Cord Blood Registry & Social Media
Today’s blog will focus on a narrow sliver of the social media world, The Cord Blood Registry. I will discuss the social media strategy they have employed, its features, and apparent strategies. Before getting into these more complex elements, it would be best to first provide a primer as to what the Cord Blood Registry is.
The CBR (as I will refer to it) is a private company that generates revenue by storing stem cells derived from the umbilical cord that is frequently discarded following the birth of a baby. These stem cells may become valuable for treatment later in life should the child have a disease, cancer, or organ failure issues. Since these cells have not yet been proven to actually save anyone, the product they’re selling is largely peace of mind to mothers and fathers that they have done everything in their power to protect their families. Presumably, treatments that employ stem cells, once developed, will be compatible with the stored stem cells that can be thawed out at a later point. At that point, the CBR will become a legitimate medical service. It is unclear when that point in medical history will occur, but they do seem to be sincere in their efforts to save people with their technology.
Regardless of your viewpoint on the future of this technology, it becomes immediately clear how important promoting their services on a logical and emotional level will be. The emotional component is the most important, because the exact future treatments this service can be used with are not entirely clear. So the business must truly engage with potential new parents in a way that fits closely with their hopes and fears. Specifically: hypothetical situations that create fear. Both fear of the “mad scientist” behind the product and fear for their child in hypothetical medical issues in the future.
The CBR has engaged potential customers and new parents through both Facebook and Twitter. However, their Facebook page is the more effective tool of the two in terms of fit with their business. The CBR offers a fairly static service: Storage. So the “news” the company would want to release is few and far between. In fact, the less news from CBR the better for parents, because the product needs to be considered safe. No news is essentially good news when it comes to storing stem cells for 20-50 years. Once the service is sold, there is not much room for upselling, unless perhaps they can eventually DNA sequence your children. So the type of news that CBR chooses to release is largely related to A) Stem cell technologies (which indirectly show future benefits from CBR) and B) diseases, afflictions, conditions that present future hazards (increase perceived probability customers will have need to use frozen cells from CBR). Twitter serves to distribute this type of news to their followers.
Facebook on the other hand offer greater benefits. The Facebook page for CBR offers much of the same information as their Twitter feed, but it also has information posted by users. In fact users often post stories before the Associate Marketing Manager of Social Media (Erika Gessin) can post them to the CBR wall. When CBR posts information directly, it often leads to reinforcing conversation among its users with each other. This two way communication has significant advantages to CBR. The three main benefits are evident. First, users/fans become information agents, notifying CBR of events relevant to their business. Even the Social Media Manager cannot be fully omnipotent to events that impact CBR around the world. Users can benefit the company by providing eyes and ears to important issues to young parents. Second, a forum is created for discussing stem cell storage issues. By creating such a forum, it avoids its creation elsewhere. You cannot control whether people talk about your brand, but you can ensure that it takes place in a place you can actively monitor it. Third, since you have access to the conversations taking place, you can also have back and forth communication with social media users. When product misconceptions exist, you can correct the issue. If new fears spread about stem cells, you can act to calm those concerns. Moreover, you will hear about and be able to get out ahead of stories before serious issues arise. Rapid response capabilities are quite valuable. Each of these three advantages are present on the CBR Facebook page wall by examining both the CBR additions and user posts. For a firm of its size, it appears Social Media is particularly effective for this business.
Applying the Elaboration Likelihood Model to the CBR business explains exactly why Social Media was so effective for their business model. ELM divides message processing into Central Route and Peripheral Route processing. Messages apply Cognitive (reason, logic, facts) or Affective (emotions, fears, desires) tactics. The product/service CBR has is one that is high involvement (keeping your family alive) and affective (dangers are unquantifiable, safety, security, uncertainty). Social Media is predominantly central route due to the direct interaction required to connect with and post anything. But the message style is often (but not exclusively) affective in nature. Unfortunately, its difficult to “prove” that Facebook is more Affective than Cognitive, but for the moment I will rely on my reader’s experiences with Facebook and assume that you agree. Putting all the pieces together, we have a product that uniquely fits the interaction level (Central Route) and communication style (Affective) of the medium. And the postings that CBR and users make on Facebook reinforce this affinity.
Sunday, April 18, 2010
Sunday, April 11, 2010
Walmart to the Rescue
Walmart to the Rescue
Constance Hays tried to write a balanced article. On the topic of Walmart data collection, her research was sound and informative. On her depiction of Walmart’s market power, her reasoning was sound. On privacy and the potential for abuse, she is largely borrowing hearsay and vague insinuations that have been leveled at Walmart for years. In her article, at no point does she provide any evidence that 1) Walmart has abused its data, 2) Walmart could abuse its data, or that 3) Walmart has any motive for abusing its data. In laying out a string of unsubstantiated doubts to fan fears, we see her channeling Glenn Beck in a way that, “…some privacy advocates worry about the potential for abuse.” Take that Constance!
Observations about Walmart from the Article:
1. Just because Walmart collects more data than the others, does not mean that it is collecting a disproportionate amount relative to the others. Divide the data by the number of customers they serve and how often they visit the store and we may find that it is Target or other firms that collect more data about you. Target has the loyalty program that collects user identifiable transaction data. Since Walmart does not do this program, they simply cannot put a name with the shopping data. Constance speculates that Walmart could figure out a way to add this information to its records. But she offers no rationale for *why* they would do this.
2. Just because Walmart collects the data, does not mean they can extract uniquely valuable insights from it. Figuring out that certain SKUs sell well before and after a hurricane is very simplistic insights into their customers behaviors. And it requires no invasion of privacy to accomplish – in fact, this could have been done before computers existed.
3. Just because you can prove that certain power could be abused does not prove that that power will be abused. While it may be possible for Walmart to do something bad with its data, it does not mean that they have an incentive to abuse it. What advantage does Walmart get by knowing the value of my house? This information is publicly available. Why is it any more dangerous for Walmart to know personal information than it is for my neighbors to google me? It is not.
4. Walmart has a consistent Rollback policy. There is no evidence that when Walmart is seeking to increase their margins. If data mining is not used to increase gross margins, then it would appear that it is impossible for the firm to use their power for dastardly purposes. Thanks.
Walmart’s Success at using its data to create an Experience:
It appears that Walmart is not very successful at using its data. If the best case study Walmart has on using its data is the Hurricane example, then this does not bode well. Analyzing SKU sales data for stores near Hurricanes could have been done in the 1960s. Speed might have been an issue, but stores in 1960 should be able to say what products sold well on what week. This indicates that Walmart may have limited talent or manpower working to harvest the data they collect. It also may imply that the architecture of the database could inhibit investigation. However, Walmart does not talk about its data harvesting activities, so we may not have an accurate picture of internal success stories. Given this reporter’s negative Walmart attitude, I am not surprised she didn’t gain access to higher level examples.
Trusting Walmart with Personally Identifiable Data
This question was a trap. Several implied assumptions were within the question itself. First, it is unclear whether Walmart has personally identifiable data. Yes, they have credit card transactions, social security numbers, and driver’s licenses. But many other firms have that information. The question is whether they have a disproportionate number of these. Corner check cashing services require the same information, charge higher prices, and are run by people who exploit the poor. Comparatively, Walmart has more controls in place, software to prevent data theft and so forth. Large companies do not perform “identify theft” – individuals do. By storing people’s social security numbers, they reduce the chance that people watching could steal the number. Clerks at stores and many retailers have been caught doing this. Reducing the people-centric risk is of higher concern.
The issue of trust is another false dilemma. I do not need to trust Walmart. So whether I trust them or not is not really an important issue. Walmart simply does not have much incentive to use my information to cheat me. They have rollbacks and their gross margins have been steady around 20% for a decade. Even Constance can not think of something dastardly for Walmart to do with this data even if they could put my name next to my shopping order.
Impact on Suppliers
We are moving from a world where the manufacturers had all the power to one where the retailer has all the power. I trust a retailer who has a fairly locked Gross Margin over manufacturers like P&G who perfected the “razor blade model” for extracting profits. These manufacturers have been doing all kinds of shady practices over the years, like cutting portion sizes and pushing high caloric foods/drinks for years. I have huge distrust for manufacturers. But I can trust a firm with Rollbacks who do not mess with coupons and promotions very much. This concentration of power has increase the standard of living for many people and I am very glad that Walmart has been pushing their suppliers hard. One of the big things about this is their ability to force change. Walmart has asked for things like reduced packaging weight/cost on to improve margins and reduce environmental impact. Without a push from Walmart, these firms may never have taken these action independently.
However, I am somewhat concerned that the private label business they have might go too far and stifle future innovation. It is difficult at this point to see where the logical conclusion of the war between premium brands and private labels will go. Some pressure on manufacturers may be a good thing. Too much and brands could exit the category. We cannot rely on the private labels to invest in new products ideas, at least not yet.
Constance Hays tried to write a balanced article. On the topic of Walmart data collection, her research was sound and informative. On her depiction of Walmart’s market power, her reasoning was sound. On privacy and the potential for abuse, she is largely borrowing hearsay and vague insinuations that have been leveled at Walmart for years. In her article, at no point does she provide any evidence that 1) Walmart has abused its data, 2) Walmart could abuse its data, or that 3) Walmart has any motive for abusing its data. In laying out a string of unsubstantiated doubts to fan fears, we see her channeling Glenn Beck in a way that, “…some privacy advocates worry about the potential for abuse.” Take that Constance!
Observations about Walmart from the Article:
1. Just because Walmart collects more data than the others, does not mean that it is collecting a disproportionate amount relative to the others. Divide the data by the number of customers they serve and how often they visit the store and we may find that it is Target or other firms that collect more data about you. Target has the loyalty program that collects user identifiable transaction data. Since Walmart does not do this program, they simply cannot put a name with the shopping data. Constance speculates that Walmart could figure out a way to add this information to its records. But she offers no rationale for *why* they would do this.
2. Just because Walmart collects the data, does not mean they can extract uniquely valuable insights from it. Figuring out that certain SKUs sell well before and after a hurricane is very simplistic insights into their customers behaviors. And it requires no invasion of privacy to accomplish – in fact, this could have been done before computers existed.
3. Just because you can prove that certain power could be abused does not prove that that power will be abused. While it may be possible for Walmart to do something bad with its data, it does not mean that they have an incentive to abuse it. What advantage does Walmart get by knowing the value of my house? This information is publicly available. Why is it any more dangerous for Walmart to know personal information than it is for my neighbors to google me? It is not.
4. Walmart has a consistent Rollback policy. There is no evidence that when Walmart is seeking to increase their margins. If data mining is not used to increase gross margins, then it would appear that it is impossible for the firm to use their power for dastardly purposes. Thanks.
Walmart’s Success at using its data to create an Experience:
It appears that Walmart is not very successful at using its data. If the best case study Walmart has on using its data is the Hurricane example, then this does not bode well. Analyzing SKU sales data for stores near Hurricanes could have been done in the 1960s. Speed might have been an issue, but stores in 1960 should be able to say what products sold well on what week. This indicates that Walmart may have limited talent or manpower working to harvest the data they collect. It also may imply that the architecture of the database could inhibit investigation. However, Walmart does not talk about its data harvesting activities, so we may not have an accurate picture of internal success stories. Given this reporter’s negative Walmart attitude, I am not surprised she didn’t gain access to higher level examples.
Trusting Walmart with Personally Identifiable Data
This question was a trap. Several implied assumptions were within the question itself. First, it is unclear whether Walmart has personally identifiable data. Yes, they have credit card transactions, social security numbers, and driver’s licenses. But many other firms have that information. The question is whether they have a disproportionate number of these. Corner check cashing services require the same information, charge higher prices, and are run by people who exploit the poor. Comparatively, Walmart has more controls in place, software to prevent data theft and so forth. Large companies do not perform “identify theft” – individuals do. By storing people’s social security numbers, they reduce the chance that people watching could steal the number. Clerks at stores and many retailers have been caught doing this. Reducing the people-centric risk is of higher concern.
The issue of trust is another false dilemma. I do not need to trust Walmart. So whether I trust them or not is not really an important issue. Walmart simply does not have much incentive to use my information to cheat me. They have rollbacks and their gross margins have been steady around 20% for a decade. Even Constance can not think of something dastardly for Walmart to do with this data even if they could put my name next to my shopping order.
Impact on Suppliers
We are moving from a world where the manufacturers had all the power to one where the retailer has all the power. I trust a retailer who has a fairly locked Gross Margin over manufacturers like P&G who perfected the “razor blade model” for extracting profits. These manufacturers have been doing all kinds of shady practices over the years, like cutting portion sizes and pushing high caloric foods/drinks for years. I have huge distrust for manufacturers. But I can trust a firm with Rollbacks who do not mess with coupons and promotions very much. This concentration of power has increase the standard of living for many people and I am very glad that Walmart has been pushing their suppliers hard. One of the big things about this is their ability to force change. Walmart has asked for things like reduced packaging weight/cost on to improve margins and reduce environmental impact. Without a push from Walmart, these firms may never have taken these action independently.
However, I am somewhat concerned that the private label business they have might go too far and stifle future innovation. It is difficult at this point to see where the logical conclusion of the war between premium brands and private labels will go. Some pressure on manufacturers may be a good thing. Too much and brands could exit the category. We cannot rely on the private labels to invest in new products ideas, at least not yet.
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