Webware

Twitter is not yet completely mainstream, but several mainstream companies are using the service to communicate with customers and potential customers. Some use it to advertise products, while others use Twitter to field customer complaints.

I looked at how several companies are using Twitter, and have a few guidelines that brand managers can apply to make the nanoblog service work for them. It appears that there are some actions that companies simply must engage in if they want to take advantage of Twitter as a marketing service.

Starbucks: It's about the people
Companies are not people. Consumers, for the most part, have a hard time relating to an amorphous, inanimate entity like a corporate brand. But Twitter can change that by giving a company a human face that can speak to customers and change perception.

@Starbucks' Twitter strategy is worth looking at. Starbucks doesn't inundate Twitter followers with advertisements. Instead, its Twitter account gives consumers the opportunity to access the company in a way they never have.

When a user corresponds with a corporate account on Twitter, they may not really expect it, but will be happy to see that there's a person on the other end. I have sent messages to the Starbucks' profile, which, as it happens, is run by an employee of the company. The responses have thoughtful, forthright, and most importantly, human -- it doesn't stink of marketing rhetoric.

From a consumer's perspective, that's ideal. How often can we really get in touch with corporate people in the position to make a difference? In my experience, telephoning customer service usually yields nothing more than banalities and scripted responses. But a Twitter profile can allow me to talk to a person at the company, creating a scenario where I develop a dialogue between myself and the organization. And it changes my perception, and makes me feel heard. Starbucks does this very well.

Comcast: We care, and we'll prove it.
Giving a company a human face through Twitter is great, but it can't stop there. The representative who's assigned to the Twitter profile can't be an intern or someone who has no power at the company. Instead, the representative must have the power to address issues and make sure that a user who believes they're being treated unfairly can have their issues handled swiftly.

@ComcastCares does an outstanding job of not only empowering the individual behind its Twitter profile, but ensures that the Twitter profile is used to fully address major issues the company has faced in the past.

According to the American Customer Satisfaction Index, Comcast led every company in the U.S. in customer dissatisfaction in 2004 and 2007. Comcast's Twitter experiment is a small part of the solution.

Based on the research I've performed across Twitter Search and other third-party Twitter tools, @ComcastCares is achieving its goal of improving customer relations. The instances of users complaining about Comcast is declining, and the complaints are becoming minor.

If you look at the @ComcastCares page, you'll find the main reason for that success: the Director of Digital Care, Frank Eliason, is individually fielding questions and concerns from customers and asking them to send him more information, their phone numbers, or account information so he can address them swiftly. He's using his power at the company as well as his forum on Twitter to help customers. Without that power, he would be just as useless as Comcast's customer service number.

Zappos: Be part of the community
The Twitter community has certain expectations. Although companies are using Twitter to promote their brand, they should be aware that they're not above those ad-hoc rules. If they follow them like any other user, it'll only help them achieve their goal of improving brand opinion.

@Zappos is one of the companies that actually understands what it means to be a part of the community. Its Twitter activity goes beyond discussions about shoes and answering user questions. A simple search of @Zappos on Twitter Search reveals something that shouldn't be overlooked: by engaging the community and providing entertaining and worthwhile content outside of its business, @Zappos appeals to users even when they're not thinking about Zappos. Perhaps the best proof of that can be seen in its current follower count: 206,553 as of this writing.

Providing value to the community should be part of any company's plan when they go to Twitter. If we want ads, we can go to a company's website, so don't waste our time. Instead, use the blueprint provided by @Zappos, which is dominated by use of Twitpic, insider information about what's going on in the CEO's day, and more. It goes back to putting a face on the organization and it makes people actually care about what's being said.

And that's a key factor companies can't overlook: As consumers, we usually don't care about issues others face with companies until we have them ourselves. Answers to other customer concerns are often only important to that affected individual, and are ignored by the rest. But by providing more tweets about topics outside of customer complaints and advertisements, we start to actually listen to a company. Zappos proves that almost every day: it entertains with interesting tweets. It mentions sales every now and then, too. And I don't think I've missed a Zappos sales alert yet.

A class action lawsuit filed earlier this week targets Facebook and eight of the participants in Beacon, its ill-fated advertising product that shared information about third-party site activity with the social network. The set of 20 plaintiffs, mostly residents of Texas, filed the suit in the U.S. District Court for the Northern District of California on Tuesday. Named as defendants are Facebook, as well as current or former Beacon participants Blockbuster, Fandango (owned by Comcast), Overstock.com, STA Travel, Zappos, Hotwire (owned by IAC/InterActiveCorp), and GameFly.

A Facebook representative told CNET News on Thursday that the company had not yet actually been served with the lawsuit, and that its legal team consequently did not have a formal statement at the time. STA Travel, Gamefly, and Overstock all declined to comment; none of the other defendants could be immediately reached.

"Until we're served, we're not being sued, so we don't have any comment," Overstock general counsel Mark Griffin told CNET News.

Beacon gained almost immediate notoriety when Facebook unveiled it as part of its Facebook Ads announcement last fall. Privacy advocates, most notably liberal activist group MoveOn.org, lambasted the program for not allowing users to disable it easily. Facebook has since modified the program and the controversy has wound down. But in the lawsuit, the plaintiffs point to the window of time before Facebook instituted the new controls--between November 7 and December 5 of last year--and claims that the social network still has access to a large amount of user data that was gathered in that period.

"If the user was not a member (of Facebook), Facebook still obtained the notification from the Facebook Beacon Activated Affiliate," the filing for Lane et al v. Facebook, Inc. read. "Information regarding user activities was sent in real time to a third party Web site--one which was not open or active in the user's browser, and one which, in many cases, the user may never even have visited or heard of."

There's one odd law that may make the plaintiffs' case stronger: the Video Privacy Protection Act of 1988. The law was passed amid the fracas surrounding Robert Bork's controversial nomination to the U.S. Supreme Court, when a journalist obtained Bork's movie rental record from a local video store and published it.

That's why there's already been a suit involving Beacon that specifically targeted Blockbuster for participating in such a program: a Texas woman filed suit against Blockbuster in April, claiming that the VPPA bars it from Beacon. Facebook was not named as a defendant in that suit, and though the plaintiff sought class action status for her case, she does not appear to have any involvement in this week's suit.

The defendants named in the suit don't encompass all of Facebook's original Beacon partners, but several of them could tie into VPPA protections: GameFly rents video games, Fandango sells movie tickets, Hotwire and STA deal with travel bookings, and Zappos and Overstock are both online retailers with a large scope (Overstock sells DVDs, for example). The suit also names the California Computer Crime Law and the Electronic Communications Privacy Act as grounds for the suit.

One of the plaintiffs, Sean Lane of Waltham, Mass., was immortalized in a Washington Post story about Beacon: He's the guy who bought his wife a diamond ring on Overstock.com, only to have her spot the purchase in a Facebook news feed, spoiling the surprise.

Guess he's still irritated.

As I made the usual morning slog through my in-box Monday, I was about to skip past a news release touting a back-to-school promotion for Live Search Cashback, when I noticed one of the featured deals was on a ThinkPad tablet PC from electronic shoe retailer Zappos.com.

(Credit: Converse)

Thinking for sure it was a typo, I went to harass the person who sent me the release. The funny thing is, it really is Zappos selling that tablet computer. I missed it when Zappos expanded from high heels to high tech.

While the departure sounds strange, Zappos certainly wouldn't be the first online retailer to go well beyond its initial category. As we all know, Amazon was the world's largest bookstore before it moved into groceries, sporting goods, and basically anything they can put in a box (and even a few things that don't need a box).

The key was Amazon had a logistics system that worked better than anyone else's. I have no idea how efficient Zappos system is, since I still buy my shoes the old-fashioned way. However, my co-workers tell me they are amazingly fast at getting your order to you and, well, they do have cool robots.

As for that Live Search Cashback promotion, some of the participants, like Zappos, are offering double their usual cash-back percentage during August to those who place their order after going through Microsoft's site.

Sometime in the next few weeks, online shoe seller Zappos.com will launch a new user interface that could soon let consumers buy lipstick and MP3 players along with Birkenstocks and Nikes.

The company is preparing to do a soft launch of the new, cleaner look to around 1,000 customers before deciding on a formal rollout plan, CEO Tony Hsieh said.

"Frankly I'm kind of surprised that what we put on sells, how our customers find it," Hsieh said. "The new site is built for easier navigation and searching, with multiple categories in mind."

Zappos.com's new user interface

(Credit: Zappos.com)

The rollout of the user interface, and the expansion into categories including small electronics and cookware, highlight the core of the company's mind-set: find out what the customer wants, and find the best way to deliver it.

"Customers will say, 'I wish you would start an airline.' Well, we're not going to do that. But if they say, 'I wish you would sell this because I just had a horrible experience somewhere else,' we'll look into it," Hsieh said. "We're experimenting with a lot of other categories. That's how we got into sunglasses. We're taking the same approach--not going out and buying 10 warehouses full of pots and pans, just trying it out."

Zappos prides itself on attention to customer service--an 800 number is plastered on every page, along with notes promoting the company's 24/7 customer service line and 365-day return policy. So far, this approach has been working: Zappos, which launched in 1999, had gross sales of $840 million in 2007, up from $1.6 million in 2000. As of the beginning of April, the company had a customer base of 7.7 million people.

The privately held company reported an operating profit in 2007, and "we exceeded (our goal) a little bit," Hsieh said. In fact, things are going so well that the company recently told its 1,600 employees they would each receive a bonus equal to 10 percent of their 2007 salary.

The company's two warehouses in Kentucky hold around 4 million items, but at just under a million square feet, Hsieh says Zappos has plenty of room to grow. And that's just what he's planning on; by the end of 2008 the company hopes to be selling footwear, apparel, sunglasses, watches, bags, bedding/linens, cosmetics, luggage, and electronics, according to his blog.

Zappos' current look

(Credit: Zappos.com)

So, is Zappos ready to take on big players like Amazon.com? Hsieh says that's not the company's goal, but it'll certainly be going up against some strong competitors.

One challenge will be convincing customers who are happy to buy shoes from Zappos that they should also turn to the company for other items.

"Getting a customer to buy from different categories from you is difficult," said Patty Freeman Evans, an analyst at Jupiter Research. "We've talked to a lot of retailers about that. What we've also seen...is that over time consumers have not increased number of categories across online shopping."

According to Jupiter's data, consumers on average purchased items from 4.1 categories online in 2001, out of a possible 32. By 2007, that number had grown to just 4.7.

"When you redefine who you are it's critical that you make the connection with the customer," said Ted Vaughan, a partner in the retail and consumer product practice at consulting service DO Seidman. "What's going to distinguish them from other companies where (they're not as well-known), especially as they move into other areas?"

Meanwhile, Zappos is facing challenges on its home turf. Big names like Gap and Amazon have jumped into the online shoe sale business with their Piperlime and Endless stores, respectively.

And as Zappos tries to distinguish itself through its customer-service mantra, it's had to cut back a bit on bargains. The main Zappos store recently changed its policy regarding price guarantees and free overnight shipping. To that end, the company recently acquired 6PM.com from eBags.com, and has designated the 6PM brand as its home for bargains.

"Long term, our plan is to not have any sale items on Zappos," Hsieh said. "We want it to be more of a premium brand for customers who value service over anything else."

That message appears to have sunk in with customers. Zappos came in second in a recent National Retail Federation survey regarding customer service, beating out online and offline brands including Amazon, Land's End, and customer service legend Nordstrom.

"For some things the technical and customer service supporting a sale is very important to the customer. Whereas maybe a GPS device is less dependent upon that and is more dependent upon pricing," Vaughan said. "Two clicks away at another Web site they may have the devices, but do they have the convenience? And in the end if you have problems and have returns customer service is critical. Price is always an issue and always going to be an issue but it's not the only issue."

Zappos is hoping the service that keeps customers coming back will have them looking at new categories. On any given day, 75 percent of orders are repeat customers, Hsieh said. The free shipping and customer service department stand in for advertising as well; Zappos does relatively little traditional advertising, spending about 85 percent of its marketing budget on online buys. Besides print ads in magazines, Zappos' offline buys include ads in airport security trays where passengers place their shoes.

"The closest analogy to a brand we might use as a model is Virgin. They're involved in CDs and airlines and whatever, but the Virgin brand is about being cool and hip," Hsieh said. "For us it's about the very best customer service. Hopefully, 10 years from now people won't even realize we started out selling shoes online."