New insights from the Global Consumer Study by the IBM Institute for Business Value confirm what social marketers have been predicting: social technologies have disrupted the manner in which consumers make decisions, possibly foreshadowing the death of many physical retail outlets.
Big words maybe but let’s analyze the findings. According to the study, which surveyed 30,554 consumers from 16 countries, brick ‘n’ mortar stores are still the largest source of retail purchases; however, those purchases have declined from 85 percent in 2012 to 72 percent in 2013. In contrast, the online retail channel nearly doubled, capturing 27 percent of shoppers’ dollars versus 14 percent the previous year. .
Even more interesting are the changing patterns and decision-making factors that have contributed to this change. Online retail is certainly not new but the convergence of media has changed the nature of lead acquisition and conversion for most businesses, and retail chains in particular.
The Bigger the Online Community, the More Important One-to-One Becomes
While most social media marketers are fixated on growing the size of their communities, it’s becoming clear that businesses should be focused on connecting with consumers one-on-one. IBM investigated three contact methods: Social handle, Location and Mobile engagement (SoLoMo).
According to the report, IBM found that shoppers’ SoLoMo adoption levels ultimately revealed four distinct consumer groups:
– Traditional (19 percent of study population) – Uses least amount of technology while shopping.
– Transitioning (40 percent) – Uses technology mostly to gather research and other information.
– Tech-intrigued (29 percent) – Uses SoLoMo from browsing to buying.
– Trailblazers (12 percent) – Uses SoLoMo extensively, including as a retailer evaluation tool.
“In particular, the Trailblazers stood out based on their high expectations that retailers provide SoLoMo capabilities. Trailblazers are the ones leading the path to an era of “self-serve” retail. Of all four groups, we see Trailblazers as the future of shoppers. Yet, it’s only a matter of time before many in the middle two groups (representing 69 percent of respondents) have the same level of expectations as Trailblazers.”
Social Friends Are Critical
Adding to the importance of SoLoMo is the effect of online friendships and engagements. The study revealed that close to 6 in 10 consumers report that their friends’ social media posts influence their purchase choices. 59% of those surveyed claim that friends’ posts on social media sites about their purchases affected their own purchase decisions.
This finding reinforces the message that Danny Brown and I illustrated in Influence Marketing: How to Create, Manage, and Measure Brand Influencers. Consumers, who already distrust brand messages and advertisements directly from the brand, are beginning to place less weight on the recommendations and social shares of spokespeople, social celebrities, or other traditional “influencers.” The real influencers are those Danny and I categorized as “micro-influencers,” social contacts with whom a potential consumer has a personal and relevant relationship. For example, a consumer in the market for a pair of athletic shoes will be more influenced by a team mate who shares status updates, comments, check ins, or photos of a pair they purchased than by the endorsements of a “social celebrity” or other online contacts who don’t share a connection to the item being considered, the consumer’s life or his rationale for purchasing that item.
No Longer a Buzzword
John Doerr developed the acronym “SoLoMo” to highlight the changes in how businesses will be engaging prospective customers in the future. He started referring to this shift as the “third wave.” “The first wave was all about PCs; the second wave was all about the Internet,” he offered. “The third wave is about the combined opportunities of mobile platforms, social networks, and local commerce.”
The fact that technology can now seamlessly connect a person’s social graph and conversations with his or her location and, using this data, engage potential customers one-on-one via their mobile phones means the acronym isn’t just a theory or buzzword anymore – it’s a business practice. The synchronization of data, preferences, and experiences across multiple platforms is handy for consumers and a goldmine for marketers.
Case in point: This week I returned to the city of Sarasota, Florida to work with a client. As my plane touched down I turned on my Android-based smart phone to find the following messages on my home screen:
– The contact information for Hertz Rent-a-car (because my assistant e-mailed my Gmail account the Hertz rental car information)
– The distance I needed to travel to the Lazy Lobster restaurant in Longboat Key (because I viewed its profile on Yelp! two weeks ago when I was here last)
– The weather forecast this week (because my phone settings were set to allow Google to track me with the phone)
– A review of Tommy Bahama’s Store and Bar in St. Armand’s Circle (because it was posted by one of my Google+ friends)
Where Web 2.0 technologies first enabled us to be more interactive with the web, and the first smart phones and tablets connected various social networks and applications, today’s technology ubiquitously connects us, our actions, and our preferences with those of our friends – and ultimately businesses.
What’s Next?
Aggregating our historical social engagements, online activity, and location for real-time, one-to-one targeting is cool but it’s just the beginning. The next phase of technology is artificial intelligence-style technology and processing that will accurately and dynamically engage with consumers, effectively predicting what we may want or need based on all this merged data. Without getting too sci-fi about it, we’re seeing practical applications today with social relationship software identifying where in the customer lifecycle consumers are when they enter the sales funnel or based on their online engagement with the brand, and then predicting which people in the prospect’s social graphs are most likely to influence them to take the desire action from awareness to consideration or from consideration to purchase. It’s the new science of influence marketing and social selling.
Sensei Debates
Is “SoLoMo” a marketing trend or marketing paradigm? Is it a retail-only tactic or an industry-wide reality? Share your thoughts in the comments below.