Trend Report from the Walpole Luxury eBusiness Forum

Royal Automobile Club London, October 2010

Stats and Insights (Brett Hurt, Bazaar Voice)
‘Is Social Commerce a Luxury?’

Importance of user reviews and encouraging interaction:

70% of today’s web is user generated
If a person writes a review or posts a comment, they would come back an average of 3 times to check to further comments
Every 5 star rating almost always has a negative review at its root. This causes the brand fans to act in defence of the brand.
Negative reviews provide an opportunity to improve product and service and almost always an invaluable insight on what customers really want.

Trend Forecast (Patti Freeman-Evans, Forrester Research)
‘Embracing the chaos: How luxury brands are adapting to a digital world’.

Patti emphasized the importance of disruptive events driving evolution throughout history. She pointed to the prehistoric ‘wheel’ as the first fundamental change in providing people the power of ‘Access’. Similarly, new technologies in our age are key to driving the change. Any innovation which improves ‘Access’ is bound to empower and ultimately become the method of choice for generations of people and more so consumers.

According to current forecasts, social commerce emerges at the top of the development trajectory for any brand online. Rather than stopping on online forums and company social networking pages, the growth in the e-commerce field is determined by the following path:

Employee networks – product sharing on social networks – recommendations of product (social media) – microblogs – customer reviews

47% of all consumers research online but would still buy offline. This vast figure indicates that ensuring a seamless experience and integrating the transition between offline and online is still a primary focus to ensure customer retention.

Trends: Mobile commerce, added value, enabling comments and seamless transition between online and offline

Insights into Strategy

Facebook’s ‘Like’ button should not be about generating traffic, but instead knowing more about the customer.

Whilst customer reviews have shown to be a powerful tool to generate uplift in sales and decrease in returns, the users will only be able to trust the reviews if they trust the reviewer. Providing profiles for reviewers or even a system to make it easier for consumer to identify the tastes and likes of the reviewer, will improve the social commerce capability even further.

Some companies have started including individual’s initials in their twets, hence providing an opportunity for consumers to relate to the tweets and develop a following.

Going forward, this model, propelled into the social media world by Hunch.com will see ever more followers, in a quest to find networks of people with similar tastes and interests.

Key Channels:

Search Engine Marketing is still viewed as the leader in generating Sales
E-mail Marketing has been chosen as the preferred route to driving customer loyalty and retention
Social Media marketing is still mostly about generating recommendations, reinforcing the value of the brand and providing testimonials.

Going Forward:

Mark Sebba, CEO of Net-a-Porter in  ‘A Conversation with the Pioneers’ nominates Controlling distribution as one of the most important objectives for retailers online. Being in charge of your distribution as well as Google results  makes a big impact to how well the business will grow and evolve

Mark’s reply to ‘Net-a-Porter’s best kept secret’ is fostering excitement amongst employees at all levels to create true passion.

This later point is something which has never been more true. Creating a transparent, passionate brand which is true to its goals not only from the outside, but from whithin, is something which will become one of the biggest differentiators for brands and companies alike going forward.

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The luxury sector was not among the early digital adopters and many luxury marketers still insist on staying away from the doom and gloom of the socio-digital reality. However there are others, in the meantime, who have been busy at creating the web’s most beautiful, engaging and useful experiences.

Here is our pick of the 3 Digital Luxury benchmarks:

Fashion.telegraph.co.uk

This site offers a great browsing experience with seamless integration of the key elements. The top area is a beautiful and intuitive mix of e-commerce, news, images and blog stories. This is the closest experience yet to the actual flicking of the magazine spreads.

Gucci digital flagship store

The new www.gucci.com, which has just been launched recently, is a benchmark of an optimised luxury shopping experience. Every detail of the site is dedicated to making an accent on the beauty, quality and craftsmanship of the Gucci collection. The products are also aligned and presented in a user intuitive way, encouraging engagement and purchase.

Hermes – I Love My Scarf

This beautiful site is an international marketing campaign by Hermes to promote its silk scarves to a younger, more trendy audience. The site is very social and provides a great visual experience. We would think that it will be of real inspiration to the younger market.

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Following months of speculation Facebook has launched its ‘Places’ geo-location functionality. Currently the service is limited to US and to the iPhones, but expansion plans across the globe and other mobile platforms are obviously in the pipeline. Given the Facebook size and digital footprint, which equals to a size of the country, the success of ‘Places’ is of course unavoidable.

Yet Facebook has a lot to account for in the privacy debate and its ongoing criticism is second only to Google. Meanwhile Foursquare has been steadily gaining momentum and growing its active user base. Whilst its stats are changing, over just 1 year of existence it has amassed half a million users (source: http://mashable.com/2010/03/12/foursquare-stats/)

Foursquare vs Facebook is a game of two halves: the numbers game vs the interactivity and appeal of the gaming element. Only time will show which one will come on top. But yet again, it is increasingly not about fighting with the behemoths, but acquiring a niche market group of its own and Foursquare has been leading the way here.

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Twitter has announced that it is taking over the ‘retweet’ button from TweetMeMe and turning it into the ‘tweet’ button, which will work in the same way as the Facebook’s ‘Like’ functionality. The move towards owning a social media action is a significant message to the remaining social media community and an interesting evolution in channelling the digital landscape.

Social media networks have successfully shown that creating and owning a popular action is not only a trademark but a unique way of engaging the fans and providing the interaction. More than that, today’s announcement from Twitter has shown that this button is more than an effective viral tool. The ‘tweet’, ‘digg’ ‘Like’, ‘buzz’ and the rest have effectively formed the TV remote control of Social Media and a powerful way for fans to switch between channels.

With the audience increasingly moving towards learning their preferences and choosing the favourites, the battle for the top place on the social media remote control is on.

Source: http://techcrunch.com/2010/08/12/twitter-tweet-button/

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Some companies just get the social media and social media integration. Daily Candy that is. Their format works, their content is spot on, their deals work, their ads are not annoying but helpful and the list goes on. The launch of their private sales site earlier this year also made perfect sense and is steadily gaining the market share.

There is something else, which they have just done and which makes perfect sense: optimising their social bookmarking menu. As a consumer and web user it would always puzzle me to see the abandoned ‘t’ and ‘f’ at the top/bottom/side of the websites. Why should anyone click on these and what would they get if they do?

Daily Candy, it seems, have an inspiring example:

I like it because it is a clear ‘call to action’ and an extra incentive to head the Facebook way. There is an obvious room for improvement, but for now it works…

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“It is not the winning that matters; it is the taking part that is important.” Or so I was brought up to believe. The spirit of the game embodied in the Olympics and other self-supportive, nurturing ideas have provided a framework for individuals, organisations, and governments to praise the winners whilst not forgetting to value everyone who takes part.

But the X-Factor, the World Cup and the forthcoming election are all about the winner, and the economic crisis couldn’t have triggered a realignment of society’s values if the gap between winners and losers hadn’t grown so big.

And that is also happening online. That sense of the web being free for all, where anyone-can-join and anyone-can-participate is fast becoming, as in life, a place where only the top 3 count.

Google has been the first to clearly mark the finish line; we all know that the top 3 search results account for 80% of clicks. The rest sink into oblivion. The next was Twitter with the launch of the ‘promoted Tweets’, which allowed companies to bid on keywords.

This is a powerful message to marketeers and brands: participation in the conversation alone is not enough. Having a presence on Facebook, a voice on Tweeter, an advert on Google, a page in Wikipedia does not by itself create a winner.

Targeted content written around keywords and an in-depth knowledge of the consumer, the things that they want, the things they search for and aspire to will mark out the strongest and the fittest. And there are plenty of tools both online and offline to help on the targeting journey: Google’s targeted ads, HP’s customisable ads publishing software, Facebook Ads, Twitter feeds – the list goes on.

And most importantly, it won’t be about the tools anymore, but about real people and real, gripping, insightful content and ideas. The Gold medal is worth fighting for.

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Jack Neff, at Advertising Age, today posted a lovely article citing the deep cultural and behavioral changes that digital might be having on how we move around, if, in deed we do move around. The numbers seem irrefutable: fewer young people are going for their driver’s licenses and certainly fewer people are buying/using cars.

For those of us in urban areas this might not seem surprising at all or even interesting: we have the benefit of being able to get the train/subway, bus, walk, cycle to work. And more than that, owning and maintaining a car is damned expensive. What was once seen by youngsters as a rite of passage, a symbol of freedom is now seen as an rapidly devaluing, encumbering, ‘uncool’ money pit. And it’s not just the expense or inconvenience of a car in urban life that is steering people away, it’s allow the lure of digital that is driving them to mass transit – we can’t read, browse, shop, play or work whilst driving and if you live in suburban areas this could account for a few hours each day. And, if you’re telecommuting, then travel is less relevant altogether.

So, what this article suggests, is that the effect runs much deeper and brands/marketers must understand this shift in behavior in order to connect more effectively with their audiences. Human behavior is changing but advertising is slow to catch up. Part of the car industries’ problem has been a string of short-termist policies, buoyed by short term ad campaigns. What must replace this, is long term strategies supported by far reaching campaigns underpinned by utility and engagement.

One of the guys in our office remarked that most of digital advertising is reminiscent of the transition from radio to TV. Most of won’t remember this but it’s well documented – the first TV ads were simply radio ads – but filmed. Yes – voice artists and singers, in front of a mic, being filmed. And now, much of what is happening online is bursts of visual interruption on our computer screens via banners, pre roll video, pop up ads, flashy micro sites, etc. etc. Pretty much print and TV ads, but online. Hmm.

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Mine is not a popular view right now, but I think the Apple iPad is the new Sony Walkman. We won’t realise we need one until we have one. And it will be a big success.

The argument against the iPad goes something like this. Why do we need a device that sits between an iPhone / iPod Touch and a Macbook? And disappointment because it is a big iPhone. The disappointment is easy to deal with – what did anyone expect? Something with poor industrial design and a dodgy interface? And I need a device of this size – for the increasing amount of time I spend surfing while watching TV, or reading on the loo (we all do it) or reading in bed (nothing kinky). The iPad is perfect for this – my iPhone is too small and my MacBook Pro makes an unnecessary connection with work and has a keyboard that for browsing photos, surfing or watching video is mostly redundant.

The Last Exit museum has both form factors of the original Newton, a device that was way ahead of its time. Many people still use them – just look at this community http://www.newtontalk.net/ Many people probably think the iPad will go the same way. I am not one of them.

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Every industry it seems is going ‘forensic’.

There are forensic medics, forensic lawyers, forensic accountants, forensic economists, forensic engineers and last but not least… forensic marketing. In the wiki descriptions of all the above, there is an an immediate sense of an almost alien brain’s effort required, some incomprehensible intelligence required to decipher and prophet – the Mulder and Scully’s.

In Marketing? In Digital? With so much data available for measurement, evaluation, research and insight, available at a click of a Google button to all of us. Perhaps the time has come for a re-definition. A question is though: should it still remain a dissection of case study material, mathematical analysis of human behavior and drawing of proven equations of social patterns, producing long reports and filling databases or perhaps, better, should it encompass what web 2.0 is all about?

People. Web 2.0 is about people. People talking, people calling, people tagging, people chatting, viewing, recommending, liking, digging, tweeting, poking and every/any other form of a blend between the cyber-human interaction.

Hence a thought towards the re-definition and taking forensic marketing to a new level of forensic as personal, forensic as identifying the reason for a behaviour, a habit and the trigger.

The emerging field of forensic marketing is defined as dealing with individual people, their personal habits, their social patterns, digital prints and cyber paths. But it is in danger of over-complicating things; all we need to do is listen.

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We make some very important decisions every day and whether life critical or strictly for pleasure, every decision requires thinking and weighing the alternatives. The closer we get to the moment when we need to make a decision, the more nervous we get and the more help we instinctively look for. Now lets leave the life’s critical decisions for the moment to concentrate on one decision that most people have the luxury for: Lunch. Rather, getting distracted from your desk and having the liberating 10mins to an hour for picking the special treat for your daily, traditional and much anticipated lunch break.

Imagine this: it’s 11am in your office and you are starting to get hungry, you are already shifting in your seat and thinking of what will you choose. Come 12pm and you are racing through…a salad, no a healthy burger…no maybe a delicious fish pie. 12.30: Still undecided and highly receptive to anything that bears the food connection you overhear your colleagues’ quick poll for lunch today. 12.45 going, going, gone. And you choose the office favourite (the local burger with chips).

Then, the clock strikes 4 and an email lands in your inbox tempting you with tomorrow lunchtime’s delicious meals, sandwiches and all you could have wished and hoped for back at 11am …. Come tomorrow and that email is so far up your email list or filed or lost in your Blackberry or iPhone, that you are back where you started at 11am: your office thinking of things to try.

Now if that email came at 11am? The queue that day would have doubled.

Being able to reach customers is key but reaching them at key times is crucial. And that’s what Digital as a field and Digital Strategy in particular enables to do best. Results? Always a happier customer and increased ROI.

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