Of course whenever you find something great it appears everywhere! Modcloth.com is a company that is leveraging social media to get its customers involved in the purchasing of its product. One of the skills and risks of the fashion business is the selecting and production of fashion items – ahead of an upcoming season and getting those selections right – so you sell your inventory by the end of the season. “As one of my old bosses told me early on – inventory is money and you don’t want that money sitting on the floor or warehouse!” Modcloth engages with its customers regarding samples and lets them vote on whether they like them or not. They select about 40% of the samples that have the highest votes and allow the comments they receive both good and bad – to assist in their decision making as well. This approach takes some of the guess work out of what they will buy and truly delivers on what their customer wants. From the customer perspective they get to be involved in the types of products sold – by participating and sharing their opinions both positive and negative. They are avid users of Twitter and Facebook – where they and their community can share the products they love and don’t love with their friends. Inc.com has written a great article by Lauren Bans about this winning 21st century online business model!

A brilliant example for retailers – on how to engage their customers and minimize the risk of their product purchases – by getting the customers involved in what they truly want, need and will buy.

Best Nicole

ModCloth’s Be the Buyer program lets customers tell the company exactly what they want.

Courtesy Company

Democracy of Style As a result of votes and comments from ModCloth customers, only the left dress is being offered for sale.

Susan Gregg Koger is a lot like her customers. The 25-year-old co-founder of ModCloth, a $15 million online clothing retailer based in Pittsburgh, Koger lives and breathes fashion, eschewing mainstream mall taste in favor of offbeat, often vintage-inspired pieces such as floral housedresses and flapper hats. “Our customers are young women in their 20s who live for fashion-forward clothes the same way we do,” says Koger. ModCloth has always prided itself on having an open channel of communication with customers, through, for example, frequent contests and an active Twitter feed. Says Koger: “Our internal motto is ‘ModCloth is a company you’re friends with.’ ” So she decided to do what any good friend would do: take her customers shopping with her and ask for their advice before making a big purchase.

In October, ModCloth began asking customers to help the company decide whether to carry certain items in its store. ModCloth’s initiative, called Be the Buyer, encourages customers to vote online on clothing samples. If a garment receives enough votes, ModCloth will sell the item.

In the past, Koger and her three-person buying team relied on their own fashion sense to select the items offered on ModCloth.com. They traveled around the country, sifting primarily through small collections from independent designers. But the buying team sometimes found clothing samples it loved but couldn’t afford to purchase because of the minimum order size. Clothing manufacturers generally need large order commitments — typically anywhere from 120 to 500 pieces, says Koger — before committing to production. If a larger retailer hadn’t already plucked a certain sample out of the lineup, ModCloth often wouldn’t risk committing to the kind of large-scale purchase needed to push it into production.

But now, says Koger, the company can confidently gamble on what were once risky items by securing the most valuable of opinions before taking the plunge — those of its customers. Each sample is put up for a vote on ModCloth’s website for 14 days, and after tallying the votes, the company decides whether it’s worth the investment. If an item is picked, the customers who voted in favor of it receive an e-mail when their chosen design becomes available for sale. There is also a comments section for each garment and a feature that lets customers send a link to the clothes to their Facebook and Twitter friends.

Koger says the program benefits everyone involved. Not only do the customers get to play a firsthand role in choosing their own fashions, but ModCloth reduces much of the guesswork involved in fashion buying. “The customers are helping us make a safer financial bet by eliminating the risk,” says Liz Bensink, ModCloth’s site manager. “Now if we order some of those samples, they’ll be exclusive to ModCloth, and we already know that our customers voted them into existence.” Plus, the designers get a chance to produce the clothes that larger, more mainstream outlets passed on.

The first batch of 66 product samples appeared on ModCloth’s site in late October. By the end of November, those items had received more than 100,000 customer votes, and Koger had decided to carry about 40 percent of them. Molly Miltenberger, a regular ModCloth shopper, weighed in on some of the samples. A self-proclaimed scarf lover, she voted in favor of a green plaid scarf with tassels and another brightly colored striped one with pompon fringe. Only the latter received enough votes to make it into production, but Miltenberger says that’s OK. She will buy the one that will be produced. Plus, she is thrilled that the company is letting her vicariously experience her “dream career” of being a professional buyer.

In addition to the votes, ModCloth also received thousands of comments, some of which were harsh — and often amusing. One customer quipped about a printed yellow dress, “It looks like a cat shred a ’70s polyester and then threw up on the shreds.” Of another multicolored outfit, a shopper wrote, “I like the cut, but the pattern makes me want to kill myself.”

Snarky or not, the comments reflect a high level of customer engagement. Plus, many of the remarks proved insightful, says Bensink. For instance, a heather-gray cotton dress, which did not make it into production, got a fair number of yes votes, but commenters kept pointing out the same flaw in the dress: It was too sheer. In the future, ModCloth may even consider asking a designer to make changes based on the criticisms of customers. “The customers are letting us know why they voted the way they did,” Bensink says, “and the point is to see how comments and votes translate to sales.”

It’s too early to tell what the exact conversion will be, says Koger, but the initiative has already boosted traffic to ModCloth.com. The number of visitors increased 25 percent in the first month after launch, partly because enthusiastic participants were promoting their favorite samples on their Facebook pages, Twitter feeds, and personal blogs. Thrilled by the response, the ModCloth team has continued to add new samples to the voting page. “Items are getting 50 votes mere minutes after we upload them on the site,” says Bensink. “It’s so exciting for us to watch. We had this customer base ready to interact with us, and we just needed to give them a proper forum.”

Best Nicole

“There’s so much talk about social media that it is easy for people to become cynical, perhaps losing track of the fact that it can have a positive impact on your business.”

So how can you determine whether a social media strategy is proving beneficial to your business? How do you know that it is working out for you? And is now really the best time to find out?

Rather than focusing on individual social media campaigns, I’d like to look at social media measurement from the perspective of a business that a) buys into social media, b) commits to it over a period of time, and as such c) has an integrated social media strategy. You people know who you are!

Let it breathe

The key with social media measurement, I think, is to stand back and take a widescreen approach to measurement. 

Rather than focusing on the smaller, campaign-specific metrics, such as traffic from Twitter or the number of fans on Facebook, wouldn’t it be better to look at how it helps to shift the most important business KPIs, such as sales, profits, as well as customer retention and satisfaction rates?

To do this effectively, you’ll need to give your social media strategy time. Like a good wine, it needs to breathe. In doing so you will be able to look at your overall business performance, as well as the performance of your social media campaigns over the duration. 

Take the Skittles campaign. I called it ‘brave’, ‘amazing’, ‘sensational’ and ‘ballsy’. I still think it is all of those things, and I’ll think that next year even if it fails miserably. It was a big move. But nobody yet knows for sure whether giving over a brand’s entire website to consumer-powered media channels is a smart move. Only time will tell.

Social media vs TV advertising

Here I want to make a small point on accuracy, and attribution. I firmly believe that if you can spend tens of millions on TV ads and make any kind of sense out of that investment, in terms of TV ads helping to boost sales while increasing the key brand metrics, then you can make sense of your (much smaller) investment into social media. 

TV campaigns can run for a long time, and the effects on the business are a) not known immediately and b) possibly overstated. Hindsight is a beautiful thing, and advertising executives (and creative agencies) like to take credit for improving sales, when really these sales might have little or nothing to do with TV ads. Attribution is one thing, but knowing that something works is entirely different. Social media appears to be a mixture of the two.

Maybe we can create a model for scoring the performance of social media, or for splitting up attribution by channel, but the truth is that there needs to be some room for manoeuvre when making sense of things. There are few absolutes in measuring advertising campaigns, if you work outside of paid search. You can far more accurately measure social media than you can a TV ad, but like TV advertising, or PR for that matter, there has to be some scope to play around with attribution.

Like TV advertising, social media will play a role in moving brand metrics, and perhaps more so (it is easier to make a noise and to be socially active; there’s an anytime, anywhere factor at work here. And hey, shit sticks around longer when you throw it online). There is a huge viral factor with social media sites (behold ye retweeters). You can really see word of mouth in action on social media sites, and as such there is less guesswork involved when measuring the results – less extrapolation is needed. If 500,000 consumers start saying good things about your brand, with few dissenters, then surely it is fair to say that brand favourability will have improved?

If brand indicators matter, or if you subscribe to the AIDA model, or if you care enough to undertake research to find out your own brand metrics (PDF), then by all means factor in your social media efforts when attributing the success of your overall marketing campaigns.

Take a snapshot

Before you start the clock it is a good idea to benchmark where you’re at…

1. Make a note of the obvious numbers (number of Facebook fans, Twitter followers, Digg links, Delicious bookmarks, and referrals from social media sites, plus existing website traffic).
2. Make a note of the less obvious benchmarks (such as SEO rankings and referrals, customer satisfaction scores and other business data). 
3. Make a note of ROI benchmarks. How much are you paying to acquire customers via other marketing channels? How vast is that advertising budget, and how is it being split up? And what proportion is being directed into channels that you cannot accurately measure?  

After that make sure you’re doing the right things. There are lots of social media experts handing out lots of advice for free. There are all manner of social media agencies out there that will help you, if you don’t have the appetite to do this in-house. And there are sites devoted to measuring social media. Get some, get some.

Measuring the effects of social media in 10 steps

1. Traffic
This is one of the more obvious ways of measuring social media. Remember that quality often beats quantity, though not always (as many CPM-focused publishers will surely testify). 

2. Interaction
Participation is a valuable indicator for many publishers (and brands). It says something about the kind of traffic you are attracting. Remember that an engaged customer is a highly valuable one. Interaction can be anything from leaving comments, to participating in support forums, to leaving customer reviews and ratings. It can happen on your website and on other websites. Keep your eyes and ears open!

3. Sales
We at Econsultancy are tracking sales from organic Google referrals and also paid search. It didn’t seem like much of a leap to track other channels, such as Twitter. Try it. Dell did, and discovered that it made $1m from Twitter in 18 months. Blendtec’s ‘Will It Blend?’ campaign on YouTube helped to drive “a five-fold increase in sales”. 

4. Leads
Some companies simply cannot process sales online, because their products or services do not allow for it. For example, the automotive industry, which tends to measure the effects of its online ad campaigns by the amount of brochures requests, or test drives booked in (as opposed to car sales, which is, in marketing terms, an altogether more macro effort). B2B operators are in a similar position. If you are a consultant and spend time interacting on LinkedIn Answers then there’s a way of tracking that activity to enquiries about your services. The same applies across the spectrum of social media sites. Choose your weapon, thought leaders.

5. Search marketing
The SEO factor cannot be understated. Social media can be far more powerful in this regard than you might initially imagine. For example, a well-placed story / video / image on a site like Digg will generate a lot of traffic and a nice link from Digg itself, but the real win here is that it will generate a lot more interest beyond Digg. Bloggers and major publishers are following Digg’s Upcoming channel to unearth new and interesting stories (Sky News now has a Twitter correspondent). One link and 20,000 referrals from Digg might lead on to 40,000 referrals and 100 links from other sites. The long tail, in action. 100 links means that your page might well wind up being placed highly on Google, resulting in lots of ongoing traffic. Remember too that you can use sites like Twitter and YouTube to claim valuable search rankings on your brand search terms (‘social search optimisation’).

6. Brand metrics
Word of mouth and the viral factor (inherent in sites like Twitter, Facebook and Digg) can help shift the key brand metrics, both negatively and positively. These include brand favourability, brand awareness, brand recall, propensity to buy, etc. Expensive TV ads are measured in this way, so if these metrics are good enough for TV then they’re surely good enough for the internet? Positive brand associations via social media campaigns can help drive clicks on paid search ads, and responses to other forms of advertising. We know that TV ads boost activity on search engines, resulting in paid search success stories, so I’d bet that social media can do the same.

7. PR
The nature of public relations has changed, forever. The last five years have been largely about the traditional PR folks not really being able to figure out the blogosphere. But if PRs cannot control the bloggers, then how on earth will they handle consumers? The distinct worlds of PR, customer service, and marketing are fusing. Twitter means everybody has a blog these days, and somewhere to shout about things to their friends (and beyond). Social media sites are the biggest echo chambers in the world! In any event, if you can measure PR (beyond adding up column inches and applying a random multiple to the equivalent size on the rate card!), then you can measure social media.

8. Customer engagement
Given the prevalence of choice, and the ease with which consumers can switch from one brand to another, customer engagement is one of the most important of all metrics in today’s business environment. Engagement can take place offline and online, both on your website and on other sites, particularly social media sites. Customer engagement is key to improving satisfaction and loyalty rates, and revenue. By listening to customers, and letting them know that you are listening, you can improve your business, your products, and your levels of service. The alternative is to ignore customers, which sends out a terrible message. Our research found that an engaged customer will recommend your brand, convert more readily and purchase more often. 

9. Retention
A positive side effect of increased customer engagement – assuming certain other factors in play work in your favour – is an increase in customer retention. This is going to be a crucial factor in the success of your business in the years to come. Make no bones about it: we are moving into an age of optimisation and retention. Watch your retention rates as you start participating in social media. Over time, all things remaining equal, they should rise. Zappos, which is a case study in how-to-do-Twitter (and active on MySpace, Facebook and Youtube), is closing in on $1bn of sales this year, and “75% of its orders are from repeat customers”. Go figure, as they say.

10. Profits
If you can reduce customer churn, and engage customers more often, the result will surely be that you’ll generate more business from your existing customer base (who in turn will recommend your business to their network of friends, family, and social media contacts). This reduces your reliance on vast customer acquisition budgets to maintain or grow profits. It makes for a far more profitable and more efficient organisation. I really hope that more businesses will find a better balance between acquisition and retention, sooner rather than later, from a resourcing standpoint. Too many acquisition strategies appear to be ill-conceived, are not joined up (both in terms of marketing and also operations), and as such are ripe for optimisation. Plug the leaky bucket and you won’t need to turn the tap so hard to top it up. And remember that old adage about it being cheaper to keep existing customers than to seek out new ones.

Marketers are directing their 2009 budgets toward content, custom media and social media initiatives, according to a new study from online marketing resource and vendor-matching tool Junta42.

More than half—56%—of marketing and publishing decision-makers plan to increase their content marketing spending next year, Junta42 found after surveying its community of corporate marketers and publishing/agency professionals.

What’s more, a full 31% expressed their intention to increase spending on content significantly, while 25% said they planned to increase it slightly.

Even in the face of dramatic cutbacks and decreased budgets, only 4% of respondents said they planned to decrease spending on content dramatically next year, while 9% said they planned to decrease it slightly.

“These findings are an acceleration of what we’ve been seeing for the past few years,” said Joe Pulizzi, founder of Junta42 and author of “Get Content. Get Customers.”

Notably, surveyed marketers were very clear that social media will be at the top of their investment list next year.

In terms of most important products/tactics, social media–other than blogs–resonated with 68% of subscribers, followed by e-newsletters/email (60%), blogs (56%), case studies (55%), online video (51% ), white papers (46%) and microsites (43%).

“If marketers will spend less in 2009, it won’t be coming from their content development budgets,” Pulizzi said. “More and more marketing professionals now realize that tomorrow’s marketing is all about developing a conversation with customers.”

The Junta42 community is made up of both corporate marketers and publishing/agency professionals. For the study, 42% were corporate marketers, 22% were traditional publishers/media, 19% were marketing/advertising agencies, 15% were custom publishers and 3% were association marketers.

In addition, 85% of the surveyed audience makes marketing purchase decisions for their organizations.

The Junta42 email study was delivered during the first week of December. A total of 1706 subscribers were invited to take the study, of which 196 completed the survey.

IF these stats are any indication using social media tools will definitely be a successful way to start the conversation with your customers. What are you waiting for? Brand evangelists for your products and services are eagerly waiting to hear from you!

Best Nicole