Brett King, author of best-selling Bank 2.0 shares his insights on the impacts of the comparison apps on business…
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.
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.
— Brett King is the author of BANK 2.0 and founder of the International Academy of Financial Management.