EXPERT PERSPECTIVE BY SAURABH MITTAL, GLOBAL PRACTICE HEAD - CONSUMER EXPERIENCE, BUSINESS ADVISORY SERVICES, WIPRO

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1 CUSTOM RESEARCH Social Media Initiatives IT S ALL ABOUT THE CONSUMER Social media is a hot topic these days, as evidenced by the almost 600 million hits the search returns on Google. And social networking now accounts for 11 percent of all time spent online in the United States. It includes everything from Facebook, Twitter and LinkedIn to interactive blogs and product reviews and more, but the common thread is the ability for consumers to interact and provide feedback through a web-based application. But how do businesses capitalize on this trend? Where do they focus their eforts? These are the questions that new research from CGT and Wipro begin to answer here. Current Status Despite the popularity of social media in our personal lives, many companies still have not developed formal initiatives for its use. When we asked about the status of current projects, our research returned a scattered response, with other as the most popular answer. There is no clear direction with most companies either just getting started or executing pilot projects. CG companies overall have attempted an average of 4.3 social commerce initiatives in the last calendar year, ranging from full-fledged projects to simple Facebook pages. For now, the expectations aren t very high. Almost half our respondents attribute no revenue to social media outreach, and 39 percent have low expectations of 0 percent to 2 percent of sales. But we expect that to change rapidly as companies establish guidelines and implement strategies around social media. Surprisingly, when asked about the barriers to adoption (see Figure 1), 32 per cent responded that it just isn t a priority in the organization. A lack of metrics was cited by another 30 percent, which is often a challenge for new technologies. Almost one-quarter cited the lack of a business case, which we expect to decline as companies gain a better understanding of what is possible and best practices. For another 24 percent, however, all of these barriers are hindering them, including technology. Interestingly, funding was only brought up by a small portion of our other responses. Measurement of social media campaigns is extremely difficult, with almost half our respondents using a variety of methods, including brand awareness, consumer comments, buzz, quantifiable leads and followers. For those selecting a single measurement method, brand perception and search engine visibility was the most popular at 36 per cent. EXPERT PERSPECTIVE BY SAURABH MITTAL, GLOBAL PRACTICE HEAD - CONSUMER EXPERIENCE, BUSINESS ADVISORY SERVICES, WIPRO COMPETITIVE ADVANTAGE WITH SOCIAL COMMERCE In today s global economy and digitally-connected world with everchanging consumer preferences, consumer packaged goods (CPG) companies need the flexibility to adapt, innovate and serve new demands promptly. Consumers are challenging CPG companies to engage, interact, learn and fulfill their needs like never before. It is not just about products and services based on consumer insights but taking a leap ahead from insight to foresight and PACE ahead of your consumer. It is the time to develop goods not only in accordance with consumer preferences but also which will redefine their tastes and preferences. Much has been spoken and written about social commerce. In our experience, the most companies are still trying to establish its meaning and are far from realizing its monetization benefits. Following are some mistakes to avoid, and possible resolutions, for when CPG companies attempt to create great consumer experiences in this social commerce world: Don t really understand their customers or consumers versus personalizing the experiences Make the problem tougher than it is there really is low-hanging fruit Refuse to adapt to changes in today s marketplace Millennials aren t the only ones using social media Relegate their consumer experience to silos multi-channel experiences provide proven benefits Approach this with a big bang approach versus driving quick, yet sustainable wins In the pursuit to PACE ahead of the consumer, Wipro enables its CPG clients to Protect BRAND ; Enhance REACH and Nurture INNOVATION. Interactive relationship marketing and consumer loyalty create the most effective sales strategy for tomorrow. Wipro helps its clients achieve higher degrees of consumer centricity and gain strategic advantage over competition by providing value-based business offerings enabled through technology. 46 CGT SEPTEMBER 2010 CONSUMERGOODS.COM

2 BY KARA ROMANOW It s All about the Consumer One thing that our survey participants clearly agree on, however, is that the primary objective of all social media initiatives is understanding consumer insights. Figur e 2 illustrates additional drivers, including testing of promotions, exploring growth areas and new product feedback. The consumer focus is consistent across our research, particularly when we explored how facets of social media are prioritized. Almost half put building branded communities first. One thing that our survey participants clearly agree on, however, is that the primary objective of all social media initiatives is understanding consumer insights. Another 35 percent cited being available for consumers for questions or complaints. This priority is also driving implementation strategies as 73 percent plan on taking a consumeroriented approach by leveraging tools that consumers already use to increase interaction. Consumer interactions will also play a big role as business cases are developed. Figure 3 depicts the perceived value of social media, with 38 percent of our respondents citing the ability to listen and respond to consumer complaints. Far fewer (22 percent) plan on using the technology as a pure marketing tool and fewer still plan on using it for direct consumer sales. The consistency is refreshing, as the consumer focus came through across all ranges of company size as well. This is one trend that we expect to survive the hype and become a major part of the CG industry s consumer outreach and overall marketing strategy. FIGURE 1 Significant Barriers to Social Media Adoption BARRIER Priority in the organization Lack of metrics Absence of business case All of the barriers listed Technology FIGURE 2 Primary Social Media Objectives OBJECTIVE All of the objectives listed Understand customer insights Test advertising/promotions, etc. Product development feedback Seeking new growth areas FIGURE 3 Biggest Value of Social Media to Your Company BIGGEST VALUE As a tool for listening to customers and responding to customer complaints effectively As a tool to market products/services As a direct to consumer medium for revenue generation As a tool for new product development through crowd sourcing of new ideas from consumers/prospects Note: Multiple responses permitted 11% 24% Note: Multiple responses permitted Note: Multiple responses permitted 32% 30% 24% 24% 54% 43% 38% CONSUMERGOODS.COM SEPTEMBER 2010 CGT 47

3 Consumer Goods Technology August 2010

4 1. What was your company's total revenue in 2009? 2009 revenue % Less than $500M 36% $500M to $1 Billion 11% $1 Billion to $5 Billion 28% $5 Billion to $20 Billion $20 Billion to $50 Billion 6% $50 Billion and above 6% 36% 11% 28% Less than $500M $500M to $1 Billion $1 Billion to $5 Billion $5 Billion to $20 Billion $20 Billion to $50 Billion $50 Billion and above 6% 6% 2. In which category does your company primarily compete in? Category % Food / Beverage 24% Consumer packaged goods 41% Cosmetics & Beauty 3% Tobacco 0% Footwear / Apparel / Accessories 24% 41% Food / Beverage Consumer packaged goods Cosmetics & Beauty Tobacco Footwear / Apparel / Accessories 3%

5 3. How would you describe the current state of your social media initiatives? Current state We are everywhere but how do I make money? We are present in limited channels but interaction with consumers is quite high We seem to be doing a lot but not getting much interaction How can I start? % 11% 30% 30% We are everywhere but how do I make money? We are present in limited channels but interaction with consumers is quite high We seem to be doing a lot but not getting much interaction How can I start? 11%

6 4. What are your most significant barriers for social media adoption? Multiple responses permitted. Significant barriers % Lack of Metrics 30% Absence of business case 24% Priority in the organization 32% Technology All of the above 24% 32% Lack of Metrics 30% Absence of business case 24% 24% Priority in the organization Technology All of the above

7 5. Organizations and brands use social media for multitude of reasons -- some more proactively and some in a reactive manner. What are your primary social media objectives? Multiple responses permitted. Primary social media objectives % Understand customer insights 43% Seeking new growth areas Test advertising / promotions, etc. 24% Product Development Feedback All of the above 54% 11% Understand customer insights 54% Seeking new growth areas Test advertising / promotions, etc. 43% Product Development Feedback All of the above 24% 11%

8 6. What listening platforms / tools do you use to track your social media initiatives and your brand buzz? Platforms / tools % Custom developed tool Radian 6 / Buzz metrics / Buzz gain 17% No specific tool 39% Looking for help 28% 3% Custom developed tool Radian 6 / Buzz metrics / Buzz gain No specific tool Looking for help 39% 28% 17% 3%

9 7. Which of the following would you give top most priority in your social media strategy? Top priority Paid advertising in social media websites Building a branded community Build fan pages on social networks Create loyalty by being available when consumers have a problem, question or complaints Generating revenue through social commerce % 0% 46% 3 0% Paid advertising in social media websites Building a branded community Build fan pages on social networks Create loyalty by being available when consumers have a problem, question or complaints Generating revenue through social commerce 46% 3

10 8. What do you perceive as the biggest value of social media to your company? Biggest value As a tool to market your products / services As a tool for listening to customers and responding to customer complaints effectively As a tool for new product development through "crowd sourcing" of new ideas from consumers / prospects As a tool for internal collaboration and idea sharing within the company by employees As a 'direct to consumer' medium for revenue generation % 38% 0% Market your products / services Listening to customers and responding to customer complaints effectively 38% New product development through "crowd sourcing" of new ideas from consumers / prospects Internal collaboration and idea sharing within the company by employees Direct to consumer' medium for revenue generation

11 9. How do you measure success of a social media campaign? Measure success Interactions with customers and their comments on my initiatives Buzz, Positive vs. Negative Fans & followers Awareness, brand perception, Search engine visibility Number of leads and revenue it generates All of the above % 11% 36% 47% 0% Interactions with customers and their comments on my initiatives Buzz, Positive vs. Negative Fans & followers Awareness, brand perception, Search engine visibility Number of leads and revenue it generates All of the above 47% 36% 11%

12 10. How many successful social commerce initiatives have you attempted in the last calendar year? Mean Median How many successful social commerce initiatives? How many of these social media initiatives have helped you in generating more revenue? Mean Median How many have generated more revenue? How much revenue would you attribute to your social media initiatives? Revenue % None, but we are betting on it 44% 0 to 2% of sales 39% 2t to of salesl 8% 5 to 10% of sales 6% More than 10% of sales 3% 44% 39% None, but we are betting on it 0 to 2% of sales 2 to of sales 5 to 10% of sales More than 10% of sales 8% 6% 3%

13 13. Which of the following approaches do you see as a successful long term strategy in social media? Approaches Big bang approach - involved in every tool available and interact with customers Slow speed approach - involved in handpicked tools. Learn from the experience and move on to other tools. Consumer oriented approach - Identify tools that consumers use and utilize them to increase interaction Innovate and build your own tools, communities, syndicate content Stay away from social media % 73% 3% 0% 0% Big bang approach - involved in every tool available and interact with customers 73% Slow speed approach - involved in handpicked tools. Learn from the experience and move on to other tools. Consumer oriented approach - Identify tools that consumers use and utilize them to increase interaction Innovate and build your own tools, communities, syndicate content Stay away from social media 1

14 14. How would you use social media data / insights in your organization? Use data / insights Integrate it with CRM / Loyalty program and generate leads Integrate it with Promotions and Campaign management systems Integrate it with the Sales systems and measure social media effectiveness Integrate it with BI / Analytics tools to harness social media data All of the above I don't think the tools are mature enough to be integrated % 0% 8% 46% 3% Integrate it with CRM / Loyalty program and generate leads Integrate it with Promotions and Campaign management systems Integrate it with the Sales systems and measure social media effectiveness Integrate it with BI / Analytics tools to harness social media data All of the above 46% I don't think the tools are mature enough to be integrated 8% 3%

15 15. Which of the following best describes the need of your investments in social media initiatives? Need of investments Social media consulting and roadmap Enhance or lay down technology tools for social media activities Empower IT teams with social media know how and policies Build a business case for social media investments I am just not clear! % 38% Social media consulting and roadmap Enhance or lay down technology tools for social media activities Empower IT teams with social media know how and policies 38% Build a business case for social media investments I am just not clear!