Innovations in Retail

May 2011

Contents
P4 Technology in retail
Lorenzo Wood, Chief Technology Officer, LBi
The iPhone has been a catalyst for mobile devices, and the sector has seen a drastic change in the perceptions and expectations of all users, who have become more demanding. In the coming months, innovations such as Google TV and the proliferation of tablets will provide an increasingly seamless integration of television and interactive digital channels. New technologies such as Amazons Kindle and Motorola Atrix will help to make continuity as perceived by customers much more feasible, supporting better narrative for brands.

Mobile retailing: the next big thing?

Michael Thompson, Senior Services Development Manager, bigmouthmedia
This is truly the year of mobile, and its importance for retailers cannot be underestimated, with more consumers browsing and buying through their smartphones. QR codes, Augmented Reality and NFC (Near Field Communications) are the technologies that offer the most opportunities for the retail sector. Retailers also need to prepare to face new challenges, such as digital shoplifting or the loss of turnover due to price comparison through mobile devices.

P8

Integrated marketing: synchronising retail channels

Andy Travers, Account Director, bigmouthmedia
Talk about synergies is being replaced with talk about technology, with sound technical infrastructures and product feeds being the basis for large-scale multichannel online activity. The recent extension of the ASA remit into digital is also a strong case to invest in technology capable to adapt to the changing demands of the online retail marketplace. Measured automation is the next logical step in the social media space, driving efficiencies and freeing up business resources to add value to campaigns.

P9

New display technologies and their impact on retail

Adam Russell, Media Account Director, LBi
High-tech display devices with rich, engaging and touchable formats that allow multiple actions will become an increasingly common fixture in the High Street. Online display advertising will also continue to grow, with increased emphasis on one-to-one targeting, behavioural targeting, re-targeting and usability. The tracking of display advertising will continue to grow in complexity, with the lack of a single standard for mobile display media tracking a considerable hindrance to the channel.

P12

Page 2 of 30

CRM and social customer service: Services Sharing

Deborah Womack, CRM Practice Director, LBi
The core issue faced by retailers today is: What do I need to THINK, KNOW, and DO about social channels and customer service? Retailers need to integrate social and traditional service channels with new ways to communicate to customers, such as social media, communities and direct communications. By putting the customer at the heart of the business and adequately managing relevant online conversations, businesses can drive customer retention and brand loyalty. CRM software can help brands add value in a cost-effective manner by leveraging mobile, locationbased marketing, social media and existing customer service infrastructure.

P13

Affiliate marketing in retail

Andrew Girdwood, Media Innovations Director, bigmouthmedia
Online affiliates are becoming more sophisticated and more active in social media, and are being watched by the ASA/CAP as part of their recent moves to regulate the digital space. Debate continues around the different methodologies to track sales and the challenges they present, although the integration with CRM databases could work for some retailers. The value of long-tail affiliates as social media influencers, able to generate conversion that might not have otherwise come and boosting social and search, is gaining recognition.

P20

Multi-channel/user experiences
Marcus Mustafa, Global Head of User Experience, LBi
The multiplicity of devices used by consumers presents new challenges to retailers, who need to be able to provide immersive, seamless experiences to their customers. Outdoor advertising spaces, gauging external data, adapting to the consumers moods and providing an interactive brand experience will increase in popularity. New payment methods likely to gain traction in the coming months are contactless payment, mobile card readers, mobile money even social payments will get attention.

P22

Creative social media: beyond physical retail spaces

Laura Jordan-Bambach, Executive Creative Director, LBi
Social media needs to rise to the challenge of providing a layer of emotion to the online retail experience whilst remaining playful and highlighting the benefits of online shopping. The idea of loyalty is moving away from store cards to indicate much deeper relationships with retail brands, able to provide detailed customer data to inform business decisions. The customers perception of retail is also changing dramatically, with some smaller boutique stores already stepping out of the physical space altogether.

P24

Contributors biographies About bigmouthmedia and LBi

P27 P29

Page 3 of 30

Technology in retail
Lorenzo Wood, Chief Technology Officer, LBi

The iPhone has been a catalyst for mobile devices, and the sector has seen a drastic change in the perceptions and expectations of all users, who have become more demanding. In the coming months, innovations such as Google TV and the proliferation of tablets will provide an increasingly seamless integration of television and interactive digital channels. New technologies such as Amazons Kindle and Motorola Atrix will help to make continuity - as perceived by customers much more feasible, supporting better narrative for brands.

Background
Since the launch of the iPhone in 2007 mobile has grown enormously as a channel. Consumers expectations of their phones and the services behind them have grown along with their willingness to use them: more time, more attention, more transactions. This rapid change is largely in behaviour rather than technology. Penetration of Internet-capable phones has been growing steadily since their introduction in 2001 and was already at around 90% in the UK when the iPhone launched. The iPhone was a catalyst: for iPhone users (as small a proportion of the market as they were) the device made using the Web so much easier that they became heavy users without thinking 1; and for everyone, the TV advertising (all about using the device rather than what it was) raised consumer expectations of all phones. All our clients have seen rapidly rising access to their Web sites from mobile phones (of all types); in user research we have seen changes in attitudes even from the most unsophisticated users, leading them to try more and be more demanding. 2 This pattern most of the pieces in place for some time, and one more catalysing events causing a sudden shift in behaviour is common for radical innovations.
The Long Nose of Innovation. Bill Buxton

Bill Buxton, a Canadian computer scientist and Principal Researcher at Microsoft Research, describes it as the Long nose of innovation 3 and suggests that technology concepts typically take at least ten years to mature into mainstream products. Here we look at three concepts that have been promises for many years and look set finally to take off through an alignment of technology solutions and consumer demand. How do these changes fit into your digital strategy? How do you plan to respond to them? When you will jump? What will be the trigger? What are the risks to not responding? What are the opportunities to getting in early?

This behaviour was helped by the tight control of the iPhones original release limited choice of carriers; all you can eat data plans to prevent iPhone owners from feeling constrained by incremental cost. 2 In our user research, from 2008 onwards, we started to meet people who would answer no to the question do you use the Web on your phone but would then cheerfully explain how they use specific services (e.g., Facebook). In 2009 we began to see users who had a difficult experience when using a mobile site blaming the owning brand more often than not a change from their previous tendency to blame the phone, the carrier or themselves. A 1,240-subject survey by Yahoo! in March 2010 confirmed this: 44% of respondents said they would blame the brand for a bad mobile experience, making it the most popular answer. 3 http://buswk.co/longnoseofinnovation, The Long Nose of Innovation, Bill Buxton, January 2008

Page 4 of 30

1. Seamless integration of TV and interactive digital

Weve all seen the concept films. Family watching a wall-sized TV; dad likes Justin Timberlakes jacket; points at the jacket; pops up a widget on his favourite clothing store; finds the jacket (or one like it); buys it; carries on watching the show with his family. The reality has been wildly different. Long release cycles and bureaucratic standards bodies have made interactive TV very limited 4. Initial attempts at connected TV have been unappealing and have failed to get large-scale participation from brands. The vast majority of installed TV hardware (sets and set-top boxes) is not designed for interaction with other channels. And adding any kind of interactivity to a TV programme means creating metadata and properly synchronising and packaging it with the broadcast content logistically complex and very far from a commodity activity today. Some recent developments are set to change this picture:

The dominant design for connected TV is here: its Google TV

Googles TV platform has had some bad press: too expensive, too slow and that most Google of problems too nerdy. And Google TV itself may not dominate the market. However, just as the iPhone created a dominant design for user experience that set consumers expectations of smart phones 5, Google TVs experience sets it apart on TV: It brings the search bar to TV. Everyone understands a search bar; with Google TV its one button away and appears over the show youre watching. Minimum conceptual leap. It brings the familiar Web to TV. Google TV adds $100 of hardware for a reason: it shows Web sites even sophisticated Web sites in a high quality way. No special widgets. It brings TV qualities to the Web. Using straightforward Web technologies, brands can create strongly televisual experiences. 6 This experience creates a challenge for brands: You are already on Google TV. This is not an opt-in platform: if youre on the Web, youre on Google TV. Consumers see your TV advertising and your Web site on the same screen, one after the other. Weve been looking, and its often not a pretty sight. The more lush the TV film the harder the site has to work; the more unexpected it is not to find the TV advertising referenced on the site; the more annoying navigation difficulties become.

Google TVs search bar appears over the top of regular TV

4 Two biggest limitations: quality of experience did not keep pace with consumers experiences on the Web; and the model of interrupting a linear TV show fundamentally breaks the TV-watching experience. 5 For smart phones, Google does appear to dominate, with the greatest penetration and market share against Apples falling market share. 6 Net-a-Porter and the New York Times provide Google TV channels but theyre just Web sites with full screen video and very simple navigation. Googles own YouTube player successfully turns YouTube into a TV channel you can just switch your TV to YouTube and leave it on, only intervening to change whats shown if you wish.

Page 5 of 30

TV device integration 1: TV viewing apps on tablets

The growth in TV watching on the Web pioneered in the UK by BBCs iPlayer is well known. Tablets seem to be an even more natural home for TV viewing: appropriately portable and casual (an evening device according to comScore 7), they are set to become widespread in 2011. Driven once again by Apples aspirational iPad, this years CES saw the launch of 83 tablet devices, predominantly based around Googles Android platform, with starting prices under $100 8. Broadcasters have flocked to create apps for their services, wrapping up bundles of live channels with video on demand and social links. As watching this way becomes more widespread it becomes another way in which consumers become used to putting TV content and Web content side by side on the same screen (admittedly, a smaller and more familiar screen for the Web).

TV device integration 2: TV in sync with tablets

As the third device, tablets also provide a great combination of a decent screen, pleasant interaction and by being separate not interrupting the linear programme. Recently apps have started to appear that synchronise additional content with TV shows. In the US ABC produced an app to use alongside its My Generation show to provide additional background content. The trick here is that the method of synchronisation is sound: the tablet listens to the show and figures out where it is. This has some problems, but requires no additional hardware and works whether the show is live or recorded.

2. Flow: better attention through better narrative

Much has been written about the availability of the Internet driving a fragmentation of attention 9. And although the original idea of hypertext 10 was to promote flow of thought and ideas, digital experiences today are loaded with discontinuity and interruption: we move between applications (or even windows within an application) and fuss about which are on top and how theyre organised; pop ups crowd our space; we use more devices at once and in more contexts, so the real world crowds in. This is a problem if you want to build a narrative over time and use that as a basis of a relationship between consumer and brand. Several technologies are starting to make continuity as consumers perceive it more feasible.
7 ComScores 2010 study of on-line newspaper reading habits showed that reading on phones ramped up most quickly at the start of the day, desktop/laptop machines dominated during the day (often at work), and tablets rose in the evening. 8 At the low end these devices are truly terrible nasty touch screens, tricky interaction. In fact, watching TV is one of the best things to do with them. 9 Nicholas Carrs The Shallows is an entertaining polemic on the subject. 10 A term first used by Ted Nelson, but dating back to Vannevar Bushs seminal As We May Think from 1945.

Page 6 of 30

Amazons Kindle: not just any old e-reader

E-readers are arguably the first properly successful digital appliances: they do (more or less) one thing and do it well a constraint imposed, perhaps, more by the limitations of early e-paper displays than a surge of restraint by manufacturers. Amazons popular Kindle e-reader is significant not just because Kindle books can be read on a variety of devices but because of the synchronisation of that experience: I can start a book on my iPad, pick up where I left off on my phone while waiting for a train; then carry on again in bed on my Kindle e-reader. We find this to be a common benefit noticed by Kindle users and instrumental in creating an expectation of stability and persistence.

Motorola Atrix: stupid device, seminal experience

Motorola recently launched its Atrix phone a dual core Android phone that runs the phone environment (Android) and also a desktop environment (Linux). Why? So that I can carry my phone around with me and, when I feel like it, dock it (either with a keyboard and screen or else with a strange portable dock that looks like a small laptop with no brain) and do my desktop work. The key aspect of this experience is brilliant: not only does my desktop come with me but when I am using it I get my phones display on the same screen and I can carry on using it.

Look theres my phone!

The ability for my whole phone to appear on the screen I happen to be working on is an excellent experience instantly understandable, instantly useful. And its the tip of the iceberg: if I can access something on my phone while its appearing on a bigger screen, perhaps I can use more of that screen to see more of what Im accessing? Brilliant as that aspect of it is, the Atrix is a stupid device because of the hardware complexity: special hardware, special docks. But the experience can be delivered without any of that; its just a matter of time 11.

11

The growing popularity of the cloud may provide an alternative experience altogether my cloud environment comes with me to my computer, tablet or phone.

Page 7 of 30

Mobile retailing: the next big thing?

Michael Thompson, Senior Services Development Manager, bigmouthmedia

This is truly the year of mobile, and its importance for retailers cannot be underestimated, with more consumers browsing and buying through their smart phones. QR codes, Augmented Reality and NFC (Near Field Communications) are the technologies that offer the most opportunities for the retail sector. Retailers also need to prepare to face new challenges, such as digital shoplifting or the loss of turnover due to price comparison through mobile devices.

The advent of the iPhone and Googles Android has created a straightforward scenario for retailers: not being fully mobile is already a huge disadvantage and will become even more so. People are not only browsing more on mobile, but also buying more, and anyone with ambitions of running a serious online shopping operation needs to come to terms with the trend as a matter of urgency. Leading the charge are mobile barcodes or QR codes, fast becoming a familiar feature of retail displays across the country. As the practice steadily takes off in Europe and the US they will almost certainly play a major role in the evolution of retailing, with codes that enable the user to enter competitions, gain rewards, pay for items, carry out price comparisons, search for products both in-store and on the move, create wish lists or share items doing much to convince retailers of the value of enriching the consumer experience with digital information. In this respect, demonstrating what many see as the way of the future, Tesco has already set a benchmark by combining barcodes and mobile shopping in an app that allows customers to scan any product barcode and add it to their shopping basket. At the same time, in a move that looks likely to become commonplace over the next five years, many shopping operations have begun experimenting with Augmented Reality applications. The use of AR by retailers enables the brand to engage more fully with the customer, bringing them closer to the transaction by allowing them to understand the product more fully, even trying it on virtually and reintroducing the social and engaging element of the in-store shopping experience to mobile customers. NFC (Near Field Communication) is similarly tipped to provide retailers with an opportunity to enable customers to spend more via their mobiles. The increased adoption of NFC by smart phone providers is likely to make waves in the coming months. Facebooks Deals platform is still very new but has huge potential for driving footfall; the challenge for retailers is ensuring that deals gain the critical mass needed to drive true incremental volume rather than simply cannibalising on existing revenues. It will be interesting to see if Facebook begin to push notifications to users of nearby deals to drive check-ins this would require Facebook to monitor users locations continuously, however, and whilst Facebook would obviously see this extra data as a boon, users may find the trade-off of location data for deals a tough one to make. Rumours surround the iPhone and whether the next version includes NFC; if it does, expect it to have a significant impact on the way consumers look to pay for products. As well as boosting the opportunities for the expansion of mobile payment, NFC also opens the door for the types of innovation only available with a true digital wallet, for example offering consumers store credit for checking in on social platforms and personalised in store recommendations. The flipside of all of this is a negative consequence of the prevalence of smart phones: Digital Shoplifting the act of going into a physical store but then ordering the products from an online competitor. Smart phone apps already make the comparison of prices incredibly easy, with offerings from Google and Amazon proving popular and Amazons even taking the step of comparing their own prices to competitors. Consumers may still see the benefit of browsing a physical store but retailers now need to be able to compete with online retailers, either in terms of price or other benefits, right up to the point of purchase.

Page 8 of 30

Integrated marketing: synchronising retail channels

Andy Travers, Account Director, bigmouthmedia

Talk about synergies is being replaced with talk about technology, with sound technical infrastructures and product feeds being the basis for large-scale multichannel online activity. The recent extension of the ASA remit into digital is also a strong case to invest in technology capable to adapt to the changing demands of the online retail marketplace. Measured automation is the next logical step in the social media space, driving efficiencies and freeing up business resources to add value to campaigns.

Background
Forget synergy, think technology. Integrating digital marketing is inherently complex but can be made less daunting with a sound technical infrastructure. For retailers, particularly those with extensive product catalogues, this means product feeds. Data from product feeds can be manipulated to populate several digital marketing channels including paid search campaigns, dynamic display ads and increasing social media activity. A comprehensive and flexible product feed can help scale your digital marketing without sacrificing efficiency; and finding creative ways to use structured data is the next step in the integrated digital marketing journey. Retailers who invest in a robust feed setup and have the flexibility to adapt to new opportunities will find a crucial competitive advantage. Added to this the extension of the ASA remit into digital marketing, feeds are a fundamental part of any digital marketers armoury.

Innovation 1: Dynamic response system FUSE and paid search

FUSE is bigmouthmedias proprietary feed management tool, a clever piece of software unique in the market that sits on top of Google AdWords or a bid management system. FUSE receives feeds in real time and uses them to allow campaigns to react to the external events they represent. By either using pre-defined rules or by taking specific actions through a number of different mediums the changes represented by feeds become opportunities, providing brands with a unique competitive advantage. Bigmouthmedia worked with a popular online retailer to roll-out dynamically generated PPC campaigns using existing product feeds and bigmouthmedias FUSE technology. Product information was fed into FUSE which constructed 165,000 adgroups, containing 825,000 keywords and 330,000 ads, all of them broken down into campaigns and adgroups adhering to Google best practice. Had they been created and trafficked manually it would have taken an estimated 5,500 hours to complete! Compared to the week prior to FUSE campaigns being rolled out the following results were seen:

87% increase in conversion rates 43% decrease in cost of sale 14% increase in click through rates (CTR) 12% decrease in cost per click (CPC)

Page 9 of 30

A key advantage in using product feeds to generate PPC campaigns is the ability to use price within ad copy. Across the retail vertical bigmouthmedias PPC teams have seen CTR uplifts of up to 15% for price inclusive ads and consequently a positive halo effect on AdWords quality score.

FUSE: bigmouthmedias feed technology

Innovation 2: Social media and feeds

With many brands increasingly investing in social platforms, the realisation that it is a resource-intensive channel has forced many to re-evaluate the potential returns of these vast word of mouth networks. Measured automation is the next logical step in the social space, driving efficiencies and freeing up the social natives within businesses to add value to campaigns and create the desired dialogue with customers.
Page 10 of 30

Product feeds in this area can be used to partially or fully automate the content distribution process so essential to maximising brands digital footprint. In addition, utilising feed technology can allow you to drag in data from 3rd party sources and, using a series of rules, dynamically promote relevant products, categories or offers. Current examples include real-time weather data being used to push summer or winter clothing lines and surface relevant media content through Twitter and Facebook statuses using trending news content or product reviews. There is also potential to using competitor data to highlight where brands are price competitive clearly a powerful message in such a price conscious era. As the Facebook Open Graph expands and social networks continue to consolidate through initiatives such as Googles Open Social, opportunities will continue to emerge for those digital marketers armed with this new generation of feed technology and a healthy dose of creativity.

Innovation 3: Personalised re-targeting

Investment in display advertising has become an increasing challenge to justify as measurement of its true impact remains hampered by the last click view of most analytics solutions. Even when you factor in postimpression sales, traditional display may not always measure up to your other digital marketing channels. Personalised re-targeting has created a sizable shift in the display industry and looking at the results of these highly targeted campaigns its not hard to see why. However, to deliver effective behaviour-led creative requires a detailed feed which enables related product images and price information to be drawn into ad creative. Again, a more comprehensive feed will enable retailers to deliver richer, more engaging ad creative, incorporating not just price but also sale and savings messaging.

Bigmouthmedia has found that retailers using behavioural re-targeting display campaigns see a dramatic improvement in Cost of Sale - up to 8 times lower - than traditional retargeting and even comparable performance with generic PPC campaigns.

Page 11 of 30

New display technologies and their impact on retail

Adam Russell, Media Account Director, LBi

High-tech display devices with rich, engaging and touchable formats that allow multiple actions will become an increasingly common fixture in the High Street. Online display advertising will also continue to grow, with increased emphasis on one-toone targeting, behavioural targeting, re-targeting and usability. The tracking of display advertising will grow in complexity, with the lack of a single standard for mobile display media tracking a considerable hindrance to the channel.

As innovations such as social media take root in mainstream society, the High Streets major players are locked in a race to be the first to introduce high-tech display developments to their operations, and commentators expect developments in both tablet computing and digital signage to impact upon the sector over the coming months. In the US JC Penny has already introduced in store iPad devices to facilitate easy and advanced product search and navigation, while some retailers are experimenting with a range of interactive store windows with touch screen capabilities. Meanwhile, the evolution of display media buying platforms is likely to have a significant impact on all digital advertisers, especially in the retail vertical, where advertisers typically have lots of customer data and often a very large number of discrete audience segments. The explosion in Demand Side Platforms has empowered agencies and advertisers to move up the chain for display media and we will increasingly see networks cut out of the equation. The benefit in this is a significant decrease in cost, combined with a greater degree of control and transparency over who we are actually targeting and why. Most commentators also feel that the best display formats will be those that adapt to the device they are displayed on and the users context: rich, engaging and touchable formats within digital magazines and easy purchase processes or save for later call to actions for direct response, so that customers can quickly respond without being diverted away from whatever they were doing at the point of exposure. Online, one-to-one targeting will also continue to grow. Behavioural targeting and re-targeting, particularly through product level specialists such as Criteo and Struq, have become significant channels for many online retailers and in the coming months we will see an increasing amount of display advertising bought in real time and tailored to individuals. This will affect media buying using data suppliers such as Experian and Blue Kai to only target individuals that match the clients target across a growing number of variables and also creative, where we will see increasing number of advertisers running their own Criteo equivalents across all media. The downside of all of this is an ever-growing amount of data and an increasingly fractured marketplace, meaning that the serving of a single impression could involve at least six different parties. As such, strong partnerships between agencies and advertisers will be more important than ever. In the meantime its evident that for mobile display advertisers media tracking continues to be an Achilles heel, with no standard solution for tracking performance across all devices. The numbers already indicate that both retail and advertising have the potential to be huge, however, and making that early move to launch campaigns now will provide the benefit of learnings before competition for the media really begins to hot up. The move away from the ownership of physical products is also likely to continue. With the continued growth in smart devices, cars with smart phone support and internet enabled TVs, stereos and entertainment devices there will be less and less demand for physical products. Whats more, ownership itself is likely to become less appealing services such as Spotify and Lovefilm are already revolutionising the way consumers pay for digital media content and OnLive threatens to do the same for gaming. Physical products may still have a few years left but it is critical those in entertainment retail have a long-term future strategy addressing the changing landscape. Last but definitely not least, we believe that there is huge scope for considering usability within display advertising. At present retailers tend to focus on sales messaging, promoting specific products and product-level retargeting, and those that put customer needs at the heart of their display activity will be likely to do well in the coming months, with creative that encourages browsing, exploration and sharing being key for maximising engagement rates.
Page 12 of 30

CRM and social customer service: Services Sharing

Deborah Womack, CRM Practice Director, LBi

The core issue faced by retailers today is: What do I need to THINK, KNOW, and DO about social channels and customer service? Retailers need to integrate social and traditional service channels with new ways to communicate customers, such as social media, communities and direct communications. By putting the customer at the heart of the business and adequately managing relevant online conversations, businesses can drive customer retention and brand loyalty. CRM software can help brands add value in a cost-effective manner by leveraging mobile, location-based marketing, social media and existing customer service infrastructure.

Customer service is becoming the most important of the social CRM pillars because it is where the most highly charged customer interacts most directly with the company. CRM expert Paul Greenberg The core issue faced by retailers today is: What do I need to THINK, KNOW, and DO about social channels and customer service?

Things to think about:

The landscape
"Dont misunderestimated me." In the immediate aftermath of the fiercely disputed 2000 US elections George W. Bush cautioned his opponents with that one simple word: not to misunderstand the voting public and underestimate his influence over them. He could just as easily have been referring to the impact customers are having on retail businesses today. Retailers who misunderstand the needs of the most valuable customers and underestimate the power they have over their brand, products and services are losing out: 64% of customers have switched companies in the past year due to poor customer service according to Accentures 2010 Global Consumer Survey. However, happy customers who get their issues resolved tell about four to six people about their experience on- and offline. The upshot is, if you want to have happy shoppers who positively impact your business through the conversations and interactions they have online, you should integrate social and traditional service channels and continue looking for new ways to reach customers via social media, communities and direct communications. Nows the time for retailers to pay attention to what customers are saying, put strategies in place that leverage social interactions and implement new social customer service strategies that respond to the social behaviours. In other words, dont misunderstestimate the power of the social consumer. Heres some food for thought from Econsultancys 20+ Mind-blowing social media statistics, March 2011: Twitter now officially claims to have 175m registered users and states that 95m tweets are written each day. This is a staggering 250% increase in twelve months. At the new rate of growth, its calculated that there are nearly 4m tweets per hour. Go Europe! There are now 20m+ EU LinkedIn members. Officially, LinkedIn has grown 100%, now having over 100m professionals who use the platform worldwide. Facebook officially hit the half-billion member mark last year. According to figures from Socialbakers, there are now some 640m Facebook users worldwide. Clearly, Facebook is still growing: More than 30bn pieces of content (web links, news stories, blog posts, etc.) are shared each month, which is an average of 7bn pieces a week. 50% of active users log into Facebook each day. This means at least 250m users every 24 hours. This is more than a 40% increase in twelve months.

Page 13 of 30

It may well be the year of mobile... for Facebook. Users accessing the site through mobile devices now top 200m an enormous 200% increase in around a twelve-month period. Flickr continues to grow at a steady rate, having increased by some 25% in the last twelve months. At the end of 2010, it was hosting more than 5bn images. Wikipedia now has more 17m articles. The site now has an army of 91,000 active contributors.

These figures illustrate that, quite simply, there are billions of conversations going on every day on- and offline. Sooner or later these conversations will be about a product or service that is critical to your business. What retailers today want to know is: how do I locate the relevant conversations and how do I influence them to drive loyalty through improved customer experience?

The customer
Conversations by nature are interactive, spontaneous, overlapping and often unpredictable. Theres conflict, disruption, inspiration, sex, occasionally world peace and hopefully always equal contribution. Consumers have always been influenced by their circle of family and friends. Today, Friends, Fans and Followers the building blocks of the social consumers DNA transforms the circle into a network allowing individual consumers to tap into multiple relationships on various networks to discover, discuss and purchase goods and services in ever more complex and sophisticated ways. KellerFay, a US word of mouth marketing research consultancy, estimates that there are nearly one trillion conversations about brands every year in the US alone. Breaking into the midst of a dialogue is a messy, complex business that retailers must get right because customers have much higher expectations today around collaboration, interactivity and responsiveness from brands. Customers expect faster responses to their queries when and how they want it a quarter of people who complain about brands through Twitter or Facebook expect a response within the hour, and around 6% within 10 minutes. Conversely, 50% of customers who made complaints via a brands own website were happy to receive a response within a day and 27% within three days according to Lightspeed Research and the IAB.

The business
Putting the customer at the heart of your business has always been the ultimate goal of CRM. This has always been a reasonably complex undertaking for many organisations, as it requires aligning all customer-facing functions like marketing, sales and customer service. Like CRM, customer service is an attitude and a business strategy supported by a technology platform, business rules, processes and social characteristics, designed to engage the customer in a COLLABORATIVE CONVERSATION. The top management goal is still focused on retaining customers and improving loyalty. The next most important goal is improving customer experience thats because retention, loyalty and customer experience are all inextricably linked. Reduced product differentiation and increased competitiveness make the combined retention, loyalty and experience dynamic more important. That is, if you fail to nurture a good relationship through great service and a fantastic customer experience, chances are you will struggle to build the fan base you need to compete in todays switched on, consumer-led world.

Page 14 of 30

Our customers are active in multiple channels, and its important for us to be there too, says Best Buys Community Manager, Gina Debogovich. Through these engagements we are providing our customers with access to knowledgeable experts who can assist them with their questions and help them get the most out of their technology experience. Best Buy runs its communities for a reason; we believe strongly that customers deserve the best service and advice we can give them. Best Buys community is thriving. In an average quarter the team sees activity in the region of 600,000 customers visiting the community and posting 20,000 messages (over 77,000 messages and counting) and looking at over 22 million pages of content. The success of the first Best Buy Community has spurred the team on, and they now run four communities, with the newest being dedicated to Mobile devices. The result is that factoring in call deflection and sales influence, the Best Buy online community engagements provide around a five million dollar benefit to the organization. Visit the Best Buy community: http://forums.bestbuy.com For more information, visit www.lithium.com
2009 Lithium Technologies, Inc.

Things to know:
Trends and truths
With 51% of European adults having sought company support in the past three months, customer service must be a key component of any company retention strategy (Forrester research, October 2009). Retailers are making a choice: play it safe and reap some reward through cost saving by focusing on shifting to online customer service and integrated data. Or take a leap of faith and win big by differentiating your brand from competitors by leveraging the power of the social customer.
Page 15 of 30

According to an online survey of 110 executives in the customer service function conducted by the Economist Intelligence Unit in February and March 2010, first trials have been undertaken by customer service functions to engage with consumers through emerging channels: 47% are using self-service, 37% are using online portals and 22% are using social media.

The use of social CRM software for customer service is still in the early adoption phase but a top issue: 4 out of 10 leading businesses will adopt social CRM technology within five years as part of their on-going efforts to improve customer service. Further, within five years community peer-to-peer support projects will supplement or replace Tier 1 contact centre support in more than 40% of top 1,000 companies with a contact centre (Source: Gartner study Emerging Technology Analysis: Social CRM for Customer Service, March 2011).

Innovation Social Customer Service: the new CRM

As with your current customer service model, this new social customer service model is based on how to minimise problems and optimise the customer experience. When there is a problem there needs to be a timely and satisfactory resolution. This means the fewer steps in the resolution process the better, using multiple channels as a way to connect with customers. The new service philosophy sets out that reviews are equally as important as complaints and digital channels enable retailers to do both simultaneously. What LBi says: new social customer service strategies facilitate a collaborative conversation between two interested parties (the retailer and the customers) looking for a mutually beneficial outcome. Sharing customer service and support tasks with your most engaged customers is the best strategy for improving your companys ability to successfully blend social networking engagements (FANS), communities of members (FOLLOWERS) and direct interaction and relationships (CUSTOMERS). In action, LBi maps out a strategic framework that provides a clear understanding and alignment of your business and customer objectives to ensure business-to-consumer social interactions and communications are relevant, timely and action-oriented. This allows retailers to launch programs that interact with consumers who are talking about their shopping experience; join with other consumers who share their interests and, together, improve the retailers business operations for themselves and/or the brands benefit. For those customers with a direct relationship with the brand (held within the database), reward is given for supporting and connecting others in other words acting as advocates. Retailers such as Sephora embed social CRM functionality (Lithium technologies) into their site in order to create a trusted space where customers can share experiences, complain, ask questions and find immediate answers. They use email and direct mail to drive traffic and footfall integrating customer testimonials, reviews and recommendations to add credibility. This is a seamless integration of Fans (social networking), Members (beauty advice community) and Customers (direct communications): Get advice; Give advice; Join the conversation.

Page 16 of 30

We had such a robust natural conversation on Facebook, said Bridget Dolan, vice president of interactive media for Sephora, a division of Paris-based LVMH Moet Hennessy Louis Vuitton SA. We saw that women were asking each other questions -- they'd say, What's a great waterproof mascara?' And within an hour, they'd have about 17 really wellthought-out answers. Visit the Sephora community: http://www.sephora.com/beautyadvi ce/

Technologies
As consumer behaviour continues to evolve, there is urgency by which technology companies are moving to develop centralised relationship management platforms that incorporate traditional CRM features such as the data collection, storage and management required to leverage social customer interactions and communications. Tools for social customer service focus on: Consolidation of tasks into one support platform that allows call centre staff for example to see what the customer sees in a customer single view this allows stuff to become community managers. Empowering self-service and personal preference which in turn allows customers and community members to get what they want: a timely answer from a trusted source. Supporting a community ecosystem of fans, followers and members.

The task is simple: rationalise large amounts of data from customer registrations and creating profiles to query resolution tracking even measuring on sentiment generates a sizable amount of data. Technology is not the whole solution it is a necessary facilitator. The real work is in the strategy and implementation: understand the nature of the community and set a strategy for purpose; measure influence and leverage the power it has within the community; integrate communication streams such as onsite and email to schedule updates, and of course draw meaningful business insights to drive change and track success. Social CRM Software vendors supporting the new landscape: Lithium, Jive, SwordCiboodle.

Page 17 of 30

The big trends are:

Mobile and location-based marketing integrated with social customer service strategies. Locate customer service functions with social networks such as Facebook and Twitter. Integrating social customer service interactions online with contact centre workflows in real time.

Things to do:

Direct portions of your marketing spend and your IT development towards joining and influencing customer conversations in order to unlock the key to the new customer service model. Surround your online shopping website with social customer service elements. One example is to allow customers to rate products and their shopping experience and to give open feedback directly to you. This will keep some conversations on your own platform and makes monitoring and response management easier. Create and integrate an online community or other social networks within web properties and allow customers to discuss, share and exchange their retail experiences and the products they are interested in. Thats the place where you will get the most valuable feedback and improve customer understanding. Integrate customer data across channels: Customers who have been unsuccessful in getting help through one channel will try another channel. Join up the experience by understanding how they interact through networks, communities and direct. Finally, continue to connect the in-store and digital service experience. When your services exceed the customers expectation, it will be likely that your customers become advocates.

Page 18 of 30

Affiliate marketing and retail

Andrew Girdwood, Media Innovations Director, bigmouthmedia -

Online affiliates are becoming more sophisticated and more active in social media, and are being watched by the ASA/CAP as part of their recent moves to regulate the digital space. Debate continues around the different methodologies to track sales and the challenges they present, although the integration with CRM databases could work for some retailers. The value of long-tail affiliates as social media influencers, able to generate conversion that might not have otherwise come and boosting social and search, is gaining recognition.

The channel has evolved, grown stronger and become a mission critical part of some retailers digital strategies even if affiliate marketing has never fully shaken off its image from its wild west origins. Both Amazon and eBay have frightfully impressive affiliate programs. Amazon has technology that rivals Googles AdWords. The $2.4bn acquisition of GSI Commerce by eBay included a hefty dose of affiliate technology and marketing prowess. One of the biggest and strangely quiet aspects of the affiliate channel in recent years is that CPA levels have remained relatively stable. This is against a backdrop of a plummeting CPM market and the creep of CPC inflation in some areas. This has allowed savvy arbiters to buy cheaply on CPM and monetise back via far more robust CPA deals. The role affiliates play in social media, buzz building and what regulators like the Office of Fair Trading and the ASA has moved swiftly into the limelight. Presently, the ASAs adjudication and thought process around affiliate claims made on behalf of brands are untested.

The regulators
The ASA is now not only accepting complaints on misleading marketing communication on websites - it is actively encouraging consumers to make them. The organisation is following its initial poster campaign with a wider effort. This includes TV slots featuring their Wow character.

Page 19 of 30

We know that the ASA and CAP are very serious at regulating the digital space. We can predict that theyll go after the notoriously unpopular drip pricing used extensively by travel companies, we know that with the OFT they are watching social media closely with a particular interest in undisclosed tweets and reviews but we are not so sure what will happen in the affiliate space. We are not so sure what will happen here because the ASA are not sure themselves. Bigmouthmedia played a pivotal role in locking ASA and CAP members together with the IAB affiliate council together in a small room. We cant be sure which way any possible ASA adjudication may go but because we have been part of the thought process we can hedge an educated guess towards insight. It is likely that the ASA will look first at the affiliate. This is the source of the potential trouble. For example, if an affiliate is claiming iPods from 30 as a method to attract registrations when in effect they have one iPod at that price and the rest are supplied via an affiliate deal at standard prices then the ASA is likely to deal exclusively with the affiliate. In most cases a shared responsibility model will be likely. For example, if an affiliate is supplying a price comparison engine with a product feed that features out of date and inaccurate prices but can show the raw feed they pick up from the retailer is also out of date then the ASA may well divide the blame. Lastly, there are cases when the brand will be held entirely at fault. If the merchant banner is not up to date or the landing page provided for that banner falls out of alignment (due to a price change, for example) then thats likely to be the exclusive recipient of the ASAs attention.

Value versus attribution modelling

Its widely established that a last click win system is neither the best tracking and analytics model nor always the wisest way to reward affiliate behaviour. Nevertheless the practicalities of installing and orchestrating robust user engagement mapping or attributing modelling have been very challenging. In some cases the time and technology cost of creating the system represents a considerable expense. Is there trouble brewing with some of the early adopters in the container tag ecosystem? Contain tags certainly represent a possible first step towards de-duplication and attribution however some of the first movers achieve this by selectively serving tags in other words, selectively throwing data away. This makes any attempt to look at historical data and calculate life-time value almost impossible. If attribution modelling, despite its advantages, may continue to be too expensive for many retailers to use satisfactorily then would a wiser action be to track their value? A retailer can gain valuable insight by being aware of the new/existing customer split from affiliate traffic, the average order value and which types of products sell better with the affiliate pre-sale as an introduction. Integrating CRM databases with affiliate knowledge is another good step here; recording when customers are interacting with the retailer through affiliates and making business decisions based on that knowledge. For example, a CRM or CMS system keeps a record of which customers are first referred via an affiliate and this allows for a simple life-time value comparison against other channels. This requires a CMS that tracks first referral and life-time value, of course. Finally, what is the value in letting trusted affiliates pioneer dangerously uncharted areas of digital marketing? The 2010 affiliate survey from bigmouthmedia asked affiliates where they thought strong opportunities would be for the year. The top four were, in order, mobile marketing, location-based marketing, video advertising and augmented reality. If brands are yet to form their own augmented reality strategy, have no budget for it then does that mean there could be room to approve an affiliate test in the area?

Page 20 of 30

Working with the long-tail affiliates

Some of the biggest affiliate programs, the ones that look the strongest from the outside, are beaten hands down by smaller and more tightly managed campaigns. In many affiliate campaigns it will be true that a majority of the sales will be driven by a small percentage of affiliates but this certainly does not mean the remaining affiliates are without value. There are two broad types of affiliates among the small number that move the conversion needle for brands. There are those affiliates who generate sales that the brand had a strong chance of being able to do so themselves and at a lower cost. There are also those affiliates who generate sales that retailer would not have been able to or might have lost at the last minute. Affiliate managers recognise that a little of the former is necessary to main the latter. The value of the long-tail affiliates which often include bloggers and other content affiliates has been harder to tap. With the growth in social media and brands becoming more involved in building authority, popularity, Facebook fans and Twitter followers then the ability to use longtail affiliates as social media influencers, who very likely to be probrand, becomes a very useful ability. Nevertheless, most affiliate network managed campaigns cannot offer this simply because social media is outside of the networks skill set. An easy example of a cross-channel, affiliate led, value add might be an infographic. A good infographic might be used to encourage positive discussion or association about a brand and may even be used as an SEO inspired link development tool. Some brands might have to reserve significant budget to seed the infographic, via a social media agency, to bloggers who might want to post it. Brands with a good relationship with their long-tail affiliates can, for free, pass the very same infographic onto a community of social media influencers who would be happy to publicise the infographic to the best of their ability. The result does not just mean additional affiliate sales from niche affiliates generating conversions that might not have otherwise have come but it means boosting the social and SEO aspects of the infographic as well.

Page 21 of 30

Multi-channel/user experience
Marcus Mustafa, Global Head of User Experience, LBi

The multiplicity of devices used by consumers presents new challenges to retailers, who need to be able to provide immersive, seamless experiences to their customers. Outdoor advertising spaces, gauging external data, adapting to the consumers moods and providing an interactive brand experience will increase in popularity. New payment methods likely to gain traction in the coming months are contactless payment, mobile card readers, mobile money even social payments will get attention.

Background
Device madness is here, hurrah! Most people are now carrying more than one device. They watch TV whilst checking out websites on their computer and chatting to their friends on their mobile. Cash as we know it is changing. Social kudos is used to pay for 'real' products and services and contactless payment is emerging as the best thing since sliced bread. And at the same time billboards that know my mood and talk to me are arriving.

The colliding worlds

Over the last few years brands have been trying to get up-close and personal with their customers in all sorts of ways but it wasnt until the recent hyper explosion of mobile devices that we saw any real immersive experiences emerge. The trick is knowing your customer, not just their name, but what devices they use, what mood they are in, what they did yesterday and what they expect from today. Outdoor They call it gladvertising that is, billboards and other outdoor advertising spaces that adapt to our moods and offer an interactive brand experience. Nike iD did something similar in Times Square, where they had people customise and order their trainers, all using SMS and a billboard. Companies like Quividi have developed a networked billboard system that uses face recognition to not only establish visual engagement and dwell time but also gender and estimated age. Acure in Japan has gone one step further and developed a vending machine that uses the same technology but combines that with date, time, temperature and other external data, so that its better at displaying ads and recommending products as time passes. People in general dont mind sharing (too much) personal information with friends and family but the concern is how personal data is collected and stored. One suggestion is to use publicly available social networking information. Another is to tap in to existing market research. In either case, one thing is certain; brands that intend to explore this will need to understand their customers much much better than today.

So how well do you know your customers really?

Currencies Social payments What things are worth and how we pay for them is constantly evolving. What we value as precious has gone from beads to salt to gold to oil. People used to barter fish for salt, or whatever else you had to trade, way before cash, credit cards and loyalty schemes. Now social payment systems like Pay with a Tweet and Flattr are getting some real attention. Services like this are still in their infancy, but brands are cottoning onto the fact that they can allow their customers to pay with social kudos. We are currently working a leading beverage brand to develop a content reward platform for the teenage market that is based on instant gratification. At the heart of all this we use location based services and social kudos to unlock exclusive content and measure brand engagement.

Page 22 of 30

So how much is a Tweet really worth to your company?

The death of cash
So the death of cash is nigh. No more bacteria-ridden coins and notes, fewer trees and minerals being wasted, less weight in the pockets of our already low-hanging jeans, no more bank robberies, less chance that your wellearned cash (that you stash at home) will burn up, and so on. The benefits seem endless. So far most experts seem to agree. How this is actually realised and what technology will replace cash is less clear. People far more clever than I have written extensively on this subject but in an attempt to summarise it Ive come up with the following: Contactless payments this requires the customer to have a card of some sort and the merchant to have a reader. Oyster Card, Barclay Card or the Boris Bikes are the most famous example in UK, but Octopus in Hong Kong, SuiCa and FeliCa in Japan are also good examples. Theres no need for PIN codes, or any other security, as it mostly handles small payments like your train fair. Although theres nothing stopping consumers using this technology for larger payments its all about how much risk you are comfortable handling. Mobile card readers - requires the customer to have a card of some sort and the merchant to have a compatible reader. Very similar to contactless payments but the technology used is arguable much cheaper and more accessible to small businesses. Mobile money this requires the customer and merchant to have a mobile phone and mobile wallet. Payments using mobile phones have been around for a while. Coca-cola introduced a vending machine in Finland in1998 that enabled you to pay for your drink using SMS (the payment would appear on your phone bill). Following that a lot of banks tried and failed with WAP services, but around 2004 the Philippines launched Smart Money and GCash, then in 2006 M-PESA was launched in Kenya. We are currently working with a world-leading provider of telecommunications equipment developing a service for expats that regularly send money home to their relatives. Similar services are rapidly expanding into more traditional banking services such as loans, saving accounts etc. One thing seems clear: mobile money will have far more impact on emerging economies than it will on already established economies. So, are you ready to drop cash?

Page 23 of 30

Creative social media: beyond physical retail spaces

Laura Jordan-Bambach, Executive Creative Director, LBi/bigmouthmedia

Social media needs to rise to the challenge of providing a layer of emotion to the online retail experience whilst remaining playful and highlighting the benefits of online shopping. The idea of loyalty is moving away from store cards to indicate much deeper relationships with retail brands, able to provide detailed customer data to inform business decisions. The customers perception of retail is also changing dramatically, with some smaller boutique stores already stepping out of the physical space altogether.

Background
What was once seen as an IT solution is now potentially your biggest shop window but even if youre delivering on this promise are you already behind the competition? Social media brings a layer of emotion to online retail that starts to mimic the behaviours and effects of the physical shopping experience, but in ways that are more playful, more convenient and with a greater range of product in store. It is changing our idea of loyalty away from store cards and into much deeper relationships with retail brands. It has the possibility of delivering us much richer customer data, which can inform business decisions in a way not possible before. And importantly it is dramatically changing our perception of retail, with many smaller boutique stores already stepping out of the physical space altogether. This poses two questions: 1) 2) What kind of opportunities are out there and how do you harness them? As your shoppers are moving from offline to online purchases, are your physical retail spaces becoming more about your brand promise? How can you bring this promise to life digitally?

Innovation1: Social Media monitoring for more than just sentiment: Zwitsal

Page 24 of 30

Innovation 2: Discovery, desire and magic objects Making retail into play. Moving on from IKEAs famous social tagging

Bakertweet playful social retail delivers real SEO value

Goldrun from coupon to Groupon to game

Page 25 of 30

Adidas in-store making the most of the retail space

Macys Magic Mirror connecting desire to purchase through digital social

Innovation 3: Strange behaviours - Mallcaching: understanding the need to share

Page 26 of 30

Contributors biographies
Technology in retail
Lorenzo Wood, Chief Technology Officer, LBi A computer scientist with over 20 years in the industry, Lorenzo has vast experience managing technology and strategy groups. Responsible for developing LBis IP strategy, including the digital dashboard offering, Lorenzo splits his time between consulting and service development for the group.

Mobile retailing: the next big thing?

Michael Thompson, Senior Services Development Manager, bigmouthmedia A gifted and straight-talking technical search veteran with extensive experience in social and mobile innovations, Michael Thomson provides technical expertise to clients surrounding their digital marketing campaigns and ensures that client resources in the online space are maximized.

Integrated marketing: synchronising retail channels

Andy Travers, Account Director, bigmouthmedia With over 7 years digital experience, Andy has worked in a variety of verticals including retail. In his current role within the cross digital team Andy manages some of bigmouthmedias most challenging multi-channel client accounts, spanning the full spectrum digital services and technologies.

New display technologies and their impact on retail

Adam Russell, Media Account Director, LBi With over 6 years in digital media agency-side, Adam has a wealth of experience running display across multiple sectors including retail, and has run paid search campaigns and affiliate marketing programs throughout Europe. He also understands SEO and social in the context of media.

Page 27 of 30

CRM and social customer service: Services Sharing

Deborah Womack, CRM Practise Director, LBi As the Head of CRM for LBi London, Deborah leads a team of seven CRM consultants who work with blue-chip clients to conceive, develop and deliver a range of multichannel communication programmes that engage consumers with relevant, timely and impactful experiences, creating compelling CRM strategies and programmes.

Affiliate marketing in retail

Andrew Girdwood, Media Innovations Director, bigmouthmedia A digital marketing pioneer, Andrew is widely regarded as an industry thought-leader, speaking regularly at conferences and events on the latest developments hitting the sector. At bigmouthmedia he is responsible for the introduction of new media techniques, options and strategies.

Multi-channel/user experience
Marcus Mustafa, Global Head of User Experience, LBi Marcus is one of the most well-respected user experience experts globally and speaks at a number of conferences throughout the year. A key member of the global management team, Marcus partners with worldwide teams to deliver best in class user experience for LBis top tier clients.

Creative social media: beyond physical retail spaces

Laura Jordan-Bambach, Executive Creative Director, LBi Laura brings together experimental and innovative uses of technology and a deep understanding of the future of marketing and communications. She has been involved in the creation, design and implementation of some of the most cutting edge digital work for international brands over the last 15 years.

Page 28 of 30

About bigmouthmedia
Bigmouthmedia is a digital marketing company developing truly integrated digital advertising campaigns across a blend of digital platforms with ROI at the core. Setting the pace in search engine marketing, affiliate marketing, display, social media, usability and analytics, bigmouthmedia has been delivering tangible online business growth solutions on a client-focussed, local, European and global level across 56 countries in over 30 languages since 1997. In 2010 bigmouthmedia merged with LBi to create Europes largest marketing and technology agency.

About LBi
LBi is Europes largest marketing and technology agency, blending insight, creativity and technology to define and execute digital strategies for clients including BT, E.ON, Lloyds TSB, Virgin Atlantic and Play.com. Across LBis and bigmouthmedias network of 24 offices in 16 countries, there are 1,800 digital experts delivering powerful and measurable ideas across communications, service design, branded content, technology innovation, mobile, CRM, media planning and buying, social media, EPR, and hosting. LBi specialises in bringing together diverse teams of digital experts to suit any brief. We call this blending, and it's the special sauce that makes our full service proposition supremely useful to our clients.

Page 29 of 30

Innovations in Retail

0845 130 0022 0207 063 6465

info@bigmouthmedia.com info@lbi.com

@bigmouthmedia @LBiLondon

This document is copyright of LBi and bigmouthmedia. We are very happy (and flattered, actually) for you to quote or reproduce the content (with a link please, if online) as long as you source it to LBi and/or bigmouthmedia and you don't reproduce it for any commercial purposes.

Page 30 of 30