Corporate Risk and the untold impact of Social

Posted on by Billy Tucker

image

I spoke at a great business breakfast recently about the impact of social on commerce in Australia and was struck by how traditional businesses can find sound reasoning not to engage in social conversation.

The key objection I heard was around Risk, which is interesting given how big business currently thinks about the notion of Risk.

Risk Management is defined as the identification, assessment and prioritization of risks, coupled with coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of unfortunate events.

Commercial exposure from unfortunate events is inevitable, and in a world of Twitter and Facebook the pace of at which that Risk manifests is astonishing. The viral nature of Social therefore undermines the traditional view of Risk mitigation and damage control – so the first thing big business has to do is acknowledge that the world has already changed, they just haven’t caught up yet.

We know that people have an inherent desire to share, regardless of the sentiment.  If a business has no means to monitor/control the conversation, that’s where the risk exists. And establishing a social platforms early is the only answer.

If your customers are worried, give them a platform to share their concerns, make them feel like they are heard, while you monitor and moderate the conversation. Take some control of the discussion. If they are angry, frustrated or even delighted, give them a platform to engage and share.

There is no reason why the conversation platform you provide can’t operate with strict rules of engagement and therefore the existing risk framework. Sure there are NEW RISKS attached to social engagement, but they exist already, start mitigating these new risks before the unfortunate event you fear most.

Five key truths about Social engagement:

•Your customers will find very effective ways to broadcast “feedback” about you online whether you like it or not

•You can and should measure the sentiment of your target Audience, engage them and give them a platform, Radian6 and People Browsr’s Kred are exceptional platforms

•Monitor and moderate the conversation, but never astrosurf

•Social brings New Risk to business, get used to it!

•It’s prudent to provide a platform BEFORE the event you fear the most happens

The issue I describe here around the inevitability of social engagement is told well by the history of a UK Cable company NTL (now Virgin) and its relationship with a consumer lobby group nthellworld in 2000, worth a read.

Profiting from the fundamentals of Group Buying: part 2… Fleeting

Posted on by Billy Tucker

It is common for consumers to react negatively to a deep discount where they don’t understand the reason for the sale. Often customers will assume there is a hidden catch, something they can’t see that others can, reasons they will look foolish and regret the purchase – in each case they will walk away from a discount rather than risk being exposed… to prevent these barriers emerging is it critical that consumers are provided with a sound rationale for the sale. This is a fundamental principle behind Group Buying, providing sound explanations for the discount, i.e. group discount, time limited offer, discount in exchange for promotion etc.

Consumers are a savvy bunch, without a clear explanation for the discount, the customer will assume there is a catch and walk away.

imageThe second mechanism employed in Group Buying to illicit maximum discounts from Merchants (and ensure impulse behaviour from consumers) is by making the offer “Fleeting”, i.e. limiting the time an offer is available in order to drive customer action through our basic fear of missing out!image

“Fleeting” is a critical function of Group Buying and Flash Sale sites and is incredibly effective at driving action. Fleeting is also used to great effect in the real world through “stock take sale”, “this weekend only” and “closing down sale”.

By time-limiting offers and proving game mechanics to generate excitement and drive action a lift in sales is guaranteed.

Much like the other tactics covered here, though, the use of a timer has to be genuine, like the Rug Store with its perpetual “closing down” sale, savvy consumers will quickly see through a fake deadline.

Profiting from the fundamentals of Group Buying: part 1… Focus

Posted on by Billy Tucker

image

Group Buying works for a reason, regardless of the service woes plaguing the industry (which have been driven by a combination of greed and inexperience, not the model itself) the principles behind Group Buying are sound. Over the next few posts, I will explain the key mechanics and position them in a series of non-Group Buying contexts.

There are six key mechanics inherent to the category that are designed to illicit an emotional response, such as an impulse purchase.image

This is the first of six posts I will write that describe those mechanics.

FOCUS ATTENTION ON ONLY A FEW OFFERS

Limiting promotional efforts to only 1 – 3 featured offers enhances the perception of those offers and likely uptake, minimising “noise” around those offers will further spotlight the chosen few. Featuring multiple offers on the other hand dilutes the “WOW” and runs the risk of Paradox of Choice effects.

Most email platforms will support controlled tests, such as sending one control group an EDM with multiple offers, one with the three best offers and one EDM with only a single “hero” offer.

Assuming the control conditions are sound, the likely outcome is that the Hero and “three best offers” EDMs will each provide a click through rate that is greater than the “multiple offers” EDM even though the multiple offers email included the featured offers from the other tests.

Finding the right balance is critical, and running controlled A/B and Multi Variant Tests will find that balance.