tJP

“Twitter is dying” prompted me to look at what the issues for Twitter. They are typical of a fast growing company in technology. In particular Twitter is a disruptive technology and it can learn from the success of Facebook on what to do next.

According to comScore the Australian audience of Internet users was 12.3m in June 09. Looking at the use of Social media with these audiences, you find that Facebook is used by 49% of this audience, Twitter by 6.4% and Digg 3.5%.

This is important data when considering what type of people are currently using these tools. Using the diffusion of innovation curve below and looking at the penetration rates - then its clear that Facebook is now entering the Late Majority stage of its adoption curve - where the overwhelming pressure from peers is influencing usage.

Both Digg and Twitter are in the Early Adopter phase. This is usually characterised by opinion formers and ‘role models’ driving adoption. The next phase for both of these companies is to grow into the Early Majority phase - this is one where the pace slackens, users are more deliberate and users are willing to adopt only after peers have adopted. Unfortunately the opinion leaders in the early phases have no influence on this next phase.

This original work by Everett Rogers was then extended by Geoffrey Moore to look specifically at high technology products from start-up. Commonly known as “Crossing the Chasm” , Moore’s book looks at the different stages and how there is a chasm between the Early Adopters and the Early Majority. The key lessons for Twitter and for Digg is that they need to focus on changing their strategies to be successful.

Currently Twitter is targeting the rare breed of people who have the insight to match an emerging technology to a strategic opportunity - prepared to take on a high-visibility, high risk project.

Their successors in Early Majority detest risk, waste of money and time. The quality of the product is key and will tend to communicate more with others from within their own social group of industry - rather than look outside. The way to success in this segment and ultimately for the whole market is to focus on a niche, to dominate that niche and to build a reference base in the pragmatists within that niche. Then to grow the niche and then develop another niche and grow from there.

Read some interesting items on retail over the holiday period. Over time shopping has gone from a chore ( and still is for some of us!) to a pastime. Just a couple of snippets caught my eye:

•  Vast majority of shoppers leave with zero purchases
• 20% ‘conversion rate’ in some department stores
  • A major reason was “unable to decide”
  • Getting a customer to try something increased conversion
    • 85% conversion for stores with fitting rooms compared to 58% without
•  Almost 100% conversion in grocery

So Grocery performance is almost 5 times that of Department Stores? Not sure I could make up such a huge gap but in another article its noted that Primark has ’stimulated a market for fast, affordable fashion that has driven clothing more towards a frequent grocery-style purchase rather than an infrequent ‘destination’ one.

My final retail reference is from a book on eBay that notes that:

• A car sells on eBay every 2 minutes
• A laptop sells every 2 minutes
• A CD sells every 7 seconds
• A piece of women’s clothing sells every 7 seconds
• A woman’s handbag sells every 36 seconds

So what will happen next - will destination sites take over from destination stores? Will you have a parrallel market - feel, touch and try instore and buy online?

Sources

eBay - book The eBay Phenomen by Lewis, E

Retail Conversion - Economist.com “The way the brain buys” and data was from Deloitte

Primark quote - from the UK’s Marketing Society Magazine “Market Leader” Article by Deboo, M “In Pursuit of Value”

I attended a seminar with Saul Eslake the chief econmist at ANZ recently. In response to a question on why the Reserve Bank reduced interest rates last month by 100 basis points - his answer was twofold - firstly because it needed to show it was serious and secondly because it could.

 It was able to because of the relatively low debt it is carrying and secondly because interest rates were quite high( and so there was room to move downwards - unlike some countries like the US).

Lesson is that this is a market that will be a great target in these tough times