What Social Networks Can Learn from Food Courts
While the growth in social networking has been explosive, many networks are experiencing difficulties engaging and retaining users. Even Facebook, the clear-cut winner in terms of users and engagement, only retains 60% of registered users, and just 50% of “active” users regularly visit the site. For Twitter, MySpace, LinkedIn and others the numbers are more alarming. According to Nielsen, Twitter has a 40% retention rate, and only 20% of those users are active. It should come as no surprise, but increasing user engagement is one of the most important factors of success for any destination website. If Twitter could reengage just 25% of their inactive users, they could double their active user base.
So how do networks re-engage inactive users? Recognizing that email is still the killer app, most social networks focus their re-engagement strategies on sending email notifications in an effort to pull users back into their sites. However, as users receive a constant flow of email alerts across a growing number of services, they have become desensitized and frustrated with the interruptions and additional email clutter. As a consequence, many users simply ignore these emails, filter them or opt-out of receiving them. Open rates for email notifications that used to be near 40% in 2004 have fallen between 10% and 20% today. It is clear that while users still depend on email, they have become more discriminating with what they open. The strategy of sending one-off email notifications is now much less effective than it once was.
What to do next? Take a lesson from food courts.
The Solution: “Coopetition”
A food court, a collection of restaurants in a single location (usually a shopping mall), may seem counter-intuitive from a business perspective. Why would retailers want to congregate in the same place when they are competing against each other for a larger piece of the market share pie? Wouldn’t it be better to open shop in an area with minimal competition?
In reality, food courts offer a tremendous value to participating retailers due to their ability to attract a larger number of potential customers with high intent to purchase a meal. In short, these smart business owners have figured out how to work together to expand the total pie of potential customers who know where to go when looking for a bite to eat. This strategy of “coopetition” enables the merchants to increase their total available market compared to the limited potential for those who operate separately in far-flung reaches of the mall. Examples of “coopetition” are everywhere, such as the gold & jewelry district in New York, clothing stores in shopping centers and car dealerships lined up along the same freeway. But what does this have to do with social networks?
Social networks continue to send one-off email alerts despite the fact that more and more users are ignoring them. Why do they ignore them? For starters, they get too many. More importantly, these alerts usually interrupt users who have little intent to log into their network at that time. However, by taking a page from retailers in a food court, social networks could improve the effectiveness of their email campaigns by working together.
This notion of “coopetition” is also one of the driving forces behind NutshellMail.com, which has proven to be a more effective way for social networks to engage users through email. By consolidating activity from multiple providers into a single email digest and empowering its users to determine exact times when their digests are delivered, NutshellMail matches users’ expectations and intent. Because each digest is full of personal and relevant information and is delivered exactly when the user expects it, NutshellMail users are far more likely to read their notifications and click back into their social networks.
By harnessing the power of “coopetition”, social networks can more effectively increase their retention and engagement rates. It may be difficult for some Web-content providers to acknowledge that teaming up with their largest competitors can be mutually beneficial, but that lesson is being learned; look no further than both MySpace and Twitter, who are now pushing their users’ updates directly into Facebook. Who knew that food courts could provide best practices for the social networking world?
