options
This greater focus by retailers on improving the delivery experience for customers and the emergence of the likes of Shutl has not been lost on Royal Mail, which is over-hauling its portfolio of delivery options.
Mike Newnham, chief customer officer at the Royal Mail, told delegates that the challenge is to make things easier for the customer and having the present 58 choices when its retail customers only focus on eight of them is not sensible: “We’re introducing a simplified portfolio next year.”
And from February 13th Royal Mail is also introducing a tracking service to enable retailers to track returned products, which it hopes will address the increasingly important issue of dealing with the growing levels of returned products that are an unsurprising result of the continued growth in online sales volumes.
