Social ROI is All About Strategy, Sharing and Data

Jan 16, 2013 8:08 PM  By

Converting traffic from the social web to sales has gotten even tougher, as consumers are increasingly bombarded by messages from retailers eager to get them to “like” or become fans of their brand. This is because social is mostly treated like other digital channels – simply blast more messages to get a higher interaction rate.

But there’s a major flaw in this scenario: It’s not working. Ten thousand Facebook fans are not translating into 10,000 eager customers. And 50,000 Twitter followers don’t necessarily mean a ready supply of buyers. The hard truth is that most retailers haven’t a clue about the bottom-line impact of social marketing. Meanwhile, efforts to acquire fans and followers aren’t getting any cheaper.

These issues are further complicated by the fact that brands aren’t clearly seeing the opportunity to integrate social marketing with other digital initiatives. Instead, marketers have run for the refuge of vague metrics like “brand equity” that don’t measure bottom-line impact.

But what if they could use social media as an igniter for retail sales? Further, what if social utilities and the data produced by social interactions could be integrated with other digital tactics to reach more likely-to-buy/share consumers in future campaigns? And what if online and offline purchases could be tracked back to the social trigger for proper attribution?

Welcome to the new world of retail, where consumers happily use social tools to motivate friends to buy. On an opt-in basis, they can unlock the value of special offers as they share them socially, finally realizing the viral promise of social and driving a significant lift in retail sales and measurable ROI. Also, intelligence mined from the social graph – including the purchase value of not just individuals but also responding friends – can lead to more precise targeting and relevance in subsequent offers. Think of the future as marketing to relationships, not just people.

Social: An extension of a complete digital strategy
If a retailer makes a special digital offer, including social ads, the usual M.O. is to track how many hits each channel gets, optimizing for those that perform better. There’s nothing truly “social” about such tactics, which just make social networks another source of traffic.

But by layering a social utility on top of these digital executions – for instance, using display as a jumping-off point for creating earned media (social sharing, blog posts etc.) – retailers increase the odds of a viral campaign.

In this scenario, when someone hits a well-targeted display ad, social becomes a mechanism to make sure it’s shared with like-minded friends who will appreciate the offer. And when this sharing is done on an opt-in basis, it’s seen more as a valuable opportunity from a trusted source than as an intrusion into their social network.

Here’s a real-world example of how this works. A global clothing retailer wanted to drive online consumers and their friends to participate in four in-store holiday promotions. They distributed a targeted display ad that added an exclusive incentive for socially connected friends; an embedded social utility enabled sharing of an invitation to shop on an opt-in basis via Facebook, Twitter and Gmail.

Social analytics and back-end integration with the point of sale system ensured proper attribution. The resulting activity led to over 40,000 in-store transactions worth nearly $1 million. Most notably, 98% of these purchases were attributable to earned media.

The lesson? Social can be a powerful extension of a digital channel the retailer uses fervently every holiday season.

The power of social data
The case above is exciting, but it’s also just a starting point for building enduring relationships with engaged consumers and their friends. Today, most retailers aren’t capturing retail and social behavior data together to expand sales.

With current ad tech, if someone were to respond to a display ad for, say, high-end cookware and then make a purchase, a retailer can use the data captured to extend the offer to look-alike consumers. But when that person recommends the offer to a Facebook friend who subsequently makes an in-store purchase, the retailer typically has no ability to track that recommendation and link the two – and the dynamic of their actions – together.

However, add integration and analytics, and the retailer becomes aware of the connected preferences and actions of the two friends; perhaps one of them shared with others as well. The retailer can then take that combined information to create subsequent offers that are more likely to drive recommendation-driven group purchasing.

At the same time, they can understand which consumers are most influential among their friends and better target them with offers that reinforce group behavior.

While there’s certainly nothing wrong with a retailer being “liked” or having tons of fans and followers, those things do little to justify their growing social media investments. With the right strategy and a slight modification in thinking about how social can be integrated with tried and true digital tactics, retailers can tap into natural social network relationships. Only then does social ROI become not only achievable but sustainable.

Todd Parsons is founder and CEO of social commerce company ADITIVE.

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