Social Media

For starters, I wanted to briefly clarify my personal position/perspective on social media. On Groundswell’s Social Technographics Ladder, I would qualify as a Specator. That classification is almost exclusively owed to my somewhat regular habit of checking out certain blogs and forums. But I am likely to never climb the ladder and become a Joiner because of my pretty deliberate avoidance of social networking sites like Facebook, Twitter and MySpace.

To oversimplify, it seems there are two primary uses of these sites – professional vs. personal. And to be honest, I can see value in both uses – to an extent.

From a professional standpoint, I can see tremendous value for companies who can more effectively target, and communicate with, current and prospective consumers. And from a personal standpoint, these sites have clearly made it much easier for people to maintain contact with friends and family.

However, often times it just seems so excessive. People seem to think that social media is everything…and everything is social media. As a result, I think it is often difficult to separate the signal from the noise. I guess I think that like many other things, social media is good in moderation. A lot of the advances that make social media so effective can also make it very annoying – specifically, attributes like speed/frequency of communication as well as the amount/type of information communicated.

So, given my selective participation in social media, I would not consider myself an expert. Additionally, I really don’t have any idea what companies are making particularly effective use of these tools. So rather than try to make sense of my limited experiences, I chose option two on this assignment. I was curious about these social media research tools and wondered what exactly they could deliver. I first decided to use these tools to determine what the buzz is around the latest news about Goldman Sachs. Then I also tested out some celebrities who are often in the news like Sarah Palin and David Beckham, as well as regional celebrities that are not currently being talked much about like Mack Brown.

I found the most interesting tool by far was the one providing website information. Understanding how many people are visiting, what else they are looking for, and what other places they stop seems extremely valuable…and also very interesting. Additionally I enjoyed the Google blog search. It very quickly provided access to the most recent and most read blogs on a particular person or topic. The volume was obviously considerably higher for Goldman Sachs who are all over the headlines right now. And the sentiment is overwhelmingly negative. In contrast Sarah Palin also generates a high volume of activity but the commentary is clearly mixed. This tool seems like a great way to quickly get a pulse for what people are saying about a particular topic.

I had higher expectations for the trending tools. At times it was interesting to view by geography – somehow David Beckham is hot in Nepal right now – and at other time it was difficult to extract anything specific. For example, where in the US is this information most sought after? Additionally, it was interesting to view the growth or “hotness” of a person or topic in relation to their category. This seems to have potential for brands or companies that are interesting in gauging level of response to their product in general, or response to a particular advertisement or promotion. But it seems further detail would be necessary for this information to really be valuable.

It seems what is most helpful is to set up alerts and notifications to ensure that information on whatever topic might interest you gets into your hands.

As a business school student it is nearly impossible to escape discussions about Walmart. Whether you are talking about real estate, supply chain, sustainability or anything in between, the retailing behemoth rears its head in most conversations. And given the fact that Walmart maintains 460 terabytes of data – more than the entire internet! – we would be remiss to ignore them when considering the topic of customer insights. But despite their relevance in all of these different spaces, when it comes down to it Walmart is mostly about one thing and one thing only – Every Day Low Prices. This mantra is woven into the culture at Walmart and influences all business decisions.

Having spent a summer working for a supplier to Walmart, I am keenly aware that each grocery store or mass merchandiser operates using a different business model. EDLP is clearly Walmart’s source of competitive advantage. They thrive because they can offer lower prices than any other retailer. In contrast, a supermarket like Publix focuses more on shopper experience. Things like cleanliness, friendliness, flexible return policies, and many other characteristics combine for a higher quality experience. Additionally, loyalty programs are in place to provide benefits to Publix customers.

So, at first thought, it doesn’t make sense to me that Walmart would spend so much money on data mining technology. After all, reducing costs is what allows Walmart to offer such low prices. So, why pay so much ($4 billion) for this technology? I would much sooner expect someone like Publix to make an investment like this to further enhance their shopper experience. But, on second thought, Walmart seems to be successful in using this information to manage inventory costs – a major challenge for retailers. So if this investment in customer information allows them to better manage costs and continue to offer low prices, then in a sense it does contribute to their competitive advantage…and in turn create a better customer experience – assuming that those customers prioritize low prices above everything else.

However, as the article discusses, Walmart isn’t all that concerned with the demographics or psychographics of their customers. They just want to know what goes into their baskets when they shop. This being the case, it is troubling that they have access to so much information on customers – specifically information that has no relevance to grocery shopping. I don’t mind if Walmart wants to know how much beer and Pop-Tarts to stock on the shelves in advance of a hurricane. I certainly wouldn’t want to be caught in a hurricane without either. But knowing that they could reference mortgage payments and bank info seems like an invasion or privacy.

I think the main point is that customers would be willing to share information that will create benefits for them. Whether those benefits come in the form of low prices, fully stocked Pop-Tart aisles, or loyalty cards from Publix. But when information is used without customer knowledge or without customer benefit, it seems a breach of privacy and/or trust.

The sheer size of Walmart obviously grants them huge power over their suppliers. For many manufacturers, Walmart represents nearly 30% of business. As a result, often times suppliers have no choice but to adhere to the strict policies Walmart puts in place. For example, products being stocked at Walmart must have a certain level of velocity or be at risk of getting booted off the shelves in the following month or quarter. And often times just to get stocked, manufacturers margins are getting squeezed to the point of loss. Now, there are examples of Walmart using its power for good – forcing Procter & Gamble to change packaging on liquid soap. But I imagine most examples are not quite as noble as this and result in reduced profitability rather than increased efficiency.