Digital Consumer

Jakob Nielsen states that user participation often follows the 90-9-1 rule – i.e. 1% generate content, 9% contribute content and 90% consume content (read/observe). This is also called participation inequality. Many organizations often face the task of driving community membership and go overboard in terms of ‘acquiring’ these members. Instead, organizations should focus on how to create and expand the core set of audience (1%) and convert them into customer advocates. They are your brand ambassadors. Nurturing this core set of customer advocates can provide significant benefits to companies – Example: improved service and reduced support costs (relevant and objective response which consumers trust), relevant voice of customer input, drive better conversation rates on products etc.

In one of my earlier communities that I had established, I have found this to be critical.  We had less than 5 active ‘creators’ who drove the success of the community so much so that we had more traction from my target audience on this community than on my web presence.

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Transactional eCommerce is increasingly becoming hygiene as community participation is driving purchase decisions.  Studies show that Over 70% consumers agree that they choose companies and brands based on what other say online; Over 80% shoppers say that online product evaluations and reviews influenced their purchasing decisions. Revenue opportunities are also higher when social media is integrated into eCommerce. This has been demonstrated by Dell which has been reported to have raked in more than $3 million from Twitter followers who clicked through its posts to its Web sites to make purchases. In another report , eBay found that their customers who participate in online communities tend to spend 54% more than those users who do not.

We see this coming together of Social Media and eCommerce critical for success of all new ecommerce initiatives.

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A business’ interaction with its customers cannot be confined to its domain on the internet. Instead, as customers interact with their peers in social media sites across the internet, companies need to reach customers in an environment familiar to them to forge closer and more meaningful relationships. Recently, I was talking to a leading industry analyst who pointed out this very well. He said “customers want to follow you but they want to be where they are”. Today channels like Facebook, Twitter, YouTube are becoming the ‘consumer conversation hubs”.

A recent analysis by Altimeter and Wetpaint titled – The world’s most valuable brands. Who’s most engaged? – supports this view. Thus, leading brands such as Starbucks (presence in 11 channels according to Wetpaint and Altimeter), Nike, Coca-Cola, Ford, etc are conversing with customers and would-be customers online. The survey further finds that companies who are active in a number of channels and show deeper engagement with customers deliver better financial results: 18% revenue growth and 15% gross margin growth for companies with highest levels of engagement and presence.

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In my previous post, I talked about the five shifts in digital strategies that companies need  to make to better engage with their consumers. Let me focus on the first one which is about shifting primary focus from paid media to earned media.

If we look at the consumer life cycle – from awareness to consideration to purchase to service – companies engage with their consumers in multiple ways. Many companies reach their customers through print advertisement, banners, direct mailers etc. This medium is quite expensive and the engagement value is low. Interactions are typically one-way and not participative. Most often, this is ‘paid media’.

Recent developments in Social Media have enabled companies to interact with their customers much more collaboratively. This has helped companies to understand and serve their customers better, build superior relationships  and potentially create customer advocates who influence the peers. We call this ‘earned media’. Here, the cost of engagement is low while the value (both for companies and their customers) is high. User Generated Content (UGC) is a key enabler for earned media. Industry research shows that there are measurable gains from adopting UGC. These include increased awareness and consideration of products and services; improved customer satisfaction; lower marketing and support costs, among other benefits.

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Consumer engagement channels have become more fragmented with each technological transformation. Websites have become verbs and, from merely ‘Googling’, millions are now Tweeting about products, Digging articles, blogging on their user experience, creating ‘communities’ on Facebook and LinkedIn – researching, discussing, analyzing, supporting, critiquing, and sharing experiences about brands, products, services, and businesses themselves. As channels multiply, they are transforming the way companies can engage with customers.

Research shows that over 70% of users choose companies and brands based on what others say online. These online customers are the ‘brand ambassadors’ (or detractors as the case may be) and are there everywhere on the net. Companies cannot control what is being said. It is important to know them, engage with them, and influence them. The power has shifted to the end user.

We believe that companies can gain a competitive advantage by making five shifts in their digital strategies

• No. 1: From “Paid media” content to “earned media” content
• No. 2: From “Domain centric” communication to “Pervasive web” collaboration
• No. 3: From “Transaction commerce” to “Web 2.0 Commerce”
• No. 4: From “Community of members” to “Community of customer advocates”
• No. 5: From “Measuring traffic” to “Measuring business value”

I will discuss each of these in my subsequent posts.

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Hi everybody!!! My name is Balaji Sampath and I am responsible for marketing of our digital consumer platform which is offered in the enterprise Software-as-a-Service (SaaS) delivery model. In this blog, we will be primarily discussing on areas influencing the digital consumer such as social media, eCommerce, customer care etc. We will also be discussing about SaaS and how it is impacting today’s business.

You will see Infosys practitioners share and discuss their views and we encourage you to participate and share your perspectives in this forum.

Happy blogging!!!

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