Tuesday, June 2, 2009
What do Dell Outlet and Kogi's BBQ have in common?
Twitter allows individuals to freely and immediately communicate through the exchange of “tweets,” frequent answers to one simple question: What are you doing?
A recent poll of 3600 LinkedIn users asked: "What is the most important new platform for brands to master." Respondents could choose one of the following online member communities: Twitter, Facebook, the iPhone, Digg and LinkedIn. The number one platform was Twitter, chosen by 30% of respondents. Find a thorough analysis of this poll on ReadWriteWeb: http://bit.ly/9Vgnj.
Twitter may not have a business model, but businesses are quickly developing winning models to leverage the company's open platform to build their brands and nurture customer relationships. Some, including DellOutlet and Kogi's BBQ are using it to successfully drive sales.
These are both great retail cases. I’ll focus on Dell Outlet since Kogi’s case involves hyperlocal targeting, a topic worthy of its own post.
Retail inventory management is probably one of the most complex of all inventory problems to solve, and successful companies like Dell find innovative ways to turn product at the highest margin possible. Returns can be especially challenging and so when Dell Outlet receives an excess number of returns of a particular model it will consider a direct e-mail campaign to promote that particular system, generate incremental demand, and eliminate the excess inventory “bubble.” However, when the bubble is smaller, the major lever to stimulate sales has been to lower the price of the overstocked item.
In March 2007 Dell Outlet recognized that the Twitter platform could be an efficient channel to promote featured products. Its Twitter program now has nearly 600,000 followers. Stefanie Nelson who heads up the Twitter efforts for Del Outlet has two objectives for the program:
1. Increase demand for products for which Dell Outlet has excess inventory by offering Twitter exclusive deals.
2. Become a resource for Dell customers looking for tips and tricks and assistance with products.
The strategy revolves around posting Twitter-only offers to its followers. When a new tweet is posted, it generally provides followers a coupon code to obtain a discount on that particular model in the Dell Outlet. Typically, this coupon is exclusive to Twitter, so they are able to measure the redemptions and know that it was due to being posted on Twitter. Twitter followers may share coupons easily by "retweeting" the Dell Outlet messages to their Twitter friends in a viral fashion.
For Dell, Twitter represented a new way to reach customers and by tracking coupon redemption, in the first year utilizing Twitter as a promotional tool, Dell Outlet generated over $500,000 in revenue in sales of refurbished systems. Dell has proven time and again their ability to innovate in sales and channel management and I predict other brands will follow.
A May 2009 “Top Ten Twitter Trends” study of Internet, mobile and social networking users (n=1,850, twitter users, n=665) conducted by Thinktank Research found that 40% of Twitter users regularly search for products or services online via Twitter. About 20% follow at least one product or service, and 12% note they’ve chosen a service or bought a product online because of information they got on Twitter. To request a copy of the report you can email Robin Boyar firstname.lastname@example.org.
It will be interesting to watch the evolution of Twitter as it continues to gain momentum as the leading conversational marketing platform for brands.