Co-creating value using social media marketing sounds like a very complex task, but it’s a very simple concept. It’s the implementation of service-dominant logic that makes co-creating value challenging.

So, now that the first paragraph had totally confused you, let me break this down into common language.

Service-Dominant Logic

Originally, Vargo and Lusch coined the phrase service-dominant logic to reflect the notion that all businesses, even ones who made things, rely heavily on service aspects to please customers. An example Bob Lusch uses in his YouTube video is that people buy cars primarily for transportation — a service.

Service-dominant logic is an unfortunate term that also means that service is a major component in all products, even ones manufactured in a factory. Going back to the car example, while you’re buying something you can touch and feel, you’re also buying a lot of things you can’t such as the reputation of the manufacturer, the quality of the service you’ll get, etc.  And car companies realize these things have a big impact on the brand you choose. That’s why you’ll hear dealers advertising about their “free service for life” or “free oil changes for life”. They know these service elements provide competitive advantage that helps them make the sale.

Co-creating value

The notion of co-creating value means that firms succeed (gain value) when they provide value to their customers. Although this makes intuitive sense, many firms fail to understand their role in creating value for customers or the notion of customer value gets lost in corporate rhetoric around profits — especially in manufacturing firms where there’s a big distance between the firm and customers in both physical distance and time (since customers won’t buy products manufactured today for weeks or months).

So, how do firms co-create value with customers and how does using social media fit into this broader notion of co-creating value? I’m glad you asked.

Using social media to co-create value

Social media is a perfect tool for co-creating value because it increases communication between the company and the customer. In manufacturing, these communications were never there before unless the firm spent a lot of money doing focus groups or collecting survey data. Using social media, firms get unbiased opinions from real customers and prospects at a fraction of the cost.

1. Collaborative innovation – maybe the most important way using social media contributes to co-creating value is through collaborative new products. If you think about it, firms need new products consumers want to buy and consumers need new products to solve problems they face. What better way for firms to know what customers need than from the customers themselves. Using social media as a conduit for customer insights is probably the most value aspect for many businesses because they learn customer pain points, discover what customers don’t like about their own brands as well as those from competitors, and may even get suggestions from customers on how to improve their brands. For instance, I was working on some software a client purchased. It wasn’t working too well, so a colleague and I discussed features we felt were missing by sharing comments as Facebook status updates.
2. Customer complaints – Twitter has replaced the corporate suggestion box as the preferred vehicle for sharing complaints about failed products. Using social media to hear and respond to these complaints goes a long way toward reducing the damage from these failures.
3. Share brand messages – firms benefit greatly when customers share favorable brand messages using social media because it amplifies message reach and because consumers believe what they friends tell them much more than messages they get from the firm. But, how does this create value for consumers? Consumers  benefit from the micro celebrity they get from being the go-to person for information. Firms can increase the value received by folks who share your brand messages using social media by recognizing them, thanking them, highlighting their comments, and other tactics that play into their micro celebrity status. Firms can even reward folks who share brand messages with discounts, free product, or other tangible benefits. For example, Red Robin offers discounts through Facebook updates and users share these updates with friends to claim the discount.
4. User-generated content — user-generated content creates significant value for both firms and users. When users create a YouTube video or song parody about your brand and it goes viral, you both get a boost. Firms can encourage user-generated content using social media through contests or special offers for folks creating content. Sometimes the simple act of providing space for users to upload content is all it takes to get a lot of content. For instance, NASA maintains a site dedicated to user-generated content where anyone can upload posts, images, etc.

See, that wasn’t too hard. And now you have some new tools you can use or new ideas for using these tools more effectively to co-create value for your firm and its customers. If you need help understanding how using social media in co-creating value can benefit your firm, we’re happy to help.

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Check out the video slides from my How To session for the American Marketing Association on Wed — on social media analytics. I’ll talk about how to measure, what to measure, and data visualization to improve your ROI.

If you’re in the DC area next week — check it out. The cost is only $30 (non-members $50; students $15) and includes lunch! What a deal!

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Businesses are using social media marketing to support a number of organizational goals, such as:

1. Bringing traffic to their website
2. Increasing brand awareness
3. Building stronger customer relationships
4. Lead generation
5. Decreased Marketing Expenses

Despite the positive impact respondents report from using social media, about 1/2 of all firms feel using social media hasn’t increased sales!

And, that’s a big image problem for social media (and agencies like mine who earn our living off of providing social media marketing services).

So, what’s the problem??????

Some clues come from this infographic based on Social Media Examiner’s annual survey of marketers using social media marketing. Take a look for yourself and I’ll be back to discuss what I think this means about the efficacy of using social media.

So, did you find out why so many marketing folks aren’t getting what they expect from using social media?

Shall I give you a few hints?

No, OK, let me share my notion of what’s going on here!

Why aren’t you getting sales from using social media?

1. You’re doing it wrong

Maybe not YOU personally, but lots of marketers just haven’t adapted to the paradigm shift in social media marketing. They’re still firmly planted in traditional media, where all they do is talk about themselves and their brand.

Wrong!

Social media is really a different type of communication, not just a different channel. Go back and review my post on the key differences between social media and traditional media.

2. Using social media takes time

Don’t expect overnight miracles. Using social media, it takes time to build a community of loyal followers who’ll amplify your message, defend your brand, and engage with you. Give it some time.

3. Wrong social media metrics

Social media analytics is still in its infancy and many firms aren’t measuring the right things, which mutes their perceived impact from using social media marketing.

Measuring vanity social media metrics, such as Facebook likes, won’t map well to sales.

Instead, firms need to have an analytical process in place to effectively assess the outcomes from using social media. As an example, firms need to monitor movement through their conversion funnel to truly measure the impact of using social media and identify where operational issues might interfere with potential customers reaching the bottom of the funnel (sales). Your social media marketing campaign may be bringing potential buyers to your website, but buyers run into problems navigating your site. Thus, the problem is not your social media marketing campaign, but your ecommerce website.

4. Understanding the hierarchy of effects

A desire to buy your brand doesn’t simply spring into the minds of consumers. Instead, it’s a notion planted in their brains (traditionally through advertising), nurtured by the needs of the consumer and his/her social and family groups, and finally harvested when their desire overcomes impediments, including having enough money and/or other resources.

When firms don’t understand the hierarchy of effects, they underestimate the benefits from using social media — or any other marketing tools.

Using social media advances potential buyers through the hierarchy of effects by:

• Creating awareness of the product when friends share information about the brand. See, folks believe their friends, but they don’t believe your advertising
• Generating interest in buying your brand, because they want to have things in common with their friends and other social reasons.
• Providing information. Consumers like to investigate things before they buy and social media is a “fun” place to get information.

But, the benefits of using social media don’t stop there. Using social media moves folks into another hierarchy of effects that turns them into advocates for your brand — creating a cycle of exposure to new potential buyers.

Convinced about the benefits of using social media?

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YouTube is definitely the world leader in video sharing, with an unbelievable 72 HOURS of content uploaded every MINUTE. Vimeo is the next closest contender in the video sharing space, but it’s a smaller site more often used by filmmakers to share ideas than businesses using video as an anchor to their social media success. That’s because the world is more visual now that technology allows for streaming video and fast download speeds.

YouTube’s new format/ layout allows businesses improved opportunities for branding. So let’s take a tour around YouTube and learn how YouTube creates social media success.

Tip #1: Branding your URL

Grab your branded URL, even if you’re not ready to start uploading videos yet. Just like other social media platforms, once a brand name is gone, it’s gone. Mine is called MarketingLetter — just like my blog, Twitter, Google+, Pinterest, etc. Stick with a brand name that’s easy to remember, pronounce, and fits your marketing goals.

Tip #2: YouTube channel art

Similar to changes Google made with other networks, such as Google+, YouTube now features a cover for your business channel. Remember — KISS. Keep it simple stupid. Don’t make it crowded and avoid over-promotion. Let your content speak for itself.

Take a look at my cover art. Simple. My logos for both Hausman and Associates and Hausman Marketing Letter, along with my tagline (which is EVERYWHERE), and my URL.

Be VERY careful and check your results carefully on several different devices. YouTube allows for an image that’s 2560 X 1440, but an image that size will only look right on a TV screen. On a computer or mobile device, it’ll look like crap. And the ability to crop the image in a way that makes it appealing is VERY limited. Play with it — keeping the actual image centered within the allowed space and only taking up about 1/5 of the available space. Mine uses 120 pt font to make it fit reasonably onto a mobile device. Record your colors and use them everywhere to enhance your branding efforts.

Tip #3: YouTube channel description

Your YouTube channel description should use your keywords within the first sentence and throughout the description. This will help future subscribers find your channel. Include basic information about the channel content, a posting schedule (something do-able), and why visitors should subscribe to your channel.

Tip #4: Brand videos

Each video you upload to your channel should include branding before and after the content — called a donut. Add some music (be careful to have permission). Animation makes your donut look more professional. At the end of the video, add contact information and a call to action to increase conversion. Don’t expect people will KNOW what you want them to do.

Tip#5: Consistency

Uploading videos on a consistent basis is really important to gaining subscribers. Tell visitors about your publication schedule in your description, then stick to your schedule. Posting too infrequently or off-schedule will reduce your social media success from YouTube.

Tip #6: Be yourself

Folks think their YouTube video has to look like something from a major studio. That may be true if you’re positioning your channel as a professional video channel and trying to break into the movie business. But, if you’re just trying to build your business with video, you don’t need to look like a feature film.

Giving visitors something of value is so much more important than having professional video quality. Find great topics for videos using Google Alerts and other tools to see what’s trending? — what are folks searching for? — where are their pain points?

Tip #7: Get your community involved

As with all social media platforms, getting community engagement is critical for your social media success on YouTube. Community engagement will bring more visitors and encourage them to subscribe to your channel. Encourage comments and sharing by asking questions in the video and putting sharing in your call to action. Be a little controversial and you’ll increase comments, just be careful when you create controversy that it doesn’t make you look uninformed.

Depending on your brand, you might encourage your community to upload their own content to your YouTube channel. That really increases engagement.

Tip #8: Analytics

Youtube provides analytics, just like most social media platforms. Be sure to regularly track your performance to ensure continued success with your YouTube strategy. What’s working and what isn’t? What drives visitors to your channel? What encourages them to become subscribers?

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Digital trends demonstrate both the new ways consumers engage online and the new ways businesses are profiting from the digital revolution. Take a look at this slideshow to see data related to these digital trends.

Top 10 digital trends.

Digital trend #1: m-commerce

While many firms still struggle to optimize their e-commerce efforts, the world has moved past them to m-commerce. As an example of the power of mobile, 45% of Groupon’s sales occur on mobile devices including smartphones and tablets.

And, with the proliferation of mobile devices, their impact on firm profitability will literally explode. Worldwide growth in smartphones was 31% last year! The average user reached for that little pocket computer 150 times a day last year.

And tablets are growing at an even faster rate, which only increase as cheaper options to the iPad emerge.

Digital trend #2: data

Digital information is exploding in the form of documents, Tweets, posts, pictures, and VIDEO. In 2011, the growth of digital information increased by 9X to 2 Zettabytes (I’m not even sure exactly how BIG a zettabyte is, but it’s enormous). To put that in perspective, YouTube ads about 100 HOURS of video every minute of every day! And, they’re not even the biggest platform for uploading video content. Instagram and Pinterest also account for huge upticks in the amount of digital information uploaded every day — for Instagram alone this is 5 million every day.

Digital trend #3: apps

New apps make life easier for consumers — and tougher for businesses who can’t adapt to the new way consumers want to engage with them. For instance, consumers don’t want to call for a taxi. They prefer apps that send a nearby cab to their GPS-enabled location. Shopping apps that integrate to deliver customized coupons based on past spending habits or where you are in the store help customers and businesses.

Digital trend #4: social media

OK, so maybe this isn’t a trend since social media has been around for nearly a decade, but the players are changes and so are the platforms. Facebook usage is declining slightly, with the slack being taken up by upstart, Google+. Visual social networks, such as Pinterest, Instagram, and YouTube are growing quickly, as well. And, consumers frequently use digital word of mouth to make decisions, so sites like Yelp can make or break your online reputation — and business.

Digital trend #5: increased usage

Usage of digital outlets increased an average of 8% worldwide, with China leading with the highest number of internet users. But, the US still leads in penetration, with 78% online. Not surprisingly — given the impact of social networks on the Arab Spring — growth of internet usage in the Middle East is high, with growth in Iran of over 200% (year on year).

Digital trend #6: information where you are

While we’re not exactly living in the world of “1984″ or Minority Report, where custom-tailored ads come to you as you walk around town, the effort necessary to get relevant, local information is decreasing with new tools, such as QR codes. You can put these codes on literally anything and take viewers to any information link you want. The British Embassy in China even has a QR code on the gatehouse to help visitors learn more about the country and it’s people. Macy’s uses QR codes throughout the store to bring customers more information about products and materials on nearby merchandise.

Digital trend #7: wearables/ drivables

Related to digital trend #6, you can assess information from personal sources, without even using your mobile device with new wearable devices, such as Google glasses and Jawbone.

More car makers are also integrating social media and email capabilities into their cars. Now, you can listen to Pandora radio online as you cruise the back roads.

Digital trend #8: knowledge gap

With all these other changes, a huge knowledge gap exists between the skill-set of existing workers and those needed to optimize firm performance in the digital age. More computer programmers, more business intelligence folks, and greater technological skills for middle managers regardless of functional silo are necessary.

Digital trend #9: advertising opportunities

As I discussed a few days ago, firms are still spending too much money advertising on traditional media (especially print) where opportunities are poor, and not enough on digital advertising. The Powerpoint shows an opportunity of over $40 Billion in advertising that matches the amount of time consumers spend on the platform. But, digital advertising spend needs to focus on engagement and creating customer value, rather than simply spreading advertising messages.

Digital trend #10: customer closeness

This is one I added myself. Digital technologies give firms unprecedented opportunities to build one-on-one relationships with customers and prospects to convert better, retain more, and increase average order sizes.

So, how do these digital trends impact your business success?

• Your site MUST be mobile-ready

• You must employ analytics to make sense of all the data available online as well as using tools to analyze unstructured data, including images.

• The internet is more visual than ever. How much of your content meets these visual standards? Consider adding more video and images to your websites.

• Get your app on. Think about ways to create user-friendly apps and gamify your business.

• Consider new social platforms. Discover where your target market likes to hang in social space and optimize for the preferences of users of that social platform.

• Think globally, act locally in your digital strategy. Think about translating sites into common languages and avoid cultural goofs that might be insulting to visitors from other cultures. Surprisingly, this site, which is written from a definite pro-US perspective, gets nearly 66% of its traffic from OUTSIDE the US, including 32% from non-English speaking countries.

• Use QR codes to bring prospective customers to your e-commerce site and convert them in your stores.

• Make hiring technological and analytical employees a priority and invest in re-training existing employees in advanced analytics and technology.

• Use social networks and other opportunities to build better engagement with customers rather than just spew ad messages at them.

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Marketing and technology, and the combination of marketing technology, really changed the landscape of business operations over the last few years. Technology gives consumers choices they never had.

• Shop in town or across the globe with ease.
• Compare prices across hundreds of retailers without leaving the comfort of your recliner.
• Discover what hundreds of friends are doing this weekend without even picking up the telephone.
• Get recommendations and have all your questions answered by a team of folks just like you across social networks.
• And, because consumers use technology to explore and purchase products, the amount of available data is exploding.

The combination of marketing and technology is critical for helping firms survive against this hyper-competition, while managing their reputation and keeping consumers informed about their brand.

According to nearly 2000 CMO’s interviewed by IBM, these are universal game changers and firms that can’t adapt to the combined challenges of marketing and technology can easily disappear from the landscape.

What this combination of marketing and technology means

Marketing and technology combine to create major challenges for today’s business managers. First, and foremost, managers must balance their focus on markets, with improved opportunities to create customer intimacy. The era of one-on-one marketing is truly upon us. Pepper and Rogers, who coined the term in the ’90s, could never imagine the technological transformation that allows businesses to customize their interactions with every single customer. Before this combination of marketing and technology, only service firms employed one-on-one marketing — they’re the only ones who could because they saw the customer face-to-face.

Combining marketing and technology involves new skills

For many marketing professionals, this combination of marketing and technology highlights a serious gap in their skill set. Marketers used to arms length transactions with customers must now create corporate personas to build lasting relationships with individual consumers.

And, social media is really the touchstone representing the struggle for many firms. Social media is really a paradigm shift brought on by the integration of marketing and technology — a paradigm most marketing managers have trouble wrapping their heads around.

• Businesses must now allow consumers “backstage” to see what goes on behind the scenes of an organization – a thought that terrifies many marketing professionals. Firms can no longer bury their heads in the sand and ignore customer complaints, but must be proactive in sharing failures, apologizing, and making things right.
• Marketing professionals must learn to speak a new language — one born of the combination of marketing and technology. Learning about SEO, SEM, SMM, SQL … is a daunting task for marketers who’s training never included technology.
• Data is exploding at a time when businesses are decentralizing their data analysis. Marketing professionals used to waving their hands over squishy terms like “awareness” are now asked to define their sales funnels and track movement through the funnel to identify problem areas.
• And, all this is happening in real-time. No longer does a CMO dig through reams of computer printouts hoping for some understanding and support for the ROI of their endeavors. Firms can’t spend months developing a complex dashboard by consensus. Marketers must learn to create dashboards on the fly — a skill few traditional marketers possess, according to the IBM CMO interviews 1/2 believe they are insufficiently prepared for this challenge.

3 challenges to combining marketing and technology

1. Understand and deliver value to consumers

Social media transfers power from organizations to consumers in a way never seen by previous technologies. These empowered consumers demand greater customer service, higher quality, more innovation, and lower prices. Businesses must respond by investing in new technologies and advanced analytics to better understand their target marketing, how they behave, what they want, and where their needs aren’t being met.

2. Create lasting one-on-one relationships with customers

Building relationships requires CMOs engage them where ever they are: which is increasingly on social networks. Firms must build online brand communities, by engaging them in these networks, as well as offline communities of consumption, by changing the landscape of retail operations

3. Measure marketing’s contribution to the business in relevant, quantifiable terms.

CMOs need to expand their capabilities related to business analytics, building capacity for more nuanced business intelligence and digital metrics to defend the impact of their plans on firm success.

Need Help?

Wanna learn more. I’ve got a lot more insights on social media analytics from my week with IBM.  So, be sure to bookmark this site so you can come back tomorrow. Or, better, sign up for my email newsletter to learn more about social media analytics and marketing strategy. If I’ve whetted your appetite to use more analytics to optimize your marketing, let me show you how Hausman and Associates can help with our unique virtual agency model that provides cutting-edge social media at a reasonable cost.

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Social media spending is still a fraction of total marketing spending in an era where e-commerce spending is exploding and the influence exerted by consumers social graph is powerful.

Opportunities to increase sales through social media marketing argue for MORE social media spending, yet this spending lags. WHY?

According to a recent HBR article, several factors account for relatively low social media spending:

Knowledge gap

The folks responsible for allocating a firm’s marketing budget still don’t “get” social media.  They don’t understand how social media marketing works, they don’t understand how social media marketing supports their brands, and they don’t understand younger employees who use social media. Many CMO’s still think social media is a waste of time or try to manage it using the paradigm of traditional marketing – they want everything planned in advance and approved before posting. That just doesn’t work in social media.

Because they don’t understand social media marketing and don’t really believe in it’s benefits, they a don’t allocate sufficient resources to social media spending in both money and personnel.

HBR proposes that social media spending won’t advance significantly until it’s younger champions “come of age” taking over the ranks as senior executives who control the purse strings.

Tracking the ROI of your social media spending

Data remains a two-edged sword for social media and impacts social media spending. While tons of data exist, knowing how to use that data to support the ROI of your social media spending remains problematic. Vanity metrics, such as #of fans, still dominate social media reporting.

However, having data isn’t as much a problem and not knowing how to use the data. Older marketing executives are used to tap-dancing around the issue of returns from their endeavors with touchy-feely data like awareness often measured using flawed methods that produced false data. These executives don’t have the analytic skills to support ROI in today’s world that relies heavily on metrics to support business actions.

Solutions to increase social media spending

Some firms hire a marketing technology director who reports to the CMO or CIO.  Others use smart agencies to develop effective social media marketing strategies. These tech-savvy folks combine talents in technology, marketing, and advanced analytics that help firms optimize their social media spending.

A few, especially smaller businesses, make do by hiring younger worker who grew up using social networks. Unfortunately, for the firms, managing your personal network of friends and managing a businesses social media marketing strategy are worlds apart and these young folks can cause serious damage to the firm’s reputation. For instance, look as ASUS who offended ½ the globe by Tweeting out images that objectified women.

While these young folks are well-intentioned, they lack the experience and training to effectively manage a firm’s social media marketing alone. Of course, there are exceptions, but I’ve taught 100’s of college marketing majors interested in social media and, while I’ve found several excellent employees, I’ve not found 1 who’s ready to assume a leadership role in developing social media marketing strategy. At the end of the semester, they still only have rudimentary skills is SEO, SEM, or analytics. Their limited consumer experience means they don’t really know how to build a social network around something mundane, like appliances or healthcare services. Their expertise is more tactical, than strategic.

So, if you want to optimize your social media spending, I would stick to hiring someone with significant experience and a proven track record in managing social media. Take a look at their credentials in building a network across several social platforms, including managing engagement on the company’s website or blog. How has the network grown under their guidance? How has engagement increased? Is the conversion rate up? How are they managing the sales or conversion funnel? What insights have they developed about the customers of their current firm?

Need Help?

Wanna learn more. I’ve got a lot more insights on social media analytics from my week with IBM.  So, be sure to bookmark this site so you can come back tomorrow. Or, better, sign up for my email newsletter to learn more about social media analytics and marketing strategy. If I’ve whetted your appetite to use more analytics to optimize your marketing, let me show you how Hausman and Associates can help with our unique virtual agency model that provides cutting-edge social media at a reasonable cost.

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Online commerce is changing — FAST! A strategy where tech weenies used to dominate is quickly changing as the importance of online and mobile sales increase dramatically. IS YOUR BRAND READY FOR THESE CHANGES ????

Not only are more customers shopping using their computers tablets, and smartphones, but digital influence dwarfs the voice of brands’ paid advertising. Frankly, I’m appalled that offline advertising still makes up the lion’s share of a brand’s marketing budget.

So, what’s driving this change? Well, a number of things. Let’s take a look, courtesy of IBM’s graphic.

Social Media

Word of mouth is nothing new. We’ve always known the power of social influence on consumer purchase intentions is strong. Social media just provides a platform for social influence to spread like wildfire.

But, the importance of social media for marketing doesn’t end with encouraging amplification and positive sentiment about your brand. Possibly the most important aspect of social media is the customer insights provided by all that data about customers and their lifestyles, wants and needs, problems and triumphs, how they express themselves, what they like and hate, etc. This unstructured data is a gold mine of customer insights that’s hard to collect using standard market research tools.

Yet most firms ignore this rich vein because they lack the tools and skill to effectively manage unstructured data. Others ignore customer insights from social media because they’re uncomfortable with the touchy-feely nature of these sociological customer insights. I remember teaching some folks for a consumer packaged goods (CPG) company which shall remain nameless, but their initials are P and G. These entry level engineers managing consumer brands thought it was crazy to use this type of customer insight to guide management decisions. They needed hard numbers, not some squishy “emotional” stuff.

But, social media offers much more than just customer insights in terms of “emotional” stuff. Using tools designed to handle big data, such as IBM’s Big Insights, can convert unstructured data into structured customer insights used for predicting things like demand in real time. Customer insights from social media include segmentation by classifying consumers into behavioral groups and developing strategies for optimizing marketing ROI from each group. Social media provides additional customer insights such as geographic clusters to help guide location strategies, consumer hot buttons to guide promotional strategies and many other customer insights that give you a competitive advantage with your target market.

Cross-channel customer insights

We no longer live in a world where customers choose a single channel for their purchases. As you can see in the graphic, consumers combine in-store search with online purchase almost as much as they use the internet to help guide in-store purchases. These shoppers spend 400-500% more than more traditional shoppers — making them a fantastic opportunity for retailers.

So, what do these customer insights suggest? Why not make it easy for in-store shoppers to use their smartphones and increase sales?

For instance, ShopKick enables retailers to track customers through the store, offering incentives for purchase and offering information to stimulate buying. Even without the high cost of this technology, Macy’s effectively uses QR codes to promote purchase. Shoppers can access information throughout the store using QR codes to provide more information about products, suggest options for accessorizing or complementary items, or just giving shoppers insights from clothing designers.

And, consumers are perfectly comfortable using their smartphones to make purchases. So, why not reduce frustration and shorten lines (especially problematic during the Christmas season) by letting customers use their phones to buy products in your store. I recognize retailers fear theft, but look at the opportunity cost of NOT doing it. Grocery stores are ahead of the curve on this one. My Giant store offers scanners that allow customers to scan and bag items as they shop through the store. When they get to the register, customers simply upload the scanner data and swipe their credit cards. It’s only a short step from this to replacing the scanner and register with smartphone apps. As a bonus for consumers, smartphone grocery apps already provide coupons that could automatically reduce purchase price. Everyone wins.

But, don’t forget the wave of data available when consumers use these digital devices. Analyzed effectively, these customer insights further enhance the retailers marketing strategy.

Need help?

Wanna learn more. I’ve got a lot more insights on social media analytics from my week with IBM.  So, be sure to bookmark this site so you can come back tomorrow. Or, better, sign up for my email newsletter to learn more about social media analytics and marketing strategy. If I’ve whetted your appetite to use more analytics to optimize your marketing, let me show you how Hausman and Associates can help with our unique virtual agency model that provides cutting-edge social media at a reasonable cost.

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The starting point for all your social media insights is your strategy — what do you want to accomplish? Gain more subscribers? Get leads? Make sales?

Social Media Insights

From these goals, you establish KPIs (Key Performance Indicators) — in other words what tells you you’re reaching your goals. When you’re talking about making sales, you’re KPIs involve traffic (the more traffic to your site, the more sales), conversion (what % of visitors actually buy something), and AOV (average order value) or how much does the average buyer buy in $ or # products.

Next, you’ll look for specifics within each of these KPIs. For instance, when looking at conversion, it’s also helpful to see what path visitors took. Did certain paths result in higher conversion than others? You’ll also want to look at what caused visitors to abandon their carts — a major problem in online shopping. Did visitors get to a certain screen than abandon? Maybe there’s something wrong with that screen. Does it load slowly? Ask for information you could live without — the more information consumers are asked to provide, the more likely they are to abandon? Were there other issues that might cause abandonment, such as asking for information consumers already entered on an earlier screen.

In other words, you’re trying to get to the root cause of problems.

Collect -> Analyze -> Decide -> Deliver

Social media insights involves a deliberate process for collecting the data you need without getting buried in non-essential data, analyzing the data, making decisions based on the data, then delivering changes to processes based on these decisions.

The social media insights process requires careful thinking about your KPIs and a disciplined set of procedures for accomplishing change based on insights.

Once you know which KPI’s you need, collect data across websites and social networks. This can be a little challenging, despite the great tools out there that help. I use Hootsuite to bring my analytics together, but it’s still hard to get insights with everything in separate files. I’m currently looking for a good solutions to this problem and welcome input from folks who’ve mastered this.

Social media insights

The solution I’m toying with now is using IBM’s Cognos software to analyze across multiple data feeds. Of course, the problem is getting the data in there — especially since I’m not a programmer. Right now, I’m importing CSV files from my social networks and Google Analytics to create a dashboard showing everything going on in my social media campaigns.

Cognos has a FREE download for personal use. I’ll update you on this dashboard once I feel it’s ready for public display.

Need help with your social media analytics

I know, this stuff is mind-bending if you’ve never worked with it before. My brain was seriously expanded after spending a week in training with IBM’s top folks.

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As part of my IBM training this week, we learned data mining as a tool to manage data and make decisions that build your ROI.

How predictive analytics builds ROI

Helps connect data to effective action by drawing reliable conclusions about current conditions and future events.

Predictive analytics is a more proactive decision-making tool that drives forms of competitive advantage by analyzing patterns found in historical and current data as well as attitudinal and social media data.

Scenario 1. Let’s say you want to retain your current customers – 30. You decide to spend 30 $250/ customer to retain them ($7500). Despite your efforts 5 customers churn (leave the company). You now spend $1500 to bring your total customers back up to 30. Outcome: Spent  $9000.

Scenario 2. Now, let’s take a look at this with predictive analytics to help predict WHICH customers are most likely to leave. I mean face it – some customers won’t leave for a variety of reasons. Maybe their firm pays for the service. Maybe they’re locked in by high switching costs …. Why send these folks offers worth $250, when they’re going to stay anyway.

Scenario 3. Now, you segment customers based on their likelihood of churning into high, medium, and low risk. You now spend $250 only for those 10 customers with a high or moderate risk of churning – for a total of only $2500.  Even though you still lose 5 customers, you’ve saved $5000 just by not wasting resources to send an offer to customers who would never leave. You still incur the $1500 cost to replace your lost customers, so the total cost is

You can afford to sweeten the pot a little. Let’s say instead of spending $250 you decided to send a really killer offer costing $400 to the 5 customers with a high risk of leaving and a $300 offer to those with a moderate list of churning. You’ve increased your expense to $3500, but now only 2 churn (instead of the original 5). It now only costs $600 to recover from this loss of customers.  Now you’ve saved $4,600 over not having the predictive information.

OK, you say. So, let’s choose option 2, since we’re financially better off with that option than either of the other 2. Well, maybe. Don’t forget that running a business is more than a simple financial exchange. Those extra 3 people you lost in scenario 2 talk. And, with the vast networks available through social media, those negative comments can have a HUGE effect on what other consumers decide to do. This can accelerate the loss of customers, increase the cost of acquiring new customers, or both. YIKES!

Benefits of predictive analytics

• Produces the highest customer satisfaction
• Projects delivered on time and under budget
• Returns the highest ROI
• 94% of firms using predictive analytics see a positive ROI in 10.7 months

Three basic pillars underscore predictive analytics:

Capture – detect and capture transactions, demographics, interactions, opinions, etc

Predict – develop predictive models, data mining, text analytics, social network analysis, and statistical analysis.  Predicting is part art and part science so NO software tool can provide answers by itself. You need skilled analyst to make sense of your data.

Act – use predictions to create rules, optimization, and processes.

Some questions answered by predictive analytics are:

• Who are your best customers?
• Can we get more like them?
• What/ why do they buy?
• Why do they leave?

Using predictive analytics in a social media context, we can also assess:

• What posts (at what times, in which social channels) provide the most visits to our website? The most conversions?
• Does spending time addressing customer service on Facebook cost less relative to having customers call our customer help desk?
• Which social networks most effectively help us reach our target market relative to consumers NOT part of our target market?

Of course, this just scratches the surface of opportunities opened through the use of predictive analytics in managing your social media marketing campaigns.

IBM Modeler helps manage the entire process of predictive analytics using drag and drop tools that alleviate any coding. Really cool stuff if you can afford the $40K price tag. Of hire a consultant who has both access to the software and the skills necessary to make your data sing — all the way to the bank.

Need help?

Wanna learn more. I’m attending IBM analytic training all week and I’ll blog about each successive day. Tomorrow is on data mining, which I think you’ll find applies more generally to social media marketing. So, be sure to bookmark this site so you can come back tomorrow. Or, better, sign up for my email newsletter to learn more about social media analytics and marketing strategy. If I’ve whetted your appetite to use more analytics to optimize your marketing, let me show you how Hausman and Associates can help with our unique virtual agency model that provides cutting-edge social media at a reasonable cost.

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