This post was guest-written by Shawn Gaide, Partnerships Director.

If you haven’t checked out Martin Lindstrom, his perspective is worthwhile. Below, Lindstrom talks of Japan’s @Cosme making the transition from e-tailer to its first brick and mortar store with huge success.

Video: Martin Lindstrom on @Cosme

The back story is @Cosme.net was launched in November of 2002, in response to rising demand for trusted information in a very crowded Japanese cosmetics market. Consider their tactics of integrating the customer voice:

  • @Cosme releases a new set of product rankings online every week (based on UGC)
  • An annually-released catalog ranking all of the cosmetics they carry – by category, age range and even skin type
  • Integration of reviews into their mobile experience
  • In-store review display and promotion

The result of these efforts? A cult-like following of more than six million customers in just over six years, and a wildly successful opening at its first physical store.

A clicks-to-mortar evolution may not be relevant for everyone, but @Cosme’s latest success is yet another validation of why customer-generated content should be a cornerstone for any business. So what lessons can we learn?

  1. Authenticity in all channels is critical, especially in a distressed economy. Imagine how today’s cash-sensitive consumers make buying decisions. High consideration purchases? They’re making fewer of them, as evidenced by abysmal numbers coming out of GM and Saks. Low consideration purchases? They struggled with the paradox of choice, and but now have more expectations to make their money work for them. On both sides of the spectrum, customers are demanding better information to make decisions, whether online or in-store. @Cosme rapidly grew its online business off authentic customer content – so why should offline channels be void of it? So far, their in-store results are showing they’re onto something. Sephora, one of our most cutting-edge customers, is also helping lead the charge.
  2. Handing over some control to customers decreases risk. This sounds strange, considering perceived issues like negative reviews (which actually is an asset) and vacuous content. In reality, retailers that capture (and moderate) UGC are mitigating their own risk. Consumers take more responsibility upon themselves in making good decisions when Ratings & Reviews and Ask & Answer are present. The retailer’s priorities then transitions to delivering exceptional customer service. Picture your own interactions with Amazon.com, where immersing yourself in UGC is part of the decision-making process. Has Amazon ever oversold you on a purchase? Was it to blame for a bad decision? Probably not. They just got it there in two days, like you requested. @Cosme’s exponential growth provides a great illustration: making the shopper’s life easier (by providing ready access to trusted content) creates positive brand experiences, which breeds customer loyalty, which generates sustainable growth. I’m curious how many more trading-in-advertising-for-authenticity case studies companies and their agencies need to see before making this a priority.
  3. Proactively manage word-of-mouth by learning to respond. Be a customer advocate. Take the @Cosme annual catalog: poorly ranked products will not (and should not!) be marketed at the top of any lists. This causes the cosmetics manufacturers to reevaluate and respond. @Cosme’s job is easy – they’re just aggregating content, and optimizing their supply mix. The greater danger here (and opportunity) is for manufacturers, because more retailers are following @Cosme’s lead. Manufacturers must learn to be honest in how they view UGC, and more importantly, nimble in how they respond. Word-of-mouth is about reach and velocity. Reach is nearly impossible to manage. But brands can learn to manage the direction of the velocity by being conversational. For example:
  • Are you fixing design flaws in the development cycle, or after the product launches, or are you ignoring it completely?  UGC can help.
  • Did you respond to a customer service incident immediately, or two weeks later with a form email, or hope that it would just disappear? Send a data feed of 1-star reviews to your customer service team to take action.
  • Have you bothered to thank a loyal customer who continues to say good things about your brand? Or did you just market the next product?

For @Cosme, word-of-mouth has been game-changing. It’s easy for their customers to contribute, and they’re ensuring that trusted content exists at every touch-point possible. Other retailers, manufacturers, and even financial services firms can find similar success by addressing two barriers: find creative ways to get customers to speak up, and use the content to benefit the customer and business operations. As a reminder, amidst all of the social technology choices, there’s no substitute for customer feedback taken directly from the purchase path. And there’s no “social” content that’s easier to repurpose as guidance for future shoppers, or for analyzing and shaping product and merchandising decisions.

10 Responses to “Lessons From a Japanese Retailer”

  1. Incredibly valuable and insightful article Shawn. The customer is always right, and this could not be more true in the evolving world of online commerce. On a basic level, people want to be heard and people want to hear what other buyers have to say, which is why ratings and reviews are so fundamental.
    However, you are right that it doesn’t stop there anymore. Customers are expecting sellers to respond to their input with explanations, answers, and possibly new innovations. Becoming authentic and proactive with those responses is the new definition of customer service.

  2. Incredibly valuable and insightful article Shawn. The customer is always right, and this could not be more true in the evolving world of online commerce. On a basic level, people want to be heard and people want to hear what other buyers have to say, which is why ratings and reviews are so fundamental.
    However, you are right that it doesn’t stop there anymore. Customers are expecting sellers to respond to their input with explanations, answers, and possibly new innovations. Becoming authentic and proactive with those responses is the new definition of customer service.

  3. Incredibly valuable and insightful article Shawn. The customer is always right, and this could not be more true in the evolving world of online commerce. On a basic level, people want to be heard and people want to hear what other buyers have to say, which is why ratings and reviews are so fundamental.
    However, you are right that it doesn’t stop there anymore. Customers are expecting sellers to respond to their input with explanations, answers, and possibly new innovations. Becoming authentic and proactive with those responses is the new definition of customer service.

  4. Marketing is becoming less about selling and more about telling, that is providing information for potential customers. Customer reviews are a brilliant way to help customers find the information they want to make a good purchase decision. If you are looking for another good case study of this, check out REI.com. They have tapped their knowledgeable and enthusiastic customers to write reviews on their website and these amateur outdoor experts are a great unpaid sales force for REI products.

  5. Marketing is becoming less about selling and more about telling, that is providing information for potential customers. Customer reviews are a brilliant way to help customers find the information they want to make a good purchase decision. If you are looking for another good case study of this, check out REI.com. They have tapped their knowledgeable and enthusiastic customers to write reviews on their website and these amateur outdoor experts are a great unpaid sales force for REI products.

  6. Marketing is becoming less about selling and more about telling, that is providing information for potential customers. Customer reviews are a brilliant way to help customers find the information they want to make a good purchase decision. If you are looking for another good case study of this, check out REI.com. They have tapped their knowledgeable and enthusiastic customers to write reviews on their website and these amateur outdoor experts are a great unpaid sales force for REI products.

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>