Social media is a phenomenon that has revolutionized the way we interact with each other and do business. Companies are using blogs and Twitter accounts each day that reach millions of people instead of a simple press release. Small firms are using the Facebook Fan Page as a way to advertise to customers in their area. Facebook has become such an “epidemic” that college students everywhere are seeing their GPA’s plummet right in front of their eyes. I may be on Facebook right now as I am writing this blog – doing “research” of course.

Companies have begun to realize the potential of social-media through the implementation of user-generated content. Businesses have learned that user-generated content creates greater customer engagement with the company and ultimately can lead to higher customer satisfaction. Companies can easily capture and display customer opinions and experiences on their website about products or uncover insights that make their business more effective. Insights gained from customers help these businesses understand how consumers buy, what they value most in a company or product, and how they can fulfill their customers’ needs. As one expert put it, it is the “first step to revolutionizing business through the voice of the customer.”

There are several ways companies can employ user-generated content. I was recently on Best Buy’s website reviewing a digital camera and came across several different kinds of customer-generated content. I was looking at the Canon PowerShot 12.1 Megapixel Digital Camera. Best Buy’s website allows customers to rate products on several different aspects: Value for Price, Picture Quality, Ease of Use, and Features – overall this camera received 4.6 stars out of 5. The website goes further by asking customers “What’s great about the product”, “What’s not so great”, and “Would [they] recommend this product to a friend?” This really gives customers the freedom to express how they feel about a product and where much of a company’s insights will come from. Just from reading a few posts, I noticed the one customer did not like the “noise” from the camera. Product developers could dig deeper into this insight to see if that means the noises are too loud or if the sound was unpleasant to hear. Finally, Best Buy allows the reader of the reviews to become involved by asking, “Was this review helpful?” as well as offering them the option to share the review through Facebook, Twitter, and other various social media outlets. Even these opportunities provided to the reviewer are creating user-generated content and giving insights for the company to use.

Google, being at the forefront of everything creative, now has applications where it can track trends of anything a person wants. So I decided, what company is more interesting to Google, than Google? Once I searched Google on the zeitgeist website, the first thing I noticed was the ‘Search Volume Index’, which correlates the amount of online searching about Google to the news or business strategies the company was making at the time. There is a huge spike in the data in 2008 that correlates to the announcement of Google Chrome and then again when the browser made news in 2009 that it would rival Windows. Another feature is that a user can compare several different components to each other. I added Apple to my trends analysis, where it compared Google and Apple, and there was a noticeable spike in 2009 when the iPhone 3G made news. Other features of the zeitgeist include that you can narrow down your search by years, regions, cities, and even languages. Under the “Trend for Websites” section, users can observe ‘Daily Unique Visitors’ over the last few years. With Apple’s website, the spikes again correspond to important business advances previously seen with the trend tracker such as the introduction of the iPhone. Only with this section, ‘Trend for Websites’ gives other visited websites. For example, with Apple, the first correlated website is iTunes, which makes perfect sense that people using Apple would also be using iTunes.

Social Media had truly changed the way people choose to interact with each other and the way companies do business. The next important step for companies though is learning how to harness all this data and apply it to benefit business.

Predictive Technology

Every week roughly 100 million customers walk through the doors of Wal-Mart to fulfill their shopping needs at the number one ‘every-day-low-pricing’ retailer in the country. What these customers don’t know is that Wal-Mart is collecting hundreds of terabytes of data about their shopping habits. Wal-Mart has so much information warehoused that it is about twice the information stored on the Internet!! So, with all this shopper history, Wal-Mart has a unique competitive advantage: Predictive Technology. Wal-Mart can “start predicting what’s going to happen, instead of waiting for it to happen.” They are using this information as a competitive advantage, while trying to not invade customers' privacy too much and keeping a balanced relationship with their suppliers.

Wal-Mart has been very successful at creating an experience that serves as a competitive advantage through the enormous amount of data they have collected. They use the data they have gathered to push for greater efficiency at all levels of its operations, especially its supply chain. And because of this, I believe they are one of the most successful companies in efficiency and inventory management. I cannot ever remember a time when I visited a Wal-Mart and they were out of stock of the product I was looking for. I usually shop at HEB because it is closer, however they are often out of something on my shopping list. This can be very frustrating because I don’t have the time to come back in a few days to pick up the one item they didn’t have earlier in the week. Collecting all this data allows Wal-Mart to keep the right about of inventory in stock. Always having the right amount in stock creates a unique advantage for Wal-Mart because it keeps their customers happy, but also saves them money in warehousing and transportation.

With Wal-Mart amassing all this data, some shoppers are concerned about their privacy. Wal-Mart is capturing data not only about who these customers are and what they bought, but also outside information like mortgage amounts, court dates, driving records, and credit levels. However, I trust Wal-Mart with this data. I do not think they will misuse it because the consequences would be severe. A corporation is seen as a separate entity, and just like people, they cannot use this data for dishonest purposes. And just because Wal-Mart has access to this data, does not mean that they will even use it. Wal-Mart is much more interested in how products sell as part of a larger basket. Knowing what items go into a shopping cart will tell Wal-Mart much more than a customer’s address and telephone number. Personally, I am not fearful of giving my information to Wal-Mart or allowing them to have access to other kinds of information. I don't have anything to hide, and if my information helps them in market research, then I am ok with that - maybe that’s just because I'm a marketing major.

Another way Wal-Mart is using this information is in their relationship with their suppliers. Eventually Wal-Mart will institute scan-based trading, where manufacturers own each product until it is sold. This allows Wal-Mart to never put inventory on their books and will shed 50 billion dollars of inventory each year. This will have a huge impact on their suppliers however. Wal-Mart's strict attitude with their suppliers, I believe, will result in driving them too hard and reducing their profitability. If these suppliers can't sell their inventory to Wal-Mart, then they will lose millions of dollars upfront. And if a certain supplier cannot perform up to Wal-Mart's standards, there will always be another company on their heels trying to take their place. However, this could make suppliers more efficient so they will not lose their contracts with Wal-Mart.