Social Media Next Logical Marketing Arena For Retailers

One of the big shifts in shopping last year was the emergence of social ecommerce, as brands and retailers found that social networks aren’t just a means to extend their visibility, but also a way to pull in more revenue. The infrastructure of the Internet now enables the sharing of information among networks at a speed and scale that has been impossible in the offline world.

The fast growing role of Facebook was a constant topic at the National Retail Federation’s Innovate 2011 conference in San Francisco in March. While most retailers’ social media presence remains limited to Facebook fan pages and a steady flow of Twitter posts, several conference presenters made clear that the retail industry is only scratching the surface of social media’s potential. Some are even going so far as to dub, “F-commerce,” with the “F” as in Facebook, the next big frontier. For example, established large retailers like Wet Seal and Steve Madden have developed sophisticated social media strategies that are bringing more than fans and followers, they’re delivering a bottom line impact. That means the area is ripe for independent retailers as well. Wet Seal CIO, Jon Kubo, says the key to getting results from social media is, “customer engagement,” which is marketing-speak for having actual online conversations with customers. Kubo places so much stock in social media that he’s had his staff jigger Wet Seal’s database software so that the company can accumulate and analyze all of the “likes” it gets from Facebook fans, as he wants to know exactly what fans liked. Kubo told the conference that Wet Seal’s social media efforts are generating 20 percent of the company’s ecommerce sales, and he ranks the return on investment among the best he’s ever gotten from a tech project.

Shoe retailer, Steve Madden, has also jumped on the bandwagon. The company recently ran a campaign to acquire 100,000 Facebook fans, and it did so by offering a fans only discount, but telling them that if anyone leaked the code, the whole promotion would be canceled. “Not one customer leaked the code,” says Andrew Koven, Steve Madden’s president of ecommerce and customer experience. Koven says the promotion not only had the desired effect on the company’s Facebook fan base, but it also netted $200,000 in sales in just 15 days. “It was an unqualified success,” he says.

All but one of 24 marketers surveyed in a new report from the World Federation of Advertisers and research firm, Millward Brown, are committed to increasing the time and money they spend on social media in the next 12 months. Marketers surveyed say their fan pages are about generating insight, advocacy, loyalty and engagement from fans. Says Nick Oram, managing director of independent media agency, Total Media, “There’s a scramble for territory between the brand, the PR agency, the creative agency, and the digital agency, as everyone’s trying to be the one to do it.” Yet it’s hard to determine the rewards. “Quite a few clients appear to want an immediate reaction,” Oram says, “but it doesn’t work like that. It takes a while to develop relationships and then to see a return. Brands know it’s a huge channel where people spend a lot of time, and logically their marketing money should be there, but it can be scary to approach it with a long-term view.”

The report includes a checklist of basic requirements for social media campaigns, and a list of behaviors that are likely to successfully differentiate a campaign. Every social networker expects, at the very least, contests and giveaways, new product information, regular posts, special offers and trustworthy brand news. Yet in order to make a real breakthrough, brands also need to concentrate their efforts on less easily defined activities such as innovation, interaction, community, variety and fun. Duncan Southgate, director of global innovations at Millward Brown, says the report shows that, “marketers’ gut instinct was right, that people are open to engaging with brands, and most of the scores were positive, although there was some variation. Not posting enough was the most common mistake, but the real challenge is in how to express a brand’s personality.”

For some brands it feels right to produce a stream of chatty posts, where another might be more brash and fun, so that its fans don’t mind a more “broadcast” approach. For tech brands that want to promote their innovations, delivering social media content in a groundbreaking way might be the priority. As expectations grow, brands have to keep pace, as those that post more frequently generally achieve higher ratings and foster more lively communities. However, many fan pages are failing to satisfy even this basic requirement. The report warns that retailers should, “beware the campaign mentality,” that is, pages that are active and then suddenly go quiet can have a detrimental effect on a company’s reputation. Oram says, “If you build up a community, and social media is all about community, of people who have taken the trouble to show an interest in you and then you ignore them, of course your brand perception is going to be damaged.” The advice from the WFA and Millward Brown is to commit considerable resources to social networking, install community managers, and focus on areas that fit most closely to a brand’s objectives, because it’s tough to deliver strongly on every front.

To that end, a number of social ecommerce solutions have hit the market and are evolving as quickly as the social networking phenomena. These types of social ecommerce can be divided into three distinct phases, also known as first, second and third generation of social ecommerce. Phase one can be defined as social distribution, and is made up of companies like Groupon, LivingSocial, or GiltGroup. They were the first to deploy retail models that leveraged the power of the social web, and these companies generate a viral distribution platform that helps businesses drive sales, liquidate inventory, and leverage the social web for marketing. Such companies will continue to have a critical role in social ecommerce, but some businesses will adopt specific tactics to work within their own customer networks.

Phase two can be better defined as companies that throw money at social features. Brands and retailers with a critical mass of customers are realizing they can employ the same tactics as the “social distributors” above, within their own customer networks. These companies are experimenting with various social features, or point solutions, including couponing, social shopping, private sales, social wish lists, reviews and ratings, Facebook shopping carts, badging, and more. These solutions add interesting social experiences and will be the subject of much focus in the coming year. Many retailers and brands that have conducted these experiments say they like the social aspects these features introduce, yet they realize they have limited integration with the most important data in ecommerce, the customer transaction.

The third phase of social ecommerce solutions addresses the needs of progressive retailers and brands that are looking to optimize their customer networks to drive revenue. For example, retailers looking to incent their network to share a link to their product or service will want to reward those followers, not just for the number of times shared, but also on the number of customers they have referred, the products they have rated and shared, the social coupons passed along, or the order volume and revenue driven. Yet if a retailer’s badging software or referral tracking system has a limited connection to couponing, ratings or reviews, the Facebook shopping cart or the company’s core ecommerce, how can this be managed? This is where a social ecommerce platform, built from the ground up to be social, with comprehensive ecommerce functionality and the ability to work with existing commerce systems, becomes critical.

The microblogging juggernaut known as Twitter is only four years old, yet it presently boasts more than 175 million registered accounts, 100 million of which are younger than one year old. During the past twelve months, users have tweeted some 25 billion times, with Twitter’s growth reflecting the rapid expansion of the entire social media universe, which is now heavily populated by businesses looking to capitalize on digital marketing. When it comes to promoting one’s small business on Twitter, the results have been hit and miss. While some report unparalleled promotional success, others claim Twitter has been a waste of time, so understandably this paradox casts doubt on the platform’s true promotional muscle for many. But for those who do it right, microblogging can be a marketing dream come true for small business owners who skillfully harness Twitter’s power. Here’s how to leverage the service the right way:

1) Personal Before Professional. If you’re new to Twitter, create a personal profile before you create one for your business, to learn the ropes. More importantly, develop relationships and trust within your online community and encourage your employees and business partners to do the same. After time, transitioning to a business profile will result in a bigger and more effective splash for the brand you’re introducing.

2) Temper Your Tweets. The biggest mistake made by Twitter newbies reflects the most widely given bad advice, and that is, don’t overwhelm your new friends and followers with a barrage of tweets that serve no other purpose than to repeatedly herald your presence. To start, release only a handful of meaningful, insightful, or funny tweets daily.

3) It’s Not All About You. Remember that Twitter is a community, and if you strictly post promotional content, you’ll not only fail to become an accepted member of the community, you’ll never build a trusting base to recognize your best stuff. Share links and interesting information that’s important or somehow pertinent to your audience.

4) Customer Relations Equals Public Relations. Successful small businesses use Twitter for customer relations with a process that begins by asking customers to follow you on Twitter. Place your Twitter handle on your website, business card, and other social media profiles, emblazon it on receipts, and even mention Twitter verbally at the point of sale. If you already have customers, engage them on Twitter and keep them apprised of happenings at your business. You may just be surprised by the results.

5) Don’t Auto-Direct Messages. Contrary to what many so-called marketing wizards advise, people are not joining Twitter for the joys of receiving spam. If you can’t send a personal message to those who kindly follow your account, don’t provide a cold, automatic message in its place.

6) You’re The Tortoise, Not The Hare. Much like Rome, a thriving Twitter presence isn’t built in a day, and building your own community takes time and consistency. If you own a smartphone, let it become your Twitter tool. Download a popular Twitter app, like TweetDeck, and manage your account on the go.

7) Evaluate Your Gains. Before you dedicate any more precious time and resources to embellish your Twitter presence, carefully evaluate how well, or how poorly, your current strategy is working. Use Google Analytics to monitor inbound web traffic from Twitter, and keep tabs on how many customers use Twitter-exclusive promotions. At the end of the day, understanding your ROI from the time you spend on Twitter is every bit as important as your Twitter presence itself.

In the coming years, customer network optimization will become as important as search engine optimization has in the past 10. Looking back at the beginning of SEO, there were rudimentary technologies, no best practices and very few experts, yet today more than $13 billion is spent annually on SEO services, and $26 billion spent on paid search advertising. Long-term success in customer network optimization will be found in a comprehensive approach to the entire funnel, from product consideration to purchase, and having a complete view of the influence value of a customer and their transactions. This requires a platform approach where companies can extend an integrated shopping experience into Facebook, other social networks or promotional sites, and centrally manage this channel with others in your ecommerce system. Social promotions like badging, incentive programs, or private sales will need to be deployed in an intelligent manner, using all the critical customer and purchase history to truly optimize customer networks, and activate them around products and services within social networks.

The preceding was adapted from reports by Matt Compton, chief executive at ShopIgniter; Investors.com; Advertising Age; and nationally published author, Michael Essany. The original stories can be accessed at http://tinyurl.com/6hgm4j8; http://tinyurl.com/6hsatjv; http://tinyurl.com/4q7qbg2; and http://tinyurl.com/5rgrpae.