As consumer demand returns and the economic gloom lifts, David Donnan examines which new avenues retailers across the globe are using to communicate with new and existing customers

As consumer demand returns and the economic gloom lifts, David Donnan examines which new avenues retailers across the globe are using to communicate with new and existing customers

The days where the High Street ruled the industry are long gone, according to David Donnan, managing director of digital marketing agency, Igentics.

In fact The Centre for Retail Research predicts e-commerce will bring European retailers €1.78 billion in January 2011, a 23% increase from 2010, with spending in shops increasing just 0.5%. “So now that e-commerce has become the norm – a tried and tested sales channel – what’s next?” Donnan asked. “The answer on many commentators’ lips is social media.”

Social media gone wrong…

He continued: “Yet, as retailers feel increasing pressure to get involved with social networks, many have embarked on the journey without understanding what they are undertaking. The fact is, social media such as Facebook, Twitter or YouTube, does not suit every retail brand. Poorly planned or executed forays into social media can result in anything from simply a drain on company resources with no benefit for the business or its customers, to more serious repercussions such as damaging brand image.

“Communicating too much, too little or in the wrong way can all negatively impact perception,” he warned. “This is magnified by the unpredictable nature of live, interactive communication and the longevity of content on the internet. Although social media can be a huge asset to a retailer, it’s vital that any risks are mitigated by setting project objectives from the start and building a strategy that matches the brand and the resources available.

And how to get it right…

“Social networking in retail will not often present direct sales opportunities and if approached as a sales tool, will likely backfire. The focus should always be on the ‘social’ element, providing a unique opportunity for companies to talk directly and personally to customers, helping to strengthen relationships, and ultimately building brand loyalty. This will have a positive, though indirect, impact on sales in the longer term.

“Informal community oriented sites such as Facebook and Twitter provide a public theatre in which retailers, and indeed any business, can face heavy scrutiny or direct criticism. Handled correctly, this can be turned into an advantage. Providing honest and timely responses to criticism; demonstrating that feedback is taken on board; and engaging dissenters personally are all ways to help a brand be seen as proactive and caring. WholeFoods’ use of Twitter – @WholeFoods – is a good example of this,” he said.

“Many retailers join a network and quickly discover they have insufficiently allocated resources, have not planned for content creation, or are not clear of who “owns” various types of communication. Even the keenest of chief executives or chief information officers can run out of inspiration – resulting in empty blogs and sporadic tweets. This undermines the entire exercise, as customer engagement requires ongoing interaction.

“As such, many businesses ‘play it safe,’ using social networks to publish news, products updates and sales messages only,” Donnan added. “Unfortunately, this kind of content is not really social. In the few cases where a sales approach has worked – for example Dell – the key has been in offering followers real value in the form of exclusive information and offers.

Communicating with the digital generation

“The key to ensuring content supports the business objectives is clear ownership and consistency with brand messaging. Without this, customers will receive mixed or unclear messages. Under clear ownership, multiple areas of the business, from sales and marketing to board level and beyond, can work together to ensure the community is a successful one.”

He concluded: “Getting social media right is essential as upcoming generations of consumers and workers are all ‘digital natives’ and expect to be able to interact in the virtual world as directly and easily as they do in the physical one. The importance of social networking tools in retail is only going to increase. The key is to get to grips with it now while it is still considered something of a frontier in commerce.”