April 13, 2009
Retail TouchPoints: Which Retailers Are Winning in the Blogosphere?
By Amanda Ferrante
Through a special arrangement,
presented here for discussion is an excerpt of a current article from the Retail
TouchPoints website.
Value retailers such as Costco and BJ’s Wholesale
Club with reputations for selling quality merchandise at low prices are
benefiting from positive buzz in the blogosphere. The two wholesales clubs
received the most favorable Consumer Generated Media (CGM) coverage across
the retail industry, according to the conclusions of a recent study from
CARMA International, a global media analyst firm. In contrast, traditional
department stores (Macy’s and Sears) and mass merchants (Kmart) fared poorly.
The study, U.S. Retailers: Winners and
Losers in the Blogosphere, reflects research from a compilation of
more than 3,700 blog posts and other consumer generated discussions about
17 of the largest U.S. retailers in three sectors in the industry in
the months of January and February.
Not surprisingly, another key quality of
coverage was that the more a retailer was affected by today’s economic
turmoil, the worse its coverage was. Macy’s exemplified this trend,
as recurrent concentration on its poor earnings and store closings resulted
in some of the worst coverage overall in the industry.
CGM coverage of the wholesale and club store
sector was dominated by Costco, which appeared in 25.7 percent of all CGM
reports analyzed, the second largest share of coverage behind retail giant
Walmart (42.3 percent of posts analyzed). As a result of combining strong
showing by share of coverage and its solid favorability performance, Costco
by far has the best overall performance. It did, however, take second to
BJ’s Wholesale Club in favorability.
Costco emerged along with Target to be the
only two retailers that exceeded the industry’s share of voice and favorability
averages. Overall, 89.6 percent of blog reporting on Costco focused on
its offerings or visits to the store, with both receiving moderately favorable
attention. Thirty-five percent of stories consumers shared in the blogosphere
were centered on Costco’s deliverability in the grocery sector, while 10.4
percent focused on the consumer electronics sector.
Walmart has been called
“evil” or “a shining example of American capitalism” in
the blogosphere. Therefore, despite having a larger volume of favorable CGM
reports (49 posts) than unfavorable CGM reports (43 posts), its overall favorability
rating was 49. Although Walmart’s attention was negative overall, it did
prevail as many posts noted the retailer excelling in such a poor economy
– several blogs detailed its strong sales and earnings results.
“The reasons people were writing about
Costco were different from the reasons they were writing about Walmart,” said
Chris Scully, VP, CARMA International, Inc. and author of the report. “It’s
a brand issue. For Walmart, a lot of the intensely negative blog posts
we saw were people taking a political stance or writing about economic
or community issues. The people writing about Costco were really talking
about their visit to the store, and its offerings. It was more about individual
shopping experience. Walmart had some of those stories, but a significant
portion was unrelated to the shopping experience, which I think has a lot
to do with the discrepancies in their performance in the study.”
Discussion Question: How much are blogs now influencing
a retailer’s reputation? Are corporate issues (earnings, layoffs, labor/environment
stances, etc.) playing a bigger role in establishing a retailer’s reputation
with the emergence of blogs? What can retailers do to improve
their reputations in the blogosphere?
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As blogs proliferate, it’s important to treat them on par with other news outlets. Retailers should constantly monitor blogs. It’s important to know what is being said about your brand. Retailers should have a strategy for responding to blogs and for being proactive in getting important bloggers information about their business. By establishing a dialogue with blogs, just as they have done with other media, retailers can reinforce their brands with vendors and customers.
Unadvertised discussion among people has always been, and always will be, influential, viral, and important. The difference in 2009 vs. 1999, 1989, or 1979, is that the discussion takes place largely through a different medium, and each discussion happens with larger numbers of people, all at once.
Even after reading the study of blogs, I’m unsure exactly who/what/how this all was determined. To judge Macy’s poorly based on the fact “they closed 11 stores” doesn’t seem to correlate to the conclusions that Wal-Mart and other big boxes, where customers typically have low expectations to begin with, are somehow “winning.” Are customers fuming about Macy’s service or corporate image? As someone who has written fairly extensively about Macy’s service, I think we have apples and oranges here.
Blogs are not the untainted voice of the consumer. There are hired hands (mouths) that will populate blogs with mentions of the retailer. Therefore, the results in the article may show us that some of the retailers are paying for blog mentions while some are not.
If the blogs refer to Wal-Mart unfavorably while its revenue is increasing, the results suggest that any analysis of blog posts has to be conducted very carefully and with a good amount of common sense. There is no standardized approach that will provide the understanding that is required to direct a strategy. I think there is a need to put a sign above these streams of conversation. “Buyer beware!”
Better yet, conduct some traditional and reliable research to confirm the findings. Use the blogs as a resource for hypothesis building. Then go out to the target audience and determine if the blog results are worthy of action.
I think Max has it right in terms of thinking about blogs as one more way in which your message and your deeds are amplified to the public. Interestingly, the discussion question is written around how blogs influence a retailer’s reputation: I think it’s actually the other way around. Blogs reflect how successfully a retailer is able to position themselves in consumers’ hearts and minds,and overcome any negative events (layoffs, customer service mishaps). Absolutely, blogs amplify and make permanent the word of mouth sharing consumers have always done but our research shows that the customer experience is at the heart of retail loyalty. Those delivering well on customer experience should see that reflected in the blogosphere as well.
Excellent points here. I particularly liked the post from Joan Treistman. So true about the paid bloggers. And how big a sample are these blogs, anyway? Looks to be under 100 postings for Wal-Mart, and yet we’re seeing slicing and dicing of “data” with impressive-sounding percentages, but not a lot on how many postings were done. Blogs’ real power today is in how they are covered by mainstream media. That’ll change over time, but for now I am beaucoup skeptical of all this “data.” I sure wouldn’t want to make a market decision based on any of it.
This discussion is both timely and unfortunate. Timely because the social media subject is taking top billing by many marketers and advertisers struggling to redefine some form of relevance. Unfortunate because this discussion will likely end up being included in some future “research.”
Treistman and Thayer have hit the big point here. Ambiguity is an issue with the online rating game. So is gullibility. Word-of-mouth advertising has long been understood to be a double-edged sword that can have a powerful influence on a retailer’s reputation. I don’t think that will change. However, I personally prefer to be able to qualify a recommender or degrader based on my knowledge of the person, even if I just met him/her at a social gathering, in which case I can ask questions like “where do you work?” Unfortunately (again), I don’t think I represent the majority here.
Retailers (and all businesses) better start paying attention to an on-line strategy. An “on-line strategy” doesn’t just mean integrating on-line sales to brick and mortar stores. An “on-line strategy” means recognizing that on-line communication is a powerful and growing phenomenon that will have a major effect on a retailer’s performance.
Separate the financial issues and the related risk of reputation. Focus on people’s experience. Consider how effective a message could be if a shopper Twitters “I can’t find any help in this g** d*** store.”
The generation defined by those graduated high school in 2000 or after will seek and receive more information from on-line and their social networks than any other venue. Businesses must recognize that customer connection will be primarily found on-line. Business must think about investing as many resources to their on-line strategy as they do with traditional communication to consumers.
Retailers should not kid themselves that negative messages are “planted” by enemies. There aren’t enough plants to hide the truth. Online communication is overwhelmingly truthful and carries significant credibility. Retailers should engage negative messages online and respond truthfully and sincerely. If there is a complaint about customer service, address it and fix it. That will give the retailer significant favorable response. Pretending a complaint is wrong when it is not will be transparent and lethal.
As in any relationship, it is important to listen and take in “constructive criticism.” Like it or not. Retailers are experts at rationalizing bad service and copping out instead of facing up to consumers’ expectations. If a retailer is truly being judged unfairly by the public, then it is a case of perception is reality. It still has to be dealt with. If the public judgment is accurate then deal with that too. The study may be flawed in its methodology for truly aggregating and analyzing the blog commentary, but that does not negate the ability of any retailer to do a random sampling of “public opinion” (aka blogs) and do something to better their standing. I think the winners in the blogosphere tend to be smaller, local retailers who might not have the advertising muscle and who will gain a lot from well placed word of mouth.
Corporate issues are a huge source of blogs – especially negative rants. At the end, I wonder how the consumer interprets and is affected by what is written.
From the article, it appears the consumer differentiates between activists and fellow consumer reviewing a product or promotion – that would explain the favorable Costco numbers in CARMA’s study. I believe that if a retailer is successful in extending their brand to the web and maintaining transparency throughout their communications and operations, consumers will be able to distinguish between fringe activism and other issues relevant to them.
Blogs should be looked at as another form of promotional campaign. Not just by retailers, but by manufacturers, service providers, software companies, banks, hospitals etc. Blogs are powerful and growing in popularity. All companies should have an overall program for on-line advertising, and blogs are just one element of that program. Some blogs are legitimate opinion, some are company developed and some are corporate sabotage by competitors.
Blogs are also critical elements to an overall SEO (Search Engine Optimization) Program for a company. They are also seeding and altering a company’s reputation faster than any other form of media.
Blogs are not going away. I would imagine that in time, there will have to be some regulation around them, but for now, you can do and say what you want online and companies have to manage that fact very carefully. I’m convinced that blogs matter more and more every day. Monitoring them and guiding them as much as possible is becoming increasingly important.
Cicero wrote, “Excitabat enim fluctus in simpulo,” meaning “He was stirring up billows in a ladle.” (Thanks, Wikipedia.) For those of us from Kansas, this translates to “Tempest in a teapot,” which applies to this discussion. Blogs represent the epitome of anecdotal research, otherwise known as mother-in-law research. It has no value whatsoever.
Full disclosure, I have a couple of blogs which I edit for accuracy, attitude, and language. Additionally, I try to guide the focus of comments for clarity and applicability, which apparently CARMA International does not. Having once consulted for the research industry, I (and most of our contributors and readers) realize that one of the look-at-me tools most used by research companies is to publish empty studies on a slow news day. The more startling, the better.
Bidnesses rarely sponsor user forums because they’re an invitation to the negativity that appeals to some of the baser human natures (e.g., empty gossip). There are no assurances of accuracy or accountability. Instead, they become negative vents which today are manifest in unmanaged blogs. CARMA (Karma? Kute) takes these blogs at face value and assigns equal value to all.
This goes to one of the cores of retail which is understanding the community and customers that you serve. The best retailers will understand the value of blogs and work aggressively to get their message out.
Perception is everything an a general wave of empathy or dislike can overwhelm a retailers ability to get its message across. Retailers should have a strategy to counter negative publicity and of course a strategy to encourage positive news. Sites like tripadvisor will come across into the retail environment where a ratemystore-like atmosphere will appear and be relied on by customers. Bad news in any media is bad.