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How Retailers Can Create the Right Social Circle


Based on a survey of 650 consumer company executives conducted as part of the TCS Global Trend Study titled ‘Mastering Digital Feedback’ on how companies are using social media


Social media-driven 360-degree customer views can dramatically boost retail performance and keep customers loyal.


In October 2013, Walmart Chief Marketing Officer Stephen Quinn announced that the retailer was achieving a tenfold ROI on its Facebook and Twitter investments compared to its return on other advertising spends. Walmart has invested hundreds of millions on social media, including the acquisition of four social media companies. Such spending and returns, however, are far from the norm.  In our 2013 global research study on how large companies, including 87 retailers, were using social media, we found that less than half of retailers generated a positive ROI on their social media efforts.

Lack of investment is not the culprit.  In our study, retailer social media investments ranked second out of 11 industries that provide consumer products and services, surpassed only by consumer packaged goods.  The average retail company spent $25.3 million last year on social media, compared to $18.8 million per company across all 11 consumer industries.  (Exhibit 1). Retailers also deploy significant numbers of full-time employees to their social media efforts— an average of 53 (and a median of 18).  (Exhibit 2.) Moreover, retailers say they plan to increase their social media spends to an average of $30.6 million annually by 2015—second only to consumer packaged goods manufacturers. 

Exhibit 1

Average 2013 Spending Per Respondent on Social Media and Spending per $1 billion in average respondents revenue

Exhibit 2


Instead, a narrow focus of social media on marketing and service is the major reason for most retailers’ lackluster social media ROI.  Our study found that, far more than any other functions, marketing, service and sales regularly follow consumers on social media—69 percent, 63 percent and 59 percent respectively.  (Exhibit 3.) Only 30 percent of brand/category managers say they do.  Among respondents from product development and distribution, the numbers are even lower—21 percent and 15 percent. 

Exhibit 3

Which business functions use social media regularly to view consumer comments

This is not to say that diligent use of social media in marketing and customer service isn’t critical to retail success.  With intense competition, especially on price, retailers are on the mark when they use all the tools at their disposal to reach consumers with targeted offers.  The same can be said about customer service after the sale.  Large numbers of consumers are dissatisfied with their retail experiences and complain through social media. 

According to a 2013 study by Arizona State University’s Carey School of Business, for example, more than 50 percent of U.S. consumers weren’t satisfied with the products they purchased or the service provided by retailers during the past 12 months.  According to the report, the number of dissatisfied consumers has been on the rise — from 32 percent in 1976 to 45 percent in 2011.  In addition, more than half (56 percent) of consumers who complained about retailers claimed that the companies did nothing about their issue — an increase of nine percentage points from two years ago. Additionally, the number of consumers that complain via social networks has nearly doubled from 19 percent in 2011 to 35 percent in 2013. [1] 

Complaints travel far if they’re not rectified. The Arizona State University study found that dissatisfied customers complain to an average of 28 people – about double the number that would have complained if the retailer had resolved the problem.   

Although social media is critical to marketing and customer service success, it also offers retailers an unprecedented opportunity beyond marketing and service to create differentiated customer experiences.  These can include better merchandising, assortments, products, and cross-channel experiences.  To do so, retailers need to “listen” to customers and create a social-media-driven 360-degree view of them.  In this paper, we explore the value this view can provide and how retailers can generate greater value from social media across their operations, stores and online venues.

[1] E. Holmes, “Shopping Dissatisfaction Is on the Rise But Savvy Complaints Get Attention,” The Wall Street Journal, Dec. 18, 2013. Arizona State University surveyed about 1,000 households.

TCS Retail Forum Journal
Read other articlesTCS-Retail-Forum-Journal-Issue-3

- Unified View of Customer: It’s All About Customer Experience
- Curate Digital Customer Engagement with Extreme Personalization
- How Retailers Can Create the Right Social Circle
- Customer Loyalty Experience: You Can't Afford to Ignore It
- Realizing Unified View for Better Customer Engagement: Understanding What to Build

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