Chapter 10 Strategy and Performance Management in Social Commerce

Learning Objectives 1.Describe the strategy-performance cycle and its major elements. 2.Describe the strategic planning process for social commerce. 3.Explain the issues involved in justifying social commerce projects. 4.Explain how market research is conducted to aid social commerce. 5.Describe the use of metrics and monitoring techniques for performance assessment. 6.Describe the process and tools for social media analytics and sentiment analysis. 7.Explain how competitive intelligence and innovations improve social commerce performance.

Opening Case: Social Media-Based Market Research Helps Del Monte Improve Dog Food The Problem – The primary goal was to decide the best way to use social media-based market research to support dog food.

Opening Case: Social Media-Based Market Research Helps Del Monte Improve Dog Food The Solution – The basic idea was first to connect and collaborate with dog lovers via social networks and conduct there market research 1.Text analysis – gathering relevant content from over 50 million blogs and analyzing relevant topics of conversation among the target customers 2.To create a special online community of dog lovers, where Del Monte could observe interactions and stimulate discussions with the community members 3.On-demand survey research, used to determine the viability of new strategies and ideas

Opening Case: Social Media-Based Market Research Helps Del Monte Improve Dog Food The Experiment – The results of application were used to help improve the company's dog treat, called Snausages Breakfast Bites – The company concluded from the analysis that people who own small dogs would be the major purchasers of Snausages Breakfast Bites – The new approach solidified the community of dog lovers who are happy that their opinions are considered

Opening Case: Social Media-Based Market Research Helps Del Monte Improve Dog Food The Results – Product cycle time was reduced by more than 50% to only 6 months – Del Monte was able to develop a better marketing communication strategy – The analysis helped the company better understand customers and their purchasing activities – The quality of the food was improved based on the suggestions of the dog lovers, increasing sales

Lessons Learned from this Case Market research can be useful in a competitive market by providing insights for better product development and marketing strategy Using the information from the text analysis of conversation, Del Monte was able to improve its dog food and devise new marketing strategies

The Strategy-Performance Cycle Performance improvement involves four major steps: 1.Create goals and objectives that express the organizational mission 2.Create the strategy and make plans to attain the goals and objectives 3.Set performance metrics and monitor the performance, then analyze the difference between the two 4.Develop a corrective strategy

Figure 10.1 The Strategy-Performance Model

The Strategy-Performance Cycle Types of SC ProjectPossible Goals Social shopping Increase revenue, acquire new customers, increase customer experience, go global Marketing communication Increase brand awareness, increase sales, increase viral marketing, increase customer engagement, reduce customer acquisition cost Social CRM and customer service Increase customer satisfaction, increase customer trust and loyalty, increase sellers’ reputation, improve public relations Social enterprise (Enterprise 2.0) Enable better recruiting, facilitate problem solving and idea generation, facilitate collaboration, improve efficiency, optimize workforce Crowdsourcing Increase innovation and collaboration, generate new business models Entertainment and gaming Increase users’ satisfaction, provide for cross selling, increase awareness, increase advertising income Social engagement/reputa tion management Increase brand awareness, improve public relations, influence customers to buy

Organizational Strategy and Strategic Planning for Social Commerce Strategy* Strategic planning* Organizational strategy* Tactics*

Organizational Strategy and Strategic Planning for Social Commerce Porter’s 5 Competitive Forces Model and Related Strategies – 5major forces that affect the degree of competition and the level of profitability in an industry 1.Threat of entry of new competitors 2.Bargaining power of suppliers 3.Bargaining power of customers or buyers 4.Threat of substitute products or services 5.Rivalry among existing firms in the industry

Figure 10.2 Porter’s Five Forces Model

Organizational Strategy and Strategic Planning for Social Commerce – The Impact of the Internet on Competitiveness The Key Elements of a Strategic Planning Process – Any strategic planning process has a variation of five major stages 1.Initiation 2.Formulation 3.Implementation 4.Assessment 5.Performance improvement

Organizational Strategy and Strategic Planning for Social Commerce Strategy Implementation in Social Commerce – Examples of Successful SC Strategies Groupon’s Strategy for Growth Walmart's Strategy for Acquiring New Suppliers and Products Zynga’s Strategy for Dealing with Unpredictable Demand

Figure 10.3 The Strategy-Performance Cycle

Organizational Strategy and Strategic Planning for Social Commerce A Strategy for Successful SC Implementation – A popular strategy involves four steps: 1.Learn and understand the environment inside and outside the organization 2.Experiment with a small-scale project so you can observe and learn 3.Assess the results of the experiment 4.Develop or abandon the project – Some Other Strategy Issues – Some Policies and Guidelines

Justification and ROI in Social Commerce An Overview of Justification The SC Justification Process 1.Establish a foundation for analysis with the software vendor and then conduct your ROI analysis 2.Conduct good research on the relevant metrics and validate them 3.Justify and document the cost and benefit and the assumptions made regarding data 4.Document and verify all used in the calculations 5.Do not leave out intangible benefits, including long-term ones 6.Be careful not to underestimate cost and overestimate benefits 7.Make supporting figures as realistic as possible and include risk analysis 8.Involve top management and all important partners, including suppliers and distribution channel members

Justification and ROI in Social Commerce Difficulties in Conducting Cost–Benefit Analysis and Justification – Difficulties in Measuring Productivity and Performance Gains Data and Analysis Issues SC Productivity Gains in One Area May Be Offset by Losses in Other Areas Hidden Costs and Benefits – Incorrectly Defining What Is Measured

Justification and ROI in Social Commerce Intangible Cost-Benefit Analysis – Intangible Costs and Benefits – Handling Intangible Benefits The Use of Gartner’s Hype Cycle – Hype cycle* – Application of the Hype Cycle – The Social Business Power Map

Justification and ROI in Social Commerce Risk Analysis – Wrong justification data due to the difficulties cited earlier – Legal risks – Security threats – Invasion of privacy – Social media fraud – Risk to Users—fraud and privacy violation Conclusion

Market Research in Social Commerce Why Conduct Market Research? E-Marketing Research in Brief – The Major Generic Topics Data sources and data collection methods Data and information quality Learning from (listening to) customers Internet social search methodologies and tools

Market Research in Social Commerce Using Social Networking for Qualitative Market Research – Merchants can easily find customers on social networks and sometimes even see what they are doing online, as well as gather information about their customers’ friends

Market Research in Social Commerce Using Social Networking for Qualitative Market Research The Process of Conducting Qualitative Market Research for Social Commerce

Market Research in Social Commerce The Process of Conducting Qualitative Market Research for Social Commerce Learning from Customers: Conversational Marketing – Illustrative Examples Video “The Voice of the Customer”at vimeo.com/ vimeo.com/ – Methods for Listening to Social Customers Polling Blogging Chatting

Market Research in Social Commerce Conducting Market Research Using the Major Social Network Sites – Using Facebook for Market Research – Using Twitter for Market Research – Using LinkedIn for Market Research – Using Virtual Worlds for Conducting Market Research – Competitive Surveillance in Social Media

Metrics and Monitoring Performance Performance Monitoring and Analysis Cycle – Social Media Intelligence* Using Metrics in Performance Assessment – Metric* – Key Performance Indicators*

Figure 10.4 Social Media Strategies Source: Strauss and Frost, E-Marketing 6e p. 312

Metrics and Monitoring Performance Using Metrics in Social Commerce – Earned media publicity – Company owned social media – Paid media – Classifying Social Media Metrics – Sources for Social Media Metrics

Metrics and Monitoring Performance Balanced Scorecards (BSC) – Aligning Strategies and Actions Metrics and Measurements for Social Influence – Monitoring the Social Media Field – What and Where to Monitor?

Social Media Analytics and Sentiment Analysis Definitions, Importance, and Applications – Social media analytics* – The Web Analytics Process Social Media Analytics

Social Media Analytics and Sentiment Analysis Tools for Mining Social Media Activities – Sentiment Analysis and Web 2.0 Sentiment analysis* (opinion mining*) Video: “Social Sentiment: Are You Listening?” at youtube.com/watch?v=YGlhCCwYVh4 youtube.com/watch?v=YGlhCCwYVh4 Dashboards in Social Commerce – Information dashboard* – Social Media Dashboards

Improving Performance Via Innovation And Competitive Analysis Competitive Intelligence for Improving Performance – Competitive intelligence (CI)*

Improving Performance Via Innovation And Competitive Analysis Innovation in Social Commerce 1.Treat innovation as a discipline. 2.Use common, dedicated platforms to increase innovation IQ and strengthen innovation culture. 3.Understand that innovation benefits from a diversity of perspectives. 4.Prevent employee self-censorship of ideas. 5.Create a culture of constant choices. 6.Focus employees’ innovation priorities.