June 21, 2011

David & Goliath … Jack and the beanstalk giant... Bad News Bears and Hoosiers. It seems like the whole world loves the underdog. We cheer for Rocky in movies, the Cubs in baseball and we love when the little guy comes off the ropes to level the bigger, meaner opponent.

But real life is not a work of fiction. In real life, as every small business professional knows, the big guys often win. Local shoppers often drive right past the local stores they say they favor en route to the mall or Walmart.

These days are even more challenging because just about everyone shops for price and everyone wants a deal.

The challenge is to find value-added services and activities that the big guys can’t, or won’t, offer. Social media doesn’t even the playing field against large competitors, but it does give you the chance to poke the elephant in the eye, and gain back customers that way.

In 2009, I wrote Twitterville, a book mostly about how business could use the social network to improve business. In it, I profiled a few small businesses that used social media to compete against branded competitors.

Among my favorite stories was the one about the ebullient and resourceful JR Cohen and Coffee Groundz, an independent coffee house and restaurant in midtown Houston.

Like other merchants in other places, Cohen started using Twitter to announce a deal here or a special there and that brought in one or two customers now and then.

But one day, something happened. Sean Stoner, a Coffee Groundz regular was late to work and hungry. He tweeted a direct message to Cohen asking if he could pick up a breakfast burrito as he drove by. A minute later, the coffee shop manager tweeted back: “what do you want on it?”

This was the first tweeted burrito in history. But it was also an example of a personalization that the franchise down the street simply could not compete with.

Starbuck’s, as you probably know, is very successful on Twitter. It has over 1.5 million followers and uses special offers to drive significant traffic into its many stores.

“The Groundz” as locals call it,  has just over 11,000 followers, a meager number compared to Starbucks. But then you have to stop and realize that nearly all 11,000 followers are probably located somewhere close to midtown Houston.

So, by serving up that tweeted burrito, JR Cohen poked the Starbucks elephant squarely in the eye.

But that’s where the success story started. It did not end there. Once Sean Stoner ate his watershed burrito, he tweeted about the experience. Other tweeters picked it up. It was written about in several prominent blogs. Traditional media picked up the story. It even got the The Groundz into a book on Twitter.

Cohen knew he couldn’t compete head-to-head in advertising or branding campaigns. He fought a battle, The Groundz could win: electric sockets. During a reconnaissance visit to Starbucks he noticed several people crawling around on the floor searching for places to plug in. He invested in outlets for every table in his establishment, then used Twitter to talk about ample outlets.

Tweeters in the area started hanging out at The Groundz. Home office consultants started meeting clients there. Then one day, Cohen was asked if a local group could hold a “tweet up” at The Groundz. Tweetups, now held all over the world, are social gatherings for people who primarily have met online and want to meet face-to-face.

Nearly 200 people showed up, a great many of who had never been at The Groundz before. It became a regular meeting place for nighttime events favored by those digitally focused.

What started as a tweet burrito became a source of customer acquisition, retention and loyalty.

I have no idea if the Starbucks manager down the street noticed. He could not tweet back in competition, because Starbucks, being big and branded, controls what is tweeted and those tweets go out of headquarters in Seattle rather than coffee shops in Houston. Starbucks is too big to respond to a local move.

I think there is a lot in the Coffee Groundz story that can help other merchants and small business professionals.

This case demonstrates that social media can be an affordable, effective competitive weapon. If you can’t actually beat a giant competitor, then you can at least poke him in the eye.

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Shel Israel, Article, social media, competition, SI Associates, Starbucks, Coffee Groundz