WFM: A Leader in Social Media

I recently read a few parts of Groundswell by Josh Bernoff and Charlene Li, and found many useful tips for thinking about online marketing strategically. As people all over the world spend ever-increasing amounts of time on the internet, marketers need to discover ways to reach their consumers through this new medium. Many companies have made an effort by creating a Facebook page, setting up product review functionalities or establishing other forms of online presence; however, very few seem to have a clear goal for their online marketing programs. Rather, marketers put their brands and companies online because they are following trends or feel as if they have to be online in order to be viewed as “current.”

The authors of Groundswell take this desire to be online one step further by putting structure around where companies should be online and what online tendencies are for customers. The categorization of “creators”, “critics”, “collectors”, “joiners” and “spectators” presented in the book has particularly compelling implications for marketers. By conducting market research to determine customers’ online behavior, marketers can tailor their online presence to fit the needs and contribution comfort level of their customers. There are a few companies that excel in tailoring their online presence to fit their customers; nevertheless, marketers have much to learn from those companies that use social media strategically and thoughtfully.

Whole Foods Market (WFM) has done a noteworthy job in creating an online experience for its customers. It is unclear whether WFM discovered its customers online tendencies through market research, trial and error or luck, but the company has certainly honed in on what works and used the online space as a way to communicate with customers foster customer relationship with WFM. For example, the WFM website contains multiple recipes featuring products available in the stores and seasonal ingredients. Customers can rate or comment on the recipes. Many customers offer suggestions or modifications for the recipes, and interact amongst them selves as well as with the WFM online contribution staff. The recipes create a WFM community around food that provides a favorable environment for customers.

The vibrancy of the WFM online recipe community suggests that the company’s core customer segment consists of “critics”. Customers seem to enjoy commenting on recipes and rating them, but fewer offer recipe suggestions in separate online portals soliciting them. Consequently, WFM has recognized the online preferences of its consumers, makes considerable efforts to create online content and allows customers to interact with this content.

Facebook is another online channel that WFM has used successfully to interact with customers. WFM team members contribute regularly to the WFM Facebook page and receive hundreds of responses of recipes, pictures and other content loaded to the site. Facebook allows WFM customers to form a community around the company and food, which creates another favorable online experience for customers. WFM also uses its strong Facebook presence to combat negative press and respond to discontented consumers. When customers use the online channel to either complain about poor in-store service or product quality, a WFM employee responds directly to the consumer within days and attempts to rectify the problem. This type of outreach allows the company to control the sentiment online and proves to customers that the company is committed to maintaining a positive relationship with them.

WFM has also had success in using online spaces to promote the community aspect of its stores. WFM has a highly active Flickr account and posts pictures from store events all over the country. These events include cooking classes, cooking demonstrations, farmers’ markets and holiday celebrations that are aimed at making WFM an experiential product as opposed to a more common grocery store concept. The company posts these pictures to Flickr and then links them to the WFM corporate site, Facebook and other social media channels. This strategy is likely to be effective in raising the interest level of infrequent customers who are less likely to know about WFM non-core services. WFM loyalists are key in spreading awareness to peripheral customers since loyalists will comment on these photos and generate activities in their network’s news feeds related to WFM. Using techniques such as picture posting illustrates WFM efforts to link its social media strategy across different sites and create a holistic online experience for its customers that goes far beyond buying groceries.

Walmart is Watching: Should We Care?

Customers

Walmart has long fought a host of reputational battles, and the company must be careful to avoid yet another over the issue of privacy. People are quick to criticize Walmart on various topics, including fair wages, local business development and the environment. While the company has made impressive strides in revamping its environmental strategy, it has not had quite as much success with other issues. If Walmart is perceived as going “too far” in collecting personal information, it may enter into confrontation with a host of new adversaries. It is in Walmart’s best interest to be mindful of how and when it uses personal data.

Consumers will be less likely to oppose Walmart’s data collection if it is obvious that the company is using the data to benefit customers. The article mentions that Walmart has been successful in using its data to predict demand levels and respond with accurate ordering. Customers will recognize the value of collecting data if it ensures Walmart shelves are stocked with the products they want. The company has been effective in using data to benefit consumers, so it should not be shy in telling consumers. Customers will appreciates efforts that allow Walmart to remain a low cost provider.

The company is likely to run into trouble if it uses the data to price discriminate or increase prices. If customer demographic information leads the company to increase prices on certain items that are determined to be more price inelastic, Walmart runs the risk of upsetting its customer base. Disgruntled customers are likely to refuse to share personal information or look to other providers with whom they feel a deeper sense of trust. Data must be used for actions that have an overt customer benefit in order to keep customers at ease with passing on their personal information. If the consumer advantage is evident, consumers may even share information willingly and freely.

Suppliers

Walmart’s extensive purchasing data is invaluable to suppliers who are trying to accurately forecast production levels and track demand across geographic areas. Working with Walmart affords them the opportunity to improve efficiency and focus advertising on areas where sales are slipping. While Walmart is notorious for using its size to influence suppliers’ actions, suppliers have much to gain from satisfying this retail behemoth. The article mentions that 100 million customers, one third of the U.S. population, walk through Walmart’s doors each week. No other retailer has the ability to give suppliers access to that many consumers. For suppliers who can use purchasing information to improve their product offerings and marketing, Walmart is the ideal place to reach a host of customer segments.

Suppliers must know their customers well in order to determine proper relations with Walmart. Since Walmart concentrates its data collection on purchasing activity, suppliers will not gain insight into customer profiles from Walmart’s databases. It is essential that suppliers conduct marketing research in order to understand their customer base, and determine factors such as loyalty and shopping habits. Major CPG players, such as P&G or Unilever, have a few legacy brands with loyal, long-time consumers. Consumers expect these items to be available in all major retailers, so retailers are obligated to carry these items in order to satisfy consumers. If retailers are able to use their internal data and market research to measure customer loyalty and expectations, they can push back on Walmart to maintain margins on these products. Losing distribution of these items would be detrimental to Walmart, so the company would be more inclined to compromise. Suppliers must use data collection to their advantage to identify areas in which they may have some leverage over the retailer, and then use this information to protect their profitability.