Part 2 of a 2-part interview with Overstock.com CEO Patrick Byrne
SMT: what are you planning for your mobile channel? What will your customers be doing with their smart phones to connect with Overstock?
Byrne: We have a nice mobile site along with mobile apps for the Android and iPhone, and we give people an incentive to use them. If you use an iPhone we give you, every day, a lottery ticket. Some days there's free shipping, some days there are 10 percent discount coupons, and some days there's nothing. People have an incentive every day to open up the Overstock ad in their iPhone or Android. We think there's going to be a lot of activity shifting to mobile. They say that in another 3 or 4 years there's going to be a lot more mobile traffic than Internet traffic.
SMT: How many employees work on your Facebook and Twitter presence?
Byrne: We have 4 full time employees working there. But the whole 2.0 Team is much bigger than that, but they handle our Community Tab and our internal 2.0 efforts.
SMT: Do all of these people talk to one another about how things are going at the customer interface?
Byrne: Yes, they all sit together and the line is starting to blur between the different communities. It's their job to be out there at conferences, to be current with where the field is heading, to try to get out in front of any movements. We have a trained customer service team that just deals with Twitter and Facebook, with anyone mentioning any problems they're having with Overstock. That's a different team - the customer service team.
SMT: How do you train your customer service reps? Are they hired in part based on their personalities?
Byrne: Customer service reps are pretty well paid here, show a lot of employee loyalty, and every year we rank 1, 2, 3 or 4 in terms of the best customer service in America, online or off. So we recruit really sharp people. They have a nice promotion path. They become team leaders and managers and so forth. There's a lot of ongoing quality control and retraining. The people on the social media team have to have a social media bent; they have to be comfortable with the technology. Some people just gravitate toward that.
SMT: Does your idea of corporate responsibility drive your social media strategy? Do you believe that this what corporations should do in relating with their customers?
Byrne: I do. If you're going to use social media in this way you have to either be honest or you have be following a strategy of deception, but you can't straddle the line. For us, our strategy is just honesty. Transparency is in our DNA, so we're very comfortable with transparency and honest engagement with the world. You hear about some companies that view 2.0 as the enemy as they're trying to figure out how to manipulate it - we're just the opposite.
We just want to engage transparently and openly.
I'll give you an example of that. There's an application called Spigit. It's a fairly new type of technology called "innovation management" or "idea management." We've been using it in the company very successfully for about a year. It's a social media tool where anyone in the company can add ideas and they can develop each others' ideas and respond to each others' ideas - vote them up and down - so you end up with the best ideas emerging out of this marketplace. And it's been a real source of innovation for us.
Spigit just announced that we're going to open one of these Spigit innovation communities in Facebook, facing the world. So that way, consumers can post ideas and argue against each other and vote ideas up and down. So this is a way for the world to tell us what direction they want us to go as a company. This was just announced Friday, and should be going live within weeks if not days on Facebook. So that's something Spigit developed with us. Ten years ago that would have seemed radical, but we would just love the consumers to be in the business of directing our strategy. Ultimately, consumers are always in that business because of the feedback they give in terms of what they buy and don't buy, and so forth. It's all information, but this is making it all transparent and explicit.
We'll even run contests. If someone has an idea that saves us a million dollars, we ought to be thanking them in some way.
SMT: That's a fascinating initiative. We'll be looking for that when it launches.
Byrne: Yes, it's a really revolutionary thing. I see this as like having 100,000 members on our board of directors to tell us what our strategy should be as a company.
You always want to listen to the community, but sometimes what you hear gets distorted by your own thinking. These tools make it easier to hear that community's message unfiltered and undistorted.
SMT: How does this impact your other marketing expenses? Does social media replace them?
Byrne: Social media allows us to deal with customers with a totally different economic model. It's not paying some big corporation to broadcast our message to 30 million people trying to find the 3,000 people who want to come and shop today. It's just engaging with the world. It's a much more Zen-like approach to it. We're not trying to force anything and in a sense, conventional marketing is all about pushing - pushing a message - and even search marketing is a way of trying to find people who are searching for you. This is different. This is just us wanting to engage with the world. We will be who we are, and just like a force of gravity the right type of people with be attracted to us.
Patrick Michael Byrne is chairman and CEO of Overstock.com, Inc., a Utah-based Internet retailer that has been publicly traded since 2002. Under Patrick's leadership the company's annual revenue has grown from $1.8 million in 1999 to over a billion in 2010.
Patrick has a black belt in tae kwon do and once pursued a career in boxing. After surviving cancer, he cycled across the country four times. His last ride, in the summer of 2000, helped raise awareness and record-breaking funds for cancer research at the Dana Farber Cancer Institute. On April 1, SDC interviewed Patrick over the phone.