Drawing Lessons from Circuit City’s Social Media Strategy
I have recently been thinking a lot about social media’s ability to drive customer satisfaction particularly if you are a challenger brand. Given the holiday season and CES, I took a look at Circuit City and Best Buy to see how the two electronic retail giants are using tools like blogs and social networks to gain or maintain a competitive advantage.
Circuit City's recent financial performance underscores its challenges in catching Best Buy. And while Best Buy gets its share of customer complaints, it appears to be winning the public perception battle on customer service.
But given Best Buy’s market position, I was surprised to discover that Circuit City’s social media presence was so much more robust than Best Buy’s. I had thought that Best Buy’s online commitment to customer service would match its in-store reputation. It doesn’t appear to be that way and herein lies an opportunity for Circuit City to gain a competitive edge.
When I visited Best Buy’s blog, it said “coming soon.” With Blue Shirt Nation, Best Buy rightfully established a forum for its 140,000 front-line employees to share tips, gripes and personal interests. But it requires an employee password – a lost opportunity to engage customers and gain valuable insights (the way Dell has done with Ideastorm).
That is not the case at Circuit City. Its City Center has won bloggers’ praise. Each of its product categories on its web site from TV & Home Entertainment to Movies & Music has discussion forums, blogs and photo galleries. In 2006, it even joined up with IBM to create a virtual presence on Second Life.
Circuit City’s Rich Lesperance, director of web sales and operations, says word-of-mouth drives much of their social media. Believing that the best way to build a community is organically, Circuit City focuses on making the site a pull rather than a push. “Marketing efforts can help once the community is self sustaining from content provided by enthusiasts who just love talking about consumer electronics.”
According to Circuit City, many years ago before it became widely adopted they were one of the first major retailers to have customer reviews. Forums are a logical continuation of that legacy.
As with most companies, Circuit City’s greatest challenge for implementing a social media strategy was simply starting. Building a critical mass of members began with the most dedicated passionate contributors who voluntarily posted to help answer questions. After more than a year, Circuit City is adding hundreds of new members each week. An even larger number comes to browse topics and learn about technology.
Having just added some brand new features, like blogs and podcasts, Circuit City plans to keep trying different things in 2008 and let the customers decide what is most helpful.
I have to give Circuit City a great deal of credit for embracing social media. It will be interesting to see over time if these efforts can help them challenge Best Buy’s leadership position.
Lessons Learned
What lessons can we draw from this comparison?
Having an online presence is no substitute for a superior in store experience. But combined the two can elevate customer satisfaction and lessen the distance between you and the competition when you are a challenger brand.
If you are a PR professional looking to convince your clients or management of the value of social media, it is helpful to point to the competition. If a competitor has a social media presence, then having one as well eliminates a point of differentiation. If a competitor lacks one, then you can make a strong case that a social media presence will give you a competitive advantage.
I suppose if you’re in the unusual position of having a captive customer base, then social media is less relevant. But very few companies have that luxury.
And if you are a market leader with an unassailable brand, there may be less incentive to cede some control to your customers. But most companies can ‘t afford to be so detached, especially in the age when customers are looking to engage in conversation with you and other customers. If history is any indication, maintaining such a lofty brand position over time is next to impossible.
But the most important lesson from all this -- Companies should not rely on their competition to decide whether to implement a social media strategy. It should be a natural extension of a company’s culture and part of its commitment to drive customer satisfaction.
Let me get back to you.
Technorati Tags: Circuit City; Best Buy; City Center; Ideastorm; Challenger Brands; Blue Shirt Nation;
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I applaud Circuit City for the Customer Forum. It's a great asset and provides value to customers (even if access to it is buried in the category dropdowns), but Circuit City has been struggling for years now to be more appealing to customer's. Perhaps if they tried talking to them they would gain some valuable insight. (Comment this)