The Use of Social Media

Last summer I worked for a startup company, Betterment, that has made excellent use of social media to create a better user experience and also gaining insight on its customers. Betterment is an online brokerage website that focuses on simplifying investment decisions for its customers. Most investors feel intimidated by the large number of investment choices offered by online brokerages, and Betterment limits investment choices to a few recommended options. One challenge for Betterment is how to do customer research with a minimal budget. They have been able to do this by looking at financial blogs and focusing on the key complaints that investors have and how can the investment experience be improved. They also looked at self-published reviews of other websites to look for areas of improvement. This is where they developed the idea of having a limited selection of investment options at a low price point. They have also actively participated in blogs to promote their website. According to the groundswell article, one in four Americans actively read blogs so this is a great form of free advertising. They are also working on getting reviews of Betterment written by these blogs for free publicity. Betterment has also published promotional videos to YouTube to further publicize their website. Without the availability of social media, Betterment would probably never been started because the costs associated with publicizing the website would have been too great.

Betterment also created a Facebook page to promote their website and receive feedback from customers. The feedback they have received has helped them greatly improve their website and which features to emphasize. They also have a twitter feed to keep in touch with their customers. They believe that their main demographic is 26-35 year olds with a college degree. Relating to the groundswell article, the social technographics profile of this target group would show that they are much more active online than the general population and Betterment has worked to take advantage of this.

Betterment has also built into their website social media aspects to improve the user experience. For example, members can see how their peers are investing. This is a unique feature that Betterment offers that they feel their target demographic will value. They also generate a Betterment Blog where they share investment advice and other information they feel is useful to their customers. Users can comment on these posts. Blog posts also can easily be shared on social media websites with one click on the share icon to further promote Betterment.

In order to improve upon their use of social media, Betterment should consider doing a survey to understand what social media its customers are using in order to better target them. For example, what percent of users are using twitter would be a good data point to understand. Also new social medias are consistently being created and becoming popular so it is important that Betterment keep track of which social media websites it should participate in. Also understanding the makeup of its user in terms of creators, critics, collectors, joiners, spectators, and inactives would be useful as well. If they have some very passionate users that are creators that should work to create a framework that enables them to publicize Betterment similar to how Lego is able to take advantage of one of its critical creators. For example creating a blog for one its users to use and promote Betterment could generate free publicity for the company.

Wal-Mart

The key to Wal-Mart’s success is their advanced Information Technology capabilities and their ability to improve the customer experience based on this. In the retail industry, obviously one negative experience is to go to the store and the product you went to the store to buy is not available. By being able to closely track inventory, Wal-Mart is able to ensure that this occurs at a minimum. Wal-Mart is also able to react to spikes in demand for example as the article discusses when there is a hurricane. Also another negative customer shopping experience is waiting in a long check out line. Wal-Mart is able to estimate how many cashiers they need to have working at any given time to ensure fast check out times. Based on my personal experience, it is clear that HEB does not have this technological capability. I actually go to the grocery store much less than I would otherwise due to this fact. I buy a lot of items from CVS due to the shorter lines unless I need to buy a lot of items.

I believe there are areas where Wal-Mart could better use their IT to improve the customer experience. One would be working with their suppliers to develop better products. Based on the article, Wal-Mart is very guarded in terms of the information it gives to its suppliers. If it could share information on its customer’s preferences to its suppliers then perhaps they could improve upon their products. For example, what types of packaging sell the best could be useful information for suppliers. Another area where Wal-Mart could use IT to improve the customer experience is to track customers shopping in their stores and watch how they make purchases. For example, what types of displays do customers prefer and buy from? This brings up privacy issues, as I am not sure I would want Wal-Mart tracking me personally when I enter their store.

In terms of privacy issues and Wal-Mart’s huge database of customer information, my greatest concern is not what Wal-Mart might do with the information but what would happen if hackers were able to break into their systems and steal it. Russian and Chinese crime syndicates have made millions off of stealing people’s personal information and have been able to get a lot of this information by hacking into supposedly secure databases. No security system is full-proof and the thought of criminals hacking into Wal-Mart’s systems greatly concerns me. In terms of Wal-Mart’s use of the information, there is always pressure to find new ways to become more profitable. There will always be a temptation to use the information in perhaps ways that are not completely ethical to improve their bottom line. I therefore am hesitant to trust them with this information. I believe there should be strict regulations in terms of what Wal-Mart can do with the information and what information they are allowed to keep on their customers.

I think Wal-Mart has both a positive and negative impact on its suppliers. I know Wal-Mart in fact has put suppliers out of business due to their demanding nature. However, Wal-Mart by being the 800-lb gorilla that almost all companies have to deal with can push through changes that are in the best interest of all their suppliers. RFID tags is one example of this. Wal-Mart is forcing their suppliers to move in the direction of using RFID tags to track their inventory. This is really in the best interest of all parties as it will cut down on un-used inventory. However, if it were not for Wal-Mart no parties would adopt because it will create a short term cost increase until economies of scale are meet which almost no individual supplier could meet on its own.

As content shifts to digital, books are the latest content that is becoming digitized and whose channel for purchase has shifted from retail stores to online transmission. E-books have been increasing rapidly in popularity, and they were one of the most popular Christmas gifts this year. However, they are still in the early adoption phase with digitized books only making up 1.4% of books sales at the end of 2009 although e-book reader sales are expected to double in 2010 (Kiplinger's Personal Finance; Mar2010, Vol. 64 Issue 3, p78-78, 1p). Many have compared e-books to MP3s however there are some significant differences. I would like to examine the customer experience of using E-readers and predict future adoption of the product.

In terms of comparing e-book readers to MP3 players, the value proposition is similar in many ways but also different. The ease of purchase between an E-Book and an MP3 is very similar in sense you can instantly purchase and consume from your home or anywhere Internet access is available. You are able to avoid the drive to the shopping center or mall, the search for a parking spot, and then the walk into the bookstore to search for your book. In comparison to purchasing books online, you do not have to pay shipping and then wait for your books to arrive in the mail. Also, with e-books, there is the advantage compared to going to bookstores that you can get instant recommendations based on past purchases. In terms of the differences between their value propositions, you have to look at the products they are replacing. E-books are replacing physical books while MP3s are replacing CDs. There really is no advantage that CDs have over MP3s to the typical consumer. CDs have slightly higher quality sound but the typical layman cannot tell the difference. However, there is a substantial difference in terms of the customer experience between physical books and e-books. Many people like the touch and feel of a book versus reading something off a computer screen. Also many rabid book readers view their bookcase as symbolic of their high intelligence and large knowledge base. This is where the adoption of e-book readers could differ from MP3 players.

Another topic I would like to examine is the consumer experience with e-book readers and how this can be improved. I would like to examine the purchase of e-books, the physical interface of e-books, and the usage scenarios of e-books and where they could have an advantage over traditional books. Amazon is obviously the current leader in e-books and offers a complete solution with both e-books and an e-book reader. I will examine this experience and how it can be improved. I will also examine Apple’s strategy in the e-book market space, as they have now announced the iPad and how they intend to improve upon Amazon’s e-book solution. Apple greatest attribute is their ability to enhance the consumer experience by simplifying it and offering a complete solution. For E-books this will be the ease of use of the iPad and also the ability to purchase e-books over iTunes.

E-books are posed as a disruptive technology to traditional books. Bookstores like Barnes and Noble are greatly threatened by this technology just as Virgin Music stores where threatened and eventually put out of business by the online purchase and transmission of music. It is yet to be seen if this will happen with bookstores. A good article I have found as a starting point for my research is the Wall Street Journal Article, “E-Readers: They're Hot Now, But the Story Isn't Over”. This article states, “Books are having their iPod moment this holiday season. But buyer beware: It could also turn out to be an eight-track moment.” It is clear that e-books will continue to exist as a niche product but whether they can exceed traditional books sales is up for debate and dependent on the continued improvement of the e-book consumer experience. I would like to examine this market trend and examine how the e-book consumer experience can be improved so that E-books can be move from being a niche product to being a truly disruptive technology that becomes the dominate platform for book reading.

Understanding Customers Better

Understanding what products consumers really want is extremely complex and cannot be found using simple survey or research methods. The main problem is that customers many times have a hard time understanding and verbalizing what they want. Apple understands this better than any company and this is why they do not do customer surveys. Apple feels they have special expertise to understand what their customers want better than they do. This is exactly the point of the article on the musician Kenna where customers when they sample his music initially don’t like it but once they actually listen to it and see him live they love it. In this case, customer data is very mis-leading.

I feel that this could be comparable to the Apple iPad. The initial reaction to the iPad compared to expectations has been fairly negative. However, it would not surprise me that once consumers actually get one in their hands and really interact with the product, it could become extremely popular. This is the case with almost any disruptive technology. Consumers have a really hard time visualizing the use of products that operates in a way that is different from what they are used to. Only a limited set of “visionaries” have the ability to do this and many times even they are wrong. I would compare Steve Jobs to the music executives in the Kenna article who have a special ear for music. Visionaries like Steve Jobs take into account the outcomes that people want instead of focusing on incremental improvements. A good example of this would be MP3 players. If you had asked users of MP3 players before the iPod existed what improvements they would like, the responses would have been “bigger hard drivers”, “higher quality headsets”, and “easier to use player interface”. Developing MP3 players based on these requirements would have lead to incrementally better MP3 players but it would not have revolutionized the MP3 player market like the iPod. Steve Jobs focused on the outcome people wanted and that was an easier to use overall music system, which included not just the physical MP3 player but also the PC software interface as well as the ability to acquire MP3s. The typical consumer would not be able to think at this high of a level and think about the entire system. However, by focusing on the outcome consumers wanted, Apple was able to develop the iPod.

Another challenge consumers have is quantifying how they feel about an existing product. I drink Coca-Cola all the time but if you were ask me how I feel about it, I would have a hard time verbalizing it. This ties in also to the Kenna article in the sense that only experts such as the food tasters can really verbalize why they like or dislike something. It takes extensive training to be able to do this. This is where I can see great value in ZMET system as it can pull out of people why they fundamentally like or dislike a product and this can help direct how the product needs to be modified or what the next generation product will look like. I do believe however this method still only works best for incremental changes. In order to develop a revolution product, companies need not listen to their customer but closely examine how their customer uses their product and for what purpose and then focus on improving the “job” the product does for the customer.

My Persona

At a high level, I am male, single, and in my early thirties. The standard persona that fits me best is “Energetic Young Guys”. I love the outdoors and am very active. I love to play sports including basketball as well as my new hobby golf. I also enjoy hiking and have gone on backpacking treks through the mountains. I am willing to spend money on my hobbies, as I am a regular shopper at REI.

I also work very hard as well and I am very career driven. I am about to complete a graduate degree in business so I am highly educated. I love to travel and have been to five continents. I also am a very technologically savvy and am always buying the latest gadgets. I would consider my self an early adopter when it comes to technology, as I am good at visualizing uses of new technology before others adopt. I owned a creative jukebox in high school before Apple even came out with an iPod and MP3 players became popular. I remember streaming songs through my car stereo from my MP3 player and how cool my friends thought it was.

I am very picky in terms of what I buy and do a lot of research online before I buy anything. I always try to read reviews of something before I buy it. I am very selective in what I buy and when I do buy something I always try to buy high quality. This is true in almost everything I buy. For example, I recently bought some furniture and I choose to buy nice furniture that would last instead of going to Ikea.

In terms of fashion and clothing, I do not follow the latest fads. I always try to buy clothes that I think look good regardless of what the latest trend is. I have shirts that are 5-10 years old that I still wear out that still fit in because they simply look good in my opinion. I am very picky in my tastes and I am willing to spend some money if I see something I really like. However, I do not buy labels. I have bought nice clothes that I liked with a label on them and then removed the label. I also like modern yet classic designs. If I could buy any car it would be an Aston Martin. I think its styling is modern yet timeless. I also really like the design of Apple Products. I think they have a modern yet timeless design as well. I like the simplicity of their design as well.

In terms of my shopping habits, I do like to shop online. I will buy something online and then return it if I have to. I do not like going to the shopping mall. One hour at a shopping mall is almost too much for me. I normally like to be left alone with I shop and do not like overly helpful attendants. Most of the time I have already done my homework before I buy something. At technology stores, 99% of the time I understand the product better than the sales person does. I am not afraid to negotiate as well. I have negotiated for products at department stories where you would think it would impossible to get a discount.