Focus Management Group

Using Social Media As An Effective Marketing Tool

Retailers today are looking for opportunities to improve their contact and their relationships with their customers.  Solidifying the relationship is critical to repeat business, which in turn is critical to success.  The potential advertising opportunities brought about by various social media sites can be an impressive opportunity for retailers, even small retailers, to drive customer relationships and repeat business.

The purpose of this article is to explore the opportunities available through Twitter, Facebook and Groupon; however, the principles would also apply to Living Social and the like.

Let’s Explore Twitter

Twitter is an information network that millions of people, organizations, and businesses use to discover and share information in up to 140 character bursts – or tweets. These tweets are made public to a group of subscribers who have expressed interest in receiving tweets, known as “followers”. Followers receive the tweet messages in real-time, which allows people to receive powerful communication instantly.

A retailer can use Twitter to share information, offers deals, and build relationships with customers who have expressed an interest in that retailer. Twitter also allows retailers to listen to what customers are saying about the retailer’s products and services, and provides an opportunity to respond to compliments and complaints immediately. This offers the customer a unique opportunity to communicate with the retailer, and the retailer a unique ability to impact the buying experience.

Successful Twitter users include the increasingly popular food trucks.  In one example, the mobile food trucks use Twitter to divulge their location, in advance, to their followers.  Followers become an exclusive club of customers with first access to the daily specials.  Another successful example of the use of Twitter is a combination of Twitter messaging and a food truck iPhone application.  The free ap, Eat St, allows users to read all Twitter feeds from food trucks in the users current area, as well as see menus, hours, pictures, etc.

Twitter has compiled some simple best practices that would assist retailers as they build followers and make an impact on the marketing efforts:

  1. Share.  Sharing photos and behind the scenes information about the business helps customers identify with the retailer.  A successful technique has been to show followers developing projects and events as they are planned.
  2. Listen.  Regularly monitor the comments about the company, its brand, and its products.
  3. Ask.  Ask questions of followers to gather valuable insights, and to show that the business is listening and cares about its customers.
  4. Respond.  Respond to compliments, complaints, and feedback in real-time.  If a retailer begins using Twitter, it is critical to be online and responsive.
  5. Reward.  Tweet updates about special offers, discounts and time-sensitive deals.
  6. Demonstrate wider leadership and know-how.  Reference articles and links about the bigger picture as it relates to the business.  For example, if the retailer sells women’s clothing and a celebrity is seen with a pocket book the retailer carries, tweeting the picture of the celebrity may build customer desire.
  7. Champion your stakeholders.  “Retweet” and reply publicly to impactful tweets posted by your followers and customers.  For example, if one of your customers is also a business owner and you enjoy their product, you begin to build relationships with new customers via your relationship with the customers of your customer.
  8. Establish the right voice.  Twitter users tend to prefer a direct, genuine, and likable tone from businesses, think about your “voice” as you Tweet.

In the world of retail, Twitter allows customers to learn more and converse with other followers about a variety of products, trends and deals – all while the retailer receives crucial information regarding what their customers are talking about, what they are looking to buy, and what they thought about a specific store or product.

How Businesses Use Facebook?

Facebook, the leading social media platform with over 750 million active users, allows companies to learn about their target audience and to understand their interest and friends. For this reason, Facebook can be used to generate new product ideas and innovations. To build a Facebook presence, businesses could run contests, create unique deals that only friends who “like” their page will have access to, gather information for future marketing efforts, and publish questions while asking for feedback. This simple process will engage followers and encourage brand advocates. With Facebook Sponsored Ads, businesses are able to set parameters for the users they are trying to reach, and to review ad analytics which assist in evaluating how each ad performs.

Arguably the greatest advantage of having a presence on Facebook is to build relationships with the consumer. Deepening relationships with the most loyal customers allows them to spread the word about the brand to their friends. Information people share about themselves on Facebook can create highly custom and personalized experiences to drive engagement and loyalty over time. As Facebook is free, there is no cost to this type of “word of mouth” advertising. Keeping text simple, highlighting special offers and telling consumers what to expect when they enter the store, will keep Facebook friends engaged in the brand.

What is Groupon?

Groupon has recently been increasing in popularity in markets across the United States.  It offers a deal-of-the-day that features discounted gift certificates redeemable at local companies. Groupon currently has amassed over 35 million registered users.  Subcribers are able to look for Groupon offers in their current geographic region, as well as offers in areas to which the subscriber is traveling.

“Groupon”, short for group coupon, offers one Groupon offer per day to subscribers in specific markets. If the pre-established number of people sign up for the offer, then the deal becomes available to all who have expressed interest in the offer.  If the predetermined minimum is not met, then the deal was not successful and no one is able to purchase it. Unlike traditional forms of print or broadcast advertising, there are reduced risks for retailers, as there are no upfront costs to participate. Groupon earns its money by keeping approximately half of the purchase price of the coupon.

There can be potential problems for a retailer participating in this program if the offer being considered is not completely thought through. For example, if the retailer is a hair salon and offers half price hair cuts, the number of offers made available must consider the number of chairs in the salon and the number of open appointments in a typical week.  If capacity for the haircuts being offered is 20 per week of open appointments, offering 200 coupons would result in angry Groupon purchasers.  These purchasers probably did not expect to make an appointment to use their coupon 10 weeks into the future.  Also, the salon may antagonize its current customer base as normally available times become filled with Groupon buyers. The Groupon organization urges retail shops to cap the number of Groupons that can be purchased, to eliminate these types of service issues.

Determining the right deal for the right price is also crucial to Groupon success. Giving away too much at too low of cost can actually cause a company to lose money on a specific item in the short term.  For example, if the retailer is an oil change shop, and it offers a Groupon that uses one full month of oil change capacity, the margin earned during that month when the majority of the coupons are used would be negatively impacted. Careful consideration of the Groupon offered must be taken into account in order to take advantage of this powerful and expanding platform.
There are many successful ways to use Groupon.  If a restaurant offers an appetizer promotion on Groupon, the probability that traffic into the location would increase, and that traffic would purchase drinks or other higher margin products is strong.  If a spa offers reduced prices for massages, the increased traffic generally books additional services to be completed at the same time.  If a hardware store offers reduced prices on paint, purchasers will probably purchase a variety of related supplies to complete a project.

What Should Retailers Think About When Considering Social Media?

The drawback to any social media campaign is that that the retailer will receive open and public complaints and negative feedback, as well as the positive feedback.  For example, if a customer waits in line for a half hour to buy a product, the customer could use that time to be Tweeting or “checking in” on Facebook with complaints about the lack of customer service. Of course this presents an opportunity for the company to respond to such criticism by reaching out with an apology or offering a free product to make up for the error – turning the negative into a positive.

Using social media affectively, takes time and resources. While the platforms are free and allow a retailer to engage with the public at no cost, there is an expectation of time commitments. No one wants to visit a page or follow an organization that does not engage with the public that supports the business. It can be difficult for a small or less tech savvy organization to be able to devote an adequate amount of time to influence customers through these platforms and drive sales/traffic.

A properly implemented social media advertising effort is certainly able to overcome these risks.  However, beginning the process with as much planning and knowledge as possible is critical – because feedback, both good and bad, will be immediate.

By: Juanita Schwartzkopf, Managing Director

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