January 31, 2008
Engaging in Digital Consumer Conversations
By Tom Ryan
With countless digital consumer conversations increasingly swaying opinions across the world, the most successful companies will be those that “merge traditional and digital consumer data and integrate them into their everyday operations.” That’s the conclusion of a report by PricewaterhouseCoopers, How consumer conversation will transform business.
Digital consumer conversations are defined as the billions of blogs, chats, emails, phone calls, text messaging, and social networks where consumers are talking about products, services and companies. The consulting firm said these “real-time, unfiltered attitudes, behaviors, and intentions” are transforming consumer behavior.
“This is already occurring in the advertising market, where consumer conversations are starting to change the foundation of pricing and performance evaluation,” said Deborah Bothun, PwC principal and Advisory entertainment, media and communications leader, in a statement. “Knowledge of the consumer gained from digital conversations not only enables advertisers to better target their audience, but it is also driving improved digital media measurement systems.”
However, the report also found that although executives recognize the potential of digital consumer conversations, they still have difficulty interpreting and reacting to them.
Of the 118 senior executives at U.S. multinationals who were surveyed in the recent PwC Management Barometer, 65 percent said they would increase their overall investment in knowing the customer in the next two years. Only about half said their companies regularly and systematically use blogs, wikis, social networking, and chat rooms to understand key influencers of market or consumer expectations.
PwC offered four ways companies can integrate consumer voices into standard operations:
1) Ask the big questions – The questions will be different for each company, but the theme is clear: where would a view of consumer behavior and sentiment that is closer, faster, cross-channel, and forward-looking impact your business most positively?
2) Pursue the best opportunities – In order to operationalize knowledge gained from consumer voices, companies should find consumer conversations that will solve specific problems and deliver value. Areas like new product launches, competitive threats and events that negatively impact reputation are a start.
3) Create a consumer intelligence unit and break down silos – The insight from consumer conversation may be applied to many functions, including driving corporate strategy, so that a company can react to early warnings of adverse issues gained through monitoring digital conversations quickly enough to lessen their impacts.
4) Improve operations according to real-time insight – The most highly evolved companies will merge consumer voices with other channels of consumer information in order to produce a granular, forward-looking, real-time and unfiltered view of their customers. The benefits of this process will be speed, agility, focus and prescience.
Discussion Question: Do you also find that executives are having “difficulty
interpreting and reacting” to the opportunity around digital conversations?
How do you think companies should approach exploring the value behind digital
conversations?
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There is clearly a disconnect between the language many business executives use–“…operationalize knowledge gained from consumer voices…”–and the way consumers actually are. No wonder that “…the report also found that although executives recognize the potential of digital consumer conversations, they still have difficulty interpreting and reacting to them…”
I agree with Peter Fader that businesses need to try to better understand the new forms of communications first, and then worry about trying to make another buck from them second.
Executives in many (most?) companies don’t take the time to fully understand social media–what the conversations mean, their individual and aggregate relevance, the potential ROI from this arena, etc. They tend to fall back on what they know and interpret social media data through the filter of traditional marketing and consumer data gathering methods.
With social media driving more and more consumer opinion and behavior, executives must engage those with social media expertise. They need to determine how much weight to give social media in strategic planning and decision making. It is not too late to attack this, but it soon may be.
Most top executives at major corporations didn’t grow up with the internet. As time goes by, more and more internet babies will grow up to be top execs, and 100% of the top corporations’ PwC surveys will be using digital media tools effectively.
It’s clearly becoming increasingly important for firms to have “digital conversations” with their customers, but it shouldn’t be done for ROI purposes (as the poll asks). Plain and simple, it’s becoming a competitive necessity–that’s the reason to do it. It’s like having a clean store or clear signage or knowledgeable employees, etc. None of those tactics are used to boost ROI–they’re just the right things to do.
So firms should begin to have more digital conversations–and should strive to be very honest with their customers in the process. But they shouldn’t expect these conversations to “move the needle” in any appreciable way. It’s only when they stop having conversations that they’ll see the (negative) impact on their performance….
The need for this discipline adds yet another layer of complexity to the marketing function, among both brand and shopper marketing teams. Suppliers who can integrate these services into an efficient and cohesive insights package will win, as classic marketing and even MBA experience and education programs do not deliver people to the marketplace with the mindsets or skill sets to make this actionable today.
More and more of our clients are increasing their focus on digital media–on both spending and measurement. As traditional media options become more and more prohibitive in costs vs. benefits (media inflation and fragmentation), it will become unavoidable for Senior Executives to understand how their consumers react to digital conversations and what options they have to influence these conversations.
Of the four solutions offered by PwC, #2 is probably the lowest hanging fruit and many companies are already harvesting digital information for new product launches and building equity (via Viral Marketing). #2 can be further expanded to actually generate new product ideas from consumer feedback. #3 & #4 may not be so easy.
Problem is that digital media is not a single entity, but represents an agglomeration of multiple consumer touchpoints that is evolving every minute. There are some research companies (Umbria) that measure the overall brand-buzz across the ‘www grapevine’. Companies can leverage them to understand in real-time how consumers interact with their brands in the digital world, but this is still an evolving sector.
Knowing how consumers feel about a brand has always been important to skilled brand managers and their managers. In the past 5 years we have seen significant proliferation of the options consumers have to express their opinions. Astute brand managers will find ways to tap into these conversations to gain knowledge and insights and to engage consumers in a two way dialogue.
When taking information from blogs and other electronic conversations it is important to look for trends and to not be unduly influenced by every comment. Brand marketers with electronic consumer panels can quickly take comments gleaned from the blogisphere and bounce them off these panels.
Consumer comments are also a great place to begin dialogue with consumers. Speed and the ability to target electronic media make it possible to dialogue with consumers as never possible before. Skilled brand managers are learning how to initiate and respond to these conversations.
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There is clearly a disconnect between the language many business executives use–“…operationalize knowledge gained from consumer voices…”–and the way consumers actually are. No wonder that “…the report also found that although executives recognize the potential of digital consumer conversations, they still have difficulty interpreting and reacting to them…”
I agree with Peter Fader that businesses need to try to better understand the new forms of communications first, and then worry about trying to make another buck from them second.
Executives in many (most?) companies don’t take the time to fully understand social media–what the conversations mean, their individual and aggregate relevance, the potential ROI from this arena, etc. They tend to fall back on what they know and interpret social media data through the filter of traditional marketing and consumer data gathering methods.
With social media driving more and more consumer opinion and behavior, executives must engage those with social media expertise. They need to determine how much weight to give social media in strategic planning and decision making. It is not too late to attack this, but it soon may be.
Most top executives at major corporations didn’t grow up with the internet. As time goes by, more and more internet babies will grow up to be top execs, and 100% of the top corporations’ PwC surveys will be using digital media tools effectively.
It’s clearly becoming increasingly important for firms to have “digital conversations” with their customers, but it shouldn’t be done for ROI purposes (as the poll asks). Plain and simple, it’s becoming a competitive necessity–that’s the reason to do it. It’s like having a clean store or clear signage or knowledgeable employees, etc. None of those tactics are used to boost ROI–they’re just the right things to do.
So firms should begin to have more digital conversations–and should strive to be very honest with their customers in the process. But they shouldn’t expect these conversations to “move the needle” in any appreciable way. It’s only when they stop having conversations that they’ll see the (negative) impact on their performance….
The need for this discipline adds yet another layer of complexity to the marketing function, among both brand and shopper marketing teams. Suppliers who can integrate these services into an efficient and cohesive insights package will win, as classic marketing and even MBA experience and education programs do not deliver people to the marketplace with the mindsets or skill sets to make this actionable today.
More and more of our clients are increasing their focus on digital media–on both spending and measurement. As traditional media options become more and more prohibitive in costs vs. benefits (media inflation and fragmentation), it will become unavoidable for Senior Executives to understand how their consumers react to digital conversations and what options they have to influence these conversations.
Of the four solutions offered by PwC, #2 is probably the lowest hanging fruit and many companies are already harvesting digital information for new product launches and building equity (via Viral Marketing). #2 can be further expanded to actually generate new product ideas from consumer feedback. #3 & #4 may not be so easy.
Problem is that digital media is not a single entity, but represents an agglomeration of multiple consumer touchpoints that is evolving every minute. There are some research companies (Umbria) that measure the overall brand-buzz across the ‘www grapevine’. Companies can leverage them to understand in real-time how consumers interact with their brands in the digital world, but this is still an evolving sector.
Knowing how consumers feel about a brand has always been important to skilled brand managers and their managers. In the past 5 years we have seen significant proliferation of the options consumers have to express their opinions. Astute brand managers will find ways to tap into these conversations to gain knowledge and insights and to engage consumers in a two way dialogue.
When taking information from blogs and other electronic conversations it is important to look for trends and to not be unduly influenced by every comment. Brand marketers with electronic consumer panels can quickly take comments gleaned from the blogisphere and bounce them off these panels.
Consumer comments are also a great place to begin dialogue with consumers. Speed and the ability to target electronic media make it possible to dialogue with consumers as never possible before. Skilled brand managers are learning how to initiate and respond to these conversations.