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October 21, 2008

Why Wal-Mart Will Succeed In Social Applications

by Josh Bernoff

Walmart_logo I just got back from a trip to Bentonville, Arkansas, home of America’s largest and perhaps most controversial retailer. While there, I met with the company’s top management, IT staff, and a couple of social media folks.  

You may believe that this company will never “get it” – and that in any cases, it has so many enemies that entering the social world would be suicidal. Let’s see if I can convince you that Wal-Mart will become social media’s biggest success story.

Wal-Mart’s social saga starts with a couple of missteps, including a blog that was revealed to be funded by Wal-Mart’s PR agency, Edelman, and a Facebook application for college students that attracted lots of negative comments from Wal-Mart haters. But when 138 million Americans go into your stores every week, you shouldn’t ignore social media, and you can’t hide from it. Wal-Mart didn’t give up after these setbacks, they got up off the mat and tried harder.

Exhibit A: ratings and reviews. Walmart.com is one of the biggest Bazaarvoice installations in the world, powering a site that sells over a billion dollars worth of stuff every year. Wal-Mart is not afraid of negative reviews from customers – for example, the top rated bicycle on the site had 139 reviews including “7th gear skips fairly frequently. . . but at $150, you can’t expect not to find problems.” Wal-Mart is famous for driving hard bargains with its suppliers; we met their PR folks in one of the very windowless, grey rooms where those prices get beaten down. Reviews on walmart.com have most likely extended that power, as the company now has concrete evidence about which products consumers consider to have acceptable quality, and which not.

Checkoutblog Exhibit B: the checkout blog. Wal-Mart’s buyer blog is still growing in popularity, but has enabled the company to join the conversation about products. It’s a genuine voice for Wal-Mart’s product folks, enabling them to explain decisions like choosing Blu-Ray over HD-DVD, (a choice that basically put the final nail in the coffin of the HD-DVD format). A post on Wal-Mart buying only milk from cows that don’t receive growth hormone generated a lively and in some cases uncomfortable discussion with 256 comments. Wal-Mart has learned to join the conversation, even in a world full of critics, and is not smothering those that disagree.

Elevenmoms Exhibit C: elevenmoms.com. Emboldened by its experience, Wal-Mart tapped a colony of mommy bloggers who write about topics like how to feed your family frugally and how to get ready for Halloween. Don’t sell moms short – these are some pretty sophisticated blogs and Wal-Mart hasn’t changed them at all, they just link to them, and are now bringing the bloggers to Wal-Mart HQ for updates and suggesting products for them to review. Learning from past experience, Wal-Mart and the moms have both made it clear that these bloggers aren’t paid and are under no obligation to slant things Wal-Mart’s way.

Exhibit D: management attitudes. This may be the most powerful of all. Some members of Wal-Mart’s senior HR staff had read Groundswell and asked me to present on the social media topic to 75 senior VP and C-level executives from around the world, including CEO H. Lee Scott. We followed this up with a workshop similar to the ones I run around the country, in which people use the POST method to generate social application ideas. Could a group of C-level executives break into groups and successfully devise social applications? I started to get worried when I saw they’d put all the lawyers together as one of the groups.

What happened next amazed me. When I kicked off the workshop, I mentioned that they might be feeling a little hesitant about these new ideas, since they involve a loss of control. Lee Scott actually interrupted me to say “You’re wrong, we’re not hesitant, we’re ready to embrace this stuff.” And they were. What followed was some of the most rapid ideation I’ve ever seen. I can’t tell you in detail the strategies they came up with – they deserve the chance to develop and announce them when they’re ready – but every single one was a viable, customer-centered idea around concepts like customers saving money or sustainability (that is, green) ideas for Wal-Mart. Even the lawyers came up with a decent application. 

(For cynics who might want to believe this was done just to fool me, trust me, the world’s largest public company has better things to do than bring its top management together from around the world to fake out a business book author.)

Having done lots of these workshops, I’m aware there’s no way to know when these plans will see the light of day, but what I saw was a company open and receptive to embracing and empowering its customers and employees online, regardless of what they end up saying. In short, advanced groundswell thinking. 

Think about the situation Wal-Mart is in. It has plenty of detractors, hundreds of people who feel the company’s labor practices, effects on small-town America, purchases of products from China, and general ways of doing business are a threat. These Wal-Mart haters have gathered in sites like Walmartwatch.com, tend to be socially savvy, and are ready to pounce on any Wal-Mart news or rumors and spread them using social technologies.

But on the other side of the ledger are hundreds of millions of customers. When these customers think about Wal-Mart, their most likely thought is “they sell the stuff I need at really low prices.” If you don’t believe me, see what they’re saying right now on Twitter – it’s mostly about saving money. Wal-Mart wants to turn these millions of voices to their advantage, to use them as a counterweight to their detractors. And with more and more Americans participating in social technologies, they can do it. 

Have I convinced you?

The Wal-Mart haters won’t go away (I expect plenty of them to comment on this post, for example). But this company has legions of people who think of it as a place to get good stuff cheap, and a commitment to pro-social activities like saving energy and responsible sourcing. It’s going to be a battle out there in the social sphere, and Wal-Mart will continue to take its lumps. But with so many customers on its side, I think Wal-Mart will win that battle. Just watch.

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Comments

howardgr

I'm interested for the same reason I believe "TheRealBritney" (aka Ms. Spears) is a sign of a big change on twitter - when something happens to bring more mainstream, non-techie Americans into the social world, that's important. (And no, I won't say JoeSixpack or Joe the plumber).

The real test, as in all these experiments, is in which direction the megaphone is pointing. If it is pointing at consumers, this be another failure.

Will Walmart's embrace of tools help them point the consumer's voices towards their suppliers to get better stuff that more people want, cheaper?

Towards the boardroom to change policies people perceive as being anti-worker or anti community sustainability (especially in a pro-union Democrat controlled House and Senate as the tide looks to be turning?)

Can they *really* handle the pressure of all the detractors in ways that companies like GM have begun to learn to do?

Ideas are great, and I hope they take them forward. I know 2 of the 11 moms and they're certainly giving feedback. Will the other 60 million moms get their voices heard too?

Let's see the product before we mark it up or down, give it a Walmart Smiley face or a fail whale.

twitter.com/nquit

Josh, I've been showing clients that WAL-MART has been giving classified ads away for 4 months. VC's in the Silicon Valley were amazed.

Frymaster

Well, I'm still skeptical, remembering Laura and Jim as I do. And I saw some of the Tweets from the ElevenMoms, and I had to wonder if WM is really ready to face the music.

What I notice completely missing from above is any kind of corporate social responsibility. I expect that to be marginal, at best.

For example, the mommies said WM would buy and protect land equal to their stores. But the store itself is only a fraction of the enviro impact of a store. Every store has a parking lot twice as big. And the parking lots are far more damaging because of run-off.

If you think I'm just a tree-hugger up on my recycled soap box, consider that I picked up this piece of information from the noted socialist at Swiss:RE the big reinsurer.

Stores could build cisterns to hold run-off from the stores and reuse it to clean the stores. Those huge flat roofs could hold solar panels.

There's a lot they could do. Let's see what the actually do.

Dave Knox

As someone that spent the past two years down in Northwest Arkansas myself, I have to agree completely with your viewpoint. Walmart recognizes the mistakes that they made with RV or The Hub. And they aren't going to repeat them again.

They also recognize the tremendous opportunity (and the luck) of launching a campaign around Save Money, Live Better right as our country was hitting the economic downturn. There potential for success is limitless and they have the right people/support to do it

Katja Presnal

I have to say that Walmart keeps impressing me with the genuine will to make things right, and truly help people to live better.

Hopefully as one of the Eleven Moms I am able to help people to see Walmart in a new light as they emerge in the social media.

My experience with the company has been all positive and they are ready to embrace social media and will lead a great example to other large corporations. I think Walmart's social media involvement will be one of the biggest success case studies in the social media history.

Lucretia Pruitt

Well much as I hate being lumped into the description of "mommy blogger" (as I may be a mom, but that's not what I write about or do as a profession) I have to say that you hit the nail on the head here.

We were out there the same time you were, and met with many of these same executives the next day.

As I talked about social media and the transparency required and the lack of control, I was told they had all gone through Groundswell training the day before. Which made it much easier to see why they weren't skeptical at all but were rather embracing what we were saying.

I have been met with a ton of skepticism since I returned whenever I've said "you don't understand - Walmart gets it. They are changing. They're actually embracing that change and will be leading the way when it comes to both retail and large corporations moving into this space." I blame that solely on the fact that these people didn't get to see what I saw.

I've dealt with many C-level execs in my lifetime (as well as many attorneys) and I've never seen such an openness to an idea that is clearly going to rock the foundations of 'how business has always been done.'

In other words - no disagreement from me. I expect to be holding back a few I-told-you-so's in a year or two.

Great work Josh! And great work Walmart! From Lee Scott on down, every person I had the opportunity to meet out in Bentonville was ready to embrace the Groundswell philosophy with open arms and open minds. Kudos to all of you.

LMP

Graham Brown (Mobile Youth)

It's all too easy to write off the big guys when it comes to innovation in social technologies. But, let's not forget that it was Procter & Gamble, the biggest of them all, that gave us the Soap Opera.

Graham Brown (mobileYouth.org)

Gina

I've been following all the 11moms and other stuff with interest but I can't seem to change my mind on the way I feel about Wal-Mart. I've lived 45 minutes from their headquarters my entire life. I know people who are involved with them on all levels and can't think of one positive thing to say. I'm not a "hater" but not a liker either!

On a consumer level I never leave the store without being irritated--and I'm pretty easy to please but it's never a good experience. Unfortunately I'm there weekly because there's no other option unless I drive an hour. It's going to take more than a cute new logo & their other attempts on being relevant to change my feelings.

Becky Carroll

I am looking forward to hearing about some of these great customer-centric ideas you witnessed, Josh. Wal-Mart has been such an operationally-focused company! I hope social media can truly bring them closer to the consumer. It would make a great case study for my Marketing via New Media class at UCSD Extension! :)

Thanks for sharing, Josh.

Carri Bugbee

I was motivated to check out the Mommy Bloggers because it did seem like a good idea. I especially wanted to check out their Twitter accounts since I’m a heavy Twitter user and manage multiple accounts.

However, after several click-throughs of bloated, ad-heavy, visually cluttered, ultra-SLOW-loading pages, I gave up before I ever got to one of the Mommy Blogger twitter accounts. Like most consumers, I can only give a brand so much of my time before I lose interest. They need to show the sizzle and stop WEIGHING everything down with a zillion flashing ads. Good grief, I’m ALREADY on their site. If they give me some INFORMATION, maybe I’ll buy something. Slowing down page-load times to yell at me with obnoxious ads just doesn’t demonstrate a savvy understanding of social media in my book.

Looks like WalMart has some good ideas, but is clearly struggling with smart execution and user-friendly design.

Lucretia Pruitt

That's great feedback Carri - and I'll pass it along. We're all heavy twitter users as well... so I'd be happy to help you find the accounts of anyone you'd be interested in following.

Dan Smith

Wal-Mart lead the way in inventory management. They could lead the way in social media use. At their volumes, tiny percentages are meaningful bucks.

Andy Keith

This was a fascinating post, given that it runs counter to conventional wisdom about Wal-Mart. What impressed me most that the executive leadership has adopted a social media mindset. They get that the real goal is not to show the world that they "get" social media, but to engage more directly with customers, and even critics. And along the way, they will hopefully create advocates who will speak with far more credibility than any corporate representative could.

Mary Catherine O'Connor

The inroads that Wal-Mart is making in social technologies are tied to an overall awakening of its IT strategy. See: http://www.transformationenablers.com/blog/archives/2008/09/walmart_wowed_t.html
Plus, the company is learning from early retailer missteps in social media: http://www.transformationenablers.com/blog/archives/2008/09/how_are_your_so.html;jsessionid=XCYT52FITK2K2QSNDLPCKHSCJUNN2JVN

Brian Hayashi

The awesome thing about Wal-Mart's decision to get into social networking is that this is a company that truly groks social networking, because it's something that has already been encoded in the corporate DNA.

There are people that wonder aloud if it's just window dressing for the new logo, while others express pessimism about the legions of detractors. All of you are about to see some amazing applications of user-generated content, because these apps mirror processes that Wal-Mart has had all along.

I predict in a few years, the most remarkable advocates will not be spokespeople or officially sanctioned bloggers, but instead long time employees and customers who have benefited from Wal-Marts social networking endeavors and have consequently rewarded the enterprise with their loyalty and increased spend.

Leandro Cervantes

Very interesting post, Josh. Thanks to share these informations with us. And, you (or someone here) know some example of Wal-Mart's social media usage, application or project in other countries, beyond the US?

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