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Hey Retail! Get Serious About Social Acquisition

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The impact that social will have on the way people shop- and on your bottom line - is expected to grow by leaps and bounds in the coming years. Learn the truth about what public social networks mean …

The impact that social will have on the way people shop- and on your bottom line - is expected to grow by leaps and bounds in the coming years. Learn the truth about what public social networks mean for your acquisition strategy.

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  • 1. hey, retail!get serious about social acquisitionthe real truth about public social networks (like Facebook and Twitter)
  • 2. 2share this whitepaperlithium.com | © 2013 Lithium Technologies, Inc. All Rights ReservedLithium social software helps the world’s most iconic brandsincrease loyalty, reduce support costs, drive word-of-mouthmarketing, and accelerate innovation.Lithium helps brands to build vibrant customer communities that:contents1 intro2 the state of social media for retail3 the social media imperative4 the social media good news/bad news6 social networks are not communities7 social network volume and velocity8 it’s a small world—and getting smaller9 public social network limitations12 resourcesrequest a demosubscribe toSocialMattersreduce service costs withsocial supportgrow brand advocay withsocial marketingdrive sales withsocial commerceinnovate faster withsocial innovation
  • 3. 1share this whitepaperintroSocial shopping may be in its infancy, but like most infants, it’s only getting bigger—and it’s growing fast.The potential benefits for retail are hard to beat: socialoffers lower acquisition costs, viral buzz, more eyeballs—andmore focused eyeballs—for targeted advertising that lead toincreased click-throughs. The impact that social will have onthe way people shop—and on your bottom line—is projectedto do nothing but grow. In fact, new estimates predict that inthe next two years the value that social media offers to retailwill more than double. This paper aims to unpack the specificpotentials (and limitations) of public social media networkslike Facebook and Twitter as engines of acquisition, and partof your broader social strategy.53%of people on Twitter recommend companies and/orproducts in their Tweetsdeliver on their purchase intent48%$2312012 2013 2014 2015 2016 2017$262$291$319$345$37014%year-on-year growthforecast: US online retail sales, 2012 to 2017(US$ billions)CAGR from 2012to 2017: 9%share of total retail sales13% 11% 10% 8% 7%8% 8% 9% 10% 10% 10%
  • 4. 2share this whitepaperthe state of socialmedia for retailWhat you’re literally acquiring over social media is awarenessand interest—winning customers’ attention and influencingthem to check out what you have to say. It‘s ultimately aboutbringing in new potential customers, of course, but socialmedia strategies function principally as a top-of-the-funnelmechanism for expanding your company’s social footprintand dramatically extending the range and impact of itsmessages. Public social media channels (and not merelybecause they’re huge) represent a giant set of tools andservices for retail, beginning with the infrastructure togenerate that huge new audience.Going online has transformed retail from the top shelf tothe bottom line, from how brands market, stock and grow, tohow they support, innovate and monetize. When it comes toacquisition specifically, social customers have totally changedthe game. They are a new breed—connected, empowered,influential, and they value customer reviews above thecompany line. One key driver of their revolution is mobileinnovation, which—ready or not—has alreadybrought social into your bricks-and-mortar stores. Today,over 40% of US smartphone owners compare prices on theirmobile device while in-store shopping. By 2015 smartphoneusers are projected to rise to 159 million, up from just 82million in 2010.Social offers your brand access to many millions moreconsumers than ever before. In turn, they have greateraccess to you, too—as well as a growing power to moveyour bottom line. Social customers expect real-time serviceand an excellent customer experience to be included in thesticker price and they complain loudly and effectively whendisappointed. That said, today’s top brands are doing morethan just satisfying their social customers, they are sparkingtheir passion and enthusiasm to help drive new business.communitymember spendnon-memberscommunitymemberscommunitysuperfans2x10xrelevanceinterestawarenessdesireactionreach
  • 5. 3share this whitepaperThe market itself has already responded to social mediadisruption with a shift in priorities. For retailers today, thepoint of sale is now only the beginning of a long-term,profitable customer relationship. Social media doesn’t justempower brands to tap a much larger consumer pool or getto know their customers really well. It doesn’t merelyenhance the speed, reach and relevance of word-of-mouthmessaging. Social media makes each of these things aneconomic imperative. At this point, a complete social strategyis more than a matter of gaining a competitive edge; it’s amatter of survival.Increasingly, social consumers expect retailers to deliver anintegrated shopping experience across all channels. Brandsfailing to deliver risk irrelevance. Already, more than 74% ofconsumers rely on social networks to guide their purchasedecisions. Over 64% of consumers have made a first purchasefrom a brand because of a digital experience such as a visit toa social network or community, a mobile coupon, or an email.How well you adapt to the changing landscape and meet thegrowing expectations of today’s social customer will helpdefine your rate of acquisition and your profits, now and intothe future.the socialmedia imperativelong-term,profitablerelationships
  • 6. 4share this whitepaperthe social mediagood news/bad newsOverall, the outlook for online retailers remains sunny. Onlineretail has seen double digit growth since 2010 and is expectedto top $367 billion by 2016. Fifty-eight percent of retailers saytheir online conversion rates were up and cart abandonmentrates down in 2012. But we all know the tide can turn at anymoment. In 2009, Netflix had been outperforming the averageInternet retailer in customer satisfaction for years andwas considered the top retailer by the American CustomerSatisfaction Index (ASCI). But in 2011 and 2012, the oncemythically popular video streaming company fell to the lowestrated Internet retailer.What happened? Netflix, arguably, made some pricing andpolicy missteps. Importantly, though, social media added fuelto the fire. Social media only did exactly what it was supposedto do—propagate messages. But what it propagated—atbreakneck speed—were negative impressions of Netflixthroughout the marketplace, and this took a sizeable bite outof the brand’s image.But channels like Facebook, Twitter, Google+, YouTube,Pinterest and Instagram can propel acquisition just asefficiently as they can accelerate disaster.For retail, the trick is in making sure the messages kept afloatwith social customers are about the positive experiences theyhave with your brand. To do that, you need to have a socialstrategy that understands how those messages propagate.When social media-based customer communities flourisharound brand messages, they create interest, awareness andloyalty, and the potential to become one of your most efficientdrivers of acquisition.80% of consumers are more likely totry new things because of social media.source: CMO Council
  • 7. 5share this whitepaperSocial networks are the top online destination. For mostsocial customers today, the components of your acquisitionstrategy will define their first direct experience with yourbrand. It’s the face you put on that all-important firstimpression. Sixty percent of people who use three or moredigital means of researching products first learned about aretailer through a Facebook or Twitter post.Any effective social strategy needs to recognize and invest inwhat channels like Facebook are designed to do best—attractlots of eyeballs and spread your message fast. It’s vital thatyou not waste time, money and goodwill trying to force publicsocial channels to do what they fundamentally can’t, likedeepen relationships or enlist customers. Those aims arebetter left to communities.
  • 8. 6share this whitepapersocial networks arenot communitiesSocial networks and communities are just how we describetwo different kinds of social structures that have been aroundfor many thousands of years. We’ve been organizing ourselvesin groups since the beginning, and we still do. But here arethe important distinctions between the two when it comes tosocial strategy:Social networks (like Facebook and LinkedIn) are heldtogether by pre-established interpersonal relationshipsbetween individuals, like family, friends, classmates, andcolleagues. You know everyone in your network personallybecause they’re all directly connected to you. Thoseinterpersonal relationships mean there’s more initial trust insocial networks than in communities. Ironically, though, allthose friends tend to get in the way of your brand goals. Thereason is that networks like Facebook do such a great jobat maintaining connections between trusted relationships,there’s not much room left for other engagements—yourbrand included.Communities (like Yelp, Wikipedia, and brand communities)are held together by a common interest. They form aroundmembers’ hobbies, goals, art, politics, as well as theproducts they use everyday. Although there may be pre-existing interpersonal relationships between members ofa community (ie: you rarely already know people in yourcommunity the way you already know everyone in yournetwork), knowing people personally is not required and it’snot even common. Community members represent a widerange of origins and types. The common element—the gluethat keeps their community together—is that they all careabout the same thing: the shared interest of their community.That shared interest means that there’s more initial relevanceinside a community than in a social network.Communities and social networks are different structures,but that doesn’t mean that they are mutually exclusive: theyoverlap, intersect and weave in and out of each other. In fact,social networks can (and often do) exist inside communities.commoninterestspre-existinginterpersonalrelationshipsheld together bymay havecommoninterest relationshipssocial networks online communities
  • 9. 7share this whitepapersocial networkvolume and velocityvolumeIn a public social network, the comparative lack of relevanceputs a limit on what your brand can do, but it doesn’t slowdown acquisition. On the contrary, if you’re trying to acquiremore customers, and keep their numbers reliably growing,social media gathering places are your richest pools. Simplyby increasing the number of aware consumers, brandsbenefit from a proportionally greater number of conversionsat the other end of the funnel. In other words, just by settingup shop where the crowds are already thickest you get abigger audience. With over a billion active users, Facebookalone offers businesses an irresistibly wide pool. Toss ina couple of other public social networks like Twitter andGoogle+ and your opportunities get even bigger.velocityMessages travel across social media so fast, it’s almostreal-time. We learn about uprisings over Twitter beforedictators a world away fully know what’s hit them. Thesedays, people can attend a conference virtually by following thehashtag for the event on their Twitter stream. And when theSupreme Court makes a decision, Facebook and Twitter arehosting reactions within seconds of the first announcement.Because information shared across social networks is sofast, using social networks to propagate your messages helpsto spark customer engagement with an increased sense ofurgency and timeliness. Engagement can and often doeshappen on your acquisition channels, though the interactionsare not usually very deep. This shallow engagement, however,is often enough to grab the attention of your potentialcustomers, and therefore helps you acquire more effectively.
  • 10. 8share this whitepaperit’s a small world—and getting smallerTo understand why social networks offer such high velocity(so that you can build tactics that take advantage of it), let’stake a look at how the interconnected structure of networkslike Facebook and Twitter are shrinking the world—to thebenefit of brands.We know that information travels across social networksfrom one person to another via sharing. So your message willpropagate through the network faster when the connectionsin it have, on average, fewer degrees of separation.This is the familiar theory of “six degrees of separation”. TheAmerican psychologist Stanley Milgram tested and madefamous the idea that even though there are infinitely manypaths connecting any two people in the world, you could stillselect any person on Earth—anyone, anywhere at all—andcontact that person using nothing but a chain of about sixindividuals, at least one of whom is a personal acquaintance.Off-line, some chains are much longer and some end upbeing shorter, but in general, the shortest and most efficientpath between any two people on the planet is on averageabout six people. That means it takes only six re-shares forinformation to spread throughout the entire social network inthe physical world.The interesting thing is that online, the path is even shorter—and it’s shrinking. As we build our networks, establishingrelationships and following people, we become more andmore tightly connected. Facebook, for example, startedout mimicking our physical social network pretty well withan average of 5.73 degrees of separation. Now there’s anaverage of 4.74 degrees of separation between any randompair of Facebook users. Twitter is smaller still. It began withan average of 4.12 degrees of separation between users. Nowthe average is 3.43. That’s the reason that breaking news is sooften heard first over Twitter.The relatively small size of our online personal networks—about 229 friends, on average— not only enables us to knowour friends better, it also keeps information that is onlyrelevant to a few people well-contained. On the other hand,when the information is relevant to a broader audience,then the small world property of our social network enableseach person to spread it rapidly to a large audience. Thisbalance between relevance and reach is what gives publicsocial networks like Facebook the power to drive interest andawareness so effectively.average degreesof separation
  • 11. 9share this whitepaperpublic socialnetwork limitationsbroad but shallowWe know that Facebook fan pages are effective at bringingnew consumers through the shallow, upper layers of thetraditional purchase funnel, but by themselves they don’t doeverything that your brand needs social to do. To say thatthey’re shallow, doesn’t mean that fan pages don’t also leadto purchase actions—they do. We call public social networksshallow because after making the initial draw into the earlystages of the funnel, fan pages simply don’t add a whole lotmore to the funnel’s natural conversion dynamics. Thoseconversion dynamics develop only through the combination ofengagement and enlistment strategies.The reason public social networks can’t drive deep-funnelbehaviors well enough on their own has to do with therelevance issue: the fact that friends and family in our socialnetworks aren’t gathered around a common interest. Thecontent they pass along to one another over Facebook orTwitter, even when it’s timely, is really just hit or miss. Theupshot is that acquisition is necessary, but not sufficient on itsown to create a holistic social strategy.irrelevance and noiseEven though you’re casting the widest net in the biggestpool, when you delve into social networks you’re still notgoing to acquire everyone. That’s because the bigger a chan-nel is, the less focus it has, and the less focus it has, the lessrelevant it is to any one individual. The reason YouTube got sobig in the first place is that it’s utterly non-specific—it’s got to have something for everyone. As individuals, afterall, we’re all interested in something different, personal,unique to us. When the audience is that broad and diverse,as it is on large social networks like Facebook and Twitter,when you focus on strong relationships instead of commoninterests, your brand’s message will inherently suffer from alack of relevance.The other downside of big social networks is that big comeswith a lot of noise. It’s not just the billions of peoplehanging out in these networks—it’s the gazillions ofconversations across every imaginable subject flying aroundthem. Lots of consumers means lots and lots and lots ofconversation. The onslaught of social media conversationcreates a huge challenge both for your technology and yourstaff, because with those noisy conversations comes a lot ofirrelevance to you.just 2% of fans returnto brand pages theylike on Facebooksource: AllFacebook.com
  • 12. 10share this whitepaperThat said, however daunting, that endless spool of socialmedia conversation threads also represents a goldenopportunity. First and foremost, it allows you to learn a lotmore about the consumer in general and more about yourcustomers in particular. Gathered well, those insights canlead to a real understanding of their interests, likes anddislikes. That data lets you understand your customers betterso that you can become more relevant to them, which in turnmakes your acquisition efforts more effective. That’s why justbeing there is never enough.the most common mistakeOne of the most common mistakes companies make withsocial media is to launch many, many fan pages for every lastfeature in their products instead of creating a cohesive socialstrategy for their online presence.By spreading their presence too thin, brands are essentiallyshooting themselves in the foot. One of the results we foundin developing the Community Health Index is that you need aconcentration of activity to produce a sense of livelihood thatattracts new members and grows the community. If brandsspread their activity too thin, they can only blame themselves.Further, the content that most companies share is rarelyoptimized for their fans’ newsfeeds. Instead, the content getsoptimized for what the company wants to communicate. Ifthat’s the case for your company, then your fan pages havejust become another one-way communication tool, which isnot what social is all about. In fact, this one-way approach isthe very opposite of social.off-domain ain’t your domainWhile public social networks are terrific top-of-the-funneltools for acquisition, powering reach and driving the aware-ness, they fall short on the deep engagement you need, andmiss enlistment entirely. The simple reason for this is thatthey are off-domain. You don’t own these channels. You don’town your Google+ fans, Twitter followers, or your Facebookpages. You can’t control the experience your customers havewhen they view your content and interact with your brand onYouTube or Pinterest, and you certainly can’t interact withcustomers on these properties in any scalable capacity.If people simply put a ‘follow me’ on Facebook or Twitteror on their corporate home page without an integratedstrategy, they are actually driving traffic away, and doingthemselves a dis-service. The effect would be N timesworse if they have N fan pages.—Jeremiah Owyang, The Altimeter Group
  • 13. 11share this whitepaperFurther, on platforms you don’t own, the data available to youis fleeting and any benefits they yield are inherently shortterm. Why? Because at anytime, Facebook can change theirinterface, their pages, layout, the way groups and peopleconnect, how much information is available to you (or not)—pretty much anything. That alone hinders your ability tolearn, adapt and innovate on the social customer experienceyou deliver.Moreover, fans go to Facebook to interact with theirfriends, not with your brand. You might pitch a clever, well-timed, totally personal message to them there, but they’restill missing the kind of engaging social customerexperiences they can—and do—get from brand-ownedcustomer communities.Facebook, Twitter, YouTube, Pinterest all attract consumersin huge numbers and yes, you need to set up shop there,too. But the difference is that in the new order, it’s not nearlyenough to catch-and-monetize—today, that’s the sameas catch-and-kill: you only get to monetize them once. Intoday’s marketplace, the point of sale is only the beginningof the profitable relationship. Gaining long-term competitiveadvantage is about winning the social customer experiencesuch that you can monetize customers over and over again.The business goal of a sustainable social strategy is toengage social customers to co-create something of mutualvalue with your brand, and then enlist them to become, inturn, your most efficient engines of acquisition.the Canon Forum communityaccumulated over 5,100registered users and 2.8M pageviews in its first 6 months
  • 14. 12share this whitepaperlithium.com | © 2013 Lithium Technologies, Inc. All Rights ReservedLithium social solutions helps the world’s most iconic brands to build brand nations—vibrant online communities of passionate social customers.Lithium helps top brands such as AT&T, Sephora, Univision, and PayPal build active online communities that turn customer passion into socialmedia marketing ROI. For more information on how to create lasting competitive advantage with the social customer experience,visit lithium.com, or connect with us on Twitter, Facebook and our own brand nation – the Lithosphere.resourcesi. U.S. Online Retail Sales to Hit $370 Billion by 2017, Forrester Researchii. Social Media Is A Highly Valuable Tool for Retailers, The Guardianiii. Majority of Consumers Relay on Social Networks to Guide PurchaseDecisions, Gartner Researchiv. Digital Brand Experience Report, Razorfishv. US Digital Future in Focus—2013, Comscorevi. Social Media Report, Nielsenvii. Smartphone Adoption Soars, Internet Retailerviii. The State of Retailing Online, Forrester Researchix. STUDY: Facebook Timeline Doesn’t Affect Engagement, AllFacebook.comx. Online Retailers’ 2013 Top Priorities, Forrester Reesarchxi. 9 Retailers with the Worst Customer Service, USA Todayxii. How to Measure Your Facbook Engagement, Social Media Examinerxiii. The Digital Divide, Lithium & the CMO Councilresources