Part 1 of this post hit a nerve. I received many emails from long-time industry friends as well as employees in our company. It makes me happy to know that a lot of you are thinking about the same profound issues that I am.
As I promised, Part 2 is more focused on the forces shaping global commerce that we directly see in our business, working with our clients and partners.
5. Digitally archived word-of-mouth: Blogs are here to stay (see BusinessWeek for a recap). Word-of-mouth online is not a phase. It’s a permanent shift. Word-of-mouth has always been with us (that’s why I named our company Bazaarvoice). More than 70 of the top 100 retailers in the U.S. have, or are launching, customer reviews today. When Brant and I launched Bazaarvoice three years ago, only five retailers in the U.S. offered customer reviews, including Amazon.com. Over the past three years, we have served 10 billion reviews to shoppers (see our recent celebration of this and real-time counter) and are on a current run-rate to serve another 20 billion over just the next year of our business. Customer reviews are word-of-mouth. People speak the same way about products online as they do offline. We are literally seeing word-of-mouth for the first time in human history.
Luxury retailers are still vigorously debating this – not wanting to give up control and open up their brand. Like I do almost every week (it seems), I spent time on Wednesday in NYC debating this with the head of online marketing and merchandising of a luxury apparel retailer. Meanwhile, Best Buy and Wal-Mart have been launching incredible multichannel campaigns (see them here and here), leveraging the power of customer reviews to drive sales online and offline. Wal-Mart and QVC have all of their online merchandisers plugged into our reports. They are having intense conversations with their suppliers to reduce returns, increase customer satisfaction, and ultimately evolve their offerings. The end-game? Better products and services for all of us. I knew we were on to something big when we started Bazaarvoice. But I had no idea it would affect this much change, this quickly. The fact that Wal-Mart launched customer-review-focused, in-store nationwide campaigns only six months after they launched with us online has staggering implications for the retail industry.
And it’s not just limited to retail. Any market where word-of-mouth plays a significant role in driving the transaction are good markets for the type of transformation we offer. We are, or soon will be (due to signed agreements), powering customer reviews for some of the largest manufacturers of consumer products, banks, credit unions, insurance companies, portals, travel sites, and healthcare companies. We are doing this globally, in 20 international languages. We have four offices now – Austin, London, Paris, and now Singapore. This is a global movement. As an entrepreneur, it is impossible for me to not be passionate about helping clients lead this transformation. Word-of-mouth online is an incredibly disruptive force, and I mean this in a positive way if harnessed correctly. Why did I start this company after seven years at Coremetrics? Because I knew it worked – but I didn't realize that it worked as well as I know it does now.
Seven years ago, Michael Porter wrote about the Web’s incredibly disruptive impact on the five forces (standard material for any MBA program). When I read this article in 2001, I thought, "Porter is late to the game". Now when I re-read it in the context of the social media movement, I think he was incredibly visionary. Smart companies are reaping the rewards of that disruption, while others have been too slow to change and are going out of business.
6. Six degrees of separation (tip of the hat to my brilliant and passionate friend, Mitch): Millennials are growing up connected to social networks, namely Facebook. Their network of friends is intact for as long as they’ve been in “the system”. They will be able to track their friends’ progress throughout life’s many stages – forever. I’ve been a programmer since I was 7 and have communicated online (via BBSs) since I was 8 (launching my own when I was 10). So I can relate. But I can’t imagine all of the implications of all of this connectedness. What does it mean, as a human being, to be able to so easily track your friends evolution in life as they go from preteen to teen to college to career to marriage to parenthood and, ultimately, to death? A typical Millennial is connected to hundreds of friends on Facebook. By comparison, I personally keep in close touch with only one of my early childhood friends (a few more are reconnecting via Facebook, but I have missed decades of their life and its hard to relate to them anymore).
How will these Millennials be shaped by this as shoppers? As people? Obviously, social media everywhere will be an expectation. Ubiquitous Web access, via mobile, is rapidly coming. How will companies adapt? Typical Facebook banner-ads are getting .005% click-thru rates, as reported on the Web 2.0 panel at Shop.org last week by those helping their clients experiment with them. That’s pathetic performance! Millennials don’t want the disruption by brands when they are in the modality of friending – unless they actually help them enhance that experience. Being on Google, Yahoo!, or Live.com and clicking on a paid-search link when they are in a shopping modality is a whole different story, and obviously that works – ridiculously well. Facebook applications, however, are performing when they give unique value to these consumers. On that same Shop.org panel, the Victoria’s Secret PINK Facebook application was pointed as one good example.
What are the long-term implications of this connectedness? I don’t know, but we’re determined to help figure this out by working with all of our clients.
Thank you again for an amazing three years in business. It is a true honor to work with such smart clients, and I look forward to seeing you soon at our Social Commerce Summit.