Crowdsourcing: New Retail Concepts Give Power to the People

By Tom Ryan, RetailWire

Editor’s Note: This article is an excerpt from one of RetailWire’s recent online discussions. Each business morning on RetailWire.com, retail industry execs get plugged in to the latest news and issues with key insights from a "BrainTrust" of retail industry experts.

Although consumers have long been involved in helping companies develop products and services through focus groups, some companies are looking to the internet to tap into consumer input on a much wider scale. In business speak, the concept is being called "crowdsourcing" and is yet another play on the "wisdom of crowds" theory.

For instance, Threadless, a t-shirt company, and Ryz, an athletic shoe manufacturer, are making it possible for consumers to design shirts and shoes, according to The San Francisco Chronicle. Consumers vote online for their favorites and determine the products these companies sell over the internet.

Crowdsourcing is particularly appealing, according to its supporters, because a new generation of internet users expects that kind of input and interaction.

"They were born digital," Frank Cooper, vice president at Pepsi-Cola North America, told the San Francisco Chronicle. "They get the process. It is not technology to them. It is another great experience to engage."

This summer, consumers were given the opportunity to vote at DEWmocracy.com to decide new flavors for Pepsi's Mountain Dew brand.

"Hundreds of thousands of people have given us feedback" on the flavors, Mr. Cooper said. "There is a wealth of information we can leverage. This is unprecedented."

Rob Langstaff, a former president of Adidas' operations in both North America and Japan, is putting $4 million into shoe startup Ryz because he believes there's too great a disconnect between businesses and consumers. Often, consumer input is only involved at the beginning of the product design process and little afterward.

Said John Butler, the creative director at Butler, Shine, Stern & Partners, which has worked on a project to get consumers to create their own Converse Chuck Taylors, "It's a smarter way to mass-produce things, getting them in the hands of people who want them, customizing products to meet individual consumer needs, and I think it is literally right around the corner for many businesses."

Online Engagement
Web 2.0 tactics have been a hot topic in the retail industry. Some analysts say it’s the way of the future for retail. “We are increasingly embedding the consumer in the ordering and inventory process of distribution through the web; embedding them in innovation makes sense,” says Liz Crawford, president of Crawford Consulting. “Wise companies will learn to use the information effectively, however, using solid testing to ensure success.”

The input of customers is retailers’ best tool, according to one analyst. “Nothing is more valuable than consumer input as long as you are talking to the right consumers,” says Robert Gordman, president of The Gordman Group. “Your best customers understand your business and products and can provide valuable feedback. If you simply solicit feedback from random "crowds" you are likely to get information that is generic at best and misleading at worst. Any research should be limited to your Core Customers.”

“It isn't hard to segment the replies into demographic and psychographic groups, weighting the replies accordingly, says Mark Lilien, consultant with Retail Technology Group. “It's a lot less expensive than a failed marketing campaign or a failed product launch. Like any other market research, it doesn't have to be precise; it just has to provide a reasonable direction.”

Mandee Targets Young Consumers With In-Store Texting Promotion

By Amanda Ferrante, Assistant Editor

On a busy Saturday at young women’s’ apparel retailer Mandee, I didn’t expect much more from the storefront greeter than a simple welcome at the door. However, in addition to a friendly, “Hi- welcome to Mandee,” the amiable greeter told me I could text Mandee7 to 45566 to receive a 20 percent discount on one item at checkout.

I thanked her and made a beeline for the beautiful shirt just a few yards away. She followed adding, “And it’s the weekend, so you don’t have to worry about your rates! It’s this weekend only!”

That was the “Aha!” I was looking for. Not only did she inform me of the great deal going on, but she made sure to create the sense of urgency by coaxing me with a subtle, yet important, piece of information that would, ultimately, seal the deal. Following suit, shoppers left and right had their cell phones in one hand and their chosen garments draped over the other.

After texting, I received a message saying I’ve opted in for Mandee Mobile Alerts — and earned 20 percent off one item for today only.

This is a deal I hadn’t seen before as a consumer — and it was executed well because the retailer, though small and limited to the east coast, had its target consumer in mind: young women with relatively low incomes in search of the latest fashion. Text messaging is becoming a more integral part of shopping, and giving customers the information they need to make a proactive decision to opt-in for a discount is how to do it.

In the stores and on the floors

In addition to having its target consumer in mind, Mandee has its target consumers on the floor. Mandee employees are typically young women wearing the latest Mandee fashions. Getting information from a greeter about a promotion is like hearing from a friend or peer at school. She was friendly, easy-going, and seemingly trying to share the good news about a great deal.

Going shopping alone at Mandee is never an issue — I don’t even have to bother sending a picture of myself in a dress I’ve picked out to one of my friends; I can ask the fitting room attendant! After all, she is someone I can relate to. Not to mention the amount of times I, a loyal Mandee shopper, have seen an outfit on an employee and asked where she got it. Where else?

For the future

I have come to expect useful promotions from Mandee. For loyalty card holders, every $20 spent earns a “hole punch” on a Mandee club pass. Once shoppers rack up 10 punches, they receive 20 percent off a purchase of $20 or more. Not only is this incentive to shop, but it’s feasible for the Mandee consumer who’s on a tight budget. Promotion by text is a new arena for Mandee, and it will be interesting to see what’s coming next after the text messaging promotion.

Most likely, the next move from Mandee will be mobile. “As mobile end users grow more sophisticated, their overall expectations for performance for performance and content will rise,” says Manny Gonzalez, senior director of mobile technology at Keynote, a provider of on-demand test and measurement products for mobile communications and the Internet. “Even if a company’s service is at the top of the performance ratings today, its customers will expect more tomorrow…Keeping in mind that the performance and reliability of a mobile marketing campaign is just as critica l— if not more.”

Gonzalez says effective mobile marketing messages should provide a link to the company’s mobile Web site anytime a user texts to a common short code (CSC). “This helps introduce users to a company’s mobile offering and further extends the interaction with the company.”

One thing I know for sure: I will be one of the first Mandee customers in line to take advantage of the next great promotion.