May 31, 2011, 4:40 PM

Listen up

E-retailers tune in on consumers' online conversations, and act on on what they hear.

Lead Photo

In the spring of 2009, Blockbuster Video retained the services of Kirkland & Ellis, a law firm with a reputation for helping companies with bankruptcy filings. Rumors that the video rental chain was going to file for bankruptcy spread rapidly across social media. In the melee, one Twitter post used Blockbuster's stock symbol, BBI, to report the rumor. Reading it, another Twitter user asked, "Is this Best Buy?"

Best Buy—its stock symbol is BBY—was listening and responded to the Twitter post directly, cutting short any rumor that the electronics' retailer might be in trouble. The event exemplified the power of consumer conversations occurring online today. Blockbuster, which later said it hired the law firm to help it raise funds and didn't file for bankruptcy for about another year and a half, saw its stock plummet 77% to 22 cents a share that day.

It was one of 15 Best Buy employees who are wholly dedicated to monitoring and engaging with consumers online who saw and responded to the potentially devastating tweet. The team has the web covered 24/7. "In a day when anyone can tweet, blog or post a video that may or may not be based in fact, brands have to be monitoring the conversations out there," says Gina Debogovich, Best Buy's senior manager of communities.

There are many tools available for consumers to use to communicate online, such as through blogs, YouTube, product reviews and social networks. And there is an equal abundance of tools available for e-retailers to monitor those communications, ranging in cost from zero to tens of thousands of dollars, and many price points in between. E-retailers using such tools say they provide invaluable insights into their customers' experiences, flag potential problems and give them a way to interact with customers directly and quickly.

E-retailers say free and low-cost tools are generally all they need to keep abreast of the online conversations that they want to be aware of. With Google Alerts, e-retailers can set up free keyword searches using their company names, competitors' names or top-selling products. Google Alerts sends an e-mail when the search engine indexes an instance of the keywords being used online, excluding the Facebook social network.

SocialMention works similarly but also reports mentions within Facebook and other social media. E-retailers using HootSuite—either the free or the paid version, which starts at $5.99 a month—also can track and respond to posts in Twitter. Online grocer Peapod.com uses all three services to track mentions of its brand and doesn't spend a dime doing it, outside of the time it takes to filter through the alerts, many of which, the e-retailer admits, are repetitive.

"We're a food retailer and so our margins are small. The free tools provide a tremendous amount of information and are tremendously helpful," says Peg Merzbacher, Peapod's director of marketing. She says she gets two to three Google Alert e-mails each day and checks her SocialMention account one to two times per week. She uses HootSuite more frequently because she uses it to both monitor Twitter mentions about Peapod and to post to Peapod's Twitter account.

PegasusLighting.com uses Google Alerts and HootSuite to keep an eye on online conversations, but keeps them limited to the company's name and its variations. Pegasus Lighting vice president Chris Johnson says he used to have Google Alerts set for the site's more popular lighting products but that the alerts brought in too much repeat information, particularly from spam sites that repost content from other sources. "There are a lot of spam sites that are there for nothing but trying to get ranked to get a Google ad click. When you are searching for a popular term like ÔLED lighting' there's not a lot of valuable information," he says. Johnson says he kept the product alerts set for a year and then deleted them.

The amount of information an e-retailer must sift through when using free services is an argument for using more sophisticated paid listening platforms, says Zach Hofer-Shall, a Forrester Research analyst following technology for tracking online conversations. "There's an inordinate amount of spam in e-commerce, just junk posts to drive up traffic. The free and more cost-effective tools won't do much of a job at all at filtering these things out," he says. But he adds that they are a good place for e-retailers to start before they consider paid services that may do a better job of filtering and analyzing communications.

Jim Deitzel, e-marketing manager at Newell Rubbermaid Inc., a manufacturer of organization and storage products that also sells direct to consumers via Rubbermaid.com, says free and low-cost tools are good enough for now for the brand to monitor the broader web. "They don't give us everything, but they give us enough. They give us the conversations we are interested in," he says. The company does pay Bazaarvoice Inc. to host and monitor ratings and reviews.

Forrester's Hofer-Shall says the market for paid listening services that monitor the broader web hasn't really found its footing among e-retailers yet, especially when it comes to listening and communicating with customers one on one. He says more costly listening platforms, such as those from The Nielsen Co. or Cymfony, are finding better traction among marketing research professionals intent on mining more data for longer-term insights. It's these deep analytical components, and the consulting services that often come with them, that drive costs up.

Best Buy, the largest consumer electronics retailer in the world by revenue, also relies on free tools for use by its communities team, which is focused on customer support. It uses Google Alerts, TweetDeck, HootSuite and RSS feeds to monitor the broader web, and hosts several of its own community forums through BestBuy.com and Twitter.

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