Last year, without a whole lot of fanfare, Google (Nasdaq: GOOG)
launched a credit card comparison tool built into its product search engine. The credit comparison site allows you to configure your card product search based on a number of parameters, including APR (annual percentage rate), intro balance transfer, intro purchases, card type, rewards, fees, network, credit history, and so on.
Not everyone is yet searching for products like this, but there is a strong trend toward this sort of transparent comparison.
Let’s look at the trend in online retail sales for the holiday season in 2010 in the United States as an example. comScore Inc. data analysis showed a record increase in online sales activity in 2010 (November through the end of December) of 12 percent, the highest recorded increase since tracking of these numbers began in 2001. The so-called Cyber Monday (November 29) recorded online spending of $1.028 billion in a single 24-hour period.
One of the contributing factors to this rapid increase in online sales is the proliferation of mobile smartphones. Increasingly, shoppers are using their phones in-store to compare the prices of products they are shopping for in real-time. There are even Websites dedicated to using products like Red Laser or Google Goggles, which enable you to compare prices in-store with those available through online retailers. Google Goggles goes one step further, even allowing you to use the app to solve Sudoku puzzles.
Source: Google Inc.
All of this isn’t necessarily helpful to the financial services and retail industries. If they weren’t in enough trouble as it is with the global recession and effects of the global financial crisis, now we have the ultimate in commoditization of products. Nowhere are you safe from a side-by-side brutal comparison of products, feature for feature, price for price. If that’s not bad enough, the next logical step of search is going to make it even tougher in the transparent world of Web 2.0.
That next step to this open comparison model is the ranking of products or the transparent scoring of your brand or product according to how your friends rank it. Already we are seeing sites like Blippy and Scuup, apps within Facebook, and apps like Delver (produced by Sears) on the iTunes store.
Think of this as real-time sentiment analysis and ranking based on active positive comments or feedback (e.g., a “Like” button effect) on your product or service. Imagine searching to compare credit cards from a bank and seeing how well their rewards programs are ranked by your network of friends, or overall how quickly you can get an approval from the time you apply. Increasingly, your performance as a brand, or the performance of your products, will be the subject of direct, transparent feedback from customers.
Right now, most retailers or financial services product providers, for a start, spend millions of dollars each year promoting their products, telling you how fantastic the products are, how you can trust them, and why you should buy or apply. In the future, this sort of advertising spend could be immediately undermined in the face of a direct comparison with your competitors according to your “social scoring.” If my friends tell me your product stinks, then I’m sorry, but no amount of you telling me otherwise is going to work.
Just like search engine optimization, brands are going to have to start pursuing an organic social metric strategy. If you aren’t actively engaging your customers, if you aren’t getting positive feedback or turning around negative feedback, this will soon directly impact the viability of your product in the open market. So how do you go about doing this?
The first step is to have a strong presence for each of your brands and products in the social media landscape so customers can actually lodge their happiness with the product’s performance. Secondly, you need to be listening to feedback on the product and rapidly correcting issues that develop. Lastly, you should be endeavoring to take customer sentiment and feed that back into the product design process so that you end up with products that naturally achieve strong social metrics or scoring.
If you aren’t engaged with customers through social media, you are very soon going to find yourself exposed and at a distinct disadvantage.
One of the assumptions that traditional economics makes in many of its theories/laws is perfect information. Perfect information was always far from seeing the light of day, so branding constantly proved economic theory wrong. But with such services, we're seeing perfect information come slowly to the fore, changing the rules of branding (as the article proves). Of course, perfect information will never be truly perfect, but I think comparisons by Google is as perfect as information can get.
The changes are coming thick & fast for the TBTF banks.And they have no option but to adapt or Die.
And if they do Die in the process they won't get any sympathy either from me or from dozens of Taxpayers who believe they should'nt exist today anyways(& exist only for the process of enriching their own pockets)...
What do you think?In your On the Ground experience do you see this kind of sentiment being expressed with excessive regularity today????Or am I just an oddball with my comments???
Absolutely! Competition keeps the playing field level and the push for transparency will benefit the consumer as well. I think this will improve the way many people handle their personal finances.
Thanx for the techcrunch link, I get all nerdy when I look at charts and graphs... I think that it is amazing Facebook was evaluated at 35 B in Nov. and now in January its cranked all the way up to 50 Billion. (now that says bubble to me)
Any idea what the market share index looks like for online advertising. I'm just curious if Facebook has surpassed or is even close to Google in terms of advertising revenue.
I'm still skeptical on the next bubble thing and think that companies especially small businesses are really starting to take advantage of the extremely targetable marketing that is occuring.
In terms of why $1.5Bn. Facebook's already doing $2Bn in revenue, but think of what they can do with 700 Million users? Just $5 a month in revenue from each user is $42Bn in revenue. So theoretically, they have a customer base that supports a much larger revenue stream, and they should be very profitable off that revenue stream.
So a $50Bn valuation seems pretty realistic. Now let's just see if they can sell us stuff...
I've never seen tough competition hurt the consumer. Retailers and service industry participants should have their margins squeezed to help promote high capital utilization and productivity numbers. These comparisons will be pushed onto the manufacturing sector and thus keeping wage inflation at bay so the consumer isn't further burdened by the rapid escalation of consumer goods.
The reaction of TBTF and other large institutions to social media shows that they're happier with the status quo and don't know how to cope with rapid change. But things just aren't getting back to normal, so they are conflicted because they have to question their reality.
The problem with this is, that in the meantime while they are grappling with shifting to the new normal, there are a bunch of new players who are taking customers by storm.
In the end, we're looking at quite a shake up in the banking arena over the next decade.
I don't mean to sound harsh but is'nt what you are saying here kinda obvious???
" The first step is to have a strong presence for each of your brands and products in the social media landscape so customers can actually lodge their happiness with the product’s performance. Secondly, you need to be listening to feedback on the product and rapidly correcting issues that develop. Lastly, you should be endeavoring to take customer sentiment and feed that back into the product design process so that you end up with products that naturally achieve strong social metrics or scoring.
If you aren’t engaged with customers through social media, you are very soon going to find yourself exposed and at a distinct disadvantage. "
If the very fact that Financial industries refuses to respond to customer feedback and re-tailor their services(& charges) they deserve to get hammered for that (and Customers are going to figure it out one way or another).
Ultimately for most of these companies-Bottomline is the most important criteria.And if they lose customers steadily,how on earth are bottomlines supposed to be improve?
It also does'nt help the case of most of the TBTF institutions that they are amongst the most unpopular companies in America today.This kind of Side-by side comparison will make their lives more uncomfortable(as well as encouraging SMBs in this space).All power to Free markets and heads on competition!!!
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