Thursday, March 26, 2009

Godiva Uses Social Media - Following the Luxury Chocolate Lover

When the economy swooned last fall, executives at Godiva Chocolatier faced a vital concern: How would financial jitters and shrinking stock portfolios affect the market for their luxury chocolates?

For answers, the New York company turned to 400 bona fide chocoholics in its online social network. It's a Web site with an online forum. But attendance is by invitation only, and the discussion revolves around things chocolate.

Through autumn and winter, as Lehman Brothers collapsed and the government scrambled to save the automakers, Godiva was busy pumping the participants in its social network for intelligence. Specifically, it wanted to know what types of products and promotions would help protect a place for premium bonbons in consumer budgets.

The feedback: Advertise bargains, especially baskets of chocolate that cost less than $25. "People are budgeting, and they want to budget chocolate," says Rich Keller, the company's director for marketing and innovation.

Little Luxuries Mean a Lot

The Godiva community also called for luxury in small doses—goodies they could pick up for not much more than the price of a cappuccino. One winner during the all-important Valentine's Day season was a heart-shaped chocolate lollipop that sold for $5.50. "It was a key winner for us," says Keller. Godiva sales have slowed, he adds, but they're still growing.

Companies are increasingly looking to social networks for a 24/7 read on shifting consumer sentiments. The advantage over traditional market research? Unlike focus groups, which disband after an hour or two, Web communities stay engaged for months, or even years on end, letting companies track attitudes over time. Godiva's network is administered by Communispace, a Boston outfit that operates online communities for more than 90 companies, including Charles Schwab (SCHW) and Wal-Mart (WMT).

Another plus: Participants, often devotees of a company, product, or service, work nearly for free. Godiva rewards its active community members with $10 gift certificates every month—not even enough for a couple of chocolate lollipops. "People are passionate," says Communispace Chief Executive Diane Hessan. In some financial communities, users even submit spreadsheets bearing their personal budgets. "It's unbelievable what they'll do," she says.

Algorithms Track Consumer Tastes

The online world offers plenty of other options to gauge customer response to promotions and brands. An entire industry of algorithm-powered companies, including Umbria Communication, a division of J.D. Power, which like BusinessWeek is a division of McGraw-Hill Companies (MHP), and Nielsen Online, have computers that read millions of blog posts automatically to cull shifting consumer sentiments.

But Godiva counts largely on its networked chocolate lovers—all women. Many of them log onto the site daily. Women tend to be more passionate than men about chocolate, and they express themselves more freely in the communities, Godiva's Keller says. (The company uses surveys to reach out to men, who tend to buy chocolate mainly for the women in their lives on Valentine's Day.)

The female forum members chat frequently among themselves, swapping insights about chocolate, the economy, and whatever themes moderators raise. The 400-member group has been going for nearly a year and will soon be shutting down. In its place, Godiva plans to launch two new 300-person communities, one for Godiva customers, the other for fans of other premium chocolates.

By Invitation Only

To populate the new communities, Godiva works with Communispace, which sends out 30-question surveys to people on its customer lists. After studying the responses, they issue invitations to a select group.

The payoff for the chosen? In addition to receiving their monthly coupons, participants get to chat with others about a food they love—and to help steer the market for premium chocolate. When they speak, Godiva listens.

Baker is a senior writer for BusinessWeek in New York.


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Alice Thomas said...
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